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118. Memorandum Prepared by Max Thornburg 1

What would we have to do?

Make up our own minds, promptly, concerning three things:

(1) Our own readiness to back the Shah in establishing a “responsible” government, by which we would mean, among other things, one loyal to the Shah, dedicated to necessary reforms within the country, willing to collaborate with us in such aids as we offer (economic, technical, military training, etc.), disposed to accept a reasonable settlement of the oil dispute (when the time comes), and opposed to Communism.

(2) The kind of a proposition we are prepared to make to the British: i.e. what we have decided to do on our own whether they come along or not; what we would like to have them do; what position we would take concerning the oil settlement if the British join us in the program—and if they do not.

(3) The kind of a proposition we are prepared to make to the Shah: i.e. what we think he should do; what kind of support he could expect from us, and from the British insofar as we act as “guarantors” for them; the principles upon which the oil dispute must be settled when the time comes.

Having reached decisions in principle concerning these points insofar as it is possible to do so at this early stage, and assuming that our decision is to go ahead, the staff selected to detail and carry out the next phase must include one or two who know the Shah personally and command his confidence. Presumably the British contact would be between very high officials. Depending upon the nature of the British participation, they might add their own representative to contact the Shah.

From here on, we must work back from what the Shah would have to do, and what opposition might be expected.

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What would the Shah have to do?

The Shah’s basic program probably still remains what was outlined in our Embassy’s dispatch of 21 June, 1952,2 which outlined his situation and intentions as of that date, based upon personal discussions between members of the Embassy (and myself) and both the Shah and General Razmara (immediately