Politics within the late-pahlavi state: The ministry of economy and industrial policy, 1963-69

International Journal of Middle East Studies

Volumn 32, Issue 1, 2000, Pages 97-122

  Nasr, Vali ^a  

^a UNIVERSITY OF SAN DIEGO   (United States)

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[No Author keywords available]

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EID: 0040956887     PISSN: 00207438     EISSN: None     Source Type: Journal    
DOI: 10.1017/S0020743800021061     Document Type: Article

References (117)

1. This article in no way claims that the economic policies of the Ministry of Economy were completely successful, or that import-substitution industrialization (ISI) was a viable or desired path to industrial transformation and growth. The focus of the paper in its entirety is on the political issues that surrounded the rise, working, and fall of the ministry. The only concern that this paper has with economic issues is the perception of the ministry's (and ISI's) performance, as seen in the 1963-69 period, and then insofar as it determined political responses to the ministry's work. Furthermore, this article does not argue that bureaucratic oversight is necessary to development - although a number of studies in the social sciences on growth and restructuring have made that claim (see n. 9). What is important here is that the political leadership came to believe that institutional change was important to industrialization and growth, and because of this the degree of its support for that change must be examined in this context.
2. Abbas Amanat, Pivot of the Universe: Nasir al-Din Shah Qajar and the Iranian Monarchy, 1831-1896 (Berkeley: University of California Press, 1997); Ali Riza Aruzi, ed., Khatirat-i Abul-Hasan Ibtihaj (Biography of Abol-Hasan Ebtehaj) (London, 1991), vol. 1, 56-196; and Said A. Arjomand, The Turban for the Crown: The Islamic Revolution in Iran (New York: Oxford University Press, 1988), 59-74.
3. Abbas Amanat, Pivot of the Universe: Nasir al-Din Shah Qajar and the Iranian Monarchy, 1831-1896 (Berkeley: University of California Press, 1997); Ali Riza Aruzi, ed., Khatirat-i Abul-Hasan Ibtihaj (Biography of Abol-Hasan Ebtehaj) (London, 1991), vol. 1, 56-196; and Said A. Arjomand, The Turban for the Crown: The Islamic Revolution in Iran (New York: Oxford University Press, 1988), 59-74.
4. Abbas Amanat, Pivot of the Universe: Nasir al-Din Shah Qajar and the Iranian Monarchy, 1831-1896 (Berkeley: University of California Press, 1997); Ali Riza Aruzi, ed., Khatirat-i Abul-Hasan Ibtihaj (Biography of Abol-Hasan Ebtehaj) (London, 1991), vol. 1, 56-196; and Said A. Arjomand, The Turban for the Crown: The Islamic Revolution in Iran (New York: Oxford University Press, 1988), 59-74.
5. The term "patrimonialism" belongs to Weberian sociology. Weber distinguished between patriarchy and patrimonialism in that in the latter, administrative and military institutions serve as an intermediary between the ruler and the population, but they do not alter the traditional character of political authority or the centrality of patron-client ties to its exercise. Weber classified an extreme case of patrimonialism as "sultanism"; on these classifications, see Max Weber, Economy and Society, ed. G. Roth and C. Wittich (Berkeley: University of California Press, 1978), 1:231-32. The concept has been used in analysis of non-democratic regimes and states in the Third World - often under the rubric of "neo-patrimonialism" or "sultanism" - to emphasize the personalized character of political authority and its dependence on patron-client ties despite significant administrative reforms. These regimes are distinguished from other forms of authoritarianism in that here bureaucratic norms and institutions are weaker and more subordinate to the strictly personalized relations of authority with the ruler. See in this regard H. E. Chehabi and Juan J. Linz, "A Theory of Sultanism 1: A Type of Nondemocratic Rule," in Sultanistic Regimes, ed. H. E. Chehabi and Juan J. Linz (Baltimore: Johns Hopkins University Press, 1998), 3-25; Juan J. Linz, "Totalitarian and Authoritarian Regimes," in Handbook of Political Science, ed. Fred I. Greenstein and Nelson W. Polsby (Reading, Mass.: Addison-Wesley, 1975), 3:260, and Juan J. Linz and Alfred Stepan, Problems of Democratic Transition and Consolidation (Baltimore: Johns Hopkins University Press, 1996), 38-65.
