The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

Twenty Years of the "Islamic Republic":
Full Steam Ahead for Islamic Capital

Apr 2, 1999

The mullahs' fundamentalist regime has been in power in Iran for 20 years. For 20 years, what they call the "Islamic Republic" has been imposing a brutal dictatorship in the name of Islamic law on the entire population, women in particular.

This fundamentalist regime emerged after a period of extensive mobilization by the poor classes. They fought against the Pahlavi dynasty, whose reigning monarch, the Shah, was the main regional pillar of the imperialist order. Throughout 1978, the young people in Tehran and the country's main cities who started the revolt were joined by a growing number of older people. They fought with bare fists against the armed police and elite troops of the dictatorship. From the summer of 1978 onward, the working class joined the struggle using its own weapons – strikes which affected most of the country's industrial strongholds, particularly the big oil refineries in the South. February 1979 was marked by days of insurrection in the capital. After one provocation too many, the capital's population rose up, seizing any weapons they could put their hands on. The Shah had already taken flight. The poorer classes triumphed, arms in hand, amid the ruins of the dictatorship they had overthrown.

This victory should have belonged to the poorer classes. But they were robbed of it even before they had won it. For they did not have a political leadership that represented their class interests, neither during the rise of the popular mobilization nor in the crucial weeks at the beginning of 1979. All the groups, from the radical organizations, whose activists had often fought heroically against the Shah's dictatorship, to those groups claiming to be more or less Marxist, rallied to the "sacred union" which formed behind the Ayatollah Khomeini. Khomeini benefited from the considerable prestige he had won among the poor masses for his long opposition to the Shah. This allowed him to use their victory over the Shah as a springboard to power. He rose to power along with a religious hierarchy of the mullahs.

In reality, the religious hierarchy took over the Pahlavi's state apparatus. This hierarchy was socially linked to the "bazaris", a reactionary caste associated with trade and small-scale production, and formed the bulk of the traditional Iranian bourgeoisie. The mullahs had no intention of calling into question the social order. At most, like the bazaris, the mullahs aspired to a fairer distribution of the wealth amongst the various privileged layers, as well as between these privileged layers and imperialism.

The Consolidation of the Islamic Dictatorship

The "Islamic Republic" which emerged from this period of agitation and intense political mobilization in March 1979 immediately set about restoring order. This was no easy task since the mobilization of the poor classes continued for several more months.

The fact that the new regime succeeded in regaining control was partly due to the repressive expertise of the army and police force, which had scarcely been purged. Even the Shah's former secret police, the SAVAK, was involved – under a different name and with new figures in charge at the top, but with the same personnel.

But the regime had other means, better adapted to the explosive nature of the situation. First of all, this included the militia of Khomeini's Islamic Revolutionary Party (the "hezbollahi"), which was the only organization allowed to keep its weapons. It was put in charge of the most brutal operations. Various regular fundamentalist militias were also formed, most importantly the "Guardians of the Revolution" or "pasdarans," which fell under Khomeini's direct authority. These militias, recruited mainly from amongst the poor population, they were led by clerics. They were more loyal to a regime to which they owed everything than was the military caste. And since they were closer to the population, they were more capable of controlling it. Clerics set up "Khomeini Committees" in factories and neighborhoods to control and direct the population. They identified oppositionists, isolated them and planned their elimination.

Within a period of a few months the left-wing activists, whose organizations had tailed behind Khomeini, faced political censorship and the rise of semi-official terror carried out by fundamentalist thugs. These activists were reduced to illegality. They were imprisoned, tortured and in many cases executed. At the same time, the national minorities, including the Kurds, who had illusions that the overthrow of the Shah would mark a change of policy, very quickly discovered that the "Islamic Republic" was every bit as efficient as the Shah in imposing national oppression and repression.

But in order for the regime to carry out this policy, it had to take into account the feelings of the poor masses – their hatred of the Iranian and foreign profiteers – if only to divert them away from any action aimed against the social order.

