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RustyHunter

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May 9, 2019
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An Introduction to Modern Iran

Since antiquity, Iran had been one of the great empires of the world. While they had been subjugated multiple times, the Iranian people had not lost their ways and eventually grew strong again. However, Iran began to fall behind much of the Western world, unable to develop a strong state. This became most apparent in a series of wars between Iran and the Russian Empire in the early 1800s. The entire Caucasus was lost to Russia, marking the beginning of Iran’s time of troubles.

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Territories lost over the course of the 19th century

Over the course of the 19th century, Iran would grow weaker thanks to a succession of ineffective monarchs of the Qajar dynasty. Initial attempts to reclaim Herat, a former Persian city, were crushed by the British, bringing a second great power into the region. The Russians and British slowly spread their control over Iran, eventually dividing the country in half. The Russians held sway over the north while the British held sway over the south. However, Britain controlled most of the Iranian economy thanks to numerous concessions they had been granted. Iran was effectively a colony in all but name, formally independent only because Russia and Britain did not trust each other enough to formally divide the country.

By the turn of the century, the Iranian upper and middle classes had become thoroughly disenchanted by Qajar monarchs. The shahs regularly sold concessions to Europeans, using the money to fund trips to Europe, extravagant palaces, and other luxuries. By 1906, the merchants, religious leaders, and some nobles forced the Shah to create a constitution and a legislative body, the Majils. His power was substantially limited, and various rights were formally declared. Within a year, the Shah had died, and his successor rescinded the constitution, provoking a civil war.

After a two-year war, the Shah was forced into exile and his eleven-year-old son was elevated to the throne, restoring the constitutional government. However, the government struggled to improve conditions due to the chaos of the civil war and was largely ineffective. The government brought in an American financial expert to help them reform government finances, which the Russians strongly objected to. After issuing an ultimatum to fire the American, Russian troops marched on Tehran, stopped only by a tribal coup that was more receptive to Russian demands. This effectively ended the brief constitutional era and continued the erosion of the country.

When the Great War broke out, Iran proclaimed its neutrality, but this was a meaningless measure. Russian garrisons had been stationed in the north for years, and the Ottomans quickly invaded as part of their campaign against Russia. By the end of the war, the entirety of western Iran had become a warzone as the British and Russians battled the Ottomans.

Iran was devastated by the war, losing hundreds of thousands of people thanks to famine, battles, and disease. Additionally, the British and Russians had all but occupied the entire country, with the British even raising a colonial unit (South Persian Rifles) to defend their interests. The Russians and British had planned to formalize the division of the country, but the collapse of the Tsarist government ended those plans. Instead, Britain was left as the sole force in the country as a vacuum formed in the center and north.

Initially, British forces used Iran as a base to support White Russian forces against their Bolshevik enemies. However, as the Reds’ position improved, British support dwindled. Unfortunately for Iran, the Bolsheviks invaded and started creating Soviet republics in the north. The government had totally failed at this point, controlling only Tehran and its outskirts. It appeared that the Soviets were going to march on Tehran and topple the government, or perhaps Britain would formally create an Iranian colony to secure India.

Instead, Reza Pahlavi and his Cossack Brigade marched on Tehran, installing a new government. Reza was an unlikely conqueror, born of a mid-ranking military officer and orphaned at eight months old. He spent his childhood with his uncle’s friend, an officer in the Cossack Brigade, and enlisted at age sixteen. His intelligence shone through, and he gradually worked his way up the ranks. He proved especially adept with a machine gun, a rare skill in Iran, and was promoted accordingly. By 1915, he was a colonel and commanded a battalion of the Brigade, earning recognition as a skilled leader.

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Reza Pahlavi operating a machine gun

General Edmund Ironside, commander of the British forces in Iran, was deeply concerned by the Soviet threat to Tehran and held a meeting with Reza. Greatly impressed, Ironside promoted Reza to command the entire Brigade and supplied the Iranians with weapons. Shortly after, Reza would take his new command and install a new government in Tehran with himself as Minister of War, Commander-in-Chief, and commander of the Cossack Brigade.

