Daily Archives: November 3, 2008

Obama, Capital Gains and Economic Growth

The New Commander-in-Chief Can Be grateful that not one American died in Iraq last month.

The new Commander-in-Chief can be grateful that not one American soldier died in Iraq last month.

According to a front page analysis in yesterday’s “Washington Post,” many of the lawmakers I most admire are going to lose tomorrow. I will be especially saddened if Senators such as Norm Coleman (MN), Gordon Smith (OR), John Sununu (NH) and Elizabeth Dole (NC) are defeated. All of them are “work horses,” not “show horses,” and they were willing to compromise for the common good. My guess is that their successors will be intense partisans. Lets hope I am wrong.

I have been wrong in the past.  Several of the predictions I made about President-elect Bill Clinton in 1992 were not correct. Of course, it can be argued that a big part of his success was due to the GOP Congress which was in power for six of his eight years in office.  Nevertheless, I would not have predicted the Clinton Administration would have focused on deficit reduction, welfare reform, free trade agreements such as NAFTA, and capital gains reductions.
In 1997, in one of his best moments, President Clinton signed the law reducing capital gains rates from 28 to 20%.  One of the results was growth rates of 4% for the next three years, and Nasdaq quadrupled in value.  (George Bush later took the rate down to 15%).  Unlike today, Clinton’s advocacy of significant capital gains reductions was an integral part of the 1996 Democratic Platform. Clinton used this repeatedly to rebut Bob Dole’s tax cut arguments during his re-election campaign. In his memoirs, Clinton himself said he could have been described as a liberal Republican.
Today, my predictions about Senator Obama could be similarly incorrect.  Last month not one American solder died in Iraq, and similar to 1992, every survey indicates the economy is the dominant issue.  Obama has repeatedly said he will cut taxes on the middle class, but I believe just the opposite will happen. The capital gains rate is crucial to investment decisions and it is already scheduled to increase from 15% back to the 20% of the Clinton era. The dividend rate will go back to 30 or 38%.  Obama will not do anything to reverse that.
This is a major factor because over half of us own stocks and almost 80% own homes. Surprisingly, one of the few couples not investing in the stock market is Barack and Michelle Obama.  In 2005, 47% of all tax returns reporting capital gains were from households with incomes below $50,000, and 79% came from households with incomes below $100,000.  The increase will also put America at a great disadvantage when competing for global capital.
In addition, I really hope Obama will rethink his position regarding an additional raise beyond 20% in rates on capital gains.  He wants to do this out of sense of “fairness,” and Obama calls for elimination of “tax breaks for the rich.”  Obama would only be hurting low income workers. He would be reducing the amount of capital necessary to create jobs.
There is a great disparity in income in our nation, but the only way to help a blue collar worker earn more is through increased capital and training. As Jesse Jackson once said, “Capitalism without capital is just another ‘ism’.” The rate reductions made by Clinton and Bush both resulted in more income to the government, but the real benefit was for our nation’s economic growth.
American companies also have to endure the highest corporate tax rates in the industrialized world, and this will not change in an Obama Administration.  
Our current corporate rate is 39.3% and even Germany has a 25% rate.  Ireland cut its corporate rate to 12.5 percent and went from being the poor man of Europe to the second-richest on a per capita income basis.  Despite Senator Obama’s comments about spreading the wealth around, we already have an extremely progressive income tax system.  For 2006 (the latest year for which statistics are available), the share of the federal income tax paid by the top 1 percent of tax returns reached an all-time high — 40% of all federal income taxes.  The top 50% paid 97% of the tax.  The bottom 50% paid only 3% of it.
I was pleasantly surprised by several of Bill Clinton’s policies, and I hope I will be able to say the same thing about Barack Obama.

Do You Support the Kyoto Protocol on Global Warming?

 

This graphic shows NYC after a 20 foot rise in sea levels. The UN IPCC Report says the worst case scenario would be 3 to 9 inches.

This graphic shows NYC after a 20 foot rise in sea levels. The UN IPCC Report says the worst case scenario would be 3 to 9 inches.