So it spoke of the "social content" of Islam, and of its opposition to usury and capitalist exploitation (mainly that of the Western corporations). The regime promised labor legislation to match the aspirations of the "Revolution." But the laws they finally passed turned out to be even worse than those under the Shah. Above all, Khomeini took great care to maintain his image as a "defender of the deprived," as he put it. Naturally, this was mainly rhetoric. The regime assured the poor that they now had no need to defend themselves against their exploiters. Instead the clerics were supposed to take care of that for them.

The Islamic moral order was imposed as a universal remedy for all the evils suffered by the poor population, a universal response to its aspirations. In fact, it was a weapon used to control the population. Thus in the first weeks of the regime, Khomeini claimed that the requirement for women to wear the veil and the physical attacks by the "hezbollahi" against left-wing activists accused of spreading foreign ideas were a part of the struggle against the corrupting influence of imperialism and a return to Islamic values.

A fraction of the poor population probably fell for the mullahs' nonsense, for want of anything better. They also enforced the regime's orders in a more or less zealous way. But the regime had to stifle peoples' aspirations and channel the anger that the poor masses expressed during the struggle to overthrow the Shah. The regime therefore strove to offer targets for this anger. An area which presented no risk was the anti-American nationalist demagogy.

On November 4, 1979, Islamic student groups occupied the U.S. embassy, took 52 diplomats hostage and demanded the extradition of the Shah, who had taken refuge in the United States. Whether or not this move was initiated by Khomeini himself, he seized the opportunity and assumed full responsibility for it. The regime succeeded in using this "hostage crisis," which lasted 444 days, to solidify the population's support in the name of anti-Americanism. At the same time, it used this period to tighten its control over the state apparatus and the whole of society. During this crisis Khomeini had the "Islamic Constitution" adopted, although only 40% of the electorate voted. This reactionary text ratified Khomeini's absolute power as a supreme leader whose authority was placed above all elected bodies. It also institutionalized the role of the religious hierarchy in directing the country's affairs.

Above all, what allowed Khomeini to consolidate his regime was the war with Iraq. The Iraqi army entered Iranian territory on September 22, 1980, provoking a deep nationalist reaction. Volunteers flocked to defend what they saw as "their Revolution." Led by the pasadarans, poorly armed and often very young, these volunteers formed, alongside the regular army, an army of poor people whose ardor in combat enabled the regime to repulse the Iraqi advance and counter-attack. In the meantime, social life was militarized throughout the country. Any opposition to the war or regime was violently exposed as an act of treason in front of the poor masses, whose families provided the majority of volunteers and therefore of those killed in the war. In factories, strikes against the war effort were crushed. The regime brutally repressed opposition organizations, which quickly decimated their ranks. Thus, the wave of popular mobilization and enthusiasm which had begun in 1978 was finally stifled by two years of war.

Dictatorship and Nepotism

From the first days of the war, the religious hierarchy took over every level of the state apparatus and seized control of the state-controlled economic machinery. The state controlled a considerable proportion of the economy, including 75% of big industry. The property of many foreign companies, the monarchy and the bourgeoisie that had been associated with it had been confiscated.

Unable to appropriate this property individually, the mullahs found a way to appropriate it collectively. To run full-scale economic empires they formed large religious foundations which they claimed to be charitable or patriotic causes. These economic empires enjoyed numerous advantages: they did not pay any taxes and were virtually unaccountable to anyone. Thus, for example, the "Foundation of the Deprived" was endowed with the assets of 63 members of the royal family, while the "Corps of the Guardians of the Revolution" was assigned control of a large part of the war industries. Some of these foundations even succeeded in controlling the industry of entire regions, for example, the Abadan region where most of the country's oil refineries are concentrated.

The capitalists linked to the Shah's entourage, who had previously acted as intermediaries to the world market, were replaced by the caste of bazaris. But they did so with characteristic greed. And this was all the more profitable for them because they were linked to the religious hierarchy. Given the legal void left by the proclamation of the Islamic Republic, they were left completely free to fill their own pockets. In fact this backward caste of bazaris was content to live as a parasite and plunderer of the state-controlled sector, with the help of their religious allies.

