354. Telegram From the Department of State to the Embassy in Iran1
1616. Embtels 14192 and 1429.3 Ambassador Amini called Department with instructions convey disappointment over loan-grant package plan and to urge U.S. reconsideration.
Amini was told of U.S. domestic problems in continuing grant budgetary aid which only rarely given and then only to meet temporary emergency. These overcome only with difficulty and problem had been increased by disappointment and concern over GOI budget increase. He was advised GOI should begin now plan its future finances on assumption further grant assistance for budgetary purposes in the future highly unlikely. Amini stated he also much disappointed in GOI budget increases and would urge GOI revision toward Foruhar levels, but hoped that in view immediate emergency and practical difficulties obtaining Majlis action and internal political implications re Baghdad Pact, U.S. would give consideration $20 million grant. He was told U.S. giving urgent consideration this request but U.S. finds it impossible separate question of grant budgetary aid from need for serious GOI efforts reduce budget. He was told Department would communicate [Page 814] with him in next few days on results U.S. reconsideration GOI to this request but in meantime we hoped he would urge GOI take immediate steps reduce budget. End Amini conversation.
View practical difficulties getting Majlis approval and based on factors raised Embtel 1419, U.S. has decided make whole $20 million in form grant. However we desire this decision be conveyed Shah and GOI in context substance Deptel 1587.4 We hope GOI will understand U.S making this decision in face great difficulties and that we view decision as inseparable from GOI assurances administratively hold 13355 expenditures to overall Foruhar levels.
Same time desire you weave into presentation fact that it highly unlikely U.S. will be able give grant budgetary aid in future. We hope our agreement give latest $20 million in grant form will provide GOI adequate lead time to enable it formulate long-range budgetary plans on this assumption.
You should also disabuse Shah and GOI of frequently expressed notion that U.S. aid programs favor neutralist nations or those attempting international blackmail. In fact comparison will show that magnitude of aid to nations aligned openly with Free World greatly exceeds that to others. No grant military aid or budgetary aid has been made available to neutral nations. Economic aid to Iran in recent years has exceeded that to other friendly countries such as Greece (long a target for invidious comparison). It is not true that U.S. has made large grant to Egypt. Consideration being given to moderate long-term loan for financing Aswan Dam but even if finally agreed by Egypt and U.S this will fall far short of aid to Iran in any one of last 3 years. In fact Iran has been among those nations receiving largest amount of grant aid in last 3 years outside of those which have been engaged in actual hostilities. In order to understand its position in a realistic context it is extremely important that GOI realize its own record of U.S. aid compares most favorably with that of other countries. Sensational news stories about U.S. aid to neutralist or unfriendly countries should be heavily discounted in favor study of facts. Recent statement in Indonesia by Secretary Dulles (mentioned by Amini) simply records facts that, as GOI well knows, we do not extract advance commitments to military pacts as condition for U.S. aid, nor do we deny some economic assistance to uncommitted countries. To illustrate above point suggest you review with Shah and Government leaders aid amounts which Iran has received from U.S. since 1951.
- Source: Department of State, Central Files, 888.10/3–1556. Secret; Niact. Drafted by Hannah; cleared by GTI, E, U/MSA, and ICA; and approved by Hoover.↩
- See footnote 2, supra.↩
- In telegram 1429, March 15, the Embassy reported that Iran’s budget of $262.7 million had been presented to the Majlis and was on the verge of passage. The budget was $26.4 million over previous levels proposed by Finance Minister Foruhar and any démarche by the Embassy to have it recalled and reduced, as the Department instructed the Embassy in telegrams 1577 and 1578, both March 13, was “out of the question.” Telegram 1429 from Tehran is ibid.; 1577 to Tehran is ibid., 888.10/3–356; and 1578 to Tehran is ibid., 888.10/3–1356.↩
- Reference is apparently an error and should be to telegram 1578.↩
- The Iranian year 1335 began on March 20, 1956.↩