6. The term "patrimonialism" belongs to Weberian sociology. Weber distinguished between patriarchy and patrimonialism in that in the latter, administrative and military institutions serve as an intermediary between the ruler and the population, but they do not alter the traditional character of political authority or the centrality of patron-client ties to its exercise. Weber classified an extreme case of patrimonialism as "sultanism"; on these classifications, see Max Weber, Economy and Society, ed. G. Roth and C. Wittich (Berkeley: University of California Press, 1978), 1:231-32. The concept has been used in analysis of non-democratic regimes and states in the Third World - often under the rubric of "neo-patrimonialism" or "sultanism" - to emphasize the personalized character of political authority and its dependence on patron-client ties despite significant administrative reforms. These regimes are distinguished from other forms of authoritarianism in that here bureaucratic norms and institutions are weaker and more subordinate to the strictly personalized relations of authority with the ruler. See in this regard H. E. Chehabi and Juan J. Linz, "A Theory of Sultanism 1: A Type of Nondemocratic Rule," in Sultanistic Regimes, ed. H. E. Chehabi and Juan J. Linz (Baltimore: Johns Hopkins University Press, 1998), 3-25; Juan J. Linz, "Totalitarian and Authoritarian Regimes," in Handbook of Political Science, ed. Fred I. Greenstein and Nelson W. Polsby (Reading, Mass.: Addison-Wesley, 1975), 3:260, and Juan J. Linz and Alfred Stepan, Problems of Democratic Transition and Consolidation (Baltimore: Johns Hopkins University Press, 1996), 38-65.
7. The term "patrimonialism" belongs to Weberian sociology. Weber distinguished between patriarchy and patrimonialism in that in the latter, administrative and military institutions serve as an intermediary between the ruler and the population, but they do not alter the traditional character of political authority or the centrality of patron-client ties to its exercise. Weber classified an extreme case of patrimonialism as "sultanism"; on these classifications, see Max Weber, Economy and Society, ed. G. Roth and C. Wittich (Berkeley: University of California Press, 1978), 1:231-32. The concept has been used in analysis of non-democratic regimes and states in the Third World - often under the rubric of "neo-patrimonialism" or "sultanism" - to emphasize the personalized character of political authority and its dependence on patron-client ties despite significant administrative reforms. These regimes are distinguished from other forms of authoritarianism in that here bureaucratic norms and institutions are weaker and more subordinate to the strictly personalized relations of authority with the ruler. See in this regard H. E. Chehabi and Juan J. Linz, "A Theory of Sultanism 1: A Type of Nondemocratic Rule," in Sultanistic Regimes, ed. H. E. Chehabi and Juan J. Linz (Baltimore: Johns Hopkins University Press, 1998), 3-25; Juan J. Linz, "Totalitarian and Authoritarian Regimes," in Handbook of Political Science, ed. Fred I. Greenstein and Nelson W. Polsby (Reading, Mass.: Addison-Wesley, 1975), 3:260, and Juan J. Linz and Alfred Stepan, Problems of Democratic Transition and Consolidation (Baltimore: Johns Hopkins University Press, 1996), 38-65.
8. The term "patrimonialism" belongs to Weberian sociology. Weber distinguished between patriarchy and patrimonialism in that in the latter, administrative and military institutions serve as an intermediary between the ruler and the population, but they do not alter the traditional character of political authority or the centrality of patron-client ties to its exercise. Weber classified an extreme case of patrimonialism as "sultanism"; on these classifications, see Max Weber, Economy and Society, ed. G. Roth and C. Wittich (Berkeley: University of California Press, 1978), 1:231-32. The concept has been used in analysis of non-democratic regimes and states in the Third World - often under the rubric of "neo-patrimonialism" or "sultanism" - to emphasize the personalized character of political authority and its dependence on patron-client ties despite significant administrative reforms. These regimes are distinguished from other forms of authoritarianism in that here bureaucratic norms and institutions are weaker and more subordinate to the strictly personalized relations of authority with the ruler. See in this regard H. E. Chehabi and Juan J. Linz, "A Theory of Sultanism 1: A Type of Nondemocratic Rule," in Sultanistic Regimes, ed. H. E. Chehabi and Juan J. Linz (Baltimore: Johns Hopkins University Press, 1998), 3-25; Juan J. Linz, "Totalitarian and Authoritarian Regimes," in Handbook of Political Science, ed. Fred I. Greenstein and Nelson W. Polsby (Reading, Mass.: Addison-Wesley, 1975), 3:260, and Juan J. Linz and Alfred Stepan, Problems of Democratic Transition and Consolidation (Baltimore: Johns Hopkins University Press, 1996), 38-65.
9. For a theoretical discussion of the role of political interests in support of bureaucratic reform, with reference to Latin America, see Barbara Geddes, Politician's Dilemma: Building State Capacity in Latin America (Berkeley: University of California Press, 1994), esp. 1-18.
10. An increasing number of social-science inquiries now look to politics within the state instead of structural factors to explain political outcomes. See, for instance, Ben Ross Schneider, Politics Within the State: Elite Bureaucrats and Industrial Policy in Authoritarian Brazil (Pittsburgh: University of Pittsburgh Press, 1991); Robert Vitalis, "The End of Third Worldism in Egyptian Studies," Arab Studies 4, 1 (spring 1996): 13-33; Timothy Mitchell, "The Limits of the State: Beyond Statist Approaches and Their Critics," American Political Science Review 85, 1 (March 1991): 77-96.
11. An increasing number of social-science inquiries now look to politics within the state instead of structural factors to explain political outcomes. See, for instance, Ben Ross Schneider, Politics Within the State: Elite Bureaucrats and Industrial Policy in Authoritarian Brazil (Pittsburgh: University of Pittsburgh Press, 1991); Robert Vitalis, "The End of Third Worldism in Egyptian Studies," Arab Studies 4, 1 (spring 1996): 13-33; Timothy Mitchell, "The Limits of the State: Beyond Statist Approaches and Their Critics," American Political Science Review 85, 1 (March 1991): 77-96.
