THE EFFECT OF EVENTS IN IRAN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81B00401R002000090004-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 15, 2016
• Document Release Date: December 17, 2003
• Sequence Number: 4
• Publication Date: February 15, 1979
• Content Type: MEMO

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15 February 1979
SUBJECT: The Effect of Events in Iran on Turkey
The Turks are deeply concerned over the implications for them of
the uncertain situation in Iran, and they are likely to move cautiously
until the dust has settled a bit. But only one aspect of that situation--
Kurdish dissidence--has the potential to add more than marginally to the
enormous pro-lems facing Turkey, and it is these problems that will con-
tinue to preoccupy the country's leaders.
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? 16 February 1979
MEMORANDUM
SUBJECT: Implications of Iran for India
1. New Delhi's swift recognition of the Bazargan
government on February 12 is an attempt to get off on the
right footing with the new Iranian regime which Indian
officials fear will be less favorably disposed toward India
than was the Shah, particularly during the last 5 years of
25X1 his rule.
2. In recent months, India has been concerned that
the surge of Muslim fundamentalism will promote instability
in the Persian Gulf region, decrease prospects for better
relations between predominantly Hindu India and its Muslim
adversary, Pakistan, and foil India's ambition to play a
more influential role in the Indian Ocean/Persian Gulf
region.
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3. Although religious affinity linking India with
? the Muslim world is absent, New Delhi was making progress,
after the onset of the oil crisis in 1973, toward improving
relations with Pakistan and its Muslim neighbors in the
Gulf.
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4. Indian overtures toward Iran were reciprocated by
the Shah, despite his suspicion of India's close ties with
the USSR, New Delhi, for its part, was apprehensive that
the Shah''s support for Pakistan could entail the transfer
of military equipment to that nation in the event of another
Indo--Pakistani war. The Indians were also wary of the Shah's
apparent determination to dominate the Gulf and possibly to
extend Iran''s naval influence into the Indian Ocean, which
India considers its domain. 25X1
5. Nonetheless, India's need for crude oil imports
and its recognition of the Gulf's vast trade and market
potential motivated Indian diplomats and businessmen to
intensify efforts to establish closer ties with the Persian
Gulf states. F
25X1 6. Iran has traditionally supplied India with oil and
petroleum products in return for minerals, jute, tea, and
skilled and unskilled manpower. The upswing in economic
relations since 1974, however, has involved a broader range
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the Gulf States to be more responsive to India's needs.
of Indian exports, including aluminum, steel, ceplent,
transmission towers, and power generating units. 25X1
7. Iranian funds for completion of the $700 million
Kudremukh iron ore project and for three other proposed
joint-venture projects in India now may be in jeopardy.
New Delhi is generally apprehensive about the prospects
for economic relations with the new Iranian government,
fearing its first priority will be to move closer to
Islamic countries. Of immediate concern to New Delhi is
the interruption of Iranian P expor-t_ ti m~_llontons
were expected to arrive in India in 1979. (India's total
crude oil requirements for 1979 are 30 million tons, of
which 16.5 were to be imported.) The UAE and Iraq have
agreed to increase their exports to India, but New Delhi
claims it still will face a shortage of 4.5 million tons,
with some .5 million tons urgently needed within the next
three months. New Delhi:. has asked the US to encourage 25X1
8. According to Indian estimates, several thousand
of the estimated 25,000 Indians in Iran have recently
returned home. A massive exodus of Indian workers from
Iran and other Gulf States, where the bulk of Indian
expatriates are working, would substantially reduce the
flow of foreiSp;excha__nge into India, which, with the rise
of Indianorexports to the region, has contributed to India's
record foreign exchange holdings 25X1
9, New Delhi's outwardly optimistic attitude toward
the new Iranian government masks an underlying sense of
regret at the sudden turn of events. In the last several
years, India had come to view the Shah as an important
force for regional stability, partly because he had pre-
vailed upon Pakistan not to escalate tension with India
and with Afghanistan, Now the Indians fear that the new
Tehran government may revert to the older Iranian policy
of strongly favoring Pakistan over India. 25X1
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16 February 1979
MEMORANDUM
Im licat ions of Iran for the Soviet Role in the Persian
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The Soviet Union could ultimately become the major
strategic winner in the Persian Gulf as a result of the
downfall of the Shah. The Soviets had always considered
the Shah a conservative leader who had built Iran into a
state of considerable power and influence in the Persian
Gulf region and who had worked against Soviet interests
there. They attributed an anti-Soviet purpose to the
Shah's foreign policy, such as his:
--links with the US, Pakistan, and the conservative
? Persian Gulf states;
--acquisition of sophisticated military hardware and
the increased US military presence;
--successful efforts to improve ties with Iraq which
were designed to reduce Soviet influence in Baghdad;
--successful efforts to suppress the Dhofar insurgency
in Oman which the Soviets had supported;
--military assistance to Jordan and Pakistan which
represented an effort to forestall Soviet influence
i
th
n
e area; and
--sponsorship of a Persian Gulf security pact and
an Indian Ocean "zone of peace" which were cer-
tainly viewed by the Soviets in a similar context]
The new regime will almost certainl
y reverse or cut
back on most of these initiatives and will embark on policies
that will be less threatening for Soviet interests in the
area and, in some cases, even unintentionally complementary.
