on the World Today

LESS than 500 yards from the Palaces of the Shah in Teheran there stands the ruined shell of a house behind a gate bearing the number 109. For some of the city’s inhabitants this spot is still a shrine of pilgrimage; but to all of them 109 Khiaban Kakh (Palace Avenue) is as well known as 10 Downing Street is to the citizens of London. For this desolate ruin, which now so aptly symbolizes the twenty-eight months of his rule, was once the residence of Dr. Mohammed Mossadegh and the administrative center of Iran.

Things have changed a lot since the memorable evening of August 19 when this house was pillaged from top to bottom by a frenzied pro-Shah mob, and not the least significant of these changes has been the shift of the Prime Minister’s quarters back to their traditional place on the second floor of the Ministry of Foreign Affairs. Here, in an office conveniently situated less than 200 yards from the Headquarters of the Police, the Ministry of War, and the Officers’ Club (where he lives), General Fazlollah Zahedi today firesides over the destinies of Iran. This deliberate geographic concentration of administrative power is symbolic of the new regime’s determination to restore the authority of the state.

Since General Zahedi took over last August, street demonstrations have been dealt with roughly by the soldiers who, with rifles and fixed bayonets, patrol the main avenues and streets and maintain order in the Bazaar. The walls and sidewalks of the city which last summer were plastered with signs like “Down with the Dynasty!" and “ Yankee, Go Home!” have been carefully washed clean. Professional sign-painters are now difficult to find, for they know that if caught they face the prospect of being shipped to some prison-fortress in the country or to the godforsaken island of Kharg in the Persian Gulf.

The only people who are still permitted to get away with a little murder are the enthusiastic supporters of the Shah—for example, the muscular youths of the Nazi-style Sumka party, who sport khaki shirts and black armbands and tour Teheran in jeep “commando units” looking for Communists to beat up; or the even more fanatically royalist supporters of “Bimokh" (The Brainless) Shaban Jafari, the black-bearded giant, once the wrestling champion of Iran, who distinguished himself during the recent elections in Teheran by leading a gang of toughs from one polling booth to the next, beating up people who were about to vote the wrong way.

Getting rid of the Communists

By and large, the imposition of martial law (including a five-hour curfew at night) and the arrest of hundreds of proven or suspected adversaries of the regime have had the desired effect. Public order, which virtually ceased to exist last summer, has been restored, and the Communist Tudeh party has been dealt a heavy blow.

The police, like every other department of government, was thoroughly infiltrated by the Communists during the two and a half anarchical years of Mossadegh’s rule. One or two prominent Communists have been arrested, but no one seems to know who the real leaders of the movement are and whether they are still at large.

So too with the press. Though a systematic effort has been made to close down all left-wing publications, the veteran Tudeh party organ, Mardom (Mankind), still manages to bring out a clandestine edition about once a week.

But the most eloquent comment on the extent and limitations of police control in Iran is provided by the simple fact that Hossein Fatemi, Mossadegh’s Foreign Minister, has so far eluded his pursuers. Without doubt the most detested man in all Iran, he is one person that almost any Persian would gladly hand over to the police. Yet he remains at large, and people have been left to speculate whether he has escaped to Baku or found refuge with the Kashgai tribes, who were proMossadegh.

Along with this systematic drive to shatter the Communist party in Iran, General Zahedi has made a determined effort to rebuild the army. Many officers who were thrown out for opposing Mossadegh have been reinstated. A number of Communists have been removed — close to 150 in the Air Force alone, the most heavily infiltrated of the three services. Soldiers and officers who last August had gone unpaid for three or four months have since been paid up all arrears, and a special bonus has been introduced to increase army salaries and to keep them abreast of the steadily rising cost of living.

Several months ago a program of cheap housing was launched, with the coöperation of the American Point Four Mission, to improve the miserable accommodations of sergeants and lieutenants, many of whom have to live in shacks and mud huts. The results, in a short period of time, have been remarkable.

The efforts to raise the morale of the fighting forces by economic measures form part of a general plan to raise the people’s standard of living, which General Zahedi cited as one of his major objectives in his first improvised radio speech to the nation last August.

In the long run both he and his economic advisers know that little can he accomplished in this line until the Persian government once again disposes of oil revenue to finance the construction of the dams, canals, wells, and sugar-beet factories that will give work to hundreds, and later thousands, of those impoverished, halfstarved, and semi-employed masses who inhabit the great slum areas of Teheran and other Persian cities. Hundreds of people have been put to work paving roads and improving public facilities in cities all over the country.

Too many bureaucrats

Eager as General Zahedi and his ministers have shown themselves to do something about the country’s desperate economic condition, the fact remains that they are faced with formidable, long-range ills which cannot be cured overnight. Perhaps the most serious of these is the fantastic overinflation of the administrative bureaucracy that has taken place in the last ten years. In the days of Reza Shah (the father of the present king) there were about 30,000 employees in the administration. Today there are over 120,000. Fxperls in the UN Mission in Iran have estimated that the government could perfectly well function today with 40,000 civil servants.

