The Dark Horses of 1994: IRAN / Big debt worry for ayatollahs

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FOR A FEW moments in the spring, Iran was corralled with its neighbour Iraq by the United States within a special category of vilification, for which was conjured up a new policy of 'dual containment'. Iran was a threat because of its rearmament programme, its nuclear aspirations and its cosiness with unloved regimes in North Korea and China. 'Dual containment' was shortlived, however. Iraq remains shunned and isolated; Iran, though treated warily by the United States, enjoys some relations, however tense, with most Western countries. And since the end of the Iran-Iraq war in 1988, Iran's reconstruction has provided opportunities for Western companies for sales of manufactured goods and large turn-key projects.

Iran is paying the price for its enthusiasm for Western consumer goods. A spending spree from 1990 to 1992 has left it billions of dollars in debt. The fall in income as oil prices tumble, the credit squeeze, curbs on imports, price increases, falling value of the currency, the rial, lack of jobs and rising expectations 14 years after the Islamic revolution, all pose potential dangers for the government. But apart from a few demonstrations over housing, which the government put down in characteristically brutal fashion, the regime is under little pressure. Opposition to the policies of President Ali Akbar Rafsanjani remains muted, since no viable alternative presents itself. The main opposition is within the regime itself.

The economic crisis is likely to make Iran more pragmatic in its dealing with Western countries and creditors, rather than less. It has improved ties with the Gulf Arabs and established high-level contact with Iraq. Yet Iran is still demonised in some quarters for exporting Islamic revolution. The Green (Islamic) Peril is said to have replaced the Red Threat. Egypt, Algeria and Tunisia have all pointed the finger at Tehran, and - without producing evidence - accused it of backing the Islamic regime in Sudan.

Iran's capacity for mischief can never be underestimated. Most of its targets have been Iranian dissidents abroad. Hardliners seldom lose an opportunity to berate the West for its policies over Bosnia. But the authorities are now moving to appoint a new grand ayatollah as marj at- taqlid - one who through his learning and probity is qualified to be followed on all points of law and practice by the majority of Shias.

With the death of the last great Shia divine, Grand Ayatollah Syed Muhammad Reza Golpayegani, the Iranian authorities are trying to appoint a man who would combine the functions of both religious and political leadership. This would have reverberations beyond Iran in Shia communities in Iraq, Lebanon and the Indian subcontinent.

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