Mohammad Reza Pahlavi distributes land deeds to a peasant woman under a land reform program
Courtesy United States Information Agency

Elections to the twenty-first Majlis in September 1963 led to the formation of a new political party, the Iran Novin (New Iran) Party, committed to a program of economic and administrative reform and renewal. The Alam government had opened talks with the National Front leaders earlier in the year, but no accommodation had been reached, and the talks had broken down over such issues as freedom of activity for the front. As a result, the front was not represented in the elections, which were limited to the officially sanctioned parties, and the only candidates on the slate were those presented by the Union of National Forces, an organization of senior civil servants and officials and of workers' and farmers' representatives, put together with government support. After the elections, the largest bloc in the new Majlis, with forty seats, was a group called the Progressive Center. The center, an exclusive club of senior civil servants, had been established by Hasan Ali Mansur in 1961 to study and make policy recommendations on major economic and social issues. In June 1963, the shah had designated the center as his personal research bureau. When the new Majlis convened in October, 100 more deputies joined the center, giving Mansur a majority. In December, Mansur converted the Progressive Center into a political party, the Iran Novin. In March 1964, Alam resigned and the shah appointed Mansur prime minister, at the head of an Iran Novin-led government.

The events leading to the establishment of the Iran Novin and the appointment of Mansur as prime minister represented a renewed attempt by the shah and his advisers to create a political organization that would be loyal to the crown, attract the support of the educated classes and the technocratic elite, and strengthen the administration and the economy. The Iran Novin drew its membership almost exclusively from a younger generation of senior civil servants, Western-educated technocrats, and business leaders. Initially, membership was limited to 500 hand-picked persons, and it was allowed to grow very slowly. In time it came to include leading members of the provincial elite and its bureaucratic, professional, and business classes. Even in the late 1960s and early 1970s, when trade unions and professional organizations affiliated themselves with the party, full membership was reserved for a limited group.

In carrying out economic and administrative reforms, Mansur created four new ministries and transferred the authority for drawing up the budget from the Ministry of Finance to the newly created Budget Bureau. The bureau was attached to the Plan Organization and was responsible directly to the prime minister. In subsequent years it introduced greater rationality in planning and budgeting. Mansur appointed younger technocrats to senior civil service posts, a policy continued by his successor. He also created the Health Corps, modeled after the Literacy Corps, to provide primary health care to rural areas.

In the Majlis the government enjoyed a comfortable majority, and the nominal opposition, the Mardom Party, generally voted with the government party. An exception, however, was the general response to the Status of Forces bill, a measure that granted diplomatic immunity to United States military personnel serving in Iran, and to their staffs and families. In effect, the bill would allow these Americans to be tried by United States rather than Iranian courts for crimes committed on Iranian soil. For Iranians the bill recalled the humiliating capitulatory concessions extracted from Iran by the imperial powers in the nineteenth century. Feeling against the bill was sufficiently strong that sixty-five deputies absented themselves from the legislature, and sixty-one opposed the bill when it was put to a vote in October 1964.

The measure also aroused strong feeling outside the Majlis. Khomeini, who had been released from house arrest in April 1964, denounced the measure in a public sermon before a huge congregation in Qom. Tapes of the sermon and a leaflet based on it were widely circulated and attracted considerable attention. Khomeini was arrested again in November, within days of the sermon, and sent into exile in Turkey. In October 1965, he was permitted to take up residence in the city of An Najaf, Iraq--the site of numerous Shia shrines--where he was to remain for the next thirteen years.

Although economic conditions were soon to improve dramatically, the country had not yet fully recovered from the recession of the 1959-63 period, which had imposed hardships on the poorer classes. Mansur attempted to make up a budget deficit of an estimated US$300 million (at then prevalent rates of exchange) by imposing heavy new taxes on gasoline and kerosene and on exit permits for Iranians leaving the country. Because kerosene was the primary heating fuel for the working classes, the new taxes proved highly unpopular. Taxicab drivers in Tehran went on strike, and Mansur was forced to rescind the fuel taxes in January, six weeks after they had been imposed. An infusion of US$200 million in new revenues (US$185 million from a cash bonus for five offshore oil concessions granted to United States and West European firms and US$15 million from a supplementary oil agreement concluded with the Consortium, a group of foreign oil companies) helped the government through its immediate financial difficulties.