No.  Environmental security is vital and these concerns should never be ignored. Unfortunately, the Kyoto Protocol was clearly not in the national interests of the United States. This was recognized by the U.S. Senate in 1997 when it passed the Byrd-Hagel Resolution in opposition to Kyoto by a 95 to 0 vote margin.

The Resolution noted that Kyoto posed “a serious threat to the United States’ economy.” Many lawmakers also noted that a number of theories advocated global warming disciples were not supported by sound science.  The cost-benefit analysis of Kyoto was skewed heavily against the United States. This is why the treaty was never submitted to the Senate for formal ratification.

The advocates of the Kyoto Protocol have done an excellent job of scaring the American people. They claim global warning will result in catastrophic floods, war, terrorism, economic dislocations, drought, crop failure, mosquito borne diseases, and severe weather conditions.  All of this will occur, they claim, because the earth is getting warmer due to man-made gases.  This should continue to be a subject of intense scientific inquiry, but far too often partisans are quickly exaggerate their claims.  For example, the UN panal on climate change said sea levels could increase three inches, not 20 feet.  
The United States and the global community must also continue their commitment to developing cleaner and more efficient methods of industrial production.  Kyoto requires that expensive exhaust-refining technologies be applied to plants, refineries and vehicles. It calls for a 7% reduction in three industrial gases: hydrofluorocarbon (HFC), perfluorocarbon (PFC) and sulphur hexafluoride (SF6). A major problem is that reducing these gases does not guarantee any reduction in global temperature.  When these gases decompose, one of their byproducts is carbon dioxide (CO2).  The concern is that CO2 allows the sun’s rays to penetrate the atmosphere but does not let the heat they generate tp escape back into space. Consequently, the atmosphere gradually gets hotter as more heat is trapped. However, respected studies have also demonstrated that it is unlikely man has produced enough greenhouse gases to affect natural climatic conditions.  Countries such as China, India, Brazil, South Korea and Mexico are all signatories to Kyoto, but they do not have to reduce their emissions even though they are responsible for over 30 percent of the world’s greenhouse gases.

Is Partisanship in Foreign Policy Increasing or Decreasing?

Foreign policy was expected to be a major issue in the 2008 campaign, but interest quickly fell with Wall Street's decline. During the 2000 campaign American's ranked foreign policy as being 23rd in importance.

Foreign policy was expected to be a major issue in the 2008 campaign, but interest quickly fell with Wall Street

It is definitely increasing.  I really should not complain because from my perspective the situation is better than in the 1992, 1996 and 2000 presidential elections. Partisanship did not disappear, but foreign policy and national security issues were ignored in those years.

This is also not a new phenomenon. This was one reason George Washington was opposed to the formation of political parties. Washington’s recommendation was quickly brushed aside, but even when the parties were formed, the founding fathers always emphasized the importance of maintain the spirit and bonds which had been formed during the revolutionary struggle. Thomas Jefferson alluded to this in his first Inaugural address when he said “We are all Republicans, we are all Federalists.”

I have recommend to students Caroline Kennedy Schlossberg’s A Patriots Handbook. She emphasizes that patriotism is neither liberal nor conservative, and both parties should implement her father’s desire for increased national service. It was her father (Editor’s note: President John F. Kennedy) who told us “Ask not what your country can do you, but what you can do for your country.” Mrs. Schlossberg says Ronald Reagan described what she is seeking when he spoke of an informed patriotism that starts at the dinner table.

Unfortunately, it has been difficult to maintain that spirit in Washington, D.C. which is intensely partisan. Members of one party have an unfortunate tendency to oppose foreign policy initiatives simply because they are being promoted by the other party.

Some intensely partisan Republicans opposed initiatives against genocide in Bosnia and Kosovo because they did not want to assist a Democratic president. In the same vein, some intensely partisan Democrats opposed President Bush’s initiatives in Afghanistan and Iraq because they did not want to assist a Republican President.