12. An increasing number of social-science inquiries now look to politics within the state instead of structural factors to explain political outcomes. See, for instance, Ben Ross Schneider, Politics Within the State: Elite Bureaucrats and Industrial Policy in Authoritarian Brazil (Pittsburgh: University of Pittsburgh Press, 1991); Robert Vitalis, "The End of Third Worldism in Egyptian Studies," Arab Studies 4, 1 (spring 1996): 13-33; Timothy Mitchell, "The Limits of the State: Beyond Statist Approaches and Their Critics," American Political Science Review 85, 1 (March 1991): 77-96.
13. A number of works on non-democratic regimes have sought to theorize and outline the detailed working of authoritarianism, most notably, Juan J. Linz, "An Authoritarian Regime: The Case of Spain," in Cleavages, Ideologies, and Party Systems, ed. Erik Allardt and Yrjö Littunen (Helsinki: Transactions of the Westermack Society, 1964), 291-342.
14. For a discussion of some these issues, see Fernando Uricoechea, The Patrimonial Foundations of the Brazilian Bureaucratic State (Berkeley: University of California Press, 1980).
15. Chehabi and Linz, "A Theory of Sultanism"; Linz, "Totalitarian and Authoritarian Regimes."
16. Chehabi and Linz, "A Theory of Sultanism"; Linz, "Totalitarian and Authoritarian Regimes."
17. A number of recent studies on growth have underscored the importance of autonomous and competent bureaucracies. See in this regard Ziya Öniş, "The Logic of the Developmental State," Comparative Politics 24, 1 (October 1991): 109-26; Stephan Haggard, Pathways from the Periphery: The Politics of Growth in the Newly Industrializing Countries (Ithaca, N.Y.: Cornell University Press, 1990); and Peter Evans, Embedded Autonomy: States and Industrial Transformation (Princeton, N.J.: Princeton University Press, 1995).
18. A number of recent studies on growth have underscored the importance of autonomous and competent bureaucracies. See in this regard Ziya Öniş, "The Logic of the Developmental State," Comparative Politics 24, 1 (October 1991): 109-26; Stephan Haggard, Pathways from the Periphery: The Politics of Growth in the Newly Industrializing Countries (Ithaca, N.Y.: Cornell University Press, 1990); and Peter Evans, Embedded Autonomy: States and Industrial Transformation (Princeton, N.J.: Princeton University Press, 1995).
19. A number of recent studies on growth have underscored the importance of autonomous and competent bureaucracies. See in this regard Ziya Öniş, "The Logic of the Developmental State," Comparative Politics 24, 1 (October 1991): 109-26; Stephan Haggard, Pathways from the Periphery: The Politics of Growth in the Newly Industrializing Countries (Ithaca, N.Y.: Cornell University Press, 1990); and Peter Evans, Embedded Autonomy: States and Industrial Transformation (Princeton, N.J.: Princeton University Press, 1995).
20. Joel Migdal has argued that anomalous decisions of state leaders must be understood in the context of imperatives before their rule and the social resistance that they face. See Joel S. Migdal, "Introduction: Developing a State-in-Society Perspective," in State Power and Social Forces: Domination and Transformation in the Third World, ed. Joel S. Migdal, Atul Kohli, and Vivienne Shue (New York: Cambridge University Press, 1994), 8; and idem, "Strong States, Weak States: Power and Accommodation," in Understanding Political Development, ed. Myron Weiner and Samuel P. Huntington (New York: Harper-Collins, 1987), 391-434.
21. Joel Migdal has argued that anomalous decisions of state leaders must be understood in the context of imperatives before their rule and the social resistance that they face. See Joel S. Migdal, "Introduction: Developing a State-in-Society Perspective," in State Power and Social Forces: Domination and Transformation in the Third World, ed. Joel S. Migdal, Atul Kohli, and Vivienne Shue (New York: Cambridge University Press, 1994), 8; and idem, "Strong States, Weak States: Power and Accommodation," in Understanding Political Development, ed. Myron Weiner and Samuel P. Huntington (New York: Harper-Collins, 1987), 391-434.
22. Massoud Karshenas, Oil, State and Industrialization in Iran (Cambridge: Cambridge University Press, 1990), 110.
23. Khudadad Farmanfarmaian, Iranian Oral History Collection (hereafter IOHC), Harvard University, tape recording no. 7, 2-7.
