By late 1976 and early 1977, it was evident that the Iranian economy was in trouble. The shah's attempt to use Iran's vastly expanded oil revenues after 1973 for an unrealistically ambitious industrial and construction program and a massive military buildup greatly strained Iran's human and institutional resources and caused severe economic and social dislocation. Widespread official corruption, rapid inflation, and a growing gap in incomes between the wealthier and the poorer strata of society fed public dissatisfaction.

In response, the government attempted to provide the working and middle classes with some immediate and tangible benefits of the country's new oil wealth. The government nationalized private secondary schools, declared that secondary education would be free for all Iranians, and started a free meal program in schools. It took over private community colleges and extended financial support to university students. It lowered income taxes, inaugurated an ambitious health insurance plan, and speeded up implementation of a program introduced in 1972, under which industrialists were required to sell 49 percent of the shares of their companies to their employees. The programs were badly implemented, however, and did not adequately compensate for the deteriorating economic position of the urban working class and those, who, like civil servants, were on fixed salaries. To deal with the disruptive effects of excessive spending, the government adopted policies that appeared threatening to the propertied classes and to bazaar, business, and industrial elements who had benefited from economic expansion and might have been expected to support the regime. For example, in an effort to bring down rents, municipalities were empowered to take over empty houses and apartments and to rent and administer them in place of the owners. In an effort to bring down prices in 1975 and 1976, the government declared a war on profiteers, arrested and fined thousands of shopkeepers and petty merchants, and sent two prominent industrialists into exile.

Moreover, by 1978 there were 60,000 foreigners in Iran--45,000 of them Americans--engaged in business or in military training and advisory missions. Combined with a superficial Westernization evident in dress, life styles, music, films, and television programs, this foreign presence tended to intensify the perception that the shah's modernization program was threatening the society's Islamic and Iranian cultural values and identity. Increasing political repression and the establishment of a one-party state in 1975 further alienated the educated classes.

The shah was aware of the rising resentment and dissatisfaction in the country and the increasing international concern about the suppression of basic freedoms in Iran. Organizations such as the International Council of Jurists and Amnesty International were drawing attention to mistreatment of political prisoners and violation of the rights of the accused in Iranian courts. More important, President Jimmy Carter, who took office in January 1977, was making an issue of human rights violations in countries with which the United States was associated. The shah, who had been pressed into a program of land reform and political liberalization by the Kennedy administration, was sensitive to possible new pressures from Washington.

Beginning in early 1977, the shah took a number of steps to meet both domestic and foreign criticism of Iran's human rights record. He released political prisoners and announced new regulations to protect the legal rights of civilians brought before military courts. In July the shah replaced Hoveyda, his prime minister of twelve years, with Jamshid Amuzegar, who had served for over a decade in various cabinet posts. Unfortunately for the shah, however, Amuzegar also became unpopular, as he attempted to slow the overheated economy with measures that, although generally thought necessary, triggered a downturn in employment and private sector profits that would later compound the government's problems.

Leaders of the moderate opposition, professional groups, and the intelligentsia took advantage of the shah's accommodations and the more helpful attitude of the Carter administration to organize and speak out. Many did so in the form of open letters addressed to prominent officials in which the writers demanded adherence to the constitution and restoration of basic freedoms. Lawyers, judges, university professors, and writers formed professional associations to press these demands. The National Front, the IFM, and other political groups resumed activity.

The protest movement took a new turn in January 1978, when a government-inspired article in Ettelaat, one of the country's leading newspapers, cast doubt on Khomeini's piety and suggested that he was a British agent. The article caused a scandal in the religious community. Senior clerics, including Ayatollah Kazem Shariatmadari, denounced the article. Seminary students took to the streets in Qom and clashed with police, and several demonstrators were killed. The Esfahan bazaar closed in protest. On February 18, mosque services and demonstrations were held in several cities to honor those killed in the Qom demonstrations. In Tabriz these demonstrations turned violent, and it was two days before order could be restored. By the summer, riots and antigovernment demonstrations had swept dozens of towns and cities. Shootings inevitably occurred, and deaths of protesters fueled public feeling against the regime.

The cycle of protests that began in Qom and Tabriz differed in nature, composition, and intent from the protests of the preceding year. The 1977 protests were primarily the work of middle-class intellectuals, lawyers, and secular politicians. They took the form of letters, resolutions, and declarations and were aimed at the restoration of constitutional rule. The protests that rocked Iranian cities in the first half of 1978, by contrast, were led by religious elements and were centered on mosques and religious events. They drew on traditional groups in the bazaar and among the urban working class for support. The protesters used a form of calculated violence to achieve their ends, attacking and destroying carefully selected targets that represented objectionable features of the regime: nightclubs and cinemas as symbols of moral corruption and the influence of Western culture; banks as symbols of economic exploitation; Rastakhiz (the party created by the shah in 1975 to run a one-party state) offices; and police stations as symbols of political repression. The protests, moreover, aimed at more fundamental change: in slogans and leaflets, the protesters attacked the shah and demanded his removal, and they depicted Khomeini as their leader and an Islamic state as their ideal. From his exile in Iraq, Khomeini continued to issue statements calling for further demonstrations, rejected any form of compromise with the regime, and called for the overthrow of the shah.

