To help the Zahedi government through a difficult period, the United States arranged for immediate economic assistance of US$45 million. The Iranian government restored diplomatic relations with Britain in December 1953, and a new oil agreement was concluded in the following year (see Concession Agreements , ch. 3). The shah, fearing both Soviet influence and internal opposition, sought to bolster his regime by edging closer to Britain and the United States. In 0ctober 1955, Iran joined the Baghdad Pact, which brought together the "northern tier" countries of Iraq, Turkey, and Pakistan in an alliance that included Britain, with the United States serving as a supporter of the pact but not a full member. (The pact was renamed the Central Treaty Organization--CENTO--after Iraq's withdrawal in 1958.) In March 1959, Iran signed a bilateral defense agreement with the United States (see Foreign Influences in Weapons, Training, and Support Systems , ch. 5). In the Cold War atmosphere, relations with the Soviet Union were correct but not cordial. The shah visited the Soviet Union in 1956, but Soviet propaganda attacks and Iran's alliance with the West continued. Internally, a period of political repression followed the overthrow of Mossadeq, as the shah concentrated power in his own hands. He banned or suppressed the Tudeh, the National Front, and other parties; muzzled the press; and strengthened the secret police, SAVAK (Sazman-e Ettelaat va Amniyat-e Keshvar--see Law Enforcement Agencies , ch. 5). Elections to the Majlis in 1954 and 1956 were closely controlled. The shah appointed Hosain Ala to replace Zahedi as prime minister in April 1955 and thereafter named a succession of prime ministers who were willing to do his bidding.

Attempts at economic development and political reform were inadequate. Rising oil revenues allowed the government to launch the Second Development Plan (1955-62) in 1956 (see The Beginnings of Modernization: The Post-1925 Period , ch. 3). A number of large-scale industrial and agricultural projects were initiated, but economic recovery from the disruptions of the oil nationalization period was slow. The infusion of oil money led to rapid inflation and spreading discontent, and strict controls provided no outlets for political unrest. When martial law, which had been instituted in August 1953 after the coup, ended in 1957, the shah ordered two of his senior officials to form a majority party and a loyal opposition as the basis for a two-party system. These became known as the Melliyun and the Mardom parties. These officially sanctioned parties did not satisfy demands for wider political representation, however. During Majlis elections in 1960, contested primarily by the Melliyun and the Mardom parties, charges of widespread fraud could not be suppressed, and the shah was forced to cancel the elections. Jafar Sharif-Emami, a staunch loyalist, became prime minister. After renewed and more strictly controlled elections, the Majlis convened in February 1961. But as economic conditions worsened and political unrest grew, the Sharif-Emami government fell in May 1961.

Yielding both to domestic demands for change and to pressure for reform from President John F. Kennedy's administration, the shah named Ali Amini, a wealthy landlord and senior civil servant, as prime minister. Amini was known as an advocate of reform. He received a mandate from the shah to dissolve parliament and rule for six months by cabinet decree. Amini loosened controls on the press, permitted the National Front and other political parties to resume activity, and ordered the arrest of a number of former senior officials on charges of corruption. Under Amini, the cabinet approved the Third Development Plan (1962-68) and undertook a program to reorganize the civil service. In January 1962, in the single most important measure of the fourteen-month Amini government, the cabinet approved a law for land distribution.

The Amini government, however, was beset by numerous problems. Belt-tightening measures ordered by the prime minister were necessary, but in the short term they intensified recession and unemployment. This recession caused discontent in the bazaar and business communities. In addition, the prime minister acted in an independent manner, and the shah and senior military and civilian officials close to the court resented this challenge to royal authority. Moreover, although enjoying limited freedom of activity for the first time in many years, the National Front and other opposition groups pressed the prime minister for elections and withheld their cooperation. Amini was unable to meet a large budget deficit; the shah refused to cut the military budget, and the United States, which had previously supported Amini, refused further aid. As a result, Amini resigned in July 1962.

He was replaced by Asadollah Alam, one of Mohammad Reza Shah's close confidants. Building on the credit earned in the countryside and in urban areas by the land distribution program, the shah in January 1963 submitted six measures to a national referendum. In addition to land reform, these measures included profit-sharing for industrial workers in private sector enterprises, nationalization of forests and pastureland, sale of government factories to finance land reform, amendment of the electoral law to give more representation on supervisory councils to workers and farmers, and establishment of a Literacy Corps to allow young men to satisfy their military service requirement by working as village literacy teachers. The shah described the package as his White Revolution (see Glossary), and when the referendum votes were counted, the government announced a 99-percent majority in favor of the program. In addition to these other reforms, the shah announced in February that he was extending the right to vote to women.

These measures earned the government considerable support among certain sectors of the population, but they did not deal immediately with sources of unrest. Economic conditions were still difficult for the poorer classes. Many clerical leaders opposed land reform and the extension of suffrage to women. These leaders were also concerned about the extension of government and royal authority that the reforms implied. In June 1963, Ayatollah Sayyid Ruhollah Musavi Khomeini, a religious leader in Qom, was arrested after a fiery speech in which he directly attacked the shah. The arrest sparked three days of the most violent riots the country had witnessed since the overthrow of Mossadeq a decade earlier. The shah severely suppressed these riots, and, for the moment, the government appeared to have triumphed over its opponents.

Data as of December 1987