TEHRAN, Dec. 30, 1978 (UPI) - Shah Mohammed Reza Pahlavi, trapped in a bloody nationwide revolt that has plunged Iran into chaos, has agreed to leave the country temporarily and to hand over his powers to a council, sources said Friday. The shah asked Shapour Bakhtiar, 63, leader of the anti-shah National Front, to form a civilian government.
In an interview with a West German television station, Bakhtiar said Friday the shah could stay in Iran after the government is formed "if he gives us sufficient guarantees."
Bakhtiar said he is not in favor of a republic or a monarchy but rather a "progressive democracy." He also said that at least half of any cabinet he names will be members of the National Front.
"The shah is not abdicating," a source said emphatically. "He may just be leaving Iran temporarily."
Saturday morning, the official spokesman of the shah's imperial court denied the ruler had agreed to leave the country.
In Paris, Prof. Mohammed Mokri, a member of the National Front, said the dissident Iranians in Paris, including religious leader Ayatollah Ruhollah Khomeini, have been told "the shah already has left, or is leaving tonight."
In Washington, however, a spokesman for the Iranian embassy said he was authorized by Ambassador Ardeshir Zahedi, who was in Tehran, to officially deny the shah was planning to leave.
In a surprise move, the shah, 59, offered Bakhtiar the premiership Thursday after Gholam Hosseini Sadighi, the candidate-premier for the last two weeks, gave up efforts to form a government to replace the rule of Prime Minister Gen. Gholam Reza Azhari.
The sources said Bakhtiar presented the shah with proposals:
* That the shah leave the country on a temporary basis, investing his powers in a regency council composed of elder politicians.
* That the current parliament, elected in 1975 under a short-lived, 1-party system, be dissolved.
* That the dread SAVAK secret police be disbanded
* That control over the Iranian armed forces be given to the civilian government, with appropriate parliamentary intervention.
Political sources said a national day of mourning called for Saturday by Khomeini, 78, the exiled leader of the most Moslem Shiites and the shah's No. 1 enemy, could pose a "real danger" to the transition.
"If there is bloodshed again tomorrow (Saturday), it would really make it difficult for Bakhtiar and the shah to enter into an accommodation falling short of the shah's outright resignation," a source said.
The hard-line National Front, headed by Karim Sanjabi, has called for the shah's abdication, but Bakhtiar failed to echo the cry.
It would be the second time the shah has left the country under political pressure. At the height of his struggle with the late Premier Mohammed Mossadegh, he flew to Rome Aug. 16, 1953. But he was back on his throne six days later, after demonstrators paraded through Tehran demanding his return.
Gen. Azhari took over the premiership Nov. 6 in an effort to put down the violence that has taken more than 1,500 lives since the uprising began in November 1977, when leftist student demonstrations poured into the streets of the Iranian cities to demand the shah's ouster.
The students' cry was taken up by Khomeini, who violently opposes the modern reforms the shah has brought to Iran. He has led the struggle from exile in Paris.
The surprise political developments followed another day of rioting in a dozen cities by wild-eyed demonstrators shouting," Death to the shah!" and "Victory is near!"
With the turmoil increasing daily and anti-Americanism on the rise, almost 1,000 American oil workers in southern Iran prepared for an exodus, joining the thousands who already have fled the country.
Demonstrations and strikes against the shah have brought Iran's economy to the brink of collapse, crippling the oil industry, banks, government departments, airlines, postal services, some hospitals, universities and colleges and newspapers.
The bakeries on which the capital's 4.5 million residents depend for their bread staples were closing because of fuel shortages.
Sources close to the palace said the shah's offer to Bakhtiar came after Sadighi, 73, a sociology professor, abandoned his efforts to put together a government of "honest veterans."
The National Front, a successor to the extremist National Front Party led by Mossadegh before his dismissal in 1953, revived activities last summer and now commands the largest following of any political group in Iran.
Troops firing automatic weapons chased anti-shah demonstrators through congested downtown streets and fired on rooftop protestors chanting "Death to the shah!"
Witnesses reported four people were killed Friday in Tehran, including a middle-age man whose head was blown off. Three others were wounded.
Soldiers fought off another attempt by screaming youths to crowd around the U.S. embassy, where an angry mob assembled Sunday. Troops riding in heavy trucks and jeeps raced across avenues that were virtually empty because of the shutdown of gasoline.
In the riot-torn southern town of Ahvaz, troops opened fire Friday to flush out about 1,000 protestors staging a hospital sit-in. Four people were reported killed and seven wounded. The shooting followed disturbances in Ahvaz Thursday in which anti-shah demonstrators burned down the Iran-American Society Cultural Center and four banks.
Elsewhere in Iran, troops shot and killed nine anti-shah demonstrators in rioting that swept 13 major towns.
Iran for decades was an island of peace in the turbulent Middle East, but Shah Mohammed Reza Pahlavi ignored the underground resentment his iron rule generated and the pressure-cooker finally exploded.
The outcome could have ramifications reaching far beyond the borders of the country, poised strategically between the Soviet Union and the oil-rich states of the Persian Gulf.
Ironically, one of the reasons for the popular uprising against the shah - an increasing Western presence he thought necessary to advance his "White Revolution" - was the very reason his father won the Peacock Throne and started the Pahlavi dynasty.
Modern Iranian history began with a nationalist uprising in 1905, the granting of a limited constitution on 1906 and the discovery of oil in 1908.
A second revolutionary movement, directed largely by the shah's father, Reza Shah Pahlavi, against foreign influence in Iranian affairs, led to his enthronement in Dec. 12, 1925.
Reza Shah made a start toward modernization of the country, but his flirtation with the Nazis led to the occupation of Iran by British and Soviet forces in 1941 and his abdication that year in favor of his son.
Iranian nationalism grew after World War II and reached its zenith with the nationalization of the British oil industry in 1951 under the premiership of Muhammad Mossadegh.
In August 1953, Mossadegh briefly overthrew the shah, who fled to Europe before being restored to power in what has been accepted as a CIA-engineered counter-coup.
After this, the shah took a more active political role and gradually tightened his grip on the country.
He instituted systematic efforts at political, economic and social development which came to be known as the "White Revolution" - an attempt to drag a tradition-minded nation onto the 20th century.
To secure this aim, the shah brooked no opposition. The SAVAK secret police took on an increasingly powerful role and in March 1975 the shah announced dissolution of the 2-party system and decreed the establishment of a new National Resurgence Party to serve as the country's sole political vehicle.
The frequently amended constitution already gave the shah wide personal powers - control of the armed forces, a veto on legislation, appointment of a prime minister and a cabinet and authority to suspend civil liberties in times of emergency.
The unrest which led to today's nationwide violence began in November 1977 when students rebelled against new regulations they considered high-handed and autocratic. There were street demonstrations and clashes with police.
Swiftly the violence grew as Iranians finally burst from the straitjacket of 38 years of the shah's iron rule. Angered by widespread high-level corruption and oppression by the secret police, they demanded freedom of political activity, freedom of expression and freedom to hold political meetings.
The majority Moslem Shiite sect weighed in against the shah's modernization program they said offended the tenets of Islam.