The inability of Iranian industry to cope with the war effort led to a huge increase in the import of arms and of essential and industrial goods. Of course, despite the calls for a ceasefire and economic sanctions by the imperialist powers, there was no shortage of Western gun merchants to take advantage of the windfall. The result was that in 1984, Iranian imports had already exceeded the level from the time of the Shah. This became the source of fabulous enrichment, both for the bazaris and for their protectors.

Thus a whole complex network of influence-peddling developed based on the religious clans that controlled large cities, regions and administrations, as well as sections of the repressive machinery and the religious foundations' economic empires. This resulted in a vast system of corruption that benefited the religious hierarchy and the bazaris. At the end of the war, a former member of Khomeini's Council of the Revolution, the economist Ezzatollah Sahobi, drew up a balance sheet of the situation, on the basis of official figures. He estimated that the direct cost of the war to be 30 billion dollars, while another 100 billion dollars was "swallowed up by scandalous plundering, which no doubt concealed kickbacks, commissions and bribes of all sorts." At least as much, if not more than the war itself, this plundering contributed to the disorganization of the economy and the impoverishment of the population.

The religious clans that were formed competed with each other for power and all the benefits that came from that power. So long as the war went on, the iron discipline which had to be imposed on the population forced them to limit their rivalries to a silent struggle fought out behind the scenes. But as soon as hostilities ended in 1988, it took all of Khomeini's authority to prevent these rivalries from breaking into the open.

The Factional War

No doubt Khomeini was conscious of the dangers that this plundering created for the country, just as he was conscious of the risks of demagogic overbidding by rival factions. In any event, at the beginning of 1988 he declared his intention to create a legal and constitutional framework aimed at ending the interpretations of Islamic law which served as pretexts for all kinds of scheming. At the same time, he began to prepare for a new successor, starting by eliminating his previous designated, Ayatollah Ali Montazeri. Closely linked to the radical factions of the religious hierarchy, Montazeri had denounced mass executions of political prisoners and "serious errors in the conduct of the war and other affairs of the Islamic Republic." Montazeri was placed under house-arrest and his right-hand man was executed.

Khomeini, however, did not have time to implement his plan for reforms any more than he had time to designate a successor. His death in June 1986 was followed by a palace revolution. Ali Khameini, the president of the Republic under Khomeini, imposed himself as his successor. Khameini had a constitutional reform adopted which gave the state bodies primacy over the religious hierarchy in the administration of public affairs. This reinforced the prerogatives of the faction in power. At the same time it increased Khameini's personal power at the expense of the government. Then Khameini arranged for the election of his ally, Rafsanjani, as president of the Republic. However, the Khameini- Rafsanjani team did not benefit neither from the popularity of Khomeini nor the assent of the majority of the religious hierarchy. They were not seen as the uncontested leadership of the Islamic Republic, as Khomeini had been. Instead, they were seen only as the representative of one of several factions. From then on, struggles between rival factions took center stage and continued unabated.

The war was over, and other sources of income had to be found for the bazari profiteers. This led to the turn toward "liberalization," a move conducted cautiously because of the need to avoid any false step which might provide ammunition for rival factions.

Initially, the regime encouraged the import of Western consumer goods for the wealthier classes. This did not fit in very well with the strict Islam preached by Ali Khameini. But it was perfectly suited to the voracious appetite of the bazaris. And it certainly increased the regime's popularity among the urban petty bourgeoisie.

At the same time, those who advocated retaining wartime state control were ousted. In June 1992, all control over private investment was abolished. There were even plans to abolish the limitation on foreign participation in local companies, which had remained set at 45% since the days of the Shah. However, partly because of the outcry this provoked and partly because of the absence of foreign investors, this proposal was left on the shelf. During the campaign for his re-election in 1993, President Rafsanjani felt sufficiently strong to call for "better and more rational relations with the West" and "reinserting Iran in the concert of nations," to the great displeasure of the radical factions of the religious hierarchy.

