For Iran, the overall result of the Second Gulf War was positive, economically and diplomatically. The conflict helped it to project a high profile internationally, and benefit from the soaring oil prices, which almost trebled between August 1990 and March 1991. This improved its economy even though it was lumbered with the deleterious legacy of the 1980s war, poor performance of the nationalized industry, scarcity of basic materials, and inadequate distribution, transport, and import and export systems. In 1990-91 the annual growth rate soared to 10.5 percent while inflation declined to 8 percent. This encouraged President Ali Akbar Hashemi Rafsanjani to accelerate the pace of privatization even though his radical plan to end the oil and gas monopoly by the state-owned National Iranian Oil Company (NIOC) was rejected by the Guardians Council.
The booming economy also encouraged him to implement long-overdue rationalization in government bureaucracy. Guided by him, the Majlis decided to combine the police, gendarmerie and revolutionary komitehs (i.e., committees), that sprouted in the late 1970s, into the Organization of Security Guards - also known as Law Enforcement Forces (LEF). It became operational on March 21, 1991, the Iranian New Year. The amalgamation of the revolutionary komitehs into a larger national force went a long way to reassure the public about the sanctity of the rule of law. In February 1992 at Rafsanjani's behest, Ayatollah Ali Khamanei ordered that there should be one head of the military and the Islamic Revolutionary Guards Corps, to be called the chief of staff of the Armed Forces General Command. He named Hassan Firoozabadi, then deputy chief of staff of the military, as the first chief of staff of the amalgamated force.
In foreign affairs, Iraq's aggression against a fellow Arab state opened up unprecedented opportunities for Iran. While shunning Iraq whom they had actively backed during the First Gulf War, the Gulf monarchies now hastened to improve relations with Tehran. In March 1991 Saudi Arabia restored diplomatic relations with Iran that had been severed in July 1987 after the Saudi police shot dead over 400 mainly Iranian pilgrims during a demonstration in Mecca at the time of the annual hajj pilgrimage, when there was a strict ban on marches or demonstrations, even displays of pictures or placards, due to the Saudi ruling that the hajj was a purely religious ritual. 1 As a goodwill gesture, Riyadh doubled