The problem of these partisan blinders were addressed by Jonathan Chait, a senior editor of The New Republic:

“Perhaps the most disheartening development of the Iraq war at home, anyway is the number of liberals who have allowed Bush-hatred to take the place of thinking. Speaking with otherwise perceptive people, I have seen the same intellectual tics come up time and time again: If Bush is for it, I’m against it. If Bush says it, it must be a lie. ”

There opposition to Bush has made liberals embrace principles such as the notion that the United States must never fight without U.N. approval except in self defense which the Clinton Administration never adhered too (see Operation Desert Fox in 1998, or the Kosovo campaign in 1999).

Why Are you in Conflict With Some of the Major Human Rights Organizations?

The human rights abuses of the Saddam Hussein regieme were often ignored by the news media.

The human rights abuses of the Saddam Hussein regieme were often ignored by the news media.

America’s Declaration of Independence emphasizes the universality of the human rights, and this is often described as the American cause. We believe international relations should be based on human rights.

The conflict you are talking about has every thing to do with partisan politics, and little to do with human rights. You are correct that it is distressing to us when prominent human rights organizations, such as Amnesty International (the winner of the 1977 Nobel Peace Prize) and Human Rights Watch, engage in partisan politics.

Prior to Operation Iraqi Freedom, the British government released a large dossier outlining tremendous human rights abuses. The report described torture, the incredible abuse of women, arbitrary and summary murders, deplorable prison conditions and the persecution of the Kurds and Shia. Since then, over 300 mass graves have been uncovered, and it is now estimated that Saddam Hussein killed 1.8 million of his own people.

One would have expected Amnesty International to praise such a document, but they instead attacked it as “a cold and calculated manipulation of the work of human rights activists in an effort to justify military action.” These groups were against the effort to remove this incredibly cruel regime. The only conclusion you can draw is that they want to complain about human rights but they do not want to do anything to change the situation.

Through the private sector we are working to assist government institutions in efforts to locate and then build forces for freedom and democracy – a free press, political parties, unions, business groups, churches, and other private institutions.

There are times that military assistance and peacekeeping missions are required, but we want to see a greater focus on public diplomacy programs in all major democratic nations. These programs should explain and strengthen freedom and democracy throughout the world.  The United States did this for many years through Radio Free Europe/Radio Liberty, and it is continuing these efforts through the Voice of America, the National Endowment for Democracy, the U.S. Institute for Peace and similar organizations. They are all designed to prod authoritarian regimes along a reform path.

Why Did You Give a Speech Outlining Problems in the NATO Alliance?

I said our allies were making important contributions, but I did not say all of our allies were contributing in every situation. To be frank, the NATO alliance today has a different outlook from the group which existed during the Cold War.

The European nations and Canada have been cutting back on military spending for decades. Canada really does not have a war fighting capability. These nations lag far behind the United States in military modernization program, and as I indicated, none of them has the power projection capabilities of the United States.  There is little popular support in Europe to increase military spending.

Over half of Germany=s $27 billion defense budget goes to salaries and benefits. German Chancellor Gerhard Schroeder was re-elected in 2002 on an anti-American platform. In February 2003, French President Jacques Chirac organized a resolution supported by 52 African nations in opposition to the U.S. position on disarming Iraq.

France has been a thorn in Americas side ever since Charles De Gaulle took his nation out of NATO=s military structure. France not only opposed sanctions against Iraq in the 1990’s, but as we now know, they are actively engaged with Iraq. They made a fortune out of the UN oil for food program. The French built the Osirak nuclear reactor for Iraq when it was bombed by Israel in 1981. Chirac approved the Osirak contract.

In 2000 France was the only country among 100 attendees not to sign the “Warsaw Declaration” on democracy, mostly because it was an American initiative. It has often been noted that France often feels a need to differentiate itself from America in order to feel important.

German companies were Saddam Husseins biggest supplier of modern weapons and dual-use technology. They flouted the U.N. sanctions for years – all while Berlin has turned a blind eye.

How Important are America’s Allies?

