4. Iran History to the 1979 Islamic Revolution
Safavid Dynasty establishes Shiism as state religion
Qajar Dynasty
Constitutional Revolution (Western features adopted; issue: is democracy consistent with Islam?) Shiism official religion
Oil discovered. Brits! WWI brings instability, famine
Colonel Reza Khan overthrows Qajar Dynasty – coup d’etat. Start of the Pahlavis Dynasty
His son, Muhammad Reza Shah Pahlavi becomes shah

5. 1951 --- Prime Minister Mossadeq nationalizes oil industry; conflict with Shah
CIA backed coup overthrows Mossadeq and reinstates the Shah
1960s-70s – White Revolution/Khomeini in exile/anti-communist/ pro-western
1975 – Shah declares single-party state/Savat
Islamic Revolution. Shah flees country. Ayatollah Khomeini returns from exile
Late 1979 – theocratic constitution approved by referendum

6. Reza Khan
Muhammad Reza Shah

7. Some observations at this point
Democratic features date to early 1900
Have experienced two major revolutions in 20th century
Secular v. religious conflict
Anti – West sentiment has historical roots
History of authoritarianism

14. Petro State
4th largest exporter
Member of OPEC
State-owned petroleum company

15. GNP grew quickly in 60s and 70s due to oil revenue
Facilitated move away from agriculture to oil-based economy
“Rentier state” oil revenues fuels state expenditures. Allows state to escape feedback from citizens.

16. Rentier Economy: heavily supported by state expenditure, while the state receives “rents” from other countries
Iran transformed into rent-seeking state under Pahlavi’s because of increasing income from oil
Iran received increasing revenue from exporting oil and leasing oil fields to foreign countries
Although shah promoted import substitution policies, by 1979 oil & associated industries provided 97% of foreign exchange and majority of Iran’s GNP

17. Oil revenue became so great government did not have to rely on internal taxes to generate income, paid expenses from oil profits
reduces pressure to diversify economy
Iran’s economy becomes dependent on the health of foreign states and world oil market
World oil prices unstable in 1970s
THEREFORE : The people become unnecessary to the government in a rentier state .. .oops!

20. Competitive Advantage /
                     
Thursday, April 4, 2013
                               
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Iran's worldwide crude oil exports
By Jodie Humphries | 11/16/ :21
                              
Iran exports oil all over the world. In fact, in Iran, net oil export revenues amount to approximately US$57 billion and, while oil exports provide approximately half of the Iranian government's revenues, crude oil and its derivatives account for nearly 80 percent of total exports.
When it comes to OPEC crude oil production, Iran produces 3.8 million barrels per day, which is approximately 4.5 percent of global production.
Now though, Iran has sought at least US$1 billion as an advance from India for supplying five million tonnes of liquefied natural gas a year from yet the demand may not be entertained by the buyers.
Iran LNG Co, a subsidiary of state-run National Iranian Oil Company, has asked Oil and Natural Gas Corp (ONGC) and its partner Hinduja Group to pay the advance so that it can complete a US$4.35 billion plant that will liquefy the natural gas produced from fields in the Persian Gulf, a source said to Express India.
                                                                                                                                                         
Advance
The demand for advance money came when ONGC-Hinduja were negotiating for a stake in the development of the Phase-12 of the giant South Pars field. South Pars Phase-12 is to feed gas to the LNG plant being built by Iran LNG at Tombak Port by 2011.
The source, said that the demand is unlikely to be met as there was no dispensation at present under which advance money can be paid for purchase of oil or gas at a future date.
US technology
With US technology not coming the Iranian way because of sanctions, the Iran LNG plant that will turn natural gas into liquid state will use technology from Statoil-Linde of Europe.
The two trains will produce almost 8.5 million tonnes per annum of LNG from gas piped in from the Phase 12 development of the giant South Pars gas field. The designated capacity is below the 10.5 million tonnes a year target cited in recent years by Iranian officials.
Construction on the Iran LNG plant, being built at Tombak Port, about 50 kilometers north of Assaluyeh in Bushehr province, started in 2007 and is 25 percent complete. The plant will cost USD 4.35 billion and is expected to become operational in January 2011.
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23. Islam - Five Pillars There is only one God, and Muhammad is his Prophet charity pray each day facing Mecca pilgrimage fast during Ramadam
Sunni
Shiism
State authority can be exercised by apart from lineage to the Prophet
State leaders not necessarily religious figures
Authority follows male descendants of Prophet
Ayatollahs have supreme authority
History of martyrdom

25. Pahlavi State Centralized State State banks National radio/TV networks
National Iranian Oil Company (NOIC)
Central Bureaucracy controlled local governments
Majlis became “rubber-stamp” legislature
Secularization in judicial branch (European-style judicial system)
“White Revolution”
Armed forces 5th largest in world by 1979
Patronage – shah’s boost personal wealth by seizing property and establishing tax-exempt Pahlavi Foundation that controlled large companies and fed their wealth
1975 Muhammad Reza Shah formed Resurgence Party, claimed Iran was one-party state, named himself head

