An analysis of the impact of American arms transfers on political stability in Iran.

Abstract

During the decade of the 1970s, the United States sold more arms to Iran than to any other country. In spite of Iran's vast oil wealth, the billions of dollars spent by the Shah on arms aquisitions had a measurable impact on both the country's economy and its ability to maintain a steady rate of developmental growth. Iran has traditionally been regarded as a non-resource constrained nation. However, in the latter half of the 1970s Iran's trade surpluses dwindled, its foreign exchange reserves shrank, and government expenditures outran revenues. All of which indicated that Iran was becoming resource constrained. As such, the nation's tremendous defense budget proved to be an economic burden. Spiralling inflation, failing development plans and rising unemployment were the result. The people's rising expectations, brought on by the oil boom of 1973, were quickly replaced by a perception of relative deprivation. This prompted a linkage of various disenchanted groups within Iranian society who together formed the basis for Iran's civil strife in 1977-78, and the eventual downfall of the Shah.