THE Islamic Republic of Iran, with its strict censorship, shortage of hard currency, and lack of film studios is hardly the most natural venue for world-class cinema. But in the last two years, Iranian films have won prizes at film festivals as far afield as Cannes, France; Locarno, Switzerland; and Pyonyang, North Korea.
Iranian cinema gained strength after the government banned foreign films in 1984. Movie theaters were forced to turn to the domestic industry, which specialized in noncommercial, artistic movies, and produced about 60 a year.
But this brief flowering of Iranian cinema might be at an end. In an effort to cut costs, the government recently announced it would abolish its subsidy to film production companies. Although technically privately funded, most filmmakers depend on the government for low foreign-exchange rates to import materials. The news has thrown Iranian cinema into turmoil.
"At the moment, the average cost of a film is 150 million rials" ($104,000), says Shuja Noori, director of international affairs at the Farabi Cinema Foundation. "Without the subsidies, it would rise to 500 million rials" about ($348,000).
While the more commercial films will undoubtedly survive, the days of delicately filmed, non-commercial movies may be numbered.
Producer Houshang Nouralahi says that "if the subsidies are cut, the end of noncommercial film will be bankruptcy."
As a way out of this impasse, the government is searching for overseas markets. The Farabi Cinema Foundation sells a few films a year to foreign television networks.
"What we are about to do is [capitalize] on television and satellite, and the huge demand for picture production overseas," says Mr. Noori.
Other Iranian filmmakers are looking for joint ventures with foreign companies.
Mr. Nouralahi is planning a joint venture with Atlas Film, a German company, and he envisions a movie shot partly in Germany, partly in Iran.
For Western studios, investment opportunities are attractive. Low wages and fewer special effects mean costs are well below Hollywood levels. Audiences are large: In Tehran, most households have a VCR, and in the provinces cinema is unchallenged as entertainment.
Some Iranian films make a sizeable profit. Pouran Derakjshandeh's 1988 hit, "Little Bird of Happiness," cost only 60 million rials (US$42,000) and grossed 10 times that amount.
Foreign studios, though, are concerned about the level of censorship in Iran. Despite some relaxation of social restraints in Iranian life, the Islamic government keeps a firm rein on film subject matter. The women on the streets of Tehran might use a little rouge and show a bit of hair, but Iran's actresses reveal bangs at their peril.
"In television and film, all women have to wear scarves," says Houshang Golmakani, founding editor of Tehran's Film Monthly magazine. "This is for the appearance of society..... It is very important for the Islamic Republic. We haven't seen a similar opening up like the rest of society."
Ms. Derakjshandeh learned this the hard way. As veteran director of Iranian television, she tried something daring. The women in her latest feature, "Lost Time," showed so much hair and makeup that the authorities panned the film and gave it third-rate distribution.
The grading is important because the government controls distribution. A high rating means the best cinemas, higher ticket prices, and a more relaxed attitude for the director's next film.
Most movies, however, do not get made without prior approval from the Ministry of Islamic Guidance. The script is read before filming, and offending portions are rewritten. There is little interference: Most filmmakers censor themselves.
Some directors approve of the system. Majid Gharizadeh says, "Some things are prohibited for the people, not by the government but by God."
Others relish the challenge. "Censorship is good for all filmmakers," says one critic. "It concentrates the mind."
Every film is classified by a government-appointed board of critics who rate it according to overall film quality. The board rarely approves a film that fails to follow the party line. Movies filled with anti-authoritarian heroes and immodest women are out, while moralistic fables are in.