With this assistance, Mohammad Reza Shah was able to maintain political stability despite the assassination of his prime minister and an attempt on his own life. On January 21, 1965, Mansur was assassinated by members of a radical Islamic group. Evidence made available after the Islamic Revolution revealed that the group had affiliations with clerics close to Khomeini. A military tribunal sentenced six of those charged to death and the others to long prison terms. In April there was also an attempt on the shah's life, organized by a group of Iranian graduates of British universities. To replace Mansur as prime minister, the shah appointed Amir Abbas Hoveyda, a former diplomat and an executive of the National Iranian Oil Company (NIOC--see Oil and Gas Industry, ch. 3). Hoveyda had helped Mansur found the Progressive Center and the Iran Novin and had served as his minister of finance.

Hoveyda's appointment marked the beginning of nearly a decade of impressive economic growth and relative political stability at home. During this period, the shah also used Iran's enhanced economic and military strength to secure for the country a more influential role in the Persian Gulf region, and he improved relations with Iran's immediate neighbors and the Soviet Union and its allies. Hoveyda remained in office for the next twelve years, the longest term of any of Iran's modern prime ministers. During this decade, the Iran Novin dominated the government and the Majlis. It won large majorities in both the 1967 and the 1971 elections. These elections were carefully controlled by the authorities. Only the Mardom Party and, later, the Pan-Iranist Party, an extreme nationalist group, were allowed to participate in them. Neither party was able to secure more than a handful of Majlis seats, and neither engaged in serious criticism of government programs.

In 1969 and again in 1972, the shah appeared ready to permit the Mardom Party, under new leadership, to function as a genuine opposition, i.e., to criticize the government openly and to contest elections more energetically, but these developments did not occur. The Iran Novin's domination of the administrative machinery was further made evident during municipal council elections held in 136 towns throughout the country in 1968. The Iran Novin won control of a large majority of the councils and every seat in 115 of them. Only 10 percent of eligible voters cast ballots in Tehran, however, a demonstration of public indifference that was not confined to the capital.

Under Hoveyda the government improved its administrative machinery and launched what was dubbed "the education revolution." It adopted a new civil service code and a new tax law and appointed better qualified personnel to key posts. Hoveyda also created several additional ministries in 1967, including the Ministry of Science and Higher Education, which was intended to help meet expanded and more specialized manpower needs. In mid-1968 the government began a program that, although it did not resolve problems of overcrowding and uneven quality, increased the number of institutions of higher education substantially, brought students from provincial and lower middle-class backgrounds into the new community colleges, and created a number of institutions of high academic standing, such as Tehran's Arya Mehr Technical University (see Education , ch. 2).

The shah had remarried in 1959, and the new queen, Farah Diba Pahlavi, had given birth to a male heir, Reza, in 1960. In 1967, because the crown prince was still very young, steps were taken to regularize the procedure for the succession. Under the constitution, if the shah were to die before the crown prince had come of age, the Majlis would meet to appoint a regent. There might be a delay in the appointment of a regent, especially if the Majlis was not in session. A constituent assembly, convened in September 1967, amended the constitution, providing for the queen automatically to act as regent unless the shah in his lifetime designated another individual. In October 1967, believing his achievements finally justified such a step, the shah celebrated his long-postponed coronation. Like his father, he placed the crown on his own head. To mark the occasion, the Majlis conferred on the shah the title of Arya-Mehr, or "Light of the Aryans." This glorification of the monarchy and the monarch, however, was not universally popular with the Iranians. In 1971 celebrations were held to mark what was presented as 2,500 years of uninterrupted monarchy (there were actually gaps in the chronological record) and the twenty-fifth centennial of the founding of the Iranian empire by Cyrus the Great. The ceremonies were designed primarily to celebrate the institution of monarchy and to affirm the position of the shah as the country's absolute and unchallenged ruler. The lavish ceremonies (which many compared to a Hollywood-style extravaganza), the virtual exclusion of Iranians from the celebrations in which the honored guests were foreign heads of state, and the excessive adulation of the person of the shah in official propaganda generated much adverse domestic comment. A declaration by Khomeini condemning the celebrations and the regime received wide circulation. In 1975, when the Majlis, at government instigation, voted to alter the Iranian calendar so that year one of the calendar coincided with the first year of the reign of Cyrus rather than with the beginning of the Islamic era, many Iranians viewed the move as an unnecessary insult to religious sensibilities.

