Foreign Relations of the United States, 1950, The Near East, South Asia, and Africa, Volume V

888.00/4–2850

The Iranian Ambassador (Ala) to the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (McGhee)

Washington, April 28, 1950.

Dear Mr. McGhee: Two days after our conversation of the 24th,¹ I received a cable from the Prime Minister² of which I venture to send you the substance in translation.

It practically corroborates the points to which I drew your attention. These are incorporated in the précis of my talk with Mr. Raymond Hare of which I handed you a copy.³

The emphasis is on the deteriorating economic situation and the need for urgent American assistance.

What do you think of the suggestion I made to you early in January about a survey of the situation by an outstanding American economist designated by the United States?⁴ This might be a way to determine the real need of Iran and the best way to cope with the crisis.

The Secretary of State has, on various occasions, issued statements which have acted as a deterrent to any contemplated foreign aggression or machinations against Greece, Turkey and Iran.

Might it not be opportune at the present critical juncture, to have recourse to the same salutary procedure?

Yours sincerely,

Hussein Ala

[Enclosure]

Substance of Cable Received From the Prime Minister on April 26th, 1950⁵

The Military budget, allocated this year on a minimum basis, amounts to 327 million tomans ( = approximately 100 million dollars). Next year it will reach the figure of 400 million tomans. Any smaller appropriation for the existing forces would be false economy and therefore wasteful.

In view of this and considering the existing weakness of our financial and economic situation, in order to enable us to bear the burden of this Military expenditure, assistance from the United States is essential, not only by way of furnishing arms and material, but also by way of financial and economic grants in aid, to enable us to expend our available limited resources for economic development. Every effort must be made to secure such aid.

If the importance of Iran’s military role and preparedness in the Middle East and in global security is not taken into consideration, the situation of Iran will become acutely dangerous, as His Imperial Majesty the Shah has already pointed out in his conversations in America. With all the insidious propaganda and subversive activities now going on, the slightest spark in Iran will set the whole of the Middle East ablaze.

As regards loans from the World Bank, the Seven-Year Plan Organization has done its utmost, in conjunction and in consultation with its advisers, the O.C.I., to prepare useful projects. Up to now several projects, such as the construction of a dam and Hydro-electric plant on the river Karadj, the establishment of two cement factories in Shiraz and Doroud, etc., have been completed and are ready for examination by the representatives of the International Bank, who have recently arrived.⁶ Projects connected with other technical aspects of the Seven-Year program are being studied and will be gradually submitted to the Bank as they become ready.

Our request is that the Bank should not raise obstacles by demanding detailed statistics and unnecessary formalities; rather, we expect that if the Bank sees that the proposals are essentially sound, they will adopt a policy of assisting and facilitating the execution of the projects submitted.

Having authority under Law to negotiate loans up to $250 million dollars during a period of seven years on the basis of projects to be submitted, we desire to borrow up to this amount and together with our own resources execute a program of Development and Reconstruction in Irrigation, Agriculture, Industry, etc.

The economic Grants-in-Aid we need are apart from this and apart from such aid as Point 4 etc.

With reference to the news lately appearing in articles published in the American press, the facts are that our Economic and Financial situation is bad, the budget shows a huge deficit; there is no question that subversive elements are active, also that local incidents of border aggression have taken place, and that clandestine radio transmitters are busy spreading unfounded rumours calculated to incite sedition and to accentuate the crisis.

The news published in this connection is however in some respects exaggerated and in some respects false such as the information published by Drew Pearson with a reference to the American Ambassador which the American Embassy absolutely denies.⁷

It appears that certain elements are endeavouring to engender difficulties in the relations between America and Iran, in order to make America and Iran lose hope and confidence in each other, and, as a consequence, to aggravate the crisis so that the situation will get out of hand which is the aim of those who desire disruption and revolution.

1. No memorandum of conversation, April 24, has been found in Department of State files, but see the memorandum of conversation, April 26 [24?], by Mr. Ferguson, p. 526.
2. Ali Mansur.
3. A memorandum of conversation of Ambassador Ala with Mr. Hare, April 12, by Mr. Ferguson is in Department of State file 888.00/4–1250.
4. Reference is presumably to the conversation between Ambassador Ala and Mr. McGhee on January 26 which is reported in the memorandum of the same date by Mr. Ferguson, p. 447.
5. The source text bears a handwritten change of date from April 27th to the 26th.
6. The International Bank for Reconstruction and Development sent a mission to Iran at the request of the Iranian Government to survey the general economic and financial situation and to study four specific projects for possible IBRD financing (telegram 427, April 13, to Tehran; 398.14/4–750).
7. Drew Pearson’s column of April 19 stated that Ambassador Wiley had cautioned the Department of State that Iranian Prime Minister Mansur might be a “Russian stooge and must be watched closely” (Washington Post, April 19, 1950). The Department reassured the Iranian embassy but declined to issue a public denial as the Iranian Embassy suggested since it would only draw attention to the story and provoke Mr. Pearson into more such reporting on Iran. It also authorized the Embassy in Iran at its discretion to inform the Iranian Government that the story had no basis in fact and to explain the Department’s reluctance to issue a public denial in the United States. (Telegram 468, April 19, to Tehran; 888.00/4–1250)