Through this policy, Rafsanjani expressed the avid appetite of a bourgeoisie that saw huge potential profits in the normalization of relations with the western world and a possible influx of foreign capital. Neither the bourgeoisie nor the leaders of the Islamic Republic did not call into question the institutions set up by Khomeini, however. Above all, they did not want the dictatorship over the poorer classes or the regime's political opponents relaxed. This was especially important since in 1992 there was a wave of strikes and riots that had been provoked by the marked deterioration of the working class's living conditions brought about by sacrifices from the war and the initial forward rush of "liberalization."

A New Step in "Liberalization"

Once re-elected as president, Rafsanjani undertook a brutal policy of austerity designed to reduce the state debt and expenditure measures in order to make the country more attractive for foreign capital. State companies deemed unprofitable were closed and unemployment suddenly soared. After paying the price of the war and its consequences, and then the price of galloping inflation, the poor population was forced to pay, in advance, the cost of a wider opening up of the country to the world market.

By 1997, after four years of this policy, the economic situation of the population had worsened severely. The country's foreign debt had been reduced considerably. But inflation remained at 42% per year. Unemployment officially affected one-third of the population, and generally, to make ends meet, those with jobs were forced to hold a second job or to resort to dealings in the black market. The poor were not alone in being affected. The urban petty bourgeoisie had become increasingly angry over being barred from possible careers because the religious hierarchy held a monopoly position over all positions in state and associated bodies.

There was even growing discontent among the bourgeoisie, even though it was living very well off the state. They suffered disadvantages from a system based on cronyism which excluded many from the flow of profits, as well as the fact that the heavy bureaucratic machinery of the Islamic Republic created bottlenecks. Above all, the aspiring young sharks of the bourgeoisie were beginning to find that the religious hierarchy's control over big industry and the public sector was a major obstacle. Far from decreasing with "liberalization," the weight of religious foundations had continued to increase. Despite closing many unprofitable factories, in 1997, the "Foundation of the Deprived" controlled hundreds of companies in all areas of the economy. And it employed 50,000 people. Taken together, the state sector and the religious foundations controlled 85% of the gross national product.

While Rafsanjani had presented himself as a champion of liberalization and individual initiative, he had always been very careful not to call into question the power of the economic-religious clans. After all, his longstanding ally, Ali Khameini, was the leader of the military-economic complex controlled by the "Corps of Guardians of the Revolution."

Some factions of the regime sought to profit from the growing discontent. They adopted a modernist line and cautiously challenged the hierarchy's established factions. One of their spokesmen was Karbatchi, the mayor of Tehran, a former mullah. He had made a career in the upper strata of the state. In 1990 he moved into politics, and tried to make the capital a modern business center modelled on those in the West.

In the end, however, a former religious dignitary of the regime, Mohammed Khatami, succeeded in capitalizing on the general feeling of discontent. Not that Khatami's past cut him out for this role. During the war against Iraq he led the Joint Command of the Armed Forces, while running the propaganda machine of the war. Then, as a minister responsible for "Culture and Islamic Guidance," he had been responsible for the censorship of intellectuals. And yet these same intellectuals, especially the younger ones, seem to have provided Khatami with his most enthusiastic support. In the end, however, he might have benefited simply, and paradoxically, from the maneuvers inside the religious hierarchy which, in its pre-selection of candidates, left him in opposition to three notorious representatives of the clergy's most backward tendencies.

In any case, the election results, particularly the record 80% turnout, showed that a large part of the electorate had thought that this time they could use their vote to express their feelings about the regime. The fact that Khatami won 69% of the vote indicated their discontent quite unambiguously.

After this election, Khatami announced that his government would "restore public liberties within the framework of the Constitution and of Islam" and would oppose "any violation of freedom and of individual rights." But he immediately added that his electors had voted for the Islamic Republic and not for civic rights – thus reducing the first part of his speech to empty rhetoric.