26. Dual Society
Upper Class %
Pahlavi family, court-connected entrepreneurs, senior civil servants and military officers
Middle Class
Traditional (propertied) 13%
Clerics
Bazaaris
Small factory owners
Commercial farmers
Modern (salaried) 10%
Professionals
Civil Servants
Office Employees
College Students
Teachers/ professors
Lower Class
Rural 45%
Landed Peasants
Landless Peasants
Unemployed
Urban 32%
Industrial workers, domestic servants, construction workers, peddlers, unemployed

27. 1979 Islamic Revolution
Dominant ideology of Iranian revolution: Religion
Leader a cleric (Ayatollah Ruhollah Khomeini)
Theocracy established
Fundamental Islam/ Shiite
Causes
Shah perceived as being totalitarian
Balance between secular and religious state ruptured
Ties with US and the Western world
Economic decline

28. Oil prices decrease about 10% in late 70s
Consumer prices increase 20% at the same time
“Revolution of Rising Expectations” – revolutions occur when people are doing better than they once were and a set back occurs
US puts pressure on shah to loosen restrictions on civil society, in particular restraints on political opposition
Once restrictions were eased many groups join the revolt (students, teachers, labor groups, oil workers, merchants, and professional associations)

29. Revolution turns violent
1978
Unarmed demonstrators killed in central square Tehran
Oil workers go on strike
Anti-regime rallies attract 2 million participants
Rallies organized and led by clerics
Shah flees the country in February 1979
Khomeini returns to Iran from exile in Paris

30. Establishment of Islamic Republic
April 1979 referendum held, Iranians officially vote out the shah, Islamic Republic established
Assembly of Religious Experts – 73 clerics elected by the people draft a new constitution in 1979
US-Iranian hostage crisis on-going during vote to ratify constitution
99% of electorate vote to endorse constitution although only 75% of eligible voters cast votes

31. Islamic Republic in 1980s Clerics consolidate power
Popular support for regime high
World oil prices rise again, allowing for social programs, improvements in medicine & housing
Iraq invades Iran, people rally around the government
Charisma of Khomeini inspired faith in the government
Khomeini dies in 1989, constitution amended
Ali Khamenei succeeds Khomeini, does not have the same political charisma as the Ayatollah
Iran/Iraq war ends in 1988, country war-torn
Oil prices drop in 1990’s
Population begins to question authoritarian rule of the clerics

32. Supreme Leader Khomeini “jurist’s guardianship”
Grand Ayatollah Khomeini (1979 – 1989d)
Referred to as Iman of all Iranians
Ayatollah Ali Khamanei (1989 – present)
Neither Grand nor expert
Former head of the Revolutionary Guard
Former president (late 1980s)

34. Public Policy: Policy-Making Factions
Conservatives
Created by often contradictory influences of theocracy & democracy
Conservatives uphold principles of regime established in 1979
Against modernization because it threatens Shi’ism
Wary of western influence
Political & religious decision should be synonymous
Support right of clerics to run the political system
Reformists
Believe political system needs reform (but disagree on what reforms)
Advocate some degree of international involvement with western countries
Believe Shi’ism is important basis of Iranian society
Support idea that political leaders do not have to be clerics

35. Structure of the National Government
Parliament = majles

36. 1980s – early years of Republic/ Iran-Iraq War –
Conservatives dominate presidency and Majles
1990s – free-market reforms under President Rafsanjani; criticisms of power of the clergy
1992 Majles elections – reformers vetted (not allowed to run)

37. 1997 President Khatami elected. Reformer
2000 Majles elections -- Kordad Front (group of reformers) won 80% vote and 70 % turnout
Early 2000s – Guardian Council retaliates “Newspaper massacre” Repression increases. Street protests, mostly students
2004 Majles elections – vetting of reformers. Conservatives regain power
2005 Presidential election – President Ahmadinezhad wins . Reformers divided and perceived as elitist and corrupt.
Presidential elections June Ahmadinezhad wins? MAJOR PROTESTS Greens–worst since BROAD

38. Political Cleavages Religion Urban/ rural Young/ older Ethnicity
Social Class
Reformers vs. Conservatives

39. (i.e. political culture and values)
the contests between or among
the Persian authoritarian model of government (with some sense of ethical rule)
the secular, democratic model
and the Khomeini-inspired theocratic model
managing economic and political change
reactions to domestic pressures for economic growth and higher standards of living
reactions to global pressures to limit domestic policy choices
political socialization in the face of a rapidly growing, poorly-educated, and under-employed population
maintenance of power by an entrenched minority in a "republic"
pragmatic policy making in an absolutist theocracy