revolution, the Shah ordered commercial banks to cease giving financial assistance to those in need of housing, but rather use that money in more “productive sectors” (Parsa 78). By 1977 and estimated 35,000 families were homeless within Tehran and as a result shantytowns were erected to provide these families with housing. The most indigent members of Iranian society were forced to pay exorbitantly high prices for black market
21 supplies. Additionally, drinking water was provided at a criminal rate by private companies, a rate seventy times that of Tehran. “Eighty percent of the city budget was allocated to provide services for wealthy inhabitants of northern Tehran, shantytowns lacked running water, electricity, public transportation, …” (Parsa 78). The healthcare and education systems were equally ineffective and corrupt, leaving those in dire need of such services utterly bereft of both. The Shah’s policies of high state intervention and modernization had a substantially deleterious effect on the Iranian society. These policies created a visible gap within society and only furthered the polarization of the various social strata against the state. Pre-revolutionary Iran was comprised of three distinct Irans, all of which were uniquely affected by the Shah’s policies. The first Iran was, “… that of the rich, of the western educated and oriented… It was the Iran that the Pahlavis wanted the world to see and accept. The second was that of the middle class and of the educated, anti-shah dissidents… The third Iran was unknown and mysterious except to those who composed it… It was the powerless and innocuous Iran that supposedly posed no threat to anyone… Iran of the mosques, takiyes, flagellation processions… Shi‘i in religious predilection… unhappy about the penetration of Western culture and gradual decline of Shi‘i values…” (Milani 26-27). The Shah pretended to not notice the existence of the blatant and ever increasing disparity between the three social classes and believed that an increase in modernization policies would remedy the growing disparity and discontent within Iranian society. “The more doses of these policies he injected in the body politic, the more explosive the political atmosphere became, paving the way for the coming of the Islamic Revolution” (Milani 105).
22 The end result of the Shah’s various modernization and reformation policies was a slowly declining economy that culminated in an economic crisis. The Iranian economy was heavily reliant on the world economy because of the Shah’s reliance on foreign investment, particularly in the oil sector. The initial economic difficulty stemmed from the fact that, “… Increased oil income created a crisis in revenue absorption. The rapid growth of the oil industry was not matched by expansion in other sectors, especially production sectors. Therefore, the economy could not absorb the increased oil revenues, and the result was rising prices” (Parsa 82). The Shah and his regime did not anticipate