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General Ironside in Iran

Whether Ironside directly encouraged Reza Pahlavi to march on Tehran is open to debate. He might have seen a capable military leader that could give the Iranians backbone and allow the British to depart without sacrificing the country to the Soviets, or he might have suggested Reza create a new government friendlier to Britain. Regardless, the new Iranian government quickly negotiated peace with the Soviets while Reza and his men set out to crush various rebels, separatists, and communists across the country.

The Persian Cossack Brigade was formed in 1879 after the Shah saw Russian Cossack units and was greatly impressed. Russian officers commanded the Brigade while the rank and file were recruited from Caucasians and Iranians. Together with the Gendarmerie commanded by Swedes, the Cossack Brigade was the most effective force in Iran and regularly determined who would rule the country. Since the officers were almost entirely Russian, the Brigade either acted on orders from Russia or the Shah since they were often aligned.

During the Great War, the Brigade was expanded to divisional strength and assisted Russian forces stationed in northern Iran, seeing some action against the Ottomans. When the Russian Civil War broke out, most of the officers left to join the White movement, leaving Iranians to fill their vacated positions. In 1920, Ironside removed the last Russian officer and made Reza Pahlavi brigadier general, the first and only Iranian to command the Brigade. He then used the Brigade to establish a new government, crush rebels, and eventually unify the state under his control. Shortly after his coronation, Reza Shah would break up the Cossack Brigade, using it as the core of a new Iranian army. Many of the Brigade’s officers were given key positions in the new government due to their close relationship with the Shah, ensuring the unit’s legacy lived on long after its dissolution.

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Soldiers of the Cossack Brigade in 1920

In 1923, Reza Pahlavi had concluded his campaigns in the north and returned to Tehran, where he was quickly made dictator. The reigning Qajar shah fled to Europe but remained the official head of state. A new government, composed of Western-educated reformers and ambitious technocrats was formed, determined to modernize and strengthen Iran. During this time, Reza Pahlavi worked to establish a republic, just like Ataturk in Turkey. However, the clerics and British were strongly opposed to the plan, insisting that Iran needed a shah.

In 1926, Reza Pahlavi was crowned Shah of Iran, taking the name Reza Shah Pahlavi. The illiterate private had climbed all the way to the throne, rising far beyond anyone’s wildest imagination. However, the Iran he inherited was incredibly weak: almost ninety percent of the population were farmers or herders; further, twenty-five percent were part of a nomadic tribe while only twenty percent lived in a town. The economy was almost wholly undeveloped, largely consisting of subsistence farming. There were no railroads or factories in the entire country, and only a few hundred kilometers of paved roads. It was as if the 19th century had passed Iran by.

Reza Shah threw himself into the task of reforming the country with great energy, determined to create a modern, industrial Iran that would be respected on the world stage. Despite effectively starting from scratch, his government made great progress in the first ten years after his coronation, bringing Iran to a semi-modern level and placing the country on track to develop even further. Reza Shah had much to be proud of, but his work had only begun as 1936 opened…

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Note: Welcome to my newest AAR for HOI3. I am once again using the HPP mod, but it has now updated to 3.4.0. I have also added a few small things of my own for the purposes of this AAR which I'll address further when we get there. I know some people were hoping for a larger country, ideally in Europe, and I promise that will still be coming at some point. I've had this AAR in mind for a while, and I had actually started compiling some ideas and research about a year ago. Most of what I had done was backed up, so I didn't lose it like I did for my China AAR. I'm also backing up my files much better than before so hopefully things go better this time around!

As far as Iran, I've wanted to play as them for a long time. They're one of those nations that have an interesting history in this era, especially the fact that the British and Soviets invaded them out of pure convenience. I tried Iran in vanilla FTM many years ago and ended in abject defeat. The British decided to focus all their forces on me while delaying the Italians just enough that I was conquered as the Italians crossed the Suez and took the Middle East. The main problems I ran into then were poor research, insufficient numbers, and poor leadership. I think these problems can largely be alleviated by HPP, but that doesn't mean this game will be easier! Instead there is an event to prompt the British and Soviets to invade in 1941 which will be incredibly hard to deal with.

I hope you'll enjoy this possibly doomed AAR and learn something about Iran along the way. I know I've learned a lot, and it's really interesting to see how much of this era impacts modern Iran. I'm aiming for updates every two weeks or so, and I've got a bit of a stockpile built up for now. Thanks for reading this far, and I look forward to your comments!
 
