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Iran: Reformer Treads A Narrow Path

Prague, 23 February 1998 (RFE/RL) -- Iran's President Mohammad Khatami has recently come to international prominence, by unexpectedly addressing friendly remarks to the people of the United States.

After nearly two decades of deep freeze between Iran's Islamic leadership and the United States, Khatami's comments made world news. The U.S. reaction was welcoming but cautious, with Washington saying it wants action, not just words, on issues like Iran's support for international terrorism.

Since then, nothing seems to have moved between the two countries. So was Khatami's overture an isolated spark, without connection to a broader policy? After all, little more than a week ago the Ayatollah Hassan Sanei renewed Iran's nine-year-old vow to kill British author Salman Rushdie for allegedly blasphemous writings. Maintenance of that vow is one of the key factors which keeps Iran isolated from the broader world community. At the same time, Sanei said the reward for killing Rushdie might be raised beyond the present $2.5 million, and he coupled the threat with new anti-American invective.

Another negative sign is that according to a recent report (January 23) from the Iranian opposition, Iran's spiritual leader Ayatollah Ali Khamenei has moved to increase the resources available to the Organization of Islamic Culture and Communications. That's one of the regime's main bodies responsible for implementing fundamentalist policies abroad and supporting organizations linked to terror.

The opposition report has not been independently confirmed. But in any case these and other events indicate that Khatami's power to change Iran's course is severely circumscribed by the fundamentalist elements grouped around the clergy. His credentials as a modernist and reformer are genuine, however. A sophisticated thinker and one of the few Iranian leaders who has lived extensively abroad, he has on several occasions spoken of the ineffectiveness of terror as an instrument of foreign policy.

His appointment of a woman, Masoumeh Ebtekar, as Iran's vice president may be another break with traditional thinking. Ebtekar, however, does have an anti-Western background, having been a spokeswoman for the activists who took over the U.S. embassy in Teheran in 1979.

Khatami and his reform supporters, who include influential former president Akbar Hashemi Rafsanjani, and the Mayor of Teheran, Gholamhusqin Karboschi, can see Iran's urgent need to modernize and diversify its economic base. Little more than 8 percent of Iran's annual foreign earnings of some $12 billion comes from the non-oil sector. With oil prices down and its oil fields aging, Iran is going to be faced with a difficult situation in view of the country's sustained population growth. This was over three per cent annually until recently, meaning that the population would be set to double with every new generation. Already nearly half the population of over 67 million people is under the age of 15. Iran's demand for jobs in the years ahead will therefore be enormous, and without jobs' growth social stability will be at risk.

The youth of the population may be in itself a political factor, though it's hard to predict the exact impact of that. The young normally stand on the side of change and opening. However, those Iranians just reaching maturity now are the first generation to have grown up entirely under strict Islamic rule, and there is no evident sign of a youth cult of opposition to Islamic norms.

Standing in the way of rational economic growth and free market mechanisms are the big bonyads, the foundations closely linked to the clergy which were formed from assets of the Shah and the middle classes which fled with him at the time of the Islamic Revolution. These bonyads tie up much of the country's industrial capacity inefficiently, and Khatami aims to break off their assets and privatize them. But progress in this direction can be expected to be slow, and Iran is in the meanwhile saddled with inadequate economic growth. In addition, Iran's external debt is relatively high, somewhere between $22 billion and $30 billion, and inflation continues to be a problem. Inward investment has been seriously restricted, but not completely cut off, by the economic sanctions imposed by the United States. One London-based analyst of Iranian affairs estimates foreign investment into Iran running in the region of $1 billion a year, mainly from West Europe, particularly France, and the Far East.

Given the scale and mix of the problems facing Khatami, it's unclear whether he will yet be able to make much progress in modernizing and liberalizing Iran. On the one hand, the conservatives appear able to override his desire to open towards the United States. On the other hand, the country's economic problems show no sign of being solved easily or soon.