By Parsi Zadeh
[The following article appeared in the May 30 issue of La Brèche, fortnightly newspaper of the Ligue Marxiste Révolutionnaire (Revolutionary Marxist League), the Swiss Trotskyist organization. The introduction to the article is by La Breche. The translation is by Intercontinental Press.]
In October 1972 Chinese Premier Chou En-lai received Farah Pahlavi, wife and empress of the butcher of Teheran, in the People's Republic of China for an official visit. On this occasion, Chou declared in the name of the proletarian government of China: "At the present time, under the leadership of his Imperial Majesty the Shahinshah Mohammed Reza Pahlavi, the Iranian government and people are working resolutely to safeguard state sovereignty, protect national resources, bring about a blossoming of national culture, and enlighten the country; and they have registered some success in this regard."
Thus would open an era of friendship between People's China and the reactionary Iranian regime, which despite that friendship would not cease its bloody repression against the revolutionists in its country. The article that we are publishing below on the role of foreign capital in Iran clearly reveals the mystifications that Peking's assertions about the self-styled "independence" of the Iranian regime were based on and shows that, contrary to Peking, a fusion exists between imperialism and the Iranian bourgeoisie, linked to imperialist capital.
Imperialist capital's domination of the peoples of the underdeveloped capitalist countries, which began at the turn of the century, has been increasingly intensifying during the past decade or so. The growing integration of the underdeveloped economies into the world market has facilitated the entry of imperialist capital into these countries and the export from these countries of the profits realized. Nevertheless, account must be taken of changes that have been going on for some time in the orientation of foreign investments.1 The case of Iran is a striking example of "the development of underdevelopment." In fact, since 1955, penetration of world capital into Iran has been growing ceaselessly; between 1955 and 1965, more than seventy foreign factories were set up in Iran. Capital imported in 1965 was six times greater than what was imported in 1955. By setting up mixed corporations foreign capitalists have gained control of the greatest possible number of branches of the Iranian economy with the expenditure of a small amount of capital.
To facilitate its penetration of Iran, international capital needed to set up financial institutions capable of making flexible the ebb and flow of capital (this apart from instituting a phony agrarian reform). It was especially after the August 19, 1953, coup that the Iranian bourgeoisiewhich was trying to link up with imperialist capitalsought to fill out the gaps. In 1955, the "law on attraction and protection of foreign investments in Iran" was passed. The benefits that this law extended to foreign capitalists can be summed up as follows:
1. Each year, after handing in his balance-sheet, the investor may export his net profits.
2. Complete exemption from taxes over a five-year period for any new factory established outside a 100- mile radius of the capital.
3. Exemption from customs duties of all imported machinery and raw materials.
4. Tax exemption for half the net profits of foreign industrial firms.
5. Guaranteed assurance to all foreign capitalists that they will be accorded all facilities for export of their profits and capital, and so on.
Linked to this law, and with the aim of implementing it, a "center for attraction and protection of foreign investments in Iran" was created; its purpose was to establish the necessary ties between foreign capitalists and the various ministries and to promote the establishment of foreign companies in Iran. In addition, in 1969 the Iran Bank for Industrial and Mining Development was set up; since its founding, its capital has risen to 400 million rials [about US$5.22 million). This bank plays an essential role in the growth of foreign investments in Iran. It is the intermediary between the Iranian market and world capital, and it orients the latter toward sectors that correspond to the needs of the imperialist countries. Another function of this bank is to control the country's foreign trade and industry (in line with the interest of world imperialism) by means of granting credits. Although officially controlled by Iranian capitalists, who hold 60 percent of the capital, the bank is in reality operated by the International Bank for Reconstruction and Development, the Agency for International Development, the Organization for Economic Cooperation and Development, and the ODIC.
The greater and greater demands of imperialist capital, rapidly rising since 1972, have given rise to new banking institutions. Toward the end of 1972 several world banks (on the initiative of the Iran Bank for Industrial and Mining Development) came to agreement on founding the Bank for World Investment in Iran (YESBA), which is based in London. These are the banks that participated in its founding: Bank of America, Bank of Tokyo, the German Central Bank, the Japan Industrial Bank, Midland Bank, the Société Général de Paris, the BPDMI.2 This bank's mission consists of granting short- and long-term credits to industrialists wanting to invest in Iran and of orienting the investments toward key sectors of the economy producing for the internal and regional markets.