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Frankly, I should not be subscribing to this as I've been deficient in reading the AARs I already follow as it is. However, this is a HPP AAR and therefore there is no question, plus it is by RustyHunter so quality and historical interest are assured.

I am curious to see how you handle Iran. On one hand, you have the benefit of foresight as the player and HPP does a fair bit to make minor powers actually playable without gamey exploits and Prepare For War cheese, notably research points are a bit less restricted for minors and rather more restricted for majors. On the other hand, the HPP-specific decision for Operation Countenance all but guarantees a rough time unless you can make a play to upset the diplomatic order ahead of time. Aside from player action, probably the biggest wildcard is how the situation develops in Europe - if the Soviets DoW Germany in 1939 or something strange like that, the landscape might change drastically.
 
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If this AAR is only half as well-written and researched than your China AAR, then we're in for a treat!
 
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Frankly, I should not be subscribing to this as I've been deficient in reading the AARs I already follow as it is. However, this is a HPP AAR and therefore there is no question, plus it is by RustyHunter so quality and historical interest are assured.
Thank you for the kind words! It wouldn't be an HPP AAR without your refined comments that spark good discussions.

I am curious to see how you handle Iran. On one hand, you have the benefit of foresight as the player and HPP does a fair bit to make minor powers actually playable without gamey exploits and Prepare For War cheese, notably research points are a bit less restricted for minors and rather more restricted for majors. On the other hand, the HPP-specific decision for Operation Countenance all but guarantees a rough time unless you can make a play to upset the diplomatic order ahead of time.
I'm fairly restricted by the diplomacy system just because Iran has very high neutrality, and there really aren't any obvious early expansion targets. Puppeting Turkey is the only one I could see working, but I'd need vanilla's Prepare for War to do that!

Instead, I'm hoping to take advantage of HPP's changes for minors, like you mentioned, that should help me have a much better army than in vanilla. I've also got one major diplomatic move that should help, but I'll save that for the next update!

Aside from player action, probably the biggest wildcard is how the situation develops in Europe - if the Soviets DoW Germany in 1939 or something strange like that, the landscape might change drastically.
That would certainly be exciting! Other thing that could be huge is how strong Italy is in North Africa. HOI3 seems 50-50 on who wins the Desert War, but I haven't played the newest HPP to know how that'll turn out.

If this AAR is only half as well-written and researched than your China AAR, then we're in for a treat!
Thanks jak! I hope you'll enjoy it, and I look forward to your comments as the gameplay starts.
 
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Thanks jak! I hope you'll enjoy it, and I look forward to your comments as the gameplay starts.
Gameplay? Gameplay?! You think we came here for GAMEPLAY?!? Bring on the historical asides, period-accurate maps, and semi-historical mechanized and armored brigade histories!! :p
 
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Gameplay? Gameplay?! You think we came here for GAMEPLAY?!? Bring on the historical asides, period-accurate maps, and semi-historical mechanized and armored brigade histories!! :p
I'm not on the level of @El Pip where I can craft updates from the ether! The gameplay is really just a mechanism to get to the asides, or at least that's what I'm counting on!

But it is Iran which has intrigued me since a child. It is @RustyHunter! Count me in. Thanks for the update and link.
I appreciate you following, even if it's not your favorite game. Maybe HOI3 will grow on you? Talking Turkey might have been the gateway drug...
 
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Ah, another HPP AAR... and Iran! I look forward to seeing where you go with this one as Iran is certainly an ambitious choice, and I have to say, one of those minors I've thought about playing a few times over the years but never got around to. Thanks for the thorough and informative historical introduction - I'm sure there will be plenty more of that to come - and I'm intrigued to see what you've added! You will probably also highlight quite a few details that ought to be corrected...

One thing I'm going to predict now is that the Shah won't be abdicating in this one! :D
 
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I look forward to seeing where you go with this one as Iran is certainly an ambitious choice, and I have to say, one of those minors I've thought about playing a few times over the years but never got around to.
It certainly is ambitious, and I wouldn't be surprised if I lose. They seem like a worthwhile minor to try, even if it all might end horribly!