The role of America’s allies will continue to be incredibly valuable, and I do not know of any responsible leader who wants us to walk away from these relationships. Their importance was clearly demonstrated when the UN approved Operation Desert Storm in 1991. The bulk of the military burden was then placed on the United States because we were and still are the only nation with power projection capabilities.

There is no other nation that comes close to having America’s technical ability. We are the only nation with five global command centers and carrier battle groups in every ocean. When Germany agreed to send peacekeepers to Afghanistan in 2001, they had to lease transport aircraft from the Ukraine. Many Americans have forgotten that the cost of Operation Desert Storm was $54 billion, but America’s allies (primarily Kuwait and Saudi Arabia) paid for everything. 

Weapons of Mass Destruction Were Not Found in Iraq. Do You Regret Supporting Operation Iraqi Freedom?

The weapon of mass destruction was found in Iraq. His name was Saddam Hussein and he was responsible for the deaths of 1.8 million of his own people. The former Iraqi regime was supporting terrorism and they openly gave $25,000 to $35,000 to the families of every Palestinian suicide bomber. They maintained a terrorist training facility at Salman Park near Baghdad where an old Boeing 707 passenger airplane was used to train hijackers. Saddam Hussein praised both Hitler and Stalin, and numerous times he threatened to burn half of Israel. His regime murdered, wounded and ethnically cleansed hundreds of thousands of Kurds, Shiites and other Iraqis over three decades. He destroyed 4000 Kurdish villages.
Because of the regimes brutality there were over 5 million Iraqi exiles. They used poison gas on their own people, their torture techniques were unbelievably cruel, and they engaged in ethnic cleansing against the Marsh Arabs and Kurds.
Forced confessions are obtained: by torturing children while their parents were forced to watch. International human rights groups described the methods used in the torture chambers of Iraq: electric shock, burning with hot irons, dripping acid on the skin, mutilation with electric drills, cutting out tongues and rape. As President Bush said, “If this is not evil, then evil has no meaning.”
The Baath Party’s favorite techniques also included throwing children out of helicopters in front of their parents. They frequently video taped gang rapes of young girls and then sent the tapes to their parents or relatives who had escaped to the West. Saddam’s own son Uday was known for having girls as young as 14 kidnapped so he could rape them.
The girls would be attending a sporting event with their parents, and they would be kidnapped when they went to the rest room. Uday Hussein would even have brides kidnapped from their wedding receptions! One groom who saw his bride carried off responded by shooting himself.
Before Saddam came to power, Iraq was richer than Malaysia or Portugal. After he took over the nation no longer had a budget. All of its money went into Saddam’s pocket. Almost a third of children born in the center and south of Iraq had chronic malnutrition, and half the population of the rural areas had no safe water. Saddam responded by building over 50 palaces.

Key Lessons of the Iran Hostage Crisis


 

On November 4, 1979, the United States faced one of the most serious crises in modern history. Almost 100 of its diplomats were taken hostage in Iran, a country that had become bitterly hostile and unpredictable. Caught totally off-guard, the U.S. was paralyzed, unable to negotiate or take action. Four years later, on October 23, 1983, 241 U.S. marines were killed in a terrorist bombing of the Marine headquarters in Beirut, Lebanon. The marines were part of a multi-national force demonstrating U.S. presence while negotiations continued for a withdrawal of hostile forces from the country.


The memories of these two days, representing two of the largest U.S. foreign policy failures in recent times, appear to have faded in the minds of President Clinton’s foreign policy team. The intent here is to call them back into much clearer focus. A recent shift in the purpose of the U.S. intervention in Somalia, resulting in the loss of U.S. lives, and the looming prospect of another intervention in Bosnia, have created new memories, much like those in 1979 and 1983.

These events, manifestations of Clinton’s ‘enlargement’ doctrine and reliance upon U.N. multilateralism, have led to a renewed questioning of the post-Cold War shape of U.S. foreign policy, especially whether it represent U.S. national interests. My purpose, therefore, is to demonstrate that important lessons from the U.S. experiences in Iran and Lebanon should serve as cautions for the Clinton Administration as it continues to shape and implement a foreign policy doctrine.

