man-1 AC 71 71 0F STAIE 'Foe museum I 5 Cu I - notmuseums 0F some o 30 11552 X61334 1 too a I v mos ems FGOV IR mm snow glances EMBASSY awe- AUGUST l 1978 SUBJECT UNCERTAIN POLITICAL HOOD RELIGIOUS DEVELOPMENTS L TOUGHER ROYAL LINE ON DEMONSTRATORS REF a In 1k 'Ill tk Lou- r cs new 1-1-3- plu- Sd urCe who'has- been helpihg broker ooutt contacts with religious groups notes official react domeloptueu't sr especially Ayatollah Sheti atrnaoerifs refusal rt Eublicly break ranks with Ayatollah Khomeini -Shah's mood m eelth concern some court officials- Aocoxding to this scum Shah has directed much tougher line against demonstrators in wake of July 26-29 rioting corruption could become major ago 1 19 agged political issue Communist and Khomeini feroes are Staying iz apposition background for moment GOl seerL as still in disat #513 Source represents pessimistic view currentjin several circle 3 g ewT-MR but probably overstates negative aspects of present situeot' Su'pp o rt 01 various elements of his Views are found in other I quarters as well howeVert and Iranian political mood seems I '6Ru roller coaster fot the memento END SWRY Hedeyat Eslaminie who has been discussing the religious situation with Embassy Political Officers for the past few mouthsr openedre July 25 meeting with Political Officer Stan- 35 in somewhat low spirits The religious situation has come apart Eslaminia learned from General Pardons and SAVAK 'Chief t-Ioghaddem that the Shah was most discre's sed that Ayatollah Shatietmadeti did notpublicly oppose A yetollah Khomeiui's call fore subdued politicized celebration at 12th room's birthday July Zl Eslaminia says Sharietmedari and his supporters have increased their'dislike for Khomeini 3 until it borders on hate because pro Khomeini gtoups are blec rv mailing Sharietmadari supporters by threatening to shut dowa oi bum their shops in the Bazaarromeo 323 4 1230Locum and donate-am Maura LaMultipu- #4 A 2 with respect to Ayatollah Shariatmadari Eslaninia said recent events have increased Shariatnadari's concern for his can position Khomeini retains an almosc n stic respect of mass of illiterate population and Shariatmadari feels he cannot- differ to a significant degree with Khomeini in public Comment we are not sure just how independent Shariatraderi actually is Eslaminia noted that all senior Ayatollehs in Iran are beginning to jockey for personal position is could create a situation in which moderate religious figures would have trouble maintaining centrist policy in the face of challenges from more reactionary groups In the wake of disturbances in Iran July 21-22 Shah net on July 22 with his aide General Fardoust and SAVAK Chief Htghaddam to discuss future policy towards demonstrators Eslaminia who is close to both FardOust and Meghaddam said the Shah was depressed with the outcome of the religious demonstrations and after a somewhat mercurial session in which Mdghaddam was heavily criticized theiShah directed that demonstrations would henceforth be broken up by military force and the army was authorized to fire on demonstrators in response to a que tion Eslaminia said he had been wbrking for three days to reverse or moderate this decision but the Shah and his principal advisers were now convinced that compromise with religious leaders may not be possible Salaminia believes this is an extreme position which will-hopefully change but it is clear that the throne is taking a much tougher line against dissidents in the wake of Shariatmadari's inability or unwillingness to oppose Khomeini publicly For example Shah is now against letting Hullah Falsafie speak publicly because it is Esared he might ignite a sizable riot in passing Eslaminia noted that Pardoust and Mbghaddam who are good friends of his expressed some concern at the Shah's health Political Officer mentioned-rumors were prevalent in Tchran that something had happened Eslaminia quickly replied that Shah was physically all right as of July 22 but somewhat down dentally According to Eslaminia medical_blood tests had been ordered to determine if there was any physical problem Later in conversation Eslaminia noted that the U S and others should keep an on the Shah and if something were wrong they should urge'him to convene the Regency Council and prepare Iran for change not just depart Iran abruptly as his father had done When Political Officer expressed thought that this might be'premature Eslaminia merely smiled sadly and acted-it pays to think ahead absence of Shah from visible public has given rise to number of rumors _Eslaminia is concerned because those nearest Shah whom he knows well are concerned This situation has arisen as a result of the Shah's current vacation during which he has made few public