Thanks for the thorough and informative historical introduction - I'm sure there will be plenty more of that to come - and I'm intrigued to see what you've added!
I'm glad you've enjoyed it! There will certainly be more to come, and I'll be curious what you think of my tweaks.

You will probably also highlight quite a few details that ought to be corrected...
Not too many really. HPP has done a surprising amount of changes for such a minor country, and the only problems I've found are things from vanilla.

One thing I'm going to predict now is that the Shah won't be abdicating in this one! :D
That is a very good prediction! I'd certainly like to avoid it if possible!
 
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Ahh Persia, a land rich in oil and history but one which struggles with pride and under-estimating it's rivals. You have set yourself quite the challenge.
I'm not on the level of @El Pip where I can craft updates from the ether! The gameplay is really just a mechanism to get to the asides, or at least that's what I'm counting on!
I was once of this view, but it is far easier than you might think to cast aside most of the game, particularly once it starts throwing up crazy results or impossible outcomes.
 
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It was a pleasant surprise to see you start another AAR, even more so to see it start with such a well-written bit of historical context. I'm excited to see where you will lead Iran during the tumultuous times ahead.
 
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You have set yourself quite the challenge.
Well you've proven that people will read an AAR doomed to inevitable defeat, so why wouldn't they read one that's 'probable' or 'more likely than not' defeat?

I was once of this view, but it is far easier than you might think to cast aside most of the game, particularly once it starts throwing up crazy results or impossible outcomes.
Point noted. Is that also when you descended into the glorious but mad realm of slower than real time, or can I do one without the other ;)

It was a pleasant surprise to see you start another AAR, even more so to see it start with such a well-written bit of historical context. I'm excited to see where you will lead Iran during the tumultuous times ahead.
Glad to see you check it out. I'm glad you liked the introduction and hope you'll enjoy the things to come. The next update should have a bit about trains, although not to your level of detail, so I'll be curious what you think of it.
 
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Just found this now - signed up, of course. Thanks for the entree, looking forward to the main course!
 
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Just found this now - signed up, of course. Thanks for the entree, looking forward to the main course!
Glad to have you along! We still have the obligatory setup of the game, but I hope I've spiced that up enough to be interesting.
 
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Part 2: The State of Iran
The State of Iran

Perhaps the greatest project that Reza Shah began was the construction of a Trans-Iranian railroad. This had long been a dream of Iranian reformers, but financial and political difficulties had prevented its construction until the 1930s.

Reza Shah’s government quickly brought in American engineers to conduct a survey, determining that a northeast-southwest rail line from the Caspian Sea to the Persian Gulf would be feasible. The route was largely chosen based on military considerations, not connecting to any neighboring rail lines. Most significantly, it denied both the British and the Soviets their desired lines. The Soviets would have preferred a line from their Caucasian territories to the Persian Gulf while the British would have preferred a line connecting Iraq and India. The Shah’s line also bypassed all major cities except Tehran and passed through nomadic tribal areas, allowing the government to extend its control deeper into the countryside.

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Determining funding was a much greater difficulty. Foreign loans would be the simplest solution, but the Qajar shahs’ history of taking out loans for personal indulgences had damaged Iran’s reputation abroad. This option was quickly eliminated, leaving only internal sources. Iran had no income tax at this time, but it was felt this would be too unpopular and almost impossible to enforce, leaving duties on imported goods as the only option. The government chose to levy a value-added tax on tea and sugar in 1925, raising the necessary funds over the next decade.

With funding secured, both German and American companies were brought in to begin work on the railroad. The Germans began on the shores of the Caspian Sea while the Americans started from the south. In 1933, Kampsax, a Danish firm, was hired to complete the remaining sections of the railroad. They had been doing significant work in Turkey and were highly recommended by Ataturk, swaying the Shah’s decision. A number of smaller foreign companies were subcontracted by Kampsax, each working on an individual section of the railroad. Major sections of the rail line had been completed by 1936, and the finishing touches were underway. (Note: In OTL, the railroad was not finished until 1938. I won’t be ordering anymore infrastructure after these finish, so we’ll have the railroad finish early instead.)