 

STRUCTURE

 

Before introducing my model of analysis, I will first provide selective reviews of U.S.-Iranian relations since 1960, then the events surrounding the two Multi National Forces missions to Lebanon. These reviews are in no way comprehensive, detailed histories; my primary objective is not to offer a new theory on why they happened, who should be blamed, and how they could have been avoided, but to demonstrate that the situations in 1979 and 1983 have viable relevance to U.S. foreign policy in 1993 and beyond.

Against this background, I will then establish my framework of analysis, what I call the “triangular base” model, for linking the lessons of Iran and Lebanon to Somalia and future U.S. intervention possibilities. I will explain this base in detail at that point.

In anticipating critical evaluations of my model, I then provide a theoretical background that might offer insight into why the above foreign policy experiences are linked, despite the different circumstances surrounding each nation, and why U.S. policies have taken the shape they did.

 

Part One:

Iran and the U.S. 1960-1980

 

As mentioned above, my purpose is not to give a comprehensive review of U.S.-Iranian relations, but to highlight aspects of this relationship that had direct effects on U.S., and Iranian, policy actions.

From the end of World War II to the advent of the 1960’s, the status of relations between Iran and the U.S had been relatively unchallenged. With Iran, the U.S. had found a strategic ally in the vital Persian Gulf region, and committed its support to the regime of Iran’s Shah, Mohammed Reza Pahlavi Shananshah Aryamehr. Under the Shah, Iran was beginning to warm to its role of regional power, and enjoyed strong U.S. support against possible Soviet aggression.

Between 1946 and 1979, Iran under the Shah was transformed from a largely agriculture-based economy to a modern society, involving massive changes in the traditional social, economic, and political orders.


The Shah accomplished this mainly through a package of reforms he called the “White Revolution.” His launching of such an ambitious reform process coincided with the Kennedy administration’s growing dissatisfaction with Iran’s economic progress. Economic development, as opposed to military strength, became the stress of long-term U.S. policy toward Iran. Land reform to the U.S. was critical, a view shared by the Shah as well. The other major initiatives of the White Revolution included profit-sharing for workers, the nationalization of forests and pastures, the sale of state-owned factories, the enfranchisement of women, and the creation of a literacy corps.(1)

The positive initial effects of the White Revolution pleased U.S. officials, validating their analysis of Iran’s economic problems. Here I must note that it is well beyond my means to chart in detail the economic course Iran took as a result of the Shah’s reforms, but some general trends are instructive in demonstrating the effects of reform and explosive economic growth for the course of Iranian affairs.

During this period, especially from 1960 to 1978, the shah’s regime successfully achieved most of its economic, social, and military objectives. World Bank data shows that in this period Iran’s annual real growth rate, 9.6 percent, almost doubled the average of countries in its category, and was higher than any other group of countries in the world. Iran registered positive growth for fourteen straight years until 1977, held unemployment to relatively low levels, pushed industrialization using oil revenues and not at the expense of agriculture, and made great strides in public health, education, and illiteracy. These economic benefits, however, hid long-term political and cultural consequences that would lead eventually to revolutionary unrest in many classes.

White Revolution policies greatly expanded the autonomous capabilities of the Iranian state, and allowed the Shah to portray himself as progressive. Moreover, increased autonomy allowed the Shah to pursue his own priorities. His quest for military superiority in the Gulf, his desire to modernize Iran and create an industrialized welfare state within a decade- all dependent upon Iranian oil revenues- became too ambitious and too much of a burden upon traditional Iranian society. Before the program officially ended in 1971, the land reform program provided land to over 50% of Iran’s peasant population, but eliminated almost all of the large landowners, destroying the traditional upper class in Iranian society.

Another important effect was the rural migration to urban areas as a result of the land reform program and Iran’s rapid economic growth. Land reform failed to lessen rural poverty: 32% of the peasants still did not own land in 1971, and 75% owned less than the minimum for subsistence. The ignorance of rural needs, therefore, pushed peasants into urban areas, where they lacked any modern skills or experience. This held great significance, for in the midst of the confusion caused by a collision with twentieth-century mores, the peasants would turn to their mullahs for guidance.


