CGSFID/NTIAL'

1. Domestic Afêàir &

The Shah ia the unquestioned leader of ihe 'moderq Ira 1ap.'xztzcàz,state. His almost unchallcnqed dominltion of the pl

56Q ea s of monarchial kradition and hisscene rests; on 2, .y rown extraordinary pkill tn exercistng hig powers f6r #*ebenefit of the nation (see Tab A 11. ke has presld qd ove:almost unprecedented economic development over the pastdecade--which has brought its own problems--and aehievedfor Iran .an impressive international stature which hascreated popular prid e in the country's achievements (seeTab A 2 for review of the Royal Familyfs place in Iran).

'or the past kwelve yearez Amir Abbas Hoveyda has been Iranlsprime minister and the Shah's faithful lieutenant. Hoveyda'spower rests on his ability to perform the role of governmentmanaqer and his capacity ko anticipate the Shah's wishes andcarry them out effectivety. He presides over a cabinet ofteehnocrats an: has ahywa himself unusually adept at balancingoff khe rïvalries, anxxetie: and skills of such powerful

1 potential rivals as Rastakhiz Party SYG Jamshid Amouwegar,Minisker of ycopomy and Einance Houshanq Ansary, apd others54No hold cab'anet portfolios.

Iran's politïcll egolution has moved more slowly tsee Tab' A 4)a Despite past periods of political importance, Iran's

pasliament, consisting of the Majles (lower house) andSenate (upper house), has been almost completely dominatedby the Shah for over a decade. thouqh he scrupulouslyobserves khe letter of the co e itution which requiresparliamentary leqitimizaEion of teqislation. Myeh of thehiskory of the past 25 years is the Shah's attempt llarqelysuccessful) to establish his political powep in the face ofradipat challenges (some of them represented in Parliament.in the' past) . He has done so by astute political man ipula-tion and by maintaining the abso e yalty of the milbtaryand of the éecuriky serivce, SAVAK. On tbe way, orgûnizedpolitical opposition has etther been coopfed. dropped out,or bemn reduced to virtual impotence. Small, dediçatedgroups of terrorists holding extreme fundamen>alis# Moslem

. or radtcal leftist viewa are a significant nuisance buk noknow a serious rackor in Iranian polittcs. Right-wingfund:mentalist Mosleml and some intellectua fk and studentsremaan disaffpcted to varying degreesu Labor has not beenA xajor political factor in Iran since the Mossadegh period:but wildcat strikes over the past 18 months have' shok?nenhanced economic muscle, if not organizatiùnal capacity.

CONFIDENTIAL' . 88