OIL REVENUE AND THE MILITARISATION OF IRAN 99 factors are firstly the geopolitical position of the country, which could be exploited by its rulers and the coterie of collaborating bourgeoisie close to power as a rationalization for its aggressive military policy. Militarization provided a line of business in which this class could safely engage without a problem of a deficient effective demand, since the latter was to be provided by the state. On the other side, for the USA there were almost equally good reasons to persuade the Iranian rulers into an aggressive military policy. It filled partly the void in arms demand after the Vietnam war. It should be remembered that the arms industry had become one of the most active and powerful lobbies in Washington by the beginning of the seventies. Secondly from 1973 onwards, the policy also helped the US to get back a part of its own and other countries' dollar outflow against oil—the so-called recycling of petro-dollars. Certainly it helped reduce the stock of dollars amassed outside the USA. Finally the political clout that developed through arms sale was particularly desirable to the US in the case of Iran because of Iran's strategic position in relation to the USSR. Thus the interests of both sides matched. The actual executions were simpler than elsewhere because of the political nature of the regime, where agreements, treaties and contracts were almost unobstructed by public scrutiny and were the prerogatives of the domestic group which would benefit the most from them. However, once started, militarism acquired its own momentum. Thus later, when the growth rate of oil revenue fell, military expenditure continued at the expense of development. Also it introduced distortions in the economy by bidding up the prices of resources including labour appropriate to defence programmes out of line with their productivity. Finally the entire exercise did not result in self-sufficiency even in military terms. It led to only dependence on the supplying counties, especially the US. Nor did it foster a domestic defence industry which could help diffusion of technology and skill domestically and could lead in the ancillary sector growth in the country. *As a reward he used to distribute the confiscated lands of Khans (the local rubers) among his high-ranking army officers. During his period some sort of Latifuntism system of land ownership was introduced, and for the first time the army appeared as a powerful social stratem. 1. Iran Almanac, Echo of Iran (Tehran, 1977), p. 67. 2. K.R. Singh, Iran Quest for Security (New Delhi: Vikas Publishing House. 1980), p. 265. 3. SIPRI, 1982, p. 51. 4. K.R. Singh, n. 2, pp. 293.4. 5. Washington Post, 13 May 1977,