But what is to be done with the excess? Throw them out onto the streets, where they would turn overnight into an army of disgruntled Communists? Rather than risk this, all Iranian governments in recent years have preferred to go on paying those scores of humble functionaries that one meets everywhere in the corridors and antechambers of the ministries in Teheran silting around and gossiping and waiting to be told to carry messages.

Even though few of Iran’s civil servants are paid anything like a living wage and have to make ends meet by doing odd jobs on the side (with the result that they often spend far more time out of the office than in it), the drain imposed on the Treasury by such an army of administrative parasites is terrible. Furthermore, it has been aggravated by the additional burden of maintaining fulltime payments to the 60,000 employees of the now idle Iranian oil industry.

Prior to the close-down of the Abadan refinery and the imposition of the British blockade in the summer of 1951, oil royalties used to supply 40 per cent of government revenue and cover from .30 to 50 per cent of Iran’s imports. One of Mossadegh’s few genuine achievements was to balance his country’s trade for the first time in its modern history. From 1951 to 1953 imports were cut drastically by 30 per cent, while exports were raised by 65 per cent.

But Mossadegh failed to score the same success when it came to balancing the budget. Though he made a few, halting steps in the direction of more rigorous tax-collect mg methods (in a country which is a tax-dodger’s paradise), he was never able to fill the huge hole created by the loss of oil revenue. In the end he had to resort to that classic inflationary device, the printing press.

Washington offers help

When General Zahedi came into office last August, the government was running a monthly deficit of some 500 million rials (or about $6 million). To bail him out, Washington agreed to grant an emergency loan of $45 million — which, it was calculated, should tide him over until April 1, by which time it was expected that Iranian oil would once again be flowing onto the markets of the world. It is clear today that this was a fond hope entertained by politicians who had not taken the trouble to have a serious look at the formidable probblems involved in dealing with a nationalized oil industry, particularly in an explosive area like the Middle East.

One of the most ticklish issues involved, but about which almost nothing has been said in public, is the price at which Iranian oil is going to be sold in the future. If it is sold at the prevailing Persian Gulf price for unrefined petroleum of $14 a ton, the National Iranian Oil Company can expect to get, after deducting pumping costs and 25 per cent for compensation to the Anglo-Iranian Oil Company, somothing like $9 a ton in profits which it will not have to share with anyone.

But the neighboring Iraqi government, which has to share all profits made on a 50-50 basis with the Iraq Petroleum Company (a joint British, French, and Dutch concern with headquarters in London), at present gets only $6 a ton. The new contract which Baghdad negotiated with the Iraq Petroleum Company in February, 1952, further specifies that if any neighboring country manages to get better terms than Iraq, the agreement with I.P.C. must be revised.

If Iranian oil were to be sold at the present Persian in If price, it would precipitate a general demand in neighboring countries for the nationalization of oil. The international petroleum corporations know this well, and have therefore not been particularly enthusiastic about reactivating the Iranian oil industry.

The only way of getting around this difficulty will be by selling Iranian oil at a price considerably below the one prevailing in the Persian Gulf. This is something that the envisaged International Consortium can easily do, inasmuch as its function will be to buy as well as to sell Iranian oil. The solution will not be unlike that once proposed by Mossadegh in a moment of desperation. To be salable on the international marked, Iranian oil will have to be sold at much less than the current world price.

While this solution may limit the outbreak of unrest in neighboring Middle Eastern countries, it cannot fail to cause acute embarrassment to the government of General Zahedi. For he will have to defend this solution against the charge that the opposition will certainly bring — that once again Iran is being exploited by the insatiable greed of the international petroleum barons. It may be the only way of getting Iran out of its present financial difficulties, but it will probably do little to increase General Zahedi’s popularily.

The General’s greatest asset

The General, well known in Teheran society for having a way with the ladies, has yet to acquire a winning way with the general public. Unlike Mossadegh, he is no orator. Nor does he have the popular appeal that another soldier, General Naguib, enjoys with the Egyptian masses. He is a military man with a fairly distinguished record and with valuable experience gained from having twice been Chief of Police for Teheran and once Minister of the Inferior. But he has yet to show himself a statesman.

To date his greatest asset has been his close association with the Shah, who, as the events of August 19 proved, is still the object of a veritable mystic cult in Iran. In hundreds of shops and cafés all over Teheran one can see the familiar photograph of the bemeduled General in full dress uniform joking with the Shah, who is similarly attired. Yet how much longer can this official myth be maintained?

Rumor flies fast in Teheran, and it is no secret any more that the General s relations with his sovereign leave something to be desired. The 33-year-old Shah, who hesitated all last summer to appoint another general as Premier, remembering his sharp conflict in 1950 with General Razmara, is once again at odds with his Prime Minister — over that perennially thorny issue, the control of the Iranian army. But one thing is certain. It will not be easy at the present juncture to find another man who can give the turbulent country of Iran the peace, order, and prosperity which its people have hoped for for years, and hoped for in vain.