Foreign Relations of the United States, 1949, The Near East, South Asia, and Africa, Volume VI

891.24/7–2949

The Secretary of State to the Iranian Ambassador (Ala)

The Secretary of State presents his compliments to His Excellency the Ambassador of Iran and has the honor to refer to the Embassy’s Note No. 1405 of July 29, 1949,¹ regarding conversations between the Ambassador and officers of the Department concerning the desire of Iran to obtain military and economic assistance.

As the Ambassador is aware, the President, in his recent message to the Congress, included Iran among those countries eligible for military assistance. The ability of this Government to provide military aid, therefore, depends upon the action taken by the Congress on the President’s proposal. The Department of State, along with the Department of Defense, is continuing to urge approval of the bill by the Congress and appropriation of the necessary funds. When and if the Congress makes this bill law, this Government will be in a position to provide certain essential needs of the Iranian military forces. It is to be noted that Iran is the only country with a favorable foreign exchange position for which military assistance has been recommended on a grant basis.

The United States Government has indicated its willingness, on several occasions, to extend technical assistance to Iran to the full extent possible under programs now in existence or contemplated in legislation now before the Congress. To this end, our two Governments have recently signed an agreement which will implement the Fulbright Act.² The Department is also seeking at this time to obtain funds appropriated under the Smith–Mundt Act for use in paying the salaries of several technicians to assist the Iranian Government in such fields as agriculture, public health, and industrial training. When and if legislation designed to implement Point Four of the President’s inaugural speech is passed by the Congress, this Government hopes to make available to the Iranian Government a substantial number of technicians and to make possible the training abroad of considerable numbers of Iranians. The skilled individuals whom we hope to provide under both the Smith–Mundt and Point Four programs should make a valuable contribution to the Iranian Seven Year Program, provided that program has been developed to a point where their skills can be fully utilized. It is the opinion of this Government that early implementation of the Seven Year Program by the Government of Iran through the use of resources presently available to it is the best possible means of raising the standard of living of the Iranian people, thereby contributing to Iran’s resistance to the aggression mentioned in the Ambassador’s note under reference. The favorable foreign exchange position of Iran, plus the probability that Iran could supplement its own resources by obtaining credit from the International Bank, would appear to place Iran in a most advantageous position to implement fully its development program. The United States Government, as has been previously indicated to the Ambassador, would be willing to support an adequately documented Iranian application to the International Bank.

With reference to His Excellency’s mention of the note recently presented to the American Ambassador to Iran requesting economic assistance to a total of 147 million dollars,³ it should be noted that the Executive Branch of this Government does not, at this time, have the authority or funds to extend gratuitous economic assistance to the Government of Iran. Furthermore, in the light of Iran’s favor able foreign exchange position, it would be difficult to justify a request of the Congress for such authority and funds.

This Government understands that the Iranian State Railway has suffered considerable deterioration since responsibility for its operation was returned to the Iranian State Railway Administration fol lowing its wartime use by the Allies, and it would appear that one of the most important tasks which might be undertaken under the Seven Year Plan would be rehabilitation of the railway.

With regard to the possibility that this rehabilitation program might be linked to a military assistance program, the Congress in appropriating previous funds for military assistance, has clearly indicated its unwillingness that such funds be used for civil purposes such as railway rehabilitation. It, therefore, is the policy of this Government not to use Military Assistance Program funds, when and if appropriated by the Congress, for projects of the type suggested. In connection with His Excellency’s statements referring to the use of the railway by the Allies during the recent war, this Government considers that the railway was returned to the responsible authorities, following its operation and maintenance by the United States Army, in a condition at least equal to that in which it was received. This Government understands that an agreement has been reached between the Government of Iran and the Government of the United Kingdom for payment of an amount equal to 5,700,000 Pounds Sterling as final settlement for claims and depreciation said to have resulted from the use of the railway by the Allies during the War. The Ambassador will recall that the Government of the United States did not assume financial responsibility for the railway during its operation by the United States Army, but considered that such responsibility rested with the British Government. In this connection, the United States recently informed the United Kingdom that it did not intend to press the Government of Iran for payment for material improvements made on the railway during its operation by the United States Army.

The Ambassador may rest assured that this Government will continue to give sympathetic consideration to requests of the Iranian Government for assistance, and will endeavor to provide such assistance whenever the need is fully justified and cannot be met from other sources available to Iran.

Washington, September 22, 1949.

1. Not printed.
2. For the text of the agreement establishing the United States Commission for Cultural Exchange between Iran and the United States, see Department of State Treaties and Other International Acts Series (TIAS) 1973; or 63 Stat, (pt. 3) 2685. The agreement was signed at Tehran on September 1.
3. See telegram 907, July 12, from Tehran, p. 540.