An early test for President Bush in his second term is likely to be multiple problems in Iran. There is a dispute between Iran and the International Atomic Energy Agency over Iranian development of nuclear fuels. The US and its European allies (Britain, France, and Germany) are not agreed on what to do. The Bush administration thinks the Europeans are too soft. The Europeans think the US is too hard. On another problem, Iraq and Jordan say that Iran is intervening in the Iraqi elections scheduled for Jan. 30.
Through all of this, Iran is and has been divided between fundamentalist and moderate Muslims. It began with a 1921 coup staged by Reza Pahlavi, an officer in the Persian Cossack Brigade. By 1925, he had consolidated the army's loyalty, improved public order, and proclaimed himself shah. He negotiated improved terms with Britain on an oil concession dating from 1901. Educational and judicial reforms deprived the Muslim clergy of much of its influence. Divorce laws were liberalized, and women were no longer required to wear the veil. When Reza Shah Pahlavi turned to Germany to counteract Russian influence, he was overthrown by an Anglo-Soviet invasion in 1941. He was succeeded by his son, Mohammed Reza Pahlavi, who turned out also to be a social reformer.
Enter Muhammad Mossadeq, a popular nationalist politician and member of the Majlis, the Iranian parliament. In March 1951, the Majlis passed a bill sponsored by Mossadeq nationalizing the Anglo-Iranian Oil Company. The shah appointed Mossadeq prime minister. The British and Americans saw the nationalization as a threat to other Western oil companies throughout the Middle East. As Mossadeq's power grew, the shah's declined. When the shah went into exile in August 1953, the CIA and its British counterpart, MI6, organized street mobs fueled with an abundant supply of small-denomination bills, and drove Mossadeq from office. The shah returned.
He was no less a social reformer than before, but this time a hard-fisted one. He cleared the way for land reform and introduced profit-sharing in industry. He allowed cultural symbols of modernization such as movie houses and women in Western dress (even blue jeans) on the street.
President Nixon sent CIA Director Richard Helms to Tehran as ambassador. The CIA, along with the Israeli intelligence service Mossad, helped organize SAVAK, the shah's no-nonsense intelligence service. The US Embassy acquiesced in the shah's insistence that it rely on SAVAK for internal Iranian intelligence, forgoing independent reporting. SAVAK agents spied on Iranian students in American universities. Large sums were spent on American military and police equipment. When conservative Muslims protested social reforms and modernization programs, the shah cracked down. Protests became violent and so did the police.
Each major collision was reported in the Western press. Newspaper stories clearly indicated that the shah's days were numbered. These stories were apparently not read in the intelligence community or White House, where there is a tendency to discount anything that may be common knowledge but is not stamped TOP SECRET. Thus, the CIA in August 1978 stated: "Iran is not in a revolutionary or even a 'prerevolutionary' situation." The Defense Intelligence Agency in September 1978: The shah "is expected to remain actively in power over the next 10 years." President Carter at a press conference Dec. 12, 1978: "I fully expect the shah to maintain power in Iran." In February 1979, the shah was overthrown by a radical fundamentalist Muslim regime. In November 1979 mobs seized the American Embassy in Tehran and held the staff there hostage until January 1981.
Here was an intelligence failure comparable to that leading to 9/11. Gary Sick, the National Security Council staff officer for Iran in 1979, explained it as "not so much a failure of sources or observation or data as a structural inadequacy of the system."
Iran's moderates have since gained enough power to elect a president, but the conservative clergy limits what he can do. It is in the US national interest that the moderates prevail. The chances for this are better in Iran than anywhere else in the Middle East. This would give Bush what he wanted, but probably won't get, in Iraq, and at a much cheaper price.
A good first step would be to restore diplomatic relations. This would do more than provide a channel for communications. It would establish a US presence, including business and cultural institutions.
• Pat M. Holt is former chief of staff of the Senate Foreign Relations Committee. He wrote the book 'Secret Intelligence and Public Policy: A Dilemma of Democracy.'