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Both Khomeini and Bazargan have long advocated a nonaligned
foreign policy that will presumably translate into policies
that will be well received in Moscow. To wit, Iran will
presumably:
--cut its ties to the Central Treaty Organization;
--press for higher oil prices in OPEC;
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--allow formal PLO representation in Tehran and
extend support to the Palestinian cause.
The new government, therefore, will be predisno_%a to_wa_r_d
policies beneficial to Soviet interests in the area, although
its ideo o ica orientation will be anti-Communi
anti-Communist and anti-
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II
?
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In a prolonged period of change in Iran, the Soviets
would be increasingly inclined to back those forces which
they considered sympathetic to their own interests. There
are indications that the role played by the Tudeh Party and
other leftist elements is growing, and a continued state of
instability would provide an atmosphere conducive to the
organization and growth of such forces. The Soviets will
probably not try to establish direct contacts with the
terrorist groups currently operating in Iran, and both the
USSR and the Tudeh have already criticized the use of terror
as a tool. 0
The Soviets will have to move cautiously to exploit
these new opportunities in the Gulf area, however, because
key Arab states--both conservative and radical--already
perceive an expansion of Soviet influence in the area.
Saudi and Iraqi insecurity, for example, has already been
heightened by:
--the toppling of the nonaligned Afghan government
in April by a Soviet-trained army abetted by a
small number of local Communists;
-the assassination of the North Yemeni president by
a South Yemeni, and the coup in South Yemen in June
that brought to power a leadership more receptive to
the Soviet leadership;
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--the Soviet-Ethiopian friendship treaty in November
which will lead to closer bilateral ties and an
expanded Soviet presence in Addis; and
--the internal explosions in Iran as well as the in-
crease of radical leftist activity on the heels of
these other events.
The Saudi response to this series of events has been to move
closer to those radical Arabs--such as the Iraqis--who
recognize the Communist threat; the Iraqi response has been
to flirt with their own domestic anti-Communist campaign
which includes harassment- I I
rrest, and even execution of
Iraqi Communists.
The Soviets appear to reali
h
ze t
at they must position
themselves carefully in order to exploit the opportunities
that stem directly from the chaos in Iran. Moscow's first
steps to date suggest that the Soviets will resort to a
public approach designed to reassure the Gulf states of the
USSR's peaceful intentions.
-- In late January, the Soviets sent the director of
their foreign ministry's Middle East Department to
Kuwait, Iraq, the Yemens, Jordan, and Lebanon to
stress Moscow's opposition to foreign intervention
in the "internal affairs of another state."
--An authoritative article in Literary Gazette on
31 January encouraged Saudi Arabia to rreconsider
its hostility toward the USSR and to rethink its
"special relationship" with the US. The Saudis
are in the process of reevaluating their close ties
to the US, and the Soviets are obviously trying to
exploit this situation by calming Saudi concerns
about Soviet intentions.
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?
g
and Iran--may be another reasonhforothetSoviets to avoidy
hasty responses to the current turmoil in the Islamic area.
The sensitive question of border security with countries that
share nationality
rou
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The trends in the region will be mostly favorable
to the Soviets even if their responses are minimal. The
US and West Europe arealready faced with higher oil prices,
which is in Moscow's interest. Soviet clients in the
area--particularly the radical Libyans, the Marxist South
Yemenis, and the stateless Palestinians--will have high-
level contacts with the Khomeini government, and presumably
serve as middlemen or at least spokesmen for the USSR. The
authority of established governments in the region will
become more fragile and, as power bases become smaller, the
opportunit
f
S
y
or
oviet exploitation becomes greater.
?