The government's position deteriorated further in August 1978, when more than 400 people died in a fire at the Rex Cinema in Abadan. Although evidence available after the Revolution suggested that the fire was deliberately started by religiously inclined students, the opposition carefully cultivated a widespread conviction that the fire was the work of SAVAK agents. Following the Rex Cinema fire, the shah removed Amuzegar and named Jafar Sharif-Emami prime minister. Sharif-Emami, a former minister and prime minister and a trusted royalist, had for many years served as president of the Senate. The new prime minister adopted a policy of conciliation. He eased press controls and permitted more open debate in the Majlis. He released a number of imprisoned clerics, revoked the imperial calendar, closed gambling casinos, and obtained from the shah the dismissal from court and public office of members of the Bahai religion, a sect to which the clerics strongly objected (see Non-Muslim Minorities , ch. 2). These measures, however, did not quell public protests. On September 4, more than 100,000 took part in the public prayers to mark the end of Ramazan, the Muslim fasting month. The ceremony became an occasion for antigovernment demonstrations that continued for the next two days, growing larger and more radical in composition and in the slogans of the participants. The government declared martial law in Tehran and eleven other cities on the night of September 7-8, 1978. The next day, troops fired into a crowd of demonstrators at Tehran's Jaleh Square. A large number of protesters, certainly many more than the official figure of eighty-seven, were killed. The Jaleh Square shooting came to be known as "Black Friday." It considerably radicalized the opposition movement and made compromise with the regime, even by the moderates, less likely. In October the Iraqi authorities, unable to persuade Khomeini to refrain from further political activity, expelled him from the country. Khomeini went to France and established his headquarters at Neauphle-le-Château, outside Paris. Khomeini's arrival in France provided new impetus to the revolutionary movement. It gave Khomeini and his movement exposure in the world press and media. It made possible easy telephone communication with lieutenants in Tehran and other Iranian cities, thus permitting better coordination of the opposition movement. It allowed Iranian political and religious leaders, who were cut off from Khomeini while he was in Iraq, to visit him for direct consultations. One of these visitors was National Front leader Karim Sanjabi. After a meeting with Khomeini early in November 1978, Sanjabi issued a three-point statement that for the first time committed the National Front to the Khomeini demand for the deposition of the shah and the establishment of a government that would be "democratic and Islamic."

Scattered strikes had occurred in a few private sector and government industries between June and August 1978. Beginning in September, workers in the public sector began to go on strike on a large scale. When the demands of strikers for improved salary and working benefits were quickly met by the Sharif-Emami government, oil workers and civil servants made demands for changes in the political system. The unavailability of fuel oil and freight transport and shortages of raw materials resulting from a customs strike led to the shutting down of most private sector industries in November.

On November 5, 1978, after violent demonstrations in Tehran, the shah replaced Sharif-Emami with General Gholam-Reza Azhari, commander of the Imperial Guard. The shah, addressing the nation for the first time in many months, declared he had heard the people's "revolutionary message," promised to correct past mistakes, and urged a period of quiet and order so that the government could undertake the necessary reforms. Presumably to placate public opinion, the shah allowed the arrest of 132 former leaders and government officials, including former Prime Minister Hoveyda, a former chief of SAVAK, and several former cabinet ministers. He also ordered the release of more than 1,000 political prisoners, including a Khomeini associate, Ayatollah Hosain Ali Montazeri.

The appointment of a government dominated by the military brought about some short-lived abatement in the strike fever, and oil production improved. Khomeini dismissed the shah's promises as worthless, however, and called for continued protests. The Azhari government did not, as expected, use coercion to bring striking government workers back to work. The strikes resumed, virtually shutting down the government, and clashes between demonstrators and troops became a daily occurrence. On December 9 and 10, 1978, in the largest antigovernment demonstrations in a year, several hundred thousand persons participated in marches in Tehran and the provinces to mark Moharram, the month in which Shia mourning occurs.

In December 1978, the shah finally began exploratory talks with members of the moderate opposition. Discussions with Karim Sanjabi proved unfruitful: the National Front leader was bound by his agreement with Khomeini. At the end of December another National Front leader, Shapour Bakhtiar, agreed to form a government on condition the shah leave the country. Bakhtiar secured a vote of confidence from the two houses of the Majlis on January 3, 1979, and presented his cabinet to the shah three days later. The shah, announcing he was going abroad for a short holiday, left the country on January 16, 1979. As his aircraft took off, celebrations broke out across the country.

Data as of December 1987