788.00/6–2150: Telegram
The Chargé in Iran (Richards) to the Secretary of State
1168. Department inform Army, Navy, Air. The progressive deterioration in both political and economic conditions in Iran has been reported by the Embassy and is well known to the Department. However, in view of Department’s plans for military and economic aid and as conditions have become worse rather than better during the past few months, I consider it advisable to review situation.
Evidence of deteriorating conditions are: national budget bankruptcy, severe and increasing business depression, stubborn dispute with British re AIOC renegotiation, recognized ineffectiveness of 7–year plan, impotence of both government and Majlis, intensified Communist activities, irresponsible press and increasing loss of faith in government. While difficult to define, there has been a noticeable reaction to the foregoing manifested in a general and rising popular demand for decisive action toward reform.
Responsible segments of the public have come to believe that Razmara is emerging as the man most capable to deal with this situation, [Page 561] and earlier opposition to him appears to be giving way to a feeling that only Razmara has the necessary capacity and courage to head positive reform government. In anticipation that he may be called upon to form a new government, Razmara has, at the Shah’s request, and in collaboration with selected colleagues of recognized qualifications, prepared tentative program embodying principles designed to meet Shah’s reform objectives. This program, details of which are being worked out, and which is to be based on time and priority schedule, embraces following principal features (not necessarily listed in order of importance):
First as to civil administration the following: (1) A functionally competent “nonpolitical” cabinet; (2) electoral reforms enabling more truly popular representation in Majlis; (3) centralization of policy and program formulation, and of execution of national undertakings; (4) decentralization of local administration and of execution of local undertakings; (5) adequate and authoritative public information service; (6) new and revised social and economic legislation and positive enforcement of the law, including tax laws, generally following OCI Dulles recommendations;1 (7) judiciary reforms corresponding to 6 above.
Second as to economic administration the following: (1) Reorganization of ministries as functional executive units; (2) extensive training programs; (3) progressive assimilation of present plan organization into reformed ministries without change in objectives of 7–year plan; (4) local and national taxes to finance corresponding projects; (5) reorganization of Customs Department and tariffs; (6) scheduled program of high priority works for immediate execution; (7) use of foreign experts for supervision and training; (8) realistic and rigorously controlled budget based upon actual revenues and approved expenditures; (9) other needed reforms in basic economy, monetary and fiscal practices.
Because the foregoing program will conflict with past and present practices and special interest, vigorous opposition is to be expected including possible hazards to program as follows: (1) Local press attacks inspired by opposing interests; (2) Russian subversion; (3) British resistance if new conditions appear to affect their position adversely; (4) opposition of wealthy landowners and present beneficiaries of administrative corruption which may require legal but robust measures to control including possible temporary incarceration of few oppositionists; (5) possible adverse American public opinion if initial implementation program represented as trend toward dictatorship; (6) lack of Iranian public confidence in reform program [Page 562] if US and British official support is not proclaimed; (7) opposition by reactionary religious groups; (8) organized public disorder inspired by certain of foregoing.
The achievement of stability in Iran with restoration faith in Government would be in US interests and is essential if our military and economic aid is to be effective. It is realized Razmara’s political emergence may have lasting effect upon course of events in Iran. Nevertheless no other political figure has yet emerged who appears to have the qualities necessary to implement effectively any reform program. Any support for Razmara is a calculated risk which we feel must be taken if he is called upon to be Prime Minister.
Accordingly, in our own interests and after consideration of hazards to program enumerated above, we urged Department give serious consideration taking following measures: (1) Advance indication to Shah of official US Government understanding of situation and that it regards reform program with favor; (2) public statement at appropriate time by Secretary of State or Department spokesman along lines of foregoing and to forestall misrepresentation by irresponsible or self interested persons; (3) definite understanding on high level between Department and British FonOff that British will support reform program and facilitate prompt settlement of AIOC dispute.
Army Att concurs.
This telegram being repeated to Athens for Ambassador Grady and I suggest Ambassador Grady and Wiley may wish comment.2
Sent Department 1168; repeated info Athens 16.