IRAN: Oil, Grandeur and a Challenge to the West

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Another and perhaps more impressive affirmation of the Shah's position in Iranian life took place at Golestan Palace. He presided over a salam or birthday levee of a thousand courtiers and high officials. Some of the men were dressed in cream-colored trousers and high-necked gold-braided uniform jackets; it was a scene oddly reminiscent of the days of Metternich. At a signal from the master of ceremonies, they carried out a prescribed ritual: a bow, a kiss bestowed on the outstretched imperial hand and flowery salutations, "Tavalod-e-Shahanshah Aryamehr ra Tabrik Arz Mikonam [Greetings on your Imperial Majesty's birthday]."

In the 33rd year of an often uncertain reign, Mohammed Reza Pahlavi has brought Iran to a threshold of grandeur that is at least analogous to what Cyrus the Great achieved for ancient Persia. Items:

> Iran is now producing 6.1 million bbl. of oil daily and is the world's second-greatest oil-exporting nation, after Saudi Arabia. Iran's refinery at Abadan is the world's largest. More important, the Shah was one of the first oil potentates to take complete control of production and reserves: since 1954 all income from production has gone to the National Iranian Oil Co., which is completely controlled by his government.

> Iran's oil revenues are increasing astronomically. Technocrats working on the country's latest five-year development plan have been forced to rejiggle the revenue side of the ledger almost daily; it now stands at $23 billion in oil income this year, v. $5 billion last year. Even if there is no further increase in oil prices, income next year should be more than $25 billion.

> Unlike Saudi Arabia, whose resources are almost inexhaustible (see chart), Iran is expending both its oil and its oil income to create a broad industrial base in the country before the crude begins to run out (1990, by Iranian estimates). That involves a heavy investment in social development, since 40% of Iranians are illiterate. Outside the cities, many live in poverty; about 85% of Iran's land is untillable without artificial irrigation. This year Iran will spend $16 billion on projects ranging from dams to schools to hospitals. By the end of the current five-year plan, the Shah will have spent more than $68 billion on domestic improvements.

> With excess oil income, Iran is also undertaking aid and investment abroad. This year's expenditures include $700 million to the International Monetary Fund to assist nations with balance of payment problems and $350 million to the World Bank. Additionally, Iran this year has committed $7 billion worth of grants, loans and deposits against future purchases from a dozen countries, including Britain and France. For an estimated $100 million, the government recently bought 25.04% ownership of the steel-producing branch of West Germany's 162-year-old Krupp steel empire. In August the Shah endowed a million-dollar chair in petroleum engineering at the University of Southern California.

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