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Alternatively, Soviet involvement in the Af
hanist
g
an
government's response to the kidnapping of Ambassador Dubs
indicates that Moscow realizes its own clients in the area
are susceptible to the kind of Shia challenge that ultimately
brought about the downfall of the Shah. The fact that
Soviet advisers were actively giving advice and guidance--
and in one case even armed an Afghan policeman with special
weaponry--suggests that the Soviets could also become in-
volved in Kabul if the Taraki government faced a direct
challenge from the Shias on the right or a faction within
the military on the left. The fact that the Soviets were
willing to become intimately involved with last week's
events in Kabul in full view of US diplomatic officials and
to fail to consult with those officials indicates that Mos-
cow may be willing to assume a certain amount of risk in
sustaining the current regime. An ongoing rebellion is
already taking place in eastern Afghanistarif-
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is
16 February 1979
SUBJECT: Implications of Iran for Afghanistan
1. The leftist Afghan regime probably views the events in Iran
as a mixed blessing. On the one hand, the pro-Soviet People's Democratic
Party of Afghanistan would welcome the demise of CENTO, a weakening in
Tehran's ties with the West, and the eventual installation of a leftist
government in Iran. Afghan leaders believe that the Shah's government
was involved with insurgent groups inside Afghanistan, and have been
25X1 unhappy that Iran has not implemented massive aid programs discussed
? 2. On the other hand, the toppling of a government in Iran by
Muslsm_cs~n~e~~es is hardly an encouraging sign for the increasingly
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unpopular Afghan regime. Khomeini has been outspoken in his criticism
of the "godless, communist" Takaki government. Since seizing power last
April, the PDPA has been challenged by Muslim dissidents who believe
the regime is Communist, and therefore athiest. The Moslem Brotherhood
claimed responsibility for several assassinations and acts of sabotage
last year, and Ambassador Dubs' kidnapers may have been Muslim dissidents.
The regime arrested approximately 150 Muslim leaders earlier this month.
The victory of Khomeini may well be seen in Kabul as likely to encourage
further Muslim opposition to authority on the Afghan side of the border.
3. Should the new government in Tehran be unable to establish its
authority quickly throughout Iran, the present government in Afghanistan
might be - - s. One of its most obvious
targets would be the Baluchi minority in Irk n, which has long resented
control from Tehran; Ye -Mow tribesmen constitute a large minority in
southern Afghanistan. The border between the two nations is long and
regarded as porous to infiltration. Strong countervailing pressure
against intervention in Iran at this time, however, comes from the
Afghan government's internal problems--in particular, its inability
25X1 to eliminate armed opposition within the eastern provinces.
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SUBJECT: Implications of Iran for Afghanistan
is unlikely to deviate greatly from the attitude of the USSR.
4. The heavy reliance of the present Afghan government on the
Soviet Union is firmly established. It is probable, therefore, that
Kabul, in its relations with Iran, will continue to be guided by advice
from Moscow; in any case the Afghan attitude toward the Khomeini regime,
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CONFIDENTIAL
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16 February 1979
SUBJECT: Implications of Iran for Pakistan
1. The government in Pakistan has reacted enthusiastically
to the establishment of the Khomeini government in Tehran. Recognition
was extended quickly and two messages of congratulations and best wishes
were sent by President Zia-ul-Haq to Prime Minister Bazargan. Despite
these overtures, there is probably some uncertainty in Islamabad about
the future course of bilateral relations. The Shah, while occasionally
irritatingly paternalistic to his poorer all was a known factor in
regional relations; Khomeini is not. 25X1
2. The alliance with Iran had come under some strains in recent
years. Pakistan viewed with consternation some aspects of the Shah's
attempts to increase his influence in the area. In particular, his
initiatives to improve relations with India in recent years, which
were warmly reciprocated by New Delhi, were poorly received in Islamabad.
The Iranian government, for its part, regarded Pakistan's recent slide
toward non-alignment with concern and was alarmed by reports of tentative
Pakistani efforts to reach an accommodation with the Soviet Union 125X1
3. As the Iranian revolution progressed, the Pakistanis established
contact with Khomeini through their embassy in Paris. Meanwhile, in
Pakistan, the religiously-oriented political parties--small but in-
fluential--issued statements supporting the "Iranian people" in their
opposition to the Shah's "tyranny." The press, influenced although not
directly controlled by the government, treated the assumption of power
by the Bazargan government with general approval 25X1
4. Zia, in his messages to the new regime, has emphasized the
"simultaneous triumph of Islamic ideology in both of our countries"
and predicted that Khomeini's victory "will consecrate the bonds that
have traditionally existed between the peoples of our two countries."
