In 1960, the Kennedy administration came to office determined to shift the shah’s preoccupation from military security to economic progress. The Americans were even willing to limit American aid as leverage.
In Iran, American influence was clearly reflected in the shah’s decision to inaugurate land reform. It seemed as if the US was successfully dictating the terms of Iran’s future development.
Iran was expected to use its own oil revenues. However, the US did offer a $3.5 million dollar loan contingent on structural change.
In September 1959, at the request of Iran’s minister of agriculture, the Agency for International Development (AID) mission actually drafted the first part of the program, the initial land reform law.
American insistence on reform reflected the Kennedy administration’s concern over the likelihood of peasant uprisings and communist revolutions such as those that had taken place in China, Cuba, and Vietnam.
In the case of Iran, the American government was especially worried about the impact of
the Iraqi revolution of 1958 and fears of possible similar mass uprisings in Iran. The Americans hoped that land reform would stabilize the countryside and prevent the development of major pressures from below. . . extensive economic problems and political discontents prompted the American government to demand agrarian reform as a condition for financial assistance to Iran.
Land reform proved quite difficult to set in motion.
The original bill was modified by the landlord-dominated Majles to such an extent that it became almost impossible to implement.
In January 1962, a land reform decree was promulgated, with the encouragement and advice of US officials. A second stage of reform came into effect in January 1963, but it was considered so radical that its provisions were diluted in 1964.
Ramifications of both the reform struggle and the economic situation were severe.
A stabilization effort, recommended by the International Monetary Fund, spurred a recession that negatively affected most social groups and classes. This situation, combined with government attacks on the landed upper class and the clergy, resulted in a collective action which “consisted primarily of segments of the bazaars and urban poor in a few major cities.” Discontent extended to the countryside where
even for the favored peasants of the first phase of reform not enough was done to make available to them appropriate means to increase production for most of them to become significantly more prosperous. As government price controls increasingly favored city dwellers, considered politically volatile, and in effect subsidized foreign grain growers by paying them, but not Iranians, world market prices, peasants became a disfavored class, although there were exceptions. As for the laborers who got no land in villages, affected by the first reform phase, they were less likely to be hired by cultivating peasants than by the old landlords, and most of them joined in the swelling migration to the cities . . . .
Regardless of the distrust and distaste that many Iranians expressed toward the US and the reform package
the United States government welcomed the Shah’s reforms and continued to praise him as a progressive leader and a Western ally.
the nation’s strategic importance was attracting more attention from the United States.
Photograph by Lisa Reynolds Wolfe.
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