This shift in political power contributed significantly to the rise of the Ayatollah Khomeini and the religious revolution in 1979.

The early 1970’s would prove to be critical in U.S.-Iranian relations. Changing political and economic conditions in the U.S., largely a result of the Vietnam war, reduced U.S. abilities to maintain its commitments overseas. Foreign policy officials in the Nixon Administration, therefore, began to rely on regional powers taking greater responsibility for collective security. These powers would receive U.S. arms, but not U.S. forces, unless it was clearly in U.S. interests.

Deciding to rely on the Shah and Saudi Arabia, U.S. policymakers developed the “twin pillars” policy toward the Persian Gulf, in which the two nations would assume responsibilities for maintaining security. Most Iranians, however, understood that Iran was the only regional country to fill the vacuum left by the British withdrawal from the Gulf in 1971, and “resented the United States for demanding this role from Iran and the Shah for playing it.”

With the twin pillars policy logically came an increase in arms sales to Iran. Since Iran was willing to contribute to its own defense, and U.S. commitment to its security maintained stability in the Middle East region, conventional wisdom became uncritical acceptance of Iranian requests for new weapons. The extent of these arms sales, and the appetite of the Shah for advance military hardware and capabilities, was not anticipated at first, however.

During the next eight years, Iran became the top buyer of military equipment of any developing nation, with almost 27% of its budget allocated to defense spending. Between 1973 and 1978, Iran bought over $20 billion worth of U.S. military hardware, representing over sixteen times the amount sent by the U.S. to Iran over the previous two decades.

Iran was able to purchase such large amounts of weaponry with the influx of oil money that resulted from the success of OPEC in 1973. But such unchecked spending began to strain not only Iran’s economy, but the patience of its people as well. Religious elements in Iranian society castigated the Shah’s regime for adopting a Western model of development that made Iran “dependent upon foreign raw materials, managerial know-how, technology, and trade.” In response, a disenchanted public took an increasingly negative view towards the modernization efforts of the Shah.

To many, they became associated with “disorganization, waste, corruption, incompetent administration, dependence on foreigners, inflation,…uncomfortably dizzying change,…[and a] poorly planned crash modernization [that] damaged Iranians economically and culturally.”

Iranian resentment spread also to the growing American presence in their country. The booming arms sales business and intensified trade ties brought thousands of U.S. citizens into Iran, whom were offered numerous perks, such as triple salaries, tax-free shopping, and extended holidays. This created resentment and envy among those working with Americans, who “were representatives of an alien and threatening faith.


The relaxed way in which these strangers dressed, their love of liquor, their noisy parties, their car and motorcycle races and their ostentatious opulence could not but arouse…mistrust and anger over the years.”

In response to the Shah’s reform efforts, the disproportional spending on military equipment, and growing anti-Americanism, opposition groups slowly reemerged in Iranian society in the 1970’s. The women’s rights movement carried out in 1959, along with the land reform program, angered much of the Shi’i clergy (mullahs), whose ideology had great appeal to traditional Iranian middle classes.

Gradual and quiet activism carried out by the mullahs had built up a large base of support in the urban lower classes, which continued to grow rapidly and became more disillusioned with Iran’s economic, social, and cultural problems.

Iranian student groups overseas, largely in the U.S., became quite adept at mobilizing students against the shah’s regime and focusing attention on Iran’s growing human rights abuses.

These groups could not effectively operate inside Iran, however, mainly because of the Shah’s repressive apparatus. Another opposition group involved small guerrilla bands, whose attempts to launch violent uprisings repeated failed to generate popular support. Their violent tactics and complex ideology alienated them from most of the Iranian society, and furthermore made them prime targets for security forces.

The election of Jimmy Carter to the Presidency cast a new shadow over U.S.-Iranian relations in 1977. The special relationship between the nations could not prevent certain allegations of human rights abuses, and the initial emphasis of the Carter Administration on linking U.S. foreign policy with human rights appeared to seriously question U.S. assistance to Iran. In fact, the two priorities Carter campaigned on in 1976 involved limiting U.S. arms sales overseas, and giving a greater role to human rights in U.S. foreign policy. Differences with Iran were unavoidable if these goals were to be pursued.