Iran, meantime, experienced a period of unprecedented and sustained economic growth. The land distribution program launched in 1962, along with steadily expanding job opportunities, improved living standards, and moderate inflation between 1964 and 1973, help explain the relative lack of serious political unrest during this period.

In foreign policy, the shah used the relaxation in East-West tensions to improve relations with the Soviet Union. In an exchange of notes in 1962, he gave Moscow assurances he would not allow Iran to become a base for aggression against the Soviet Union or permit foreign missile bases to be established on Iranian soil. In 1965 Iran and the Soviet Union signed a series of agreements under which the Soviets provided credits and technical assistance to build Iran's first steel mill in exchange for shipments of Iranian natural gas. This led to the construction of the almost 2,000-kilometer-long trans-Iranian gas pipeline from the southern fields to the Iranian-Soviet frontier. The shah also bought small quantities of arms from the Soviet Union and expanded trade with East European states. Although Soviet officials did not welcome the increasingly close military and security cooperation between Iran and the United States, especially after 1971, Moscow did not allow this to disrupt its own rapprochement with Tehran.

In 1964 the shah joined the heads of state of Turkey and Pakistan to create an organization, Regional Cooperation for Development (RCD), for economic, social, and cultural cooperation among the three countries "outside the framework of the Central Treaty Organization." The establishment of RCD was seen as a sign of the diminishing importance of CENTO and, like the rapprochement with the Soviet Union, of the shah's increasing independence in foreign policy. The three RCD member states undertook a number of joint economic and cultural projects, but never on a large scale.

The shah also began to play a larger role in Persian Gulf affairs. He supported the royalists in the Yemen Civil War (1962-70) and, beginning in 1971, assisted the sultan of Oman in putting down a rebellion in Dhofar (see Historical Background , ch. 5). He also reached an understanding with Britain on the fate of Bahrain and three smaller islands in the Gulf that Britain had controlled since the nineteenth century but that Iran continued to claim. Britain's decision to withdraw from the Gulf by 1971 and to help organize the Trucial States into a federation of independent states (eventually known as the United Arab Emirates--UAE) necessitated resolution of that situation. In 1970 the shah agreed to give up Iran's long-standing claim to Bahrain and to abide by the desire of the majority of its inhabitants that Bahrain become an independent state. The shah, however, continued to press his claim to three islands, Abu Musa (controlled by the shaykh of Sharjah) and the Greater and Lesser Tunbs (controlled by the shaykh of Ras al Khaymah). He secured control of Abu Musa by agreeing to pay the shaykh of Sharjah an annual subsidy, and he seized the two Tunbs by military force, immediately following Britain's withdrawal.

This incident offended Iraq, however, which broke diplomatic relations with Iran as a result. Relations with Iraq remained strained until 1975, when Iran and Iraq signed the Algiers Agreement, under which Iraq conceded Iran's long-standing demand for equal navigation rights in the Shatt al Arab, and the shah agreed to end support for the Kurdish rebellion in northern Iraq.

With the other Persian Gulf states, Tehran maintained generally good relations. Iran signed agreements with Saudi Arabia and other Gulf states delimiting frontiers along the continental shelf in the Persian Gulf, began cooperation and information-sharing on security matters with Saudi Arabia, and encouraged closer cooperation among the newly independent Gulf shaykhdoms through the Gulf Cooperation Council.

To enhance Iran's role in the Gulf, the shah also used oil revenues to expand and equip the Iranian army, air force, and navy. His desire that, in the aftermath of the British withdrawal, Iran would play the primary role in guaranteeing Gulf security coincided with President Richard M. Nixon's hopes for the region. The Nixon Doctrine, enunciated in 1969, sought to encourage United States allies to shoulder greater responsibility for regional security. Then, during his 1972 visit to Iran, Nixon took the unprecedented step of allowing the shah to purchase any conventional weapon in the United States arsenal in the quantities the shah believed necessary for Iran's defense (see Foreign Influences in Weapons, Training, and Support Systems , ch. 5). United States-Iranian military cooperation deepened when the shah allowed the United States to establish two listening posts in Iran to monitor Soviet ballistic missile launches and other military activity.

Data as of December 1987