24. Jahangir Amuzegar, The Dynamics of the Iranian Revolution: The Pahlavi's Triumph and Tragedy (Albany: State University of New York Press, 1991), 181; Karshenas, Oil, 131. In 1958-59, General Muhammad Vali Qarani planned a military coup, then, in the early 1960s, the powerful chief of SAVAK, General Teymour Bakhtiar, was removed from his post after his ambitions for power became apparent. In his attempt to assuage discontent within the armed forces, he removed a number of generals, notably Hajj-Ali Kia, Muhammad Ali Alavi-Muqaddam, and Abdullah Hidayat, from their positions. See Mark J. Gasiorowski, "The Qarani Affair and Iranian Politics," International Journal of Middle East Studies 25, 4 (November 1993): 625-44. See also interviews with Ali Amini and Haj-Ali Kia, IOHC, and Ali-Akbar Muhtadi, Aqa Khan Bakhtiar, and Ali Amini, interviews, Oral History of Iran Collection (hereafter OHIC), Foundation for Iranian Studies.
25. Jahangir Amuzegar, The Dynamics of the Iranian Revolution: The Pahlavi's Triumph and Tragedy (Albany: State University of New York Press, 1991), 181; Karshenas, Oil, 131. In 1958-59, General Muhammad Vali Qarani planned a military coup, then, in the early 1960s, the powerful chief of SAVAK, General Teymour Bakhtiar, was removed from his post after his ambitions for power became apparent. In his attempt to assuage discontent within the armed forces, he removed a number of generals, notably Hajj-Ali Kia, Muhammad Ali Alavi-Muqaddam, and Abdullah Hidayat, from their positions. See Mark J. Gasiorowski, "The Qarani Affair and Iranian Politics," International Journal of Middle East Studies 25, 4 (November 1993): 625-44. See also interviews with Ali Amini and Haj-Ali Kia, IOHC, and Ali-Akbar Muhtadi, Aqa Khan Bakhtiar, and Ali Amini, interviews, Oral History of Iran Collection (hereafter OHIC), Foundation for Iranian Studies.
26. Jahangir Amuzegar, The Dynamics of the Iranian Revolution: The Pahlavi's Triumph and Tragedy (Albany: State University of New York Press, 1991), 181; Karshenas, Oil, 131. In 1958-59, General Muhammad Vali Qarani planned a military coup, then, in the early 1960s, the powerful chief of SAVAK, General Teymour Bakhtiar, was removed from his post after his ambitions for power became apparent. In his attempt to assuage discontent within the armed forces, he removed a number of generals, notably Hajj-Ali Kia, Muhammad Ali Alavi-Muqaddam, and Abdullah Hidayat, from their positions. See Mark J. Gasiorowski, "The Qarani Affair and Iranian Politics," International Journal of Middle East Studies 25, 4 (November 1993): 625-44. See also interviews with Ali Amini and Haj-Ali Kia, IOHC, and Ali-Akbar Muhtadi, Aqa Khan Bakhtiar, and Ali Amini, interviews, Oral History of Iran Collection (hereafter OHIC), Foundation for Iranian Studies.
27. Jahangir Amuzegar, The Dynamics of the Iranian Revolution: The Pahlavi's Triumph and Tragedy (Albany: State University of New York Press, 1991), 181; Karshenas, Oil, 131. In 1958-59, General Muhammad Vali Qarani planned a military coup, then, in the early 1960s, the powerful chief of SAVAK, General Teymour Bakhtiar, was removed from his post after his ambitions for power became apparent. In his attempt to assuage discontent within the armed forces, he removed a number of generals, notably Hajj-Ali Kia, Muhammad Ali Alavi-Muqaddam, and Abdullah Hidayat, from their positions. See Mark J. Gasiorowski, "The Qarani Affair and Iranian Politics," International Journal of Middle East Studies 25, 4 (November 1993): 625-44. See also interviews with Ali Amini and Haj-Ali Kia, IOHC, and Ali-Akbar Muhtadi, Aqa Khan Bakhtiar, and Ali Amini, interviews, Oral History of Iran Collection (hereafter OHIC), Foundation for Iranian Studies.
28. See, for instance, Habib Ladjevardi, ed., Memories of Shapour Bakhtiar (Cambridge, Mass.: Center for Middle Eastern Studies, Harvard University, 1996), 70-74.
29. Stephen D. Krasner, "Approaches to the State: Alternative Conceptions and Historical Dynamics," Comparative Politics 16, 2 (January 1984): 223-46.
30. Both the minister of finance (Abdol-Hossein Behnia) and the minister of agriculture (Hasan Arsanjani) favored fiscal frugality and ad hoc development projects managed in various agencies: American Embassy, Tehran, "Politico-Economic Assessment," 29 September 1962; General Records of the Department of State, National Archives, Washington, D.C., box 2832, file 888.00/9-2962.
31. Interviews with Manuchehr Gudarzi, Khodadad Farmanfarmaian, and Abdol-Majid Majidi in Ghulam Riza Afkhami, ed., Barnamirizi ⊂Umrani va Tasmimgiri Siyasi (Development Planning and Political Decision-Making) (Bethesda, Md.: Foundation for Iranian Studies, 1999), 96-100, 159-74, 255-68.
32. American Embassy, Tehran, "Biweekly Economic Review," 12-25 August 1962; General Records of the Department of State, box 2832, file 888.00/8-2962.
