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WEEKLY NEWSLETTER
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Iran
Index
Military expenditures under the shah were high and unpopular.
Even after the 1974 rise in the price of petroleum, a
disproportionately high percentage of the government's annual
budget was devoted to military expenditures. Iran's military
establishment occupied a special place, and the civilian
population, particularly in the rural areas, disapproved of its
privileged status. Despite the nation-building activities in which
the armed forces were engaged (especially in the area of
education), Iranian society in general never fully shared the
shah's commitment to a buildup that drained the treasury of scarce
resources.
Since 1980 the armed forces' budget has been prepared by the
Ministry of Defense (formerly the Ministry of War under the shah)
in consultation with the SDC. The latter is also consulted by the
Ministry of the Pasdaran in preparing its budget. In turn, the
prime minister, who is also a member of the SDC, submits the
completed package to the Majlis for debate, approval, and
appropriation.
In the absence of official data, the precise levels of military
expenditures are difficult to determine. Figures collected and
analyzed by the Stockholm International Peace Research Institute
for the 1976-83 period indicate a reduction in defense expenditures
from the equivalent of US$14.6 billion in 1976 to US$5.2 billion in
1983. Not surprisingly, the sharpest decline occurred in 1979, when
the revolutionary regime either canceled or postponed contracted
purchases. The most notable cancellations were the navy's six
Spruance-class destroyers and three Tang-class submarines. The air
force also canceled big-ticket items, including 160 F-16 fighters
and 7 Boeing E3A-AWACS aircraft. Admittedly, some cancellations
were caused by economic difficulties during the shah's last years
in power. With a reduction in Iran's oil revenues during the
1977-78 period, the shah reluctantly agreed to scale down ambitious
construction projects, such as the naval facility at Chah Bahar
(now Bandar Beheshti) on the Arabian Sea and the military
industrial complex at Esfahan.
Nevertheless, the revolutionary government abandoned many
military projects, not only because most were contracted with
American corporations such as Northrop and Boeing, but also because
the new regime's priorities were different. The Khomeini government
claimed to represent the oppressed masses and promised to provide
for their needs. To this end the government chose to reallocate
massive defense expenditures in other directions.
This trend was rapidly reversed, however, with the
revolutionary government's first war budget in 1981. Because
published figures are lacking, reliable estimates of Iran's defense
expenditures are difficult to make. For example, according to the
International Institute for Strategic Studies, defense expenditures
in FY 1981-82 may have been somewhere between US$4.4 and US$13.3
billion; if so, the latter figure would represent 41.6 percent of
Iran's total budget. By 1987 all defense expenditures, including
those of the Pasdaran and Basij and payments to the families of war
martyrs, may have totaled US$100 billion.
Iran's prerevolutionary defense budgets were high by the
standards of developing countries, and large expenditures for its
armed forces continued through the early 1980s. Despite the
outbreak of the war, Iran's gross national product
(GNP--see Glossary)
climbed from an estimated US$107 billion in 1979 to
US$158 billion in 1984. Military expenditures climbed similarly
from an estimated US$8.8 billion in 1979 to US$11.3 billion in
1984. The United States Arms Control and Disarmament Agency's
statistics indicated that military expenditures as a percentage of
GNP increased from 6.6 percent to 7.2 percent between 1980 and
1984. More significantly, according to some estimates, military
expenditures represented 19.7 percent of central government
expenditures in 1980 and 29.9 percent in 1984. By all accounts, the
impact of these large military expenditures on Iranian society has
been considerable.
The World Bank (see Glossary)
estimated that with almost
one-third of the annual budget allocated to the war effort, other
sectors of the economy, including education, health, and housing,
experienced sharp declines. Iran's revolutionary government,
however, rechanneled some of its military disbursements to the
nonmilitary population. For example, veterans, disabled veterans,
and widows continued to receive financial support from the
government. In rural areas, ad hoc procurement mechanisms were
rapidly put in place to feed and clothe the swelling volunteer
ranks. These activities created employment opportunities that
channeled government monies to the civilian population.
Ingenious as these steps were, the burden of defense
expenditures left some of Tehran's revolutionary promises
unfulfilled. Khomeini had criticized the shah's regime for
squandering Iran's assets by pouring a large percentage of oil
revenues into the military and denying basic services to the
majority of the population, but in some cases Khomeini was obliged
to do the same thing. It was true that after 1980, economic
conditions improved proportionately faster for the lower classes
than for any other group
(see War Costs
, ch. 3). Still, the
revolutionary regime was exacting great sacrifices from those who
could least afford it.
Data as of December 1987
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