The Islamic Republic of Iran is going through a crucial phase in its development 1 7 years after the revolution. Having carved out a niche for itself in a generally hostile world it is now having to demonstrate it can reach a viable and permanent accommodation.

Attention in Iran and abroad since the 1979 revolution has tended to focus on efforts to cope with war and a succession of economic and political crises. In the latest chapter. an external debt crisis w as averted by negotiating rescheduling agreements and resuming timely payments as of 1996. On the political front, the fifth majlis was constituted despite open divisions.

The economy is still a long way from normality, particularly for the majority of the population suffering from high inflation.

And the political establishment still has to negotiate the sensitive run-up to the presidential election of 1997. Tehran also faces mounting sanctions from the US and has yet to complete pain ful economic reforms.

However, many in Iran are looking beyond crisis management to more fundamental issues and attitudes, in order to resolve contradictions and clear the way for full development. The initiative lies essentially with the country’s religious institutions and personalities. Also being watched as pointers to the future are economic experiments such as free zones.

The Shia mosque in Iran has been going through a reformation since the revolution.

The religious leadership, long accused of retreating into an unreal world dominated by ritual, has had to deal with issues of real substance since 1979 and to come up with practical answers Without much fanfare the religious institutions led by the conservative seminaries of Qom, have expanded their horizons and encouraged new mechanisms dealing aith the issues of the day. Because there is an Islamic republic, the clergy are having to define Islam in more practical, even pragmatic, terms.

Some specialised institutions are pushing interpretations to their ideological limits. A few are working up to a radical rethink. Such is the scope of the transformation, that it is reasnable to predict that the Shia mosque might be unrecognisable in just a few years time.

On the fringes of the economy, an experiment with free zones appears finally to have taken off The Qeshm island free zone has since early 1995 become one of the country’s most active regions. Hundreds of investors are going in, and, even though very few are foreign and there are lingering legislative problems, Qeshm appears to have built up an unstoppable momentum.

In this report, researched in Iran in April, Vahe Petrossian looks at some of the people, places and processes that are changing the face of the Islamic republic.