33. Abdul-Majid Majidi (director of Plan and Budget Organization, 1973-77) recollects that at this time the shah had no clear notion of the needs of coherent planning and its institutional requirements, and that young technocrats were instrumental in persuading the monarch and the political leadership of their importance: Habib Ladjevardi, ed., Memories of Abdolmadjid Madjidi (Cambridge, Mass.: Center for Middle Eastern Studies, Harvard University, 1996), 93-94.
34. Reza Niazmand, OHIC, 40.
35. On 6 September 1962, the cabinet passed the Third Plan with 140 billion rials (as opposed to the original request of 190 billion rials) development spending over five-and-a-half years: American Embassy, Tehran, 9 September 1962; General Records of the Department of State, box 2832, file 888.00/9-962.
36. Karshenas, Oil, 167.
37. For an overview of debates on this issue, see Gholam Reza Afkhami, "Introduction," in Khuzistan's Development, ed. Gholam Reza Afkhami (Washington, D.C.: Foundation for Iranian Studies, 1994), 11-16.
38. Aruzi, Khatirat-i Ibtihaj, 2:297-332; Frances Bostock and Geoffrey Jones, Planning and Power in Iran: Ebtehaj and Economic Development Under the Shah (London: Frank Cass, 1989), 5-8; Niazmand, OHIC, 12-13, 88-89; and Farmanfarmaian, IOHC, tape no. 3, 14.
39. Aruzi, Khatirat-i Ibtihaj, 2:297-332; Frances Bostock and Geoffrey Jones, Planning and Power in Iran: Ebtehaj and Economic Development Under the Shah (London: Frank Cass, 1989), 5-8; Niazmand, OHIC, 12-13, 88-89; and Farmanfarmaian, IOHC, tape no. 3, 14.
40. See the reminiscences of Gudarzi, Farmanfarmaian, and Majidi in Afkhami, Barnamirizi.
41. Aruzi, Khatirat-i Ibtihaj, 2:430-90.
42. A colorful example of the opposition to Ebtehaj is narrated by Farmanfarmaian (who worked under Ebtehaj and would later lead the Plan Organization). He recollects that at one point, General Fazlullah Zahedi (leader of the coup of 1953 and subsequently prime minister), who was at loggerheads with Ebtehaj, was frustrated with the Plan Organization's unresponsiveness to the cabinet and sent a tank with soldiers to Ebtehaj's office. It took the Shah's direct intercession to get the tank withdrawn: Farmanfarmaian, tape no. 3, 27-28.
43. Bostock and Jones, Planning and Power, 109. Ebtehaj was even known to throw books at parliamentary deputies who visited his office to get projects for their districts: Niazmand, OHIC, 16.
44. Richard Cottam, Nationalism in Iran, 2nd ed. (Pittsburgh: University of Pittsburgh Press, 1979), 290.
45. American Embassy, Tehran, "Biweekly Economic Review," 17-30 November 1962; General Records of the Department of State, box 2832, file 888.00/12-462.
46. Waterbury characterizes "change teams" as technocrats with few or no links to the political arena who serve as the "brain trust of the political leadership," especially in initial stages of ISI projects: John Waterbury, "The Heart of the Matter? Public Enterprise and the Adjustment Process," in The Political Economy of Adjustment, ed. Stephan Haggard and Robert Kaufman (Princeton, N.J.: Princeton University Press, 1992), 191-92.
47. The deputy ministers were Muhammad Yiganih (economic affairs), Riza Niazmand (industries; he joined in 1964 and was preceded by Amir Ali Shaibani, and was succeeded in 1967 by Farrukh Najmabadi); Ghulam-Reza Kianpour (customs), Ahmad Ziai (administration and, briefly, commerce), and Ruknudin Sadat-Tihrani (commerce and trade; preceded briefly by Ahmad Ziai). Alikhani and Najmabadi came to the Ministry of Economy from the National Iranian Oil Company (Najmabadi had also worked for OPEC); Niazmand and Kianpur from the Plan Organization; Ziai from the Industrial Credit Bank; Sadat-Tihrani from the High Economic Council; and Yiganih from the U.N. Development Program. Abu⊃l Qasim Khiradju, who as the director of the Industrial Development Bank, worked closely with the Ministry of Economy and was central to its industrial planning came from the World Bank where he had served as a ranking manager and worked extensively on Japan. Other managers were recruited from among the best in other government agencies, especially the Ministry of Commerce, as well as from recent university graduates.
48. The prime minister literally asked Jahangir Tafazzuli, who was supervisor of Iranian students in Europe, whether he knew anyone and Tafazzuli recommended Alikhani: Alikhani, interview by author.
49. Ahmad Ashraf, "From the White Revolution to the Islamic Revolution," in Iran After Revolution: Crisis of an Islamic State, ed. Saeed Rahnema and Sohrab Behdad (London: I. B. Tauris, 1995), 21-44.