appearances The Embassy has no evidence to indicate_there is anything wrongg'but the rumors are beginning to take on a life of their own a 5 1 SECRETILEXDIS 3 When asked hOW'religious leaders sieved the recent miniscerial changes Eslaninia sighed and said it does no matter how-one arranges the garbage cans The Prime Mi isrer and the Cabinet are doing virtually nothing about religious political challenpes and persist in the view-that this is the Shah's and problem Only the Shah himself and the Court inistcr are concerned and time is passing A bed situation is developina because Tudeh communist and radical groups are lining on a behind Khomeini very quietly The plan to let the nancini faction discroetly back candidates to parliament who will after they are elected reveal true colors and ban-together to wage war against the present system- Eslaminia believes this tactic may well work because the GUI is currently in political disarray- the reSurgence party is confused ano the Prime with sufficient Speed to consolidate his forces Eslaminia reeled off the fellowing names of political figures who might be used as speakers All are political activists who have the repsect of religious leaders as well as politicians Seed vaziri Rahin Zehtebfard former East Azarbaijan Resurgence Party Chief who resigned shortly before striz riots in February Mehmoud Touloui Abdul Hossen Tobatabaie presently a judge and former MP and Dr Shokraie an EvaP from Qom with excellent ties to the Shariatmadari camp These and others like them should begin politicking so that basic lines of administration positions will be public by the time universities open in September If this is not doner the student movements-are likely to be won completely to one or more of dissident groups who are now planning major thrusts on campuses - Eslaminia sees an even bigger oroblem with corruption - A 'number of key Bazaar merchants including all major leaders wrote a public letter recently to the E-Iinister of Finance asking for an investigation of certain deals favoring the uealthy importers Eslaminia ticked off three A Ali Rezaie imported two million tons of iron at 20 rials per kilo without paying tax and is selling it at 36 rials per kiloc Small iron shops here no or little profit margin and are being driVen to the wall while Rezaie is reaping immense profits 1 35 Fabric maker Yassini a close confident of Princess Ashraf has imported two million meters of cloth without paying requisite customs duties He is selling it at virtually double what he payed for it C Textile maker Lajeuardi has also imported cheap-teXtiles and sold them at a higher price In addition a number of importers of vehicle spares with known ties to Princess have raised their prices to retailers withoUt any apparent justification thus squeezing profits of this group The result says Eslaminia is the I Steer mots 52 sscaa'r anrs a- bra nnings of a major new wave of dislike for the royal family as well as the government raising the question of corruption in a major political issue Eslaninia said he thought the Shah had better take a band before small merchants and some ranufacturers became convinced their interests lie with the orpusition COHKERT While the problem of corruption has brim 1 consiStent Eslaninia concern in past Embassy has heard from a number of sources that financial wheelings and dealings keyed to royal family and friends are beginning to affect a number of people and merchants are getting both smarter and bolder about raising these questions in the public arena _ coal This conversation being reported by airgram because it emphasizes several themes which we have heard often else- during the past month relating to confusion in the Iranian political system a concern for health of Shah 5 increasing difficulties in gezting the regime and religious leaders on compatible tracks and C growing concern with corruption and problems of cor political-disorganization The nctual_situation is not of-course as bad as tableau being painted by pcssimists There is much uncertainty and-anxiety in political circles which has increased bath suspicions and manicedepressive tendencies of Iranian political figures Iranian politics are undoubtedly going through a summer of discontent New alliances may or may not emerge Observers shOuld not however jump to conclusion that country is going to hell in a hand basket Situation seems to be one of trying to manage long overdue political growing pains under somewhat less than optimum conditions SECRETILTHDIS 53 This document is from the holdings of The National Security Archive Suite 701 Gelman Library The George Washington University 2130 H Street NW Washington D C 20037 Phone 202 994-7000 Fax 202 994-7005 nsarchiv@gwu edu