331. Telegram From the Embassy in Iran to the Department of State1
532. Foreign Minister Entezam asked me to call today. He told me that Government of Iran (Shah) had definitely decided during Turco-Iranian conversations to join Baghdad Pact sometime before October 26. Exact date of announcement not yet determined and depended upon progress shown preparing ground in Majlis. Factor in Iran’s decision was feeling that announcement of adherence prior to Geneva conference would increase Iran’s prestige. If it joined afterwards Iran might seem to be climbing on the band wagon. He had been fully informed of my comments to Ala under Department’s instructions (my telegram 511);2 I repeated these to make quite sure. He wished to make it clear that Iran is taking this step because of its own self-interest and “unconditionally”. However, he could not hide Iranian concern over difficult budgetary situation. Iran hoped that after adherence U.S., in its (U.S.) own self-interest, would find it possible to give some additional assistance to military budget. I repeated now familiar arguments and told him that I could not hold out any hope of support beyond that already indicated. I told him I would be less than frank if I [Page 776] did not point out that it would be most unlikely, if not impossible, for U.S. to justify further budgetary assistance to Iran in light availability oil revenues. U.S. recognizes Iran’s need for economic development, and most certainly would not advocate that entire amount of oil revenues be used to meet military deficit. I reminded Mr. Entezam that vague statement of a need for budgetary assistance had been raised many times before, but Iranian government had given no evidence that Government itself knows what aid is required and for how long.
I said our repeated requests for data on this subject have been unanswered. Mr. Entezam said that he could assure me that crisis was only temporary; if they could weather next 2 or 3 years, they would take care of their own budget. Shah was, however, worried over middle of the road majority of the Majlis which, while willing go along with adherence, is itself deeply concerned over Iranian budgetary situation, and Shah hoped for something concrete with which he could reassure this important majority.