50. For more on ISI, its initial logic and later shortcomings see Haggard, Pathways, and John Waterbury, Exposed to Innumerable Delusions: Public Enterprise and State Power in Egypt, India, Mexico and Turkey (New York: Cambridge University Press, 1993). It is also noteworthy that as of late, ISI has been somewhat rehabilitated as a development strategy: see Wil Hout, "Development Strategies and Economic Performance in Third World Countries, 1965-1992," Third World Quarterly 17, 4 (1997): 603-24.
51. For more on ISI, its initial logic and later shortcomings see Haggard, Pathways, and John Waterbury, Exposed to Innumerable Delusions: Public Enterprise and State Power in Egypt, India, Mexico and Turkey (New York: Cambridge University Press, 1993). It is also noteworthy that as of late, ISI has been somewhat rehabilitated as a development strategy: see Wil Hout, "Development Strategies and Economic Performance in Third World Countries, 1965-1992," Third World Quarterly 17, 4 (1997): 603-24.
52. For statistics on the economy at the time, see Charles Issawi, "The Iranian Economy 1925-1975: Fifty Years of Economic Development," in Iran Under the Pahlavis, ed. George Lenczowski (Stanford, Calif.: Hoover Institution Publications, 1978), 133-66.
53. There are serious criticisms of Iran's economic policy during that period from both neo-classical and structuralist perspectives (especially insofar as the manner in which they laid the foundation for economic-policy-making in the 1970s). See Amuzegar, Dynamics, esp. 181-82;
54. Robert Looney, Economic Origins of the Iranian Revolution (New York: Pergamon Press, 1982);
55. M. H. Pesaran, "Economic Planning and Revolutionary Upheavals in Iran," in Iran: A Revolution in Turmoil, ed. Haleh Afshar (Albany: State University of New York Press, 1985), 18;
56. John Foran, Fragile Resistance: Social Transformation in Iran from 1500 to the Revolution (Boulder, Colo.: Westview Press, 1993), 309-58;
57. Fred Halliday, Iran: Dictatorship and Development (London: Penguin Press, 1979);
58. and Homa Katouzian, The Political Economy of Modern Iran, 1926-1979 (New York: New York University Press, 1981), 213-331.
59. Abrahamian, Iran, 430.
60. Real GDP for this period grew at 9.2 percent and real GNP at 8.8 percent per annum, and industrial-growth rates averaging 15 percent were among the highest in the Third World and twice or three times the average rates for developing countries: Issawi, "The Iranian Economy," 142-43, 150. Iran was often cited in World Bank reports during this period as a model for economic development in the Third World.
61. Chehabi and Linz, "A Theory of Sultanism," 11-12.
62. Sadat-Tihrani and Niazmand, interviews by the author.
63. Ibid.
64. Interviews with Niazmand, Alikhani, and Fereydoun Mahdavi. Mahdavi, who was minister of commerce in the 1970s, recollects that Yatsevich and the Rashidian brothers continued to control the monopoly on the importation of important commodities into Iran well into the 1970s.
65. These were Alikhani's own words in an interview with the author.
66. This led to a concerted effort on the ministry's part to locate an entrepreneur willing to invest in automobile manufacturing and to scout the small machine-tools shops on the outskirts of Tehran (Darvazeh Qazvin) for evidence of the existence of preliminary labor skills needed for the undertaking: Niazmand, OHIC, 52-56.
67. It has been argued that it is generally unlikely that a powerful government agency could remain immune to rent seeking: Anne O. Krueger, "The Political Economy of the Rent-Seeking Society," American Economic Review 64 (June 1974), 291-303; Mancur Olson, The Rise and Decline of Nations (New Haven, Conn.: Yale University Press, 1982);
68. It has been argued that it is generally unlikely that a powerful government agency could remain immune to rent seeking: Anne O. Krueger, "The Political Economy of the Rent-Seeking Society," American Economic Review 64 (June 1974), 291-303; Mancur Olson, The Rise and Decline of Nations (New Haven, Conn.: Yale University Press, 1982);
69. James M. Buchanon, Robert D. Tollison, and Gordon Tullock, ed., Towards a Theory of Rent-Seeking Society (College Station: Texas A & M, 1980),
70. and Charles K. Rowley and Robert D. Tollison, ed., The Political Economy of Rent-Seeking (Boston: Kluwer, 1988).
71. Alikhani was uniquely qualified to appeal to the private sector. Before becoming minister, he had supplemented his regular income by working as an adviser for the Chamber of Commerce. The chamber then consisted of entrepreneurs, small-scale producers, and mercantile and bazaar leaders. Alikhani helped the chamber with its petitions to the government, strategic planning, and preparation of reports. At the chamber, Alikhani developed an appreciation for the problems facing the private sector and saw the inefficiencies of the public sector and the consequences of arbitrary government policy-making - all of which convinced him of the wisdom of industrialization in partnership with the private sector. He also developed close personal ties with leaders of the business community at the time. In addition, one of his deputies at the ministry, Ruknuddin Sadat-Tihrani, was from a leading bazaar family: Alikhani, Niazmand, and Sadat-Tihrani, interviews. See Ahmad Ashraf, Encyclopedia Iranica, ed. Ehsan Yarshater (Boston: Routledge and Kegan Paul; Costa Mesa, Calif.: Mazda, 1984-), s.v. "Chamber of Commerce."
