IRAN'S ARAB WORLD INITIATIVES AND THEIR IMPLICATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000300070004-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 15, 2016
• Document Release Date: July 26, 2004
• Sequence Number: 4
• Publication Date: January 14, 1975
• Content Type: IM

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From this domestic powerbase, the Shah embarked in the
early 1970s upon a more activist foreign pcl?cy designed to
extend Iran's influence in regional and world councils. Two
events lent momentum tp this outward thrust. The UK gave up
its peacekeeping role in the Persian Gulf in late 1971 and the
sharp rise in oil prices in 1973.74 increased Iran's foreign
reserves from $1.3 billion to $6.3 billion. Monetary reserves
stood at $7.6 billion at the end of 1974,
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
Janutry 14
SUBJECT: Iran's Arab World Init an their Implications
On October 27, 1967--26 years after his accession to the
throne-s-Mohammed Reza Pahlavi crowned himself Shah of Iran.
That event symbolized the Iranian monarch's transition from anl,;,!
inexperienced figurehead placed on a shaky throne by foreign
powers to a leader increasingly confident of his right to rule.
Domestic political stability nad been attained, Ivan's inde-
pendence from foreign powers had been asserted, and the coun-
try's growing military strength gave it the ability to protect
its territory from all but its most powerful neighbor, the
Soviet Union.
The Shah's gamble--some would argue that it was essential
to forestall revolution--in placing the government on the side
of social and economic reforms with the launching of the "White
Revolution" in 1963 had paid off by 1967. The "White Revolu-
tion" was a. domestic political success, if not yet an economic
one. The religious reactionaries on the right and the Iranian
leftists, both of whom had opposed the Shah's program. had
been crushed, and the issue of social reform had for the moment
been denied to dissidents.
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The termination of the UK's Gulf ro to sharpened Tehran's
traditional concern over the security situation in the Persian
Gulf. The sharp rise in oil prices gave Iran the ability
simultaneously to sustain its developmental programs, to build
the most powerful armed force in the regiono and to use its
economic leverage abroad ~o, enhance political and strategic
objectives.
The flow of visitors to and from To} rar, since the: October
19 i war has been heavy. In the first six months of 1974 some
thirty countries--including many from Western Europe--sent high-
level delegations seeking aid and trade agreements, and in many
cases offering "political IOUs'' in exchange.. Since August
1974 the Shah has visited the Soviet Union, France, Southeast
Asia, Australia, New Zealand, Jordan:, arzd Egypt. Trips to
Pakistan and Latin America are planned f?or Later this year.
Major Iranian foreign policy initiatives included
strengthening ties with India, Afghar,dstan, and the most impor?-
tant Arab states, and increasing Tehran' s influence in Africa
through economic deals. Iran proposed in the UN that the
Middle East be declared a nuclear weaporis-free zone; the Shah
advocated a "zone of peace" for the Indian Ocean, and advanced
general plans for a common market and closer- security coopera-
tion among its littoral states.
Iranian financial commitments to au-no 17 countries during
1974 totaled over $6 billicn. They included individual offers
of 31 billion or more to India, Franco, and the United Kingdom;
over one half billion to Pakistan, and an aid package worth
nearly $1 billion to Egypt. The Shah also proposed the ostab-
Xishment of a development fund for LDCs, ane promised large
loanv to the IMF and IBRD to cushion the off eras of higher oil
prices on the L['Cs.
Military equipment purchases totaling nsoro. than $7 billion
during 1973-74--it will go up to $9.3 bi llio>n rbxt year--reflect
the Shah's determination to ensure Iran's preeminent military
position in the Persian Gulf region. Visrtua ily all new weapons
ordered will enter the inventory by 1978 - MFw additions include
nearly 800 chieftain tanks and 250 Scorpion light tanks from the
UK, the British-made Rapier and the US H.a k air defense missile
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 systems, 280 F--4E and F?-5E jet fighters and 80 P-14 jet
fighters from the US, and several new ships for. Iran's
Iran has shown itself willing to commit its militar
n the Persian Gulf region
Although the Shah has often indicated his preference
for collaboration among Gulf states on security matters, the
examples of the islands and Iraq show clearly his willingness
to act alone and against Arab governments when he feels
Iranian interests are directly involved. Aid to Oman shows
his willingness to aid Gulf sheikdoms threatened by leftists.
The View From Iran
Iran's arms buildup, the Shah's diplomatic forays, and
his numerous pledges to transform Iran into a world power,
have raised questions about his objectives and ambitions;' and
their impact on regional stability. Do Iranian ambitions
exacerbate ti a dangerous degree historical Arab-Persian ten-
sions? Can i,nwar Sadat's vision of the "Arab nation" coexist
with the Shah's vision of the "Grunt Civilization?" Does the
Shah have a "grand design?"
It appears to us that the Shah's foreign policy objectives
are to:
-- undercut radical influence in the underdeveloped coun-
tries, of the region and increase Iran's influence with
the LOCs.