Relations between the two nations remained unchanged, however. Iran and Saudi Arabia continued to anchor U.S. strategic policy in the Persian Gulf, and the Shah appeared determined to ease Carter Administration fears of human rights violations in Iran.

Beginning in 1977, the Shah instituted a series of reforms which prohibited the use of torture by security forces, released a number of political prisoners, loosened censorship rules, and made other minor policy changes. Whether or not this liberalization led to further demands for more reforms, and the eventual downfall of the Shah, is a possibility, since revolutionary forces were gathering significant strength in 1977 and 1978.


The Shah’s visit to Washington, D.C. in November of 1977 is an excellent example of the status of U.S-Iranian relations, and the surrounding environment, at this point. At the initial press conference, televised nationwide in Iran, 4,000 anti-shah students engaged 1,500 pro-shah demonstrators in a violent clash outside the White House, resulting in 124 injuries. Tear gas was needed, and a cloud of the gas drifted toward the conference, causing Carter and the Shah to blink and wipe their eyes. Privately, however, Carter praised and reassured the Shah, telling him how Iran was “‘a very stabilizing force in the world at large’ to which the U.S. was ‘bound with unbreakable ties.'” New arms sales were discussed, as well as controlling OPEC prices.

Only eight days after Carter returned from a visit to Iran in January of 1978, riots broke out in Iran that signalled the beginning of the end for the Shah. The riots continued to escalate in number, violence, and bloodshed throughout the summer, while the Shah desperately looked to the U.S. for advice and assistance, and continued to alternate between extending more liberalization and suppressing the violence.

Finally, with tacit U.S. support, the Shah appointed General Gholam Reza Azhari prime minister of a military government on November 6. (My summary of these and subsequent events leading up to November 1979 is taken primarily from a chronology of events found in Barry Rubin’s Paved with Good Intentions.)

Three weeks later, Carter reaffirmed U.S. support for the Shah, and declared that the U.S. would not interfere in Iranian domestic affairs.

Oil production continued to fall in Iran, causing huge shortages which ground the economy to a virtual standstill. As riots continued in most Iranian cities, Azhari resigned from the government on the last day in December of 1978. Four days later, the Iranian parliament appointed Shahpour Bakhtiar as prime minister, to whom the U.S. immediately offered cooperation. The Shah would leave Iran, and effectively end his thirty-seven year reign, on January 16.

The solidification of the Ayatollah Khomeini’s power was in evidence upon his return from exile on January 31, when hundreds of thousands of supporters greeted his arrival back into Iran. His announcement of Mehdi Bazargan as his choice for prime minister of a provisional Islamic government, led to the resignation of Bakhtiar in February. Bakhtiar’s departure effectively shut the U.S. out of the Iranian government, for the Embassy and foreign policy officials had failed to cultivate any genuine ties with Iranian officials who still remained in some position of influence.

U.S. attempts to generate diplomatic ties with the new religious power in Iran were for the most part unsuccessful. Throughout the spring of 1979, Khomeini and Iranian students continued to demand that the U.S. admit its guilt for past involvement in Iranian affairs, and return the Shah to Iran to be tried by the Islamic government. U.S. officials refused, and any further hopes of reconciliation were dealt a severe blow when the Carter Administration agreed to let the Shah come to New York for medical treatment in October.


On November 4, one day after the Iranian Foreign Ministry formally protested the U.S. decision to admit the Shah for treatment, Iranian students staged a sit-in at the U.S. Embassy, which ended violently with the taking of U.S. diplomatic personnel hostage. Khomeini shortly thereafter condoned the event, stating that “if they [the U.S.] do not give up the criminal…then we shall do whatever is necessary.” Khomeini had received his wish- a direct confrontation with the “Great Satan,” that would last over 440 days and cost the lives of eight U.S. servicemen in the aborted rescue attempt in April of 1980.