From the moment Khatami came to power, economic "liberalization" was stepped up. In October 1997, foreign oil companies were invited to take part in the exploitation of the country's land-based oil resources (they had previously exploited only its offshore reserves, which are more costly to extract). At the same time, three free- trade zones were created, offering investors tax free operations for 15 years and the possibility for foreigners to export their entire profits in cash. In January 1998, the planned break-up of the state's electricity monopoly was announced, along with the privatization of the power plants and the end of this industry's state subsidies. In March, a plan to privatize 2,400 state companies was announced. In April, three petrochemical complexes were put up for sale. This was followed in July by 48 oil exploitation and prospection contracts.

The hunt for foreign capital was on. The only problem was that foreign capital was slow to respond. There happened to be no shortage of capital when it came to lending Iran the funds it needed to buy goods from abroad or to purchase new oil concessions or prospecting rights. But more than a year after their creation, the free trade zones had still only found 43 foreign investors, who had put up only 15 million dollars. And there were no offers to buy up privatized companies.

The Twists and Turns of American Policy

For the regime to obtain "the reinsertion of Iran in the concert of nations," as had been proposed by Rafsanjani in 1993 and Khatami in 1997, imperialism had to recognize it as a partner in the region, both on the political and on the economic level. And this meant that, as in the days of the Shah, American imperialism, the dominant player in the Middle East, had to agree to "reinserting" Iran.

This was a whole different matter.

American imperialism may not have systematically ostracized Iran, but the Shah had been its faithful ally, and his overthrow had inflicted a heavy blow on American policy in the Middle East. This blow had been made all the more crushing because it was achieved through a mass uprising. Of course, the anti-imperialist demagogy of the Islamic regime never extended to the cancellation of all the unequal treaties signed between the U.S. and the Shah. But the escalating confrontaiton during the hostage crisis was, for the U.S., an act which could not be allowed to go unpunished. The imperialist leaders needed to remind this part of the world that they were the only real masters. So they blacklisted the Iranian regime, at least for a limited time.

However for Washington the fact that the new regime practiced a brutal form of anti-communism in a part of the Middle East which physically bordered on the Soviet Union could only be considered positive. The mullahs reduced Soviet influence in the Middle East. Behind the flag of religion, they encouraged centrifugal tendencies in the adjacent Soviet republics. And with the consolidation of the Islamic regime, it became clear that the poor masses would be effectively contained – even more brutally than they had been by the Shah's dictatorship. So the regime had a number of characteristics which the imperialist leaders could only welcome.

To a certain extent, the attitude of U.S. leaders toward the Iranian regime was settled by the outbreak of the Iran-Iraq War. The war inflicted far harsher punishment on the Iranian population than diplomatic and economic sanctions against Iran ever could have achieved. That is why the imperialist leaders encouraged Saddam Hussein's warmongering. And why it is why the U.N. Security Council waited a full two years to call for a ceasefire, that is, it waited for the Iraqi advance to be pushed back and the positions on the ground to be returned more or less to the pre-war borders.

Imperialism did not want this war to bring about major border changes that could have set off all sorts of unpredictable chain reactions among the oppressed minorities in the region. Nor did it want a major change in the balance of power between the two countries. Besides, once the Iranian regime had made it through the early part of the war, it became clear that it had its state apparatus firmly under control and that it would take a new revolutionary intervention of the masses to overthrow it. Once this was established, it was in imperialism's interests to protect this regime from being shaken by any excessively crushing defeat.

Throughout this seemingly endless, bloody war, Western arms manufacturers supplied both sides, either openly or covertly. Western arms dealers were not the only ones involved. The Irangate scandal in 1986 revealed that the American secret services had sold thousands of anti-tank missiles to Iran, together with radar and spare parts for the U.S. aircrafts that had been bought under the Shah.