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the r is w rawa in late , I a pied * three
small islands near the Strait of Hormuz, climaxing more than
a decade of unsuccessful negotiations over their ownersh'p.
Iranian forces have helpecT--th
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-- assure a viable economic future for Iran after the
country's oil resources are depleted. (Current reserves
are estimated at 60 billion barrels; at current produc-
tion rates, reserves will begin to dwindle rapidly in the
early 1990s.)
-- assure a dominant political and military role for
Iran in the Persian Gulf and eve'ntually-an'effective
influence in Indian ocean affairs.
-- isolate Iraq, thwart the spread of radical influences
in the Persian Gulf, and combat what the Shah sees as
the continuing threat to Iran through encirclement and
subversion of Gulf and subcontinent states.
At the moment, the most crucial of these is to thwart
subversion and prevent the emergence of radical governments in
the Gulf and, as a corollary, to prevent further Soviet pene-
tration of the Middle East. This objective is the force behind
the Shah's diplomatic effort to create a rapprochement with the
moderate Arab states.
The Shah's outlook and goalu about the Middle East are a
blend of attitudes common to most Iranians, as well as events
of his lifetime. The Shah is heir to a traditional Persian
sense of isolation in a largely hostile world. Surrounded by
peoples of different origins and cultures, the Persians believe
they have io natural allies. To some extent, this perception
explains the Shah's emphasis on arms and security.
The direct role of fo,.aigners in putting the Shah on the
throng and in saving his position in 1953, the bitter Arab
propaganda a.:tacks on Iran during the Nasir era, and the
Soviet designs on Iranian territory following World War II
have all acted to reinforce in the Shah that sense of Persian
isolation and insecurity. Those events have also strengthened
his determination tc; free Iran frnm all manner of foreign domi-
nation and dependence.
The Shah also has the notion--Faysal feels the same way
about Saudi Arabia--that Iran in threatened with encirclement.
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The hostility of thu Iraqis, Baghdad's support for the Dhofar
rebellion and for tribal unrest on iran':a border with Pakistan,
is linked by the Shah to the Soviet friendship treaties with
Iraq and India, the dismemberment of Pakistan through the
secession of Bangladesh, and the overthrow of the monarchy in
Afghanistan to present a pioture'of Iran beset from all sides
by revolution and chaos: Although distant, from Iran's borders,,.
the 'ouster of' Einpurbr Haile Selassie, h w''speculations'about
the survivability of his fellow monarchs Husayn of Jordan and
Hassan of Morocco, and the prospect of a Fatah-led Palestinian
state, have all reinforced the Shah's view of regional insta-
bility and the need for him to,counter these developments.
The Arabs
It is the vulnertlb',lity of the Arab Gulf states to subver-
sion that the Shah sees as the most dangerous challenge to
Iran's well-being. Above all, and at any cost, the Shah
intends to safeguard the transit of his oil--upon which his plans
to make Iran a major power depend,., The Shah subscribes to the
notion that a power vacuum on the Arab shore was caused by the
UK withdrawal in 1971 and that it poses a danger to him. Iran,
he believes, has the right to take action there, if necessary,
as a last resort.
Before that, however, the Shah is committed to political
and military efforts to onhance the stability of select Arab
governments and to making overtures for closer relations with
the more moderate Arab regimes, not only on the Arabian Penin-
sula, but extending to Egypt, Jordan, and even Syria.
At the same time, there is a recognition in the Arab world
of Iran's growing importance in the Middle East, because of
its economic and military power, its willingness to use that
power, and its key role in the Organization of Petroleum
Exporting Countries.
Saudi Arabia and the Gulf: It is a cardinal principal of
the Shah's foreign policy that security of the Persian Gulf
should be left to the littoral states. Nevertheless, he recog-
nizes their inability to deny influence to the major pow-era.
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A US naval presencel is~ therefore, 25X1
seen by the Shah as appropriate counter to Soviet influence.
It will be welcome to the Shah at least during the eight to ten
years he estimates it will' take to build up the Iranian navy.
The 'Shah 'naturally expects that Iran will., lead any grouping
of littoral states. Nevertheless, his goal is a cooperative
arrangement. He tried several years ago--unsuccessfully--to
interest Saudi Arabia and the small Gulf states in fo,:mal
security arrangements. The initiatives failed because of tra-
ditional Arab distrust of Iranian motives, and clashes on
specific issues such as Iran's occupation of the Gulf islands 25X1
in 1971.
Saudi Arabia and Iran share a fundamental identity of
interests on regional matters. Both are politically conser-
vative and wish to limit Soviet influence in the Middle East,
eliminate or moderate existing radicLJ regimes, and prevent the
further spread of radicalism. Both have an interest in main-
taining high oil prices, although Sauda Arabia--with greater oil
reserves and a lesser ability to absorb the revenues--can afford
to be more flexible on prices. The *_