Politics of Marketing: US Policies of Antagonization and Growing Commercial Ties with Shah

By the time Kennedy took over, Iran’s internal problems had intensified. A revised NIE from May 1961 painted a gloomy picture: ‘We think that the chances of a coup by military elements during the next year or so are greater than they appeared to be when NIE34–61 was written.’ Just over a year later, this had become grim: ‘Over the longer term, profound political and social change appears virtually inevitable.’ The new president ordered a review and established a task force to deal with the problem.

The result was a sobering conclusion. Unless the Shah embarked upon widespread and pervasive social, economic and political reform, he would lose control of Iran.15 Kennedy ordered a reduction in US military aid (and an end to the CIA’s SAVAK training) and increased instead the amount of economic grants and loans. Fearing that the president’s talk of revolutions around the world (fuelled by his efforts to unseat Khrushchev as the champion of forces of national liberation) put him in Kennedy’s crosshairs, the Shah rolled out his ‘White Revolution’, a series of reforms designed to address some of the most egregious social and economic problems but without similar progress on the political front. This ticked some of the right boxes but by no means all. The unaddressed political dimension and the Shah’s pro-Soviet noises gave policymakers pause. Kennedy had attempted to rein in the Shah. It was the first and the last serious attempt in the prerevolutionary period to bring some order to what had become an unhealthy, and increasingly counterproductive relationship.

President Johnson was considerably less interested in pressuring the Shah to reform and, with deepening preoccupations at home and in South East Asia, had no desire to pick a fight over reform in Iran. To a large extent, therefore, he allowed the Shah free rein. During his presidency, the Iranian tail came to wag the superpower dog. This approach was confirmed by more positive NIEs: ‘It remains uncertain whether modernization in Iran will proceed relatively peacefully or whether violence and revolution are in store,’ with conclusion that ‘the outlook is satisfactory for US–Iranian relations for at least a considerable time to come’. During this period of growing oil revenues, US arms sales and diminishing aid, the Shah consolidated his power and the balance of power in the relationship tilted away from the United States. By the end of the decade, oil revenues had increased so significantly that aid assistance was phased out. The transformation was portentous. As one report noted:

"The Shah had often acted against US advice. As a result, he attributes his considerable success to the correctness of his policies and to his own skill in political manoeuvre. This belief has transformed that Shah from a timorous, titular monarch into a self-confident potentate, determined to assert his and Iran’s prerogatives against all comers".

It was by now a relationship bound by so many ties that the US was able to ask for and be granted an immunity law that effectively gave carte blanche to American citizens of all hues in Iran. Indeed, the US ambassador at the time was referred to as a ‘public relations officer for the Shah’. This growing US dependency on Iran – for oil, as an arms customer and for intelligence – provoked some debate in Washington (and Tehran) even if the administration remained generally in favour of allowing it to continue.

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