After seven years of war, imperialism judged that the punishment had gone on long enough, and that the war might develop into a major source of instability in the region. The imperialist leaders pushed hard. In application of U.N. Resolution 598, which demanded a ceasefire on both sides, the major powers sent their fleets into the Gulf. Iran was the main target of American missiles. Five Iranian warships were sunk. An Iran Air commercial jet with 290 passengers on board was shot down.

Once the war was over, the American leaders ostensibly continued their diplomatic boycott of Iran and their ban on American companies importing Iranian oil. Even though Iran indulged Washington during the Gulf War, by adopting a policy of neutrality rather than posing as champions of the opposition to American intervention in the Arab world, Washington was not convinced to change its policy.

Behind the scenes, however, American imperialism was playing a complex game. As soon as the war with Iraq was over, Iran was able to get loans from imperialism's financial bodies, such as the International Monetary Fund and the World Bank. Until 1994, the USA continued to be Iran's main trading partner. While U.S. oil corporations were not allowed to import Iranian oil, there was nothing to stop them from buying it to sell to other countries. In fact, in 1994 they bought 30% of all the oil produced in Iran. And nothing stopped American companies from selling their products to Iran. They supplied Iran with most of the equipment and vital spare parts to increase oil production.

Softening a Harder Line?

A turning point in American policy came in 1993 when Clinton adoped the so-called "double containment" strategy. It was decided to blacklist both Iran and Iraq and subject both to economic sanctions, in order to prevent them from becoming regional powers comparable to Iran under the Shah.

No matter what Clinton's intentions were, the policy was not applied until March 1995, with the sudden decision by the U.S. government to cancel a contract that the U.S. oil giant, Conoco had signed with the Iranian government. The administration invoked a report by the Israeli secret services claiming that Iran was developing an atomic bomb that would be operational within three years. But most likely Clinton's decision was largely motivated by party politics and the Republicans' attempts to win favor with America's Jewish electorate. In fact, Clinton chose to announce his intention to extend the commercial boycott of Iran at a banquet of the World Jewish Congress, surely no coincidence.

In any case, in May 1995 a decree by Clinton forbade American companies to carry out any commercial or financial operations with Iran. In the following year, a new law adopted by Congress decreed that any non-American company investing more than 20 million dollars per year (an amount which was doubled the following year) in Iran would be subject to American sanctions. Once again, in July 1997, a decree by Clinton reaffirmed the American blockade of Iran.

However, this change in policy by Clinton quickly led to protests among big U.S. companies, echoed by such important personages as Zbigniew Brzezinski, the former presidential adviser on national security. In an article published in July 1997, Brzezinski condemned U.S. sanctions, which he claimed only isolated the U.S. from its Western allies and handicapped American companies. Brzezinski demanded the resumption of unrestricted commercial relations with Iran.

Of course, the big European and Japanese companies were the main beneficiaries of the stiffer U.S. policy. In 1995, the French company Total, for example, had snapped up the contract lost by Conoco. Among the companies signing substantial contracts were British groups (Premier Oil, Shell, British Gas, GEC, Losmo), French groups (Elf, Total, Peugeot, Alsthom), Italian, German, Russian, Malaysian and even Canadian groups. There were no American groups, of course.

Up to now, the discontent of big U.S. corporations has not pushed U.S. political leaders to change their attitude. Of course, this is not because of their stated reservations about Iran. Clinton may call Iran a "terrorist state," but American imperialism maintains excellent relations with many such states, starting with Israel. And even though Washington cites Iran's "violations of human rights," it never complained about such acts in the past when they were carried out by the Shah. Nor does it currently mention such practices by its Turkish ally.

But U.S. leaders still have to find a way to reconcile several contradictory factors. Many Arab states feel threatened by the Muslim fundamentalism inspired by the Iranian regime. Israel is concerned by the recognition of a regime which enjoys real influence among Palestinians in its own territory, as well as in Lebanon. Then there are the problems posed by the future regional balance between Iraq and Iran. (Iran cannot be allowed to grow too strong with respect to a greatly weakened Iraq.) Finally, the interests of U.S. imperialism in competition with its rivals demand that any normalization should be dominated and determined solely by American economic and military power.