The latest creation of this type is the Shahriar Bank, which was just founded with a capital of 5 thousand million rials.3
With the aid of the above-mentioned institutions, world imperialism is consolidating its hold on the Iranian economy, and through it on the Middle East market.
Where Does Imperialism Invest?
Since the 1953 coup d'etat, and especially since 1959, foreign investments have turned more and more to manufacturing sectors that produce for the internal, and even regional, market.4 In fact, the sectors that have "profited" from foreign investments since 1959 have been essentially industries necessitating a large capital investment, industries with a high productivity like chemicals, pharmaceuticals, assembly plants, mining, and rubber. The table below shows the development of foreign investments in strongly capitalist sectors.
[Table: Investments in Machine and Equipment Industry, 1963-68, not reproduced; see the scan]
Now, looking at the second table, one sees that the investments tend to flow ever more strongly toward sectors producing for the internal market and for the whole Middle East: rubber, pharmaceuticals, etc.
[Table: Foreign Private Investment in Iran by Type of Activity, 1965-1968, not reproduced; see the scan]
Finally, imperialist capital directs itself toward areas in which national investors invest the least. The third table shows that national investments flow rather toward construction.
[Table: Share of Imported Capital in Domestic Investment, machinery and construction, 1959 and 1968, not reproduced; see the scan]
Consequently, foreign investment flows toward the machine sector, for there "national investors" have penetrated only marginally. The results of this new tendency are on the one hand that production is growing in industries requiring heavy investments in capital (technologically advanced sectors)5 and on the other hand, as the fourth table illustrates, that a decline is developing in employment in the agricultural sector (due to the effects of industrialization on part of agriculture, accelerated pauperization of the poor peasants who are leaving the countryside, etc.), and this is creating unemployment among the peasants, who cannot be absorbed because of insufficient industrial employment.6
[Table: Percentage of Agricultural and Industrial Workers Among the Active Population, 1906-1966, not reproduced; see the scan]
Send the Profits Home!
The profits reaped by foreign firms set up in Iran are growing without end. ( The rate of profit stands at about 25 or 30 percent.) The tendency to repatriate these profits has been growing since 1960. As P. Salama remarked, "profits that are sent back home flow into productive activities based in other parts of the world." The fifth table shows the increase in profits repatriated (based solely on official reports of the "center for the attraction and protection of foreign investment in Iran").
[Table: Flow of Foreign Investments, outflow and reinvestment, 1956-1968, not reproduced; see the scan]
Sharing Out the Market
Up until the 1953 coup d'etat, the majority of capital investments in Iran came from Britain; British imperialism dominated the Iranian economy. Since then, American capital has penetrated more and more. Nevertheless, the share held by German, Japanese, French, and British capital is far from negligible. The sixth table shows the share held by each country (over the period 1963-67) in the total private investment in Iran.
[Table: Division of Investments by country, not reproduced; see the scan]
Now, since 1967 investments have grown enormously. Other countries, like Japan, joined in. Briefly, the development of participation by various countries since 1970 went like this:
In January 1972 a conference on American investments in Iran was opened in New York by Spiro Agnew. During this conference, American capitalists agreed to invest $543 million in Iran. Union Carbide invested in chemicals, American Metal Climax in the mining industry, Goodyear in rubber. As far as agribusiness investment is concerned, in 1971 Shell acquired a 15,000-hectare area in the Khoisistan region. In 1972 American capital was also invested in construction (of big hotels). Finally, the Cabot Corporation's contribution to the construction of a carbon factory ran to $10 million.
On October 15, 1972, a delegation of German capitalists arrived in Teheran. Among the "guests" were a representative of the Association of German Industrialists, the president of the administrative council of Weba, a member of the administrative council of Siemens, the director of the Benz factories, and finally, a member of the administrative council of the Deutsche Bank. By the beginning of 1972 capital invested in Iran by German capitalists had risen to 98 million marks, which represents 15 percent of German investments in Asia.