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The planned route ran into several problems during construction thanks to the inhospitable terrain being crossed. Several planned tunnels had to be rerouted thanks to softer rock than expected, while one tunnel encountered a cavern within the mountain and required a bridge built across it. Perhaps the most impressive feat was the Veresk Bridge, spanning 66m while being 110m above the valley floor. This bridge was built entirely from stone and had no steel frame within it despite the vast distance spanned. This was one of the tallest bridges in the world and was considered the centerpiece of the Trans-Iranian Railroad.

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There were some arguments that the route was not economically efficient, and it is undoubtedly true it was not the optimal route economically. However, the economic benefits were only one consideration of Reza Shah and his government. The line helped to connect the core of the Iranian state together and extended government authority into traditional nomadic lands. The Qajars had never managed to fully subdue the nomadic tribes which proved a constant danger to centralized rule, but the railroad allowed government authority to spread. It was also meant to demonstrate the new government’s modernity and give the Iranian people something to be proud of after a century of humiliation. Construction projects such as the Veresk Bridge were truly state of the art, a sign of the new government’s vitality.

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Reza Shah opening a rail line

By the beginning of 1936, the Shah had made major strides in developing Iran, as demonstrated by the Trans-Iranian Railroad, but much work remained. The high-profile and strong-willed reformers of the Shah’s first government had largely been removed, leaving a mix of competent but quiet administrators like Mahmud Jam, but also incompetents like Inoyatullah Khan Sami. That meant the Shah always got his way on matters of state, but how well these decisions were implemented could vary greatly.

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Iranian industry has been built up significantly since the coup of 1921, but it was still pitifully small compared to even the weakest European powers. 10 large factories had been built across Iran, with nearly a third of them centered in Tehran. Due to improvements in efficiency and skillful administrators, the 10 factories were operating at 110% effectiveness.

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Iranian technology was in an even more sorry state than the industry. Most technologies were at a Great War level or even earlier, outside of supply production, agriculture, industrial efficiency and production, and oil production. Iran did not even have the technologies to produce Great War infantry divisions or supporting regiments of artillery. Therefore, any new military formations would have to be equipped with foreign weapons.

The Imperial Iranian Military consisted of the Imperial Iranian High Command under Reza Shah, commanding both the Imperial Iranian Ground Forces (IIGF) and Imperial Iranian Air Force (IIAF). The IIGF consisted of one infantry division and three cavalry divisions, a humble force for such an ostentatiously named military.
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The IIGF could trace its lineage to the Qajar-era Cossack Brigade and Gendarmerie, with many of the officers being comrades from Reza Shah’s days in the Brigade. Despite the humble beginnings and questionable skill of its leaders, Reza Shah and his reformers had succeeded in creating a military loyal to the Shah, and through him, Iran. The Qajars had never succeeded in this, relying on the Russians to rescue them from disaster. The IIGF had not been tested in a war, but they had fought numerous tribal rebellions throughout the late 1920s and early 1930s, giving at least some familiarity with combat.

The cavalry divisions were only two regiments and didn’t have any supporting heavy artillery, AT guns, or AA. This had proven sufficient for police actions in the remote territories of Iran, but everyone recognized they would not fare well in a modern war. The infantry had three regiments as well as a battalion of Renault FT-17 tanks from the Great War. However, they were similarly lacking in heavier support equipment.

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The IIAF was equipped with a single wing of Hawker Hind light bombers purchased from the United Kingdom. These biplanes were relatively modern but were quickly being outshone by newer monoplane designs. Airbases, trained pilots, and trained ground crews were a significant limitation on the IIAF, leaving them unlikely to acquire new aircraft anytime soon.

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All the infantry and cavalry’s equipment were acquired from the British, making these divisions only a few years out of date. Unfortunately, the British had not been interested in selling more equipment to Iran; they only wanted to provide Iran with a military capable of suppressing tribal revolts, not one that could pose a threat to British hegemony.

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Much work had been done in the first ten years of Reza Shah’s reign, but the country was still significantly behind even the humblest of European powers. Iran’s three most important areas of further modernization were in industry, education, and the military. Unfortunately, Iran only had the resources to do one or two of these over the next five to ten years. The Shah believed modernizing both industry and the military were mutually exclusive as they required many of the same resources, but education could be improved regardless.