72. Niazmand, Kazim Khusrawshahi, and Mustafa Akhavan, OHIC; Qasim Lajivardi and Akbar Lajivardian, IOHC. See also Habib Ladjevardi, Labor Unions and Autocracy in Iran (Syracuse, N.Y.: Syracuse University Press, 1985), 234-35.
73. Ladjevardi writes that, during Alikhani's term in office, conscious effort was made to dissuade the new industrial elite from ostentatious behavior: "industrialists who wanted to be seen in the best light knew that any ostentatious behavior on their part would jeopardize their next request for tariff protection and other favorable decisions by the Ministry of Economy." Ladjevardi is of the opinion that it was the greater self-indulgence of the ruling regime during the 1970s that encouraged the private sector to more openly flaunt its wealth; ibid.
74. Abu⊃l Qasim Khiradju, IOHC, tape no. 2, 17-18, and Alikhani, Niazmand, and Sadat-Tihrani, interviews by author.
75. Yiganih, IOHC, tape no. 14, 9-10.
76. The list of complaints against the Ministry of Economy narrated here were related to me by Alikhani, Najmabadi, Niazmand, and Sadat-Tihrani. The actual source of the accusations and complaints was never specified, but their contents were routinely related to the ministry's managers in cabinet meetings or during Alikhani's audiences with the shah.
77. Interviews, especially with former Minister of Commerce Fereydoun Mahdavi; he recollects that the protection of interests of Ayadi and Aghayan continued to be justified in the 1970s in terms of the regime's need to cultivate support among minorities.
78. Graham provides an analysis of the manner in which patronage facilitated the exercise of power by the monarchy in the late-Pahlavi era (although he defines patronage narrowly as corruption); see Robert Graham, Iran: The Illusion of Power (New York: St. Martin's Press, 1978), 152-53.
79. For a discussion of the political implications of increasing state capacity for rulers, see Geddes, Politicians Dilemma, 131-81.
80. Muqaddam, IOHC, tape no. 1, 6.
81. Yiganih, IOHC, tape no. 2, 8.
82. Ibid., 10, 14;
83. ibid., tape no. 6, 9-10.
84. The nature and scope of the American opposition to the ministry was also narrated to this author by Alikhani and Sadat Tihrani, both of whom detailed the specifics of American policy toward the ministry.
85. Yiganih, IOHC, tape no. 14, 16-17.
86. Between 1963 and 1965, Asadollah Alam and Hasan Ali Mansur served as prime ministers.
87. Interviews with Alikhani and Farrukh Najmabadi (who served in Hoyeda's cabinet in the 1970s as minister of industries and mines). This issue was also evident in debates in the cabinet over the mandate of the Renovation and Expansion of Industries Organization (Sazman-i Nawsazi va Gustaraish Sanayi⊂), which was created to assist with setting up new industrial projects and revamping failing ones: Reza Niazmand (the organization's first overseer), interview.
88. Sadat-Tihrani, interview by author.
89. Evans, Embedded Autonomy, 13-14.
90. Chalmers Johnson, MITI and the Japenese Miracle (Stanford, Calif.: Stanford University Press, 1982), 26. Evans refers to such a bureaucracy as a "pocket of efficiency" - which, in states where the bureaucracy as a whole does not approximate the Weberian ideal, can nevertheless spearhead veritable development: Evans, Embedded Autonomy, 64-65.
91. Chalmers Johnson, MITI and the Japenese Miracle (Stanford, Calif.: Stanford University Press, 1982), 26. Evans refers to such a bureaucracy as a "pocket of efficiency" - which, in states where the bureaucracy as a whole does not approximate the Weberian ideal, can nevertheless spearhead veritable development: Evans, Embedded Autonomy, 64-65.
92. The term belongs to Johnson: MITI, 27-28.
93. Ladjevardi writes that Alikhani was seen to be unpretentious and uncorrupted by practices associated with many government figures: "[he] had refused the new government automobile provided to the other ministers. Instead, throughout his term as minister, he rode in the vehicle used by his predecessor and continued to live in an unpretentious house. This style of leadership was effective": Ladjevardi, Labor Unions, 234.
94. Alikhani himself is of the opinion that the Shah did not view interference with the ministry's policy-making as supporting corruption (which he understood to be limited to embezzlement). In fact, the Shah viewed the bestowing of favors as his prerogative and a necessary aspect of his imperial image. Alikhani's resistance to interference in policy-making was therefore viewed by the Shah as an infringement on monarchical prerogatives.
95. Graham writes of typical ministerial attitudes toward monarchical authority at the time that "it [became] unavoidable that the men chosen, and willing to serve, as Ministers [had] to emasculate themselves if they [wished] to survive in their posts": Graham, Iran, 133. Alikhani's posture must be understood in this context.