As for investment in agriculture, the agribusiness Basico works an area of 2,500 hectares in Ahvaz. One should also note the construction of an aluminum factory in Arak by the Basicodre company, the setting up of a Benz factory in Tabriz, the participation of German capital in the construction of the Berlin-Iran Chemical Company, etc. It is interesting to note that during the October 1972 Iranian-German negotiations it was proposed to the German investors that they produce commodities in Iran (at a low cost) for sale on the world market. These German investors declared that they would invest $240 million in the Iranian five-year plan.9
After their arrival in Teheran in November 1972, representatives of British capitalists (four members of the Confederation of British Industrialists) affirmed their intention of sinking big investments into heavy industry in Iran. In another connection, in November 1972 a consortium of English, French, and Belgian investors was set up with a view toward investing $300 million in the construction sector.
The first conference of Iranian-Japanese investors, at which a large number of Japanese capitalists gathered, was held in Teheran August 25-29, 1972. During this conference, it was decided to invest in petrochemicals, textiles, heavy industry, electricity, tire manufacture, naval construction, etc. The goal of future investments would be as high as $1.5 thousand million. Further, since 1971, Japanese capitalists have been participating in exploitation of the iron mines of Gol Gohar and Sangzagh in Kerman. They have also participated since 1971 in exploitation of the copper mines at Ghelen Zari (a $6 million share).
Japanese capital is especially active in the tire industry. In fact, the Japanese expect to monopolize tire supplies in the Middle East and export the products to Yugoslavia, Holland, South Africa, and Greece. Toward this end, the Japanese company Bridgestone is in the process of building a big tire factory that will cost 1 thousand million rials.
Protecting Imperialist Capital
In an interview granted the TLM on June 25, 1972, the shah of Iran declared: "In the West, one can insult a chief of state without incurring any great punishment.... But in the East, it is different. A single spark can trigger off a powder keg. This must be prevented... • Faithful to our international commitments for a good thirty years, we will remain oriented toward the free world. That is what I just told President Nixon. ... We are the first power in this zone and we intend to remain so. The West can only help us in this, even if it does not make our Arab neighbors happy."
In reality, in order to make imperialist investments as profitable as possible, in order to make sure that Iranian oil and labor power remain at the service of imperialism, it is necessary for the Iranian bourgeoisie to maintain "order" and stability not only in Iran, but throughout the Persian Gulf as well. To fulfill this mission, the Iranian regime needs more and more aid — political, financial, and military —from American imperialism and its European allies.
The nomination of Richard Helms, former director of the CIA, to be U.S. ambassador to Teheran; the holding in Teheran (April 23-25, 1973) of the conference of U.S. ambassadors and chiefs of diplomatic missions in the Asian countries; the furnishing of modern arms to the Iranian army7 — all these facts clearly reveal the intention of the United States: to make Iran the base of intervention against all revolutionary movements in the Middle East.
In this context, the task of Iranian revolutionists, after the many lessons of the struggles of 1963 and 1970- 71, is to define more clearly a revolutionary strategy and to forge the instrument necessary for the development of the anti-imperialist struggle and the socialist revolution in Iran.
Notes
1. In this regard, see P. Salama, Le proces du sous-developpement.
2. Keyhan magazine, October 19, 1972; Talash Revue, March, 1973.
3. Teheran magazine, January 23, 1973.
4. As opposed to English capital before 1953, which was invested primarily in oil.
5. Between 1962 and 1970, production in automobile assembly went from 1.5 million to 30 million metric tons; production of cement went from 53 million metric tons in 1953 to 2,577 million metric tons in 1970.
6. Most of the unemployed are directed toward unproductive sectors, which are being increasingly swelled; in Teheran it is shocking to see the growing number of people selling lottery tickets or watching over automobiles.
7. The March 13, 1973, Le Monde reported that according to the arms deal arrived at with the United States, Iran would pay for military material valued at 12 thousand million francs. Apart from the delivery of the most modern weapons, the contract also involved "furnishing" Iran with 300 American advisers for training the Iranian army.