Zia's devotion to his religion and his determination to impose a form
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SUBJECT: Implications of Iran for Pakistan
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Pakistan has long wanted to detach itself from the organization but has
been reluctant to do so in the face of the Shah's opposition.0 25X1
of Islamic fundamentalism on the life of all Pakistanis is well
documented and received further confirmation last weekend when he
announced several fiscal, judicial, and educational measures to bring
his nation more in line with Islamic teaching. Zia, at least, seems
sincerely convinced that there will be a strong transcendental bond
between the nations in the future
5. There are other more pragmatic reasons why relations between
Tehran and Islamabad should remain close in the future. Both nations
seem headed toward non-aligned status and withdrawal from CENTO.
6. Both nations face possible insurgencies among the Aa uch
tribesmen occupying lands on each side of the common border. Continued
intelligence and military cooperation in dealing with this problem would
be in the interest of both nations. Additionally, the new pro-Soviet
government in Afghanistan remains a potential threat to both Iran and
Pakistan--particularly if it chooses to stir up dissident elements
within the territories of its two neighbors. Finally, both Zia and
Khomeini are fearful of Moscow's machinations against their two countries
and presumably will want to colla st any Soviet drive to
expand its influence to the south i 25X1
7. The present government in Islamabad will certainly hope that
the new regime in Tehran, in view of its devotion to Islamic solidarity,
will be more responsive than was the Shah's government in recent years
to Pakistani pleas for help against the perceived threat from India.
Whether a successor civilian government, probably one under leaders
less devoted to Islamic fundamentalism than is Zia, would view the
Khomeini government as enthusiastically as does Zia is questionable.
The geopolitical factors at work in the region, however, argue for any
government in Islamabad to try to maintain the closest possible relations
with virtually any non-Communist government in Tehran. 25X1
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U 'ted States -Pakistan 3ilateral Agreement of Cooperation of 5 March 1959.
This was a formal, bilateral mutual defense pact. In case of agression
aqainst Pakistan, the United States agreed to take, in accordance with
itd constitutional process, "such appropriate action, includinqthe use
of armed forces, as may be mutually agreed upon..o in order to assist
the Government of Pakistan at its request." The agreement had the
effect of reinforcinq the defensive capability of the Eaghdad Pact,
since the United States signed in March 1959 identical pacts with Iran
and Turkey. While Article 1, cited above, is the most important in
its scope, Article 2 is of considerable significance in that it provides
that the United States will continue to furnish, on an agreed basis,
military and economic assistance to Pakistan with a view to helping in
the preservation of its national independence and integrity and the
promotion of its economic development.
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Pakistan: Breakdown of IMF Talks.
Pakistan's negotiations with the
International Monetary Fund for a new
$70 million standby credit have broken
down because the government is reluc-
tant to curb budget expenditures--par-
ticularly the $140 million annual wheat
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subsidy that keeps down food rites for
urban consumers.
The governmen i
, about go-
ing along with the Fund probably stems
from its concern that cuts in subsidies
could cause consumer unrest and
aggravate the current uneasy domestic
political situation. Chief Martial Law Ad-
ministrator Zia-ul-Haq has come under
increasing criticism for his assumption of
the presidency, and there appears to be
general restlessness about Pakistan's un-
certain political future. : i
The government also faces a potentially
volatile situation within the next few
weeks, when it may have to decide the fate
of still-popular former Prime Minister
Bhutto. If Bhutto's conviction for a
political murder is upheld and if he is ex-
ecuted in accordance with a lower court
sentence, his supporters could attempt to
launch violent demonstrations.
Pakistan's balance-of-payments situa-
tion has improved significantly since the
end of 1977, when negotiations with the
Fund started, and the government may no
longer feel the urgent need for a new
standby. An unanticipated $500 million
surge in remittances from Pakistanis
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working abroad has helped to slash the
current account deficit by nearly $400
million for the fiscal year that ended in
June. Continuing inflows of aid allowed
foreign exchange reserves to increase by
$240 million to $660 million at the end
of June.
The breakdown in negotiations with the
Fund is likely to affect other international
financial negotiations in which Pakistan is
involved. The country may have a hard
time persuading its major international
creditors to extend debt relief because its
external accounts have improved.
Pakistan's creditors deferred until
December a decision on its request for ad-
ditional debt relief; they cited the need for
more details on government economic
policy and the new long-term develop-
ment program.
The government's case for food aid will
also come under close scrutiny when
Pakistani representatives meet on Mon-
day in Washington with a group of
prospective donor countries. Pakistan
needs to import 1.5 million to 2 million
tons of wheat this year and hopes to ob-
tain about a third of this on concessionary
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