96. Marvin Zonis, The Political Elite of Iran (Princeton, N.J.: Princeton University Press, 1971), 83, 91; Khosrow Fatemi, "Leadership by Distrust: The Shah's Modus Operandi," Middle East Journal 36, no. 1 (winter 1982): 49. See also Alikhani's own comments on the shah's rule in his Introduction to Asadollah Alam, The Shah and I: The Confidential Diary of Iran's Royal Court (New York: St. Martin's Press, 1991), 7-22.
97. Marvin Zonis, The Political Elite of Iran (Princeton, N.J.: Princeton University Press, 1971), 83, 91; Khosrow Fatemi, "Leadership by Distrust: The Shah's Modus Operandi," Middle East Journal 36, no. 1 (winter 1982): 49. See also Alikhani's own comments on the shah's rule in his Introduction to Asadollah Alam, The Shah and I: The Confidential Diary of Iran's Royal Court (New York: St. Martin's Press, 1991), 7-22.
98. Marvin Zonis, The Political Elite of Iran (Princeton, N.J.: Princeton University Press, 1971), 83, 91; Khosrow Fatemi, "Leadership by Distrust: The Shah's Modus Operandi," Middle East Journal 36, no. 1 (winter 1982): 49. See also Alikhani's own comments on the shah's rule in his Introduction to Asadollah Alam, The Shah and I: The Confidential Diary of Iran's Royal Court (New York: St. Martin's Press, 1991), 7-22.
99. Sadat-Tihrani was asked by SAVAK for details of some of his negotiations in Moscow, and recollects that after 1966 other managers in the ministry had been subjected to similar demands: Sadat-Tihrani, interview.
100. Mark J. Gasiorowski, "Policymaking in a Highly Autonomous State: Iran Under the Shah, 1963-1978," Iranian Journal of International Affairs 5, 2 (Summer 1993): 457-66.
101. According to Alikhani, from 1966 onward his meetings with the Shah involved to an increasing degree explanations of the requirements of growth and private-sector investments in response to royal suggestions to accommodate various requests: Alikhani, interview.
102. For a discussion of the "Dutch Disease" (the impact of rent on rate of exchange, exports, and production), see Terry L. Karl, The Paradox of Plenty: Oil Booms and Petro-States (Berkeley: University of California Press, 1997), 5-6, 25-32.
103. Karl argues that in "Petro-States," the main impact of oil rent on development is through the changes that it brings about in the institutional structure of the state: ibid., esp. 6-12.
104. Yiganih, IOHC, tape no. 6, 2-4; also Sadat-Tihrani, interview.
105. Yiganih, IOHC, tape no. 6, 2-4; also Alikhani and Niazmand, interviews.
106. Yiganih, IOHC, tape no. 6, 5; also Alikhani, interview. Alikhani then became chancellor of Tehran University, where he carried out some of the most important reforms in that institution's history. Later he joined the private sector. Today he is a consultant at the World Bank.
107. Sadat-Tihrani, interview.
108. Yiganih, IOHC, tape no. 7, 16-17.
109. Graham, Iran, 78-80.
110. Karl, The Paradox of Plenty, 46-49.
111. The private sector became wealthier after 1969, and especially after 1974. However, it did so through greater dependence on the government, and hence became socially and politically weaker.
112. Cited in Alice H. Amsden, Asia's Next Giant: South Korea and Late Industrialization (New York: Oxford University Press, 1989), 14.
113. 86 Khosrowshahi and Akhavan, interviews, OHIC.
114. In the Third World, the rise of autonomous private sectors has accounted for the stability of regimes. For instance, the strategic power of East Asian states during the critical years of high growth is explained in terms of the political coalition of those states with their private-sector industrial elite to limit the power of the left, other dissident and popular groups, and organized labor. See, for instance, Frederic C. Deyo, "Coalitions, Institutions and Linkage Sequencing: Toward a Strategic Capacity Model of East Asian Development," and Hagen Koo, "The Interplay of State, Social Class, and World System in East Asian Development: The Cases of South Korea and Taiwan," in The Political Economy of the New Asian Industrialism, ed. Frederic C. Deyo (Ithaca, N.Y.: Cornell University Press, 1987).
115. In the Third World, the rise of autonomous private sectors has accounted for the stability of regimes. For instance, the strategic power of East Asian states during the critical years of high growth is explained in terms of the political coalition of those states with their private-sector industrial elite to limit the power of the left, other dissident and popular groups, and organized labor. See, for instance, Frederic C. Deyo, "Coalitions, Institutions and Linkage Sequencing: Toward a Strategic Capacity Model of East Asian Development," and Hagen Koo, "The Interplay of State, Social Class, and World System in East Asian Development: The Cases of South Korea and Taiwan," in The Political Economy of the New Asian Industrialism, ed. Frederic C. Deyo (Ithaca, N.Y.: Cornell University Press, 1987).
116. On the role of private sectors in development and their relationships with the bureaucracy and the political leadership, see the various essays in Sylvia Maxfield and Benn Ross Schneider, Business and the State in Developing Countries (Ithaca, N.Y.: Cornell University Press, 1997).
117. Chehabi and Linz, "A Theory of Sultanism," 11-12.