Ultimately, the Shah decided that the military and education should be improved first. No amount of industrial development would be worth anything if the military was unable to protect the factories, so industry would follow the military’s expansion. Education would also prove essential in providing the diplomats, officers, and bureaucrats necessary to truly turn Iran into a modern country.

With his goals determined, the Shah had then decided the budget for 1936, directing Iran’s limited educated classes to pursue several tasks:

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First, Iran’s existing officers would continue to train new recruits, but would receive no increase in funding. Second, a number of diplomats were put to work in reaching out to foreign countries. These men would be tasked with increasing trade, purchasing military equipment, and inviting Western advisors to help modernize Iran, all without antagonizing the British or Soviets. Iranian intelligence had received a much larger investment than usual, but it was only temporary. The Shah had decreed that the internal security apparatus must be expanded and modernized to limit covert foreign interference. Once this was completed, much of the budget would be shifted to other tasks.

Finally, the bulk of the budget had been invested into research endeavors. The first project was focused on improving the educational system in Iran. By establishing primary schools across the nation, the Shah hoped he could forge a common identity and develop skilled workers capable of modernizing Iran. (Note: It seems a little harsh that Iran doesn’t have any Ed. Techs researched. Historically, the Shah had built a number of schools, meriting at least the first level IMO).

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The second project focused on synthesizing the results of the Great War into a military textbook that could be supplied to existing officers and cadets. Both Iran’s experiences fighting the Soviet-sponsored rebels, as well as a more academic analysis of Western experiences would be synthesized. Once this was done, Iranian military theorists could begin to focus on more specific subjects such as training and doctrine.

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The Shah’s final decision was to align Iran more closely with Nazi Germany. The Shah did not wish to join Germany’s faction, but he did wish to buy modern military equipment from them. If the Germans felt that Iran was an ally or friend, they might be more willing to sell. Even more importantly, Iran needed a foreign nation to act as a counter against the Soviets and British. The Soviets and British prevented each other from acting aggressively in Iran, but neither wished to see a modern, prosperous Iranian state. In order to achieve the Shah’s dreams, Iran must engage with Germany and use their help to modernize the nation. Some whispered that this was a deal with the devil, but Reza Shah brooked no dissent…

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Note: I figured it would be nice to get the obligatory setup post out of the way. I hope there are enough historical tidbits to be interesting, and I imagine our resident rail enthusiasts might have something to share, which I'd enjoy.

Overall, I'd say HPP does a pretty decent job representing Iran. In fact, those infrastructure projects were added in 3.4.0, so somebody actually improved Iran! I will note that in 3.3.3 Iran was a developed nation, giving 2 LS, while in 3.4.0 it dropped to undeveloped, giving only 1 LS. I modded this back up to developed since 1 LS is too little to do anything, although in hindsight I should have given them 2 levels of Education Tech instead.

Also apologies on the low image quality, I'm not sure what caused that but hope to avoid it in the future. Thanks for reading!
 
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I heard excellent things about your China AAR, @RustyHunter, but for many reasons – none of them interesting – never got around to following along. So let me try and redress that by getting in on the ground with this one.

Looks excellent so far! Will be fascinated to see where you are able to take Iran over the coming years.
 
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Several planned tunnels had to be rerouted thanks to softer rock than expected, while one tunnel encountered a cavern within the mountain and required a bridge built across it.
That's something I'd have to see in person - a railway bridge in a tunnel. Must be quite a sight!

Perhaps the most impressive feat was the Veresk Bridge, spanning 66m while being 110m above the valley floor. This bridge was built entirely from stone and had no steel frame within it despite the vast distance spanned.
Why did they build this bridge out of stone instead of steel? Stubbornness? Showing off? Or was steel not available for some odd reason?

It was also meant to demonstrate the new government’s modernity and give the Iranian people something to be proud of after a century of humiliation.
Now this language seems familiar...

Iranian industry has been built up significantly since the coup of 1921, but it was still pitifully small compared to even the weakest European powers. 10 large factories had been built across Iran, with nearly a third of them centered in Tehran. Due to improvements in efficiency and skillful administrators, the 10 factories were operating at 110% effectiveness.
This is one of the nice but less-trumpeted changes in HPP, nations have access to 100% of their IC from the game start, or closer to it, usually instead of the cripping of democracies that happens in vanilla.

