ABSTRACT Who Whispers in the King's Ear, for How Long, and to What Effect? the Primary Hypothesis Guiding This Study Is That E
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ABSTRACT Title of Dissertation: TO WHISPER IN THE KING’S EAR: ECONOMISTS IN PAHLAVI AND ISLAMIC IRAN Ehsanee Ian Sadr, Doctor of Philosophy, 2013 Directed by: Professor Virginia Haufler Department of Government and Politics Who whispers in the King’s ear, for how long, and to what effect? The primary hypothesis guiding this study is that economists gain influence when the international resources they can deliver are valued and desired by the country’s political leadership; and economists lose influence when those resources are not valued or desired. Alternate hypotheses that consider the role of increasing complexity in international economic relations, epistemic communities, emulation, and economists’ political activity are also considered. These hypotheses are evaluated through a study of the experiences of economists in Iran under both the Pahlavi monarchy and the Islamic regime. Results indicate support for the primary hypothesis that economists are desired for their ability to signal competence and gain the trust of the international financial and donor communities. Surprisingly, especially in the Islamic Republic, epistemic communities of economists are also found to have been very successful in using moments of political or economic crisis to influence the worldview and economic policy preferences of political leaders. TO WHISPER IN THE KING’S EAR: ECONOMISTS IN PAHLAVI AND ISLAMIC IRAN By Ehsanee Ian Sadr Dissertation submitted to the Faculty of the Graduate School of the University of Maryland, College Park, in partial fulfillment of the requirement for the degree of Doctor of Philosophy 2013 Advisory Committee: Professor Virginia Haufler, Chair Professor Shibley Telhami Professor Karol Soltan Professor Margaret Pearson Professor Ahmad Karimi-Hakkak © Copyright by Ehsanee Ian Sadr 2013 To Allison and Ali Sadr who believed in me from the first breath. ii Acknowledgements My first expression of thanks must go to Professor Virginia Haufler, an exceptional advisor in every respect. Dr. Haufler always managed to administer the perfect cocktail of intellectual challenge, emotional support, and practical guidance needed at various stages of this project. Without her kind but firm mentorship I would have been lost trying to navigate the long-distance completion of the dissertation while also working and starting a family. Professor Shibley Telhami has been an inspiring example of a ferocious academic intellect combined with a passionate commitment to improving policy, particularly in the Middle East. I’m particularly grateful for his introducing me to the Palestinian Business Committee through which I’ve had the opportunity to observe the policymaking role of academics up close. Professors Karol Soltan, Margaret Pearson, and Ahmad Karimi-Hakkak also contributed in meaningful and multiple ways toward improving the final dissertation product. I am grateful for their patience with and many insights for improving a flawed earlier draft. During the process of researching the role of economists in Iran, I imposed upon many who were kind enough to share opinions, experiences, data, and contacts with me. I am particularly grateful to Dr. Mohammad-Hadi Mahdavian for facilitating introductions to a number of key players and to Dr. Alireza Qandahari for helping me access needed data and challenging me to think about my topic in new ways. iii The generosity of my in-laws in hosting me and entertaining two small and active children while I roamed Tehran doing interviews cannot be overstated. I’m also grateful to my own parents for, among other things, watching the kids, photographing records at the National Archive, editing various drafts, and instilling the confidence I needed to take on such a big project. It is to them that this dissertation is dedicated. And with my own little family, the children I full-heartedly adore, and the man I share my life with, I look forward to a new dissertation-free future. With you as my companions I can’t wait to see what happens next! iv Table of Contents Chapter One: Introduction and Literature Review ...................................................... 1 Why Study Economists? ......................................................................................... 3 The Ubiquitous Rise of Economists ....................................................................... 6 Explaining the Phenomenon ................................................................................... 8 International resources ................................................................................ 8 Economists as political interest groups ..................................................... 10 Functionalism ............................................................................................ 11 Epistemic Communities ............................................................................ 13 Mimetic Isomorphism ............................................................................... 16 Hypotheses and Variables Under Investigation .................................................... 17 Case Justification and Significance ...................................................................... 23 Background on Iran............................................................................................... 24 Data and Methods ................................................................................................. 32 Chapter Two: After the coup (1953-1961) .................................................................... 34 Iran’s first economists ........................................................................................... 35 Ali Amini .................................................................................................. 36 Ebtehaj ...................................................................................................... 38 The Shah and his economic team .......................................................................... 43 The Shah’s support falters .................................................................................... 46 Amini’s return ....................................................................................................... 47 Understanding the Shah’s support ........................................................................ 49 Chapter Three: The White Revolution, the Young Turks, and the start of the Golden Decade (1962-1969) ............................................................................................ 55 The White Revolution ........................................................................................... 57 The ‘Young Turks’ ............................................................................................... 62 The Mansur Government ...................................................................................... 63 Hoveyda ................................................................................................................ 68 The Technocrats .................................................................................................... 72 Understanding the Shah’s support ........................................................................ 78 Chapter Four: Boom and Bust (1969-1979) ................................................................. 84 The Shah and his Military ..................................................................................... 88 The Shah and his Economic Team........................................................................ 91 The Oil Boom ....................................................................................................... 92 Planning in an Era of Plenty 1973-1974 ............................................................... 95 Hyperboom 1974-1975 ......................................................................................... 98 The King is Displeased ....................................................................................... 102 Understanding the Shah’s relations with his Economic Team ........................... 104 Revolution ........................................................................................................... 108 v Chapter Five: Revolution, War, and Economists (1979-1989) ................................. 109 Initial optimism is crushed .................................................................................. 109 Islamic Economics .............................................................................................. 115 The First Development Plan is Defeated ............................................................ 119 Economists, Population Growth, and War .......................................................... 124 The First Development Plan and a New Team ................................................... 129 Economists in the Islamic Republic: Why the turnaround?................................ 132 Chapter Six: The Rafsanjani Years (1989-1997) ....................................................... 139 The First Five Year Plan ..................................................................................... 140 Beyond the Plan .................................................................................................. 143 Privatization. ........................................................................................... 143 Exchange Rate Policy ............................................................................. 145 Implementing the Plan—Initial Success ............................................................