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

888.00/10–2150: Telegram

The Ambassador in Iran (Greedy) to the Secretary of State

top secret

Tehran, October 21, 1951—4 p. m.

946. For McGhee from Grady. Five things are first essentials for economic progress this country and for continuance and increased strength of Razmara Government and its ability to carry out essential reforms. These are: (1) Eximbank loan; (2) IBED loan; (3) Point Four; (4) AIOC agreement; (5) Trade problem.

Two of these have been achieved and I hope will be effectively implemented in near future. I hope also that three Iranian representatives going to Washington (Embtel 921, October 19¹) will be effective in getting full IBRD loan. Problem of AIOC agreement is still difficult one and the interpellations in Majlis are resulting in extremely bitter statements against AIOC and the British and threats of cancellation of concession. London telegram 45, October 18, sent Department as 2238 states that AIOC will not consider points a, b and d, but will consider c and e.² Latter two seem to have minor importance especially e which asks for turning over to Iranian Government, if it has use for it, gas which otherwise would be destroyed. It will not take great magnanimity on part AIOC to make such concession. Attitude AIOC in view seriousness of situation to company and to Iran is quite incomprehensible. Unfortunately there seems to be little we can do about it, but if by various means AIOC can jam agreement through Majlis bitterness on part of Iranians will continue to increase.

Trade problem is primarily agricultural surpluses in northern areas of Iran which are already under fairly complete propaganda control of Russia. If Russians succeed in making agreement which will in effect give them a monopoly for their immediate years ahead over the surpluses of this area, it, together with their propaganda monopoly, will give them an increasingly strong position in matter taking over that area by some device or other. I have urged (Embtel 701, September 21; Embtel 716, September 22; Embtel 795, October 3³) that War Department endeavor to divert purchases to Iran to lift 30,000 tons rice and 30,000 tons dried fruit while the Russians are attempting to get terms of agreement favorable to their general political objectives here. Reply from Department stated that the Army cannot purchase these surpluses and that we should endeavor to develop trade agreements with other countries, particularly of Western Europe. A West German delegation has made an agreement and we shall shortly have a copy. Italians are also negotiating for purchase of cotton and some other products. Action in both these matters is bound to be slow. The situation calls for some extraordinary measures. With 100,000 prisoners of war in Korea and with large numbers of refugees needing aid, it would seem that there would be some way for our government to take advantage of the extremely great opportunity here. For us to be able to state that we were diverting purchases to Iran of food needed in Korea in order to help Iran in its problem of surpluses would be of incalculable benefit to US and chagrin to Russians. It would be on small scale like strategy of landing in Inchon.

I can hardly tell you how much I hope that some way can be found to do this and to do it quickly. The stakes are great indeed. Please give your personal attention to this matter and see if you can get Army to take action.

Grady

1. Not printed; it reported, inter alia, that Grady had been consulted in the selection of the Iranian delegation which would go to Washington to discuss the Export-Import Bank loan. (888.10/10–1950)

2. Telegram 2238 is not printed; the points under reference, transmitted in telegram 2023 from London, October 6, not printed, were as follows:

   • “a. Royalties to be equated with those obtained by Iraq in such way that Iranian royalty would never be less than Iraquis;
   • b. Iranian Govt to receive free of charge oil equal in quantity to that used by company itself in Iran;
   • c. Some form of control (in rating sense) of export of oil …;
   • d. Complete Iranianization of AIOC in 10 years except for certain chiefs of dept and other high posts, and necessary experts and technicians;
   • e. Gas now destroyed by fire to be made available free to Iranian Govt when it has use for it.” (787.00/10–650)

3. None printed.