The cavalry divisions were only two regiments and didn’t have any supporting heavy artillery, AT guns, or AA. This had proven sufficient for police actions in the remote territories of Iran, but everyone recognized they would not fare well in a modern war. The infantry had three regiments as well as a battalion of Renault FT-17 tanks from the Great War. However, they were similarly lacking in heavier support equipment.
Seems like the best plan is to add support elements to the INF division and then build traditional INF divisions to expand the army. The CAV divisions are unlikely to be much use for anything other than bare flanking attacks, but could be upgraded to MOT and reinforced with LARM if you can build enough IC and get some help from Germany.

First, Iran’s existing officers would continue to train new recruits, but would receive no increase in funding. Second, a number of diplomats were put to work in reaching out to foreign countries. These men would be tasked with increasing trade, purchasing military equipment, and inviting Western advisors to help modernize Iran, all without antagonizing the British or Soviets. Iranian intelligence had received a much larger investment than usual, but it was only temporary. The Shah had decreed that the internal security apparatus must be expanded and modernized to limit covert foreign interference. Once this was completed, much of the budget would be shifted to other tasks.

Finally, the bulk of the budget had been invested into research endeavors.
I wonder what methods are available to boost leadership in game terms. HPP is pretty systematic about LS allocation, so it may be possible to gain some easy points by building a larger army or more IC. Otherwise the Education techs are the payoff option here.

I would recommend building some IC in any case if you have the tech to build it, you have 5-6 years until Operation Countenance which is enough time for a run of IC to pay for itself, and while I'd be leery about introducing player foresight into the game it's easily justifiable as Reza Shah doesn't know that he will be invaded in 1941.

(Note: It seems a little harsh that Iran doesn’t have any Ed. Techs researched. Historically, the Shah had built a number of schools, meriting at least the first level IMO).
This is something I would readily change with a submod to be honest.

Overall, I'd say HPP does a pretty decent job representing Iran. In fact, those infrastructure projects were added in 3.4.0, so somebody actually improved Iran!
TZoli did a whole revamp of the world map and SSmith did some checking for balance. It is still a bit of a WIP in some ways but I love the new map, mainly for the infrastructure improvements that represent railways much better than the previous map did.

I will note that in 3.3.3 Iran was a developed nation, giving 2 LS, while in 3.4.0 it dropped to undeveloped, giving only 1 LS. I modded this back up to developed since 1 LS is too little to do anything, although in hindsight I should have given them 2 levels of Education Tech instead.
I'd bet that it dropped due to losing some IC in the map changes, this makes the most logical sense since I don't think their OOB was touched.
 
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And so we our setup and Iran is well on the path to joining the Evil Axis. Something are clearly just fated to be! ;)

British would have preferred a line connecting Iraq and India
Maybe. If it was built by a British firm and didn't connect to any north running lines. The concern was always that such a line would be more useful to some looking to invade India (like the Russians) than for moving Indian reinforcements to Mesopotamia. Better to move troops by ship than give an enemy a direct rail route.
It seems a little harsh that Iran doesn’t have any Ed. Techs researched. Historically, the Shah had built a number of schools, meriting at least the first level IMO).
He built a lot of schools, but there remain questions over if there were any actual trained staff to operate them. It is often easier to build a school than train a competent teaching staff to use it. But then that too might be a bit harsh.
Why did they build this bridge out of stone instead of steel? Stubbornness? Showing off? Or was steel not available for some odd reason?
I believe there was no actual steelworks in Iran at this point, they wouldn't get one till 1970s despite trying for decades. This was due to the traditional reasons- just too small a market and no good local material sources, so the economics were awful.

In this case the extra cost of imported steel, plus the challenges of transporting said steel inland on rough roads, probably made the stone bridge make more sense that it would elsewhere. I believe a similar issue affected the tracks, they were built with fairly lightweight track which used less steel (and was cheap), but limited the size and load of trains that could use it.
 
