501.BD Europe/9–2849: Telegram
The Acting Secretary of State to the Embassy in Iran
846. Past week Ebtehaj accompanied by Amb Ala engaged in series consultations with Dept officials. His gen line was that Iran not now in need econ grant or loan1 but in order to preserve Iran revenues for purpose econ development, US must supply minimum needs Iran Army as determined by joint US–Iran studies.
Dept informed Irans (including MA Mazhari) that determination of Iran share of Title Three MAP appropriation impossible until joint US–Iran high level mil talks take place. They were told Iran requirements may be supplied from fol classes of material; (a) new procurement priced at cost (b) army stocks requiring replacement priced at replacement cost (c) army stocks priced at 1945 levels approx 40–50 percent below current prices (d) equipment excess to US Army reserves provided gratis except for cost reconditioning and/or crating. On basis varied supply possibilities Dept pointed out discussion of dol figure wld be misleading as measure quantity assistance which Iran may receive.
Ebtehaj pressed issue of provision under MAP from US sources such locally procurable items as uniforms, shoes, etc. He was informed MAP legis intended supply only mil end items not otherwise available to recipient countries, and Dept pol is not to supply locally procurable items. Ebtehaj was told IranGov must plan accordingly in preparation its program and budget.
IranReps were informed mil aid under MAP designed provide essential items based on determination by joint US–Iran mil group. Amt such aid wld be limited by requirements of other nations, and limitation [Page 562] on funds and equipment available in US. They were reminded Iran is only nation with favorable fon exchange position recommended to Cong to receive mil aid from US, and US Govt is currently operating on budget deficit. Dept stated bilateral discussions re mil equipment to be programmed for Iran wld be carried on by US Amb in Tehran assisted by his mil advisers, and pointed out this desirable because IranGov cld thus more conveniently make decisions such as those calling for choice of several alternatives or affecting several ministries simultaneously. For ur info foregoing is without prejudice to any position we might take to prevent embarrassment Evans (such as sending Dept Defense personnel to Iran for negots).
Ebtehaj repeated disavowal Iran need for econ grant or loan at public mtg attended by some members Cong. Despite FonOff note which is matter of record, he repeated theme Iran will implement plan without assistance and thereby implied Iran has made no request to US for econ grant. He added, however, although Iran cld get along without Point Four aid, it will be welcomed if made available. In conversations with Dept Ebtehaj said Point Four wld be very useful to Iran, and at same time pointed out Iran development program wld be outstanding example self-development in line with Point Four concept and therefore useful to US. In conversation Asst Secy Thorp, Ebtehaj discussed possibility attracting US private capital to Iran, US Govt plans for guaranteeing investments, and restrictions which might be imposed by Iran limiting export annual earnings and repatriation capital.
Memos conversations fol.
- Tehran, on October 19, reported information from Minister of Court Hajir that “Ebtehaj statement in Washington that Iran does not now need economic aid were contrary to Shah’s instructions and not statement of Iranian Government policy.” (Telegram 1340, 893.50/10–1949)↩