15-Year-Old Iran Regime Has Little to Celebrate : Mideast: The economy is a shambles. But Tehran’s Islamic government is squabbling over foreign videos, pornography and proper women’s clothing.

On the 15th anniversary of Iran’s revolution, the austere Islamic republic has less to celebrate than at any time since Ayatollah Ruhollah Khomeini forced the shah to abandon the legendary Peacock Throne, according to U.S. officials and Iran experts.

For years, Khomeini’s revolutionary regime faced its primary challenges from abroad: the war with Iraq, diplomatic isolation imposed by the United States, economic sanctions from the West, the disdain of the Arab world.

Now Iran’s problems are largely internal.

With the economy a shambles, the government is squabbling over such distractions as foreign videos, pornography and proper women’s clothing.

“There’s no mortal, external threat to the revolution,” said a Clinton Administration official who asked not to be named. “The greatest destruction is coming from within.”

The mounting internal tension erupted during commemorations at Khomeini’s tomb last week when five shots were fired in what Tehran radio later called an assassination attempt against President Hashemi Rafsanjani.

Yet Iran has spurned repeated opportunities over the last year to take steps--including improving diplomatic and trade relations with the West, particularly the United States--that might help ease its problems.

Relations between Washington and Tehran have turned colder after what had looked like a thaw at the end of the George Bush Administration.

Rafsanjani’s regime is believed to be well-aware of its plight. But for all its initial interest in repairing international relations, it has hesitated for fear of backlash at home.

When Rafsanjani was elected president after Khomeini’s death in 1989, U.S. diplomats viewed him as a pragmatist who favored loosening Iran’s strict Islamic rule politically, economically and socially.

In 1989, and again after the 1991 Persian Gulf War, when Iran remained neutral and then helped win release of U.S. hostages in Lebanon, Rafsanjani gave American officials grounds to hope for improved relations.

They expected him to move toward political, economic, social and diplomatic reforms after purging Khomeini’s die-hard followers from Parliament in 1992.

Many hard-liners were, indeed, driven from office. But they were replaced by social conservatives who had little use for reforms. Rafsanjani’s maneuvering room was further circumscribed last year by the narrow margin of his own reelection.

Analysts are now pessimistic that Rafsanjani’s second term--and his final one, under Iran’s constitution--will feature significant openings in either domestic or foreign policy.

“The political base of the regime is now very narrow,” said Shaul Bakhash, a professor at George Mason University in Virginia. “To keep this base happy, the regime must appear radical on international issues and Islamically correct on social issues like women’s dress and Coca-Cola.”

Part of the problem faced by Rafsanjani is known in Tehran as the “Gorbachev syndrome”--the land mines that await leaders who try to introduce a little reform into authoritarian countries.

Soviet leader Mikhail S. Gorbachev “made concessions that were intended to reform communism, not scrap it. But in the end he lost everything,” said Geoffrey Kemp, a National Security Council staffer in the Ronald Reagan Administration. “Even Iranian pragmatists are afraid that, if they make concessions, reforms will never be enough and will instead open up a slippery slope. They’re obsessed with fear that the whole idea of a modern Islamic republic will collapse.”

Iran’s economy--depleted by the prolonged war with Iraq, a birthrate that has nearly doubled the population in 15 years and rampant corruption and mismanagement--is a mess.

Inflation has reportedly reached almost 100% a year, while unemployment and underemployment are soaring. Middle-class workers, forced in the last five years to work second jobs to make ends meet, are now taking on third jobs. Up to two-thirds of Iranian factories run at limited capacity, with raw materials in chronic shortage.

Two years ago, Iran’s Majlis, or Parliament, passed laws to make Iran once again inviting for foreign investment.

Although some of the new laws are even more favorable to foreigners than those in effect during the shah’s Western-oriented regime, they have failed to lure significant outside interest.

Meanwhile, the drop in world oil prices has led to an estimated 20% budget shortfall for the Islamic year ending in March, according to Iran’s Oil Ministry. The resulting cash-flow problem has increased the difficulties of gaining access to the credit necessary to buy foreign consumer goods.

Economic woes have, in turn, forced the government to propose reductions in subsidies for gasoline and other necessities--moves criticized in both Parliament and the press and likely to hurt the regime’s power base among the poor.

While the economy has collapsed, the Majlis, once the engine of revolutionary action, has passed no major legislation. Instead, tangential issues have dominated the agenda.

After years of a thriving black market in videos, for example, the Majlis last year finally allowed foreign videos. The government went into the business of dubbing movies in an attempt to control content, and it allowed the death penalty for repeated convictions for distributing pornography.

The Majlis came down hard when state-controlled Iranian television, which is run by the president’s brother, tried to introduce more entertainment and foreign shows.

Late last year, it condemned Iranian television for showing “Billy Budd,” a 1962 film based on a Herman Melville novella about an 18th-Century seaman who is court-martialed for killing a sadistic master-at-arms. The criticism was based on the characterization of Budd as highly moral, even though he was implicitly illegitimate.

Despite all its problems, the regime still faces no internal opposition force capable of ousting it, American officials say. And the regime still likes to blame the United States for its woes.

Just last month, Rafsanjani declared that Washington had “lost the game” of trying to topple the Islamic republic.

“We have been exposed to a very dangerous propaganda plot engineered by arrogant powers, particularly America,” he said in a sermon at Tehran University.

But Iran is now “out of danger,” he said. “We’re in need of practically nothing with regard to defense. . . . Iran has reached a state of stability, and they can no longer do us harm.”

But American policy has grown less intent on manipulating Iran, Administration officials contend.

“Since the hostage period, we have come of age in a difficult area. We no longer believe we can play games inside the country to strengthen one wing or weaken another,” an Iran analyst said.

The Administration is now pursuing a strategy of “enhanced containment,” focusing only on the actions and policies that concern Washington.

Most notable are Iran’s opposition to the Middle East peace process and its support of extremist groups, both Islamic and secular.

In accord with that strategy, the Administration has banned the sale to Iran of any goods that might have military uses. And Iranian goods may not be sold in the United States.

Yet the door is not completely shut.

U.S. oil companies are now the biggest buyers of Iranian oil. Since they can’t bring it home, they sell it outside the United States.

U.S. exports to Iran--consumer goods, oil equipment and other non-military material--climbed from $60 million in 1989 to $750 million in 1992, according to the Commerce Department.

Kemp, the Reagan Administration official, said the Clinton Administration had adopted “a realistic approach to Iran that calls for a dialogue. Iran has rejected that call. And it’s highly unlikely that Tehran will be able to change its policy on that count anytime soon. It’s a unique situation where we’re so used to the United States not talking to people. Now it’s the other way around.”