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Reza Shah threw himself into the task of reforming the country with great energy, determined to create a modern, industrial Iran that would be respected on the world stage. Despite effectively starting from scratch, his government made great progress in the first ten years after his coronation, bringing Iran to a semi-modern level and placing the country on track to develop even further. Reza Shah had much to be proud of, but his work had only begun as 1936 opened…

Reza Shah seems to be a very capable ruler... and Iran certainly needs that to negotiate the next few years safely.

Reza Shah’s government quickly brought in American engineers to conduct a survey, determining that a northeast-southwest rail line from the Caspian Sea to the Persian Gulf would be feasible. The route was largely chosen based on military considerations, not connecting to any neighboring rail lines. Most significantly, it denied both the British and the Soviets their desired lines. The Shah’s line also bypassed all major cities except Tehran and passed through nomadic tribal areas, allowing the government to extend its control deeper into the countryside.

Good to see we managed to get that about right. :)

Perhaps the most impressive feat was the Veresk Bridge, spanning 66m while being 110m above the valley floor. This bridge was built entirely from stone and had no steel frame within it despite the vast distance spanned. This was one of the tallest bridges in the world and was considered the centerpiece of the Trans-Iranian Railroad.

That's an impressive bridge. As for the lack of steel I would suppose the engineers simply used the materials to hand.

The IIGF consisted of one infantry division and three cavalry divisions, a humble force for such an ostentatiously named military.

The cavalry divisions were only two regiments and didn’t have any supporting heavy artillery, AT guns, or AA. This had proven sufficient for police actions in the remote territories of Iran, but everyone recognized they would not fare well in a modern war. The infantry had three regiments as well as a battalion of Renault FT-17 tanks from the Great War. However, they were similarly lacking in heavier support equipment.

This certainly needs to be improved, doesn't it?

The IIAF was equipped with a single wing of Hawker Hind light bombers purchased from the United Kingdom.

Anything is better than nothing, but building an air force is an expensive undertaking and I suspect it's one Iran just won't be able to afford.

Unfortunately, the British had not been interested in selling more equipment to Iran; they only wanted to provide Iran with a military capable of suppressing tribal revolts, not one that could pose a threat to British hegemony.

Sounds about right!

The first project was focused on improving the educational system in Iran. By establishing primary schools across the nation, the Shah hoped he could forge a common identity and develop skilled workers capable of modernizing Iran. (Note: It seems a little harsh that Iran doesn’t have any Ed. Techs researched. Historically, the Shah had built a number of schools, meriting at least the first level IMO).

That's defintitely a good move. Education is one of the best ways for a country in Iran's position to expand leadership. This is the first note I've made - having one education tech already researched doesn't seem at all unreasonable.

The Shah’s final decision was to align Iran more closely with Nazi Germany. The Shah did not wish to join Germany’s faction, but he did wish to buy modern military equipment from them. If the Germans felt that Iran was an ally or friend, they might be more willing to sell. Even more importantly, Iran needed a foreign nation to act as a counter against the Soviets and British.

This seems a very reasonable and logical course of action under the circumstances. Iran's objective, clearly, is to break free of British and Soviet influence and needs the support of another major power to do so. Also, despite the somewhat disfunctional diplomacy AI, I think there's a very good chance you'll manage to license equipment from Germany.

Overall, I'd say HPP does a pretty decent job representing Iran. In fact, those infrastructure projects were added in 3.4.0, so somebody actually improved Iran! I will note that in 3.3.3 Iran was a developed nation, giving 2 LS, while in 3.4.0 it dropped to undeveloped, giving only 1 LS. I modded this back up to developed since 1 LS is too little to do anything, although in hindsight I should have given them 2 levels of Education Tech instead.

The infrastructure projects would be the result of @TZoli's work. I'm not sure if/when/why Iran dropped a status level but 3.4.0 doesn't appear to be any different from the 3.3.3(e) patch. Logically, the only thing that would have caused that to happen is the loss of some IC, but as far as I know Iran's total IC hasn't been changed, and it wasn't in 3.4.0, as I've just checked. You do have more manpower in this version, though.

Without modding it in as you have, you would probably have been able to get to 'developed nation' with a couple of new factories and one or two industrial production techs. I think industrial research is probably the next priority I would have gone for, straight after eduction of course.
 
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