All of this is compounded by the personal political problems of Clinton himself, who is constantly threatened by moves by the Republicans who dominate America's legislative bodies to outflank him. All of this contributes to the apparent wait-and-see policy of the U.S. leaders. It took nearly six months for Washington to reply to the advances made by Khatami in January 1998 on CNN, the first interview of an Iranian leader on American television since the fall of the Shah. At that rate, the process of normalization may drag on for quite a long time.

An Explosive Social Situation

In Iran, meanwhile, the implementation of Khatami's reforms has inevitably led to violent resistance within the religious hierarchy. A whole section of the clergy and its clientele is directly threatened by these measures. The measures that may well follow are even more threatening. The dismantling of state-owned industries means the loss of positions of both power and privilege, as well as the possible loss of major profits for those who live off these industries. And this is even before any one has publicly raised dismantling the foundations and other economic bodies directly controlled by the religious hierarchy.

No doubt part of this hierarchy, along with their clientele, will find the means to hold onto their positions. Some may even emerge as new owners, either individually or collectively, of the privatized companies. But at best this will only be a minority of ythe hierarchy. The same goes for all the positions which the mullahs and their clientele occupy at all levels of the state apparatus and related bodies. Today the religious hierarchy still allocates these positions, but less than in the past. And its role may not last much longer if the forces which carried Khatami to power succeed in relegating the clergy to the margins of public life.

The factions that advocate maintaining the status quo are still a long way from being ousted from power. The year 1998 was marked by a long series of trials against newspapers, journalists and intellectuals for having merely mentioning ideas already formulated by Khatami in some of his speeches. Even though a newspaper was linked to the Ministry of Culture, its offices were still firebombed, and its director, himself a mullah, was arrested for publishing a reader's letter critical of Khomeini. There is also increasing repression by paramilitary groups linked to the most reactionary factions of the regime. Several oppositionists, including two leaders of the Party of the Iranian Nation (a semi-legal opposition party), were murdered, including two journalists known to be supporters of Khatami and a doctor, whose only "crime" seems to have been that he was Khatami's neighbor. The role of the state bodies in these attacks was underlined by the arrest in January of ten secret service "operators" accused of committing some of these murders.

Yet, apart from the economic reforms, Khatami's liberalization is just rhetoric. The fine speeches about individual rights do not prevent the continuing executions of the regime's opponents, nor the exactions carried out by the pasadarans and other thugs paid by the state. Meanwhile, political parties remain illegal. In fact, there is no guarantee that Khatami will take political liberalization any further. The path taken by the regime on the economic level is bringing it back, more or less, to where it had been in the days of the Shah. It may well maintain a dictatorial regime similar to that of the Shah. In that case, Khatami would merely need to ensure that the religious factions agree to the new state of affairs. This is not necessarily impossible since these factions do not actually aspire to a social order any different from that proposed by Khatami.

What could transform the situation is a new intervention by the poor masses. Since 1979, the conditions for a social explosion have been accumulating. The urban population has grown from 50 to 62% of the population. This is a very young population – 65% are under 24. And while it may lack political traditions, it has been steeled by an already long experience of repression. Officially one third of the active population is unemployed. Poverty is all the more severe because the institutions which in the early days offered a certain amount of relief to the poor, in the name of Islamic compassion, now serve only as an easy source of income for a whole bureaucracy of profiteers linked to the regime.

Since the beginning of 1998, there appears to have been an increase in strikes and demonstrations in poor neighborhoods. No doubt these are mainly defensive strikes against layoffs, late payments of wages and low wages, demonstrations against price rises. But given the systematic repression which the strikers have to face, they no doubt indicate a certain militancy.

As opposed to what happened in 1979, a direct intervention by the poor masses, behind their own banner and with their own class objectives will once and for all sweep away the reactionary remnants of the "Islamic Republic" and at the same time the no less reactionary prospect of a Khatami-style "Islamic capitalism."