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

891.001 Pahlavi [,Reza Shah]/11–1749

Memorandum by the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (McGhee) to the Secretary of State ¹

secret

[Washington,] November 17, 1949.

Discussion

The following briefly summarizes the subjects the Shah of Iran² is likely to raise with you when you call on him at the Prospect House on November 18. The subjects are outlined in detail in the “Back ground Memorandum”³ on the visit:

1. Military Assistance

The Shah will probably describe his strategic plans in the event of a Soviet invasion and his consequent need for an army larger and more elaborately equipped than is possible under both Iran’s present budgetary position and our plans for military assistance. We feel the Shah should be listened to sympathetically but without commitment. If he asks concerning the present status of the list of military equipment, he might be told the program is not sufficiently far advanced for the presentation of any detailed lists at this time. It can be pointed out that our military assistance to Iran is limited by

(a) The fact that effective use of military equipment depends on an army tailored to fit the military budget and any increase in Iran’s budget would have serious repercussions on its Seven Year Plan for economic development;

(b) Our own security considerations and the fact that our resources are hot unlimited;

(c) The fact that Iran is the only country with a favorable foreign exchange program to receive military assistance on a grant basis;

(d) The availability of trained personnel capable of handling and maintaining the more complex varieties of modern military equipment.

2. Economic Assistance

The Shah is likely to raise the question of economic assistance to his government. In this connection, Iran has embarked upon a Seven Year Program involving about $650 million. Financing of this program, which involves agricultural, irrigation, highway, railway, industrial, public health, and educational projects, depends primarily on oil royalties. The IBRD may also be asked for loans up to $250 million to provide additional funds. Immediate aims of the program include raising standards of education and public health, improving agricultural methods and transportation facilities, and reforming tax administration.

Last September, in answer to a specific Iranian request for an economic grant of $147 million, the Department replied that no authority existed for a grant, and that it would be impossible to obtain such authority from Congress since Iran has a favorable foreign exchange position (mainly because of an arrangement under which the British Government freely converts its sterling royalties to dollars) and has not yet exhausted other sources of financial assistance, i.e., the IBRD. We added that the U.S. would be willing to support an adequately documented Iranian application for a loan from the International Bank.

You may want to convey a general idea to the Shah of the part that the Point Four Program might play in assisting Iran in its Seven Year Plan, reiterating the program’s emphasis on technical rather than financial assistance and stressing the role that private capital must assume. You might also say that the first step that Iran could take in preparing the way for its Point Four participation should be the negotiation of a Treaty of Friendship, Commerce and Navigation with the United States, which would include suitable clauses on investment guarantees.

3. Extension of the Truman Doctrine to Include Iran

Since preparation of the Background Memorandum, Iranian Ambassador Ala has suggested that upon the departure of the Shah, a joint statement be issued reaffirming the principles of the Tehran Declaration on Iran, promising Iran further military and economic assistance and “extending the Truman Doctrine” to include Iran. If the Shah raises this pointy it might be pointed out that our position regarding the maintenance of the independence and territorial integrity of Iran is well known, that we will consider a public reiteration of it in connection with his visit here, but that we cannot make any commitments towards further financial, military, or other aid at this time.

4. Regional Defense Pacts

If the Shah suggests a regional Middle East defense pact, with or without a guarantee by the United States, he might be informed that this Government is not in a position to give consideration to any other pacts until the ramifications of the North Atlantic Pact become clear and can neither encourage nor discourage consideration of such pacts by the countries concerned. It is important, however, that any remarks on this subject be phrased in such a way as to avoid the impression that if Iran were attacked she would be left to her own resources.

5. General Line

Whether or not the Shah raises the question of military or economic aid or further American commitments to Iran, I believe it is desirable that you should make our position on these points and our general attitude toward Iran as clear as possible. He has probably heard all of these things before, but they have come to him through intermediaries in whom he does not appear to have complete confidence or who have not been able themselves to make the situation completely clear. One of the main objectives we should seek during the Shah’s visit to the United States is to demonstrate to him that our own Ambassador in Iran and his Ambassador here have in fact been correctly representing the policies and problems of the United States Government with regard to Iran.

The Shah must be convinced that we have a genuine interest in his country and that we are prepared to assist it within reasonable and practicable limits, and he must also be convinced that when we reject his requests we do so for sound logical reasons rather than out of any prejudice against Iran or in favor of other countries.

The two main lines which, I think, can be used to get this point across are:

1. That we must insist with Iran, as we do with all other countries, that she do everything she can to help herself before requesting American assistance; (this is especially applicable to the question of economic aid) and

2. That we must make haste slowly and not attempt over night to make up for the deficiencies developed over many years (i.e. even if our resources were unlimited, we could not renovate the Iranian Army in a year or two simply by pouring in great quantities of equipment).

1. Drafted by C. Vaughan Ferguson, Jr., Officer in Charge of Iranian Affairs.
2. The Shah arrived in the United States on November 16, aboard President Truman’s personal plane, the Independence; for press releases by the White House and the Department of State see Department of State Bulletin, November 28, 1949, pp. 831, 832.
3. This refers to a binder entitled “Background Memoranda on Visit to the United States of His Imperial Majesty Mohammad Reza Pahlavi Shahinshah of Iran November 1949.” The contents of the binder were prepared in the Department on November 1, 1949, and consisted of seven parts: the importance of the visit; a biographic sketch of the Shah; important events in Iran during the past two years; outstanding problems facing Iran; recent United States-Iranian relations; a guide for discussions with the Shah; and several appendices (891.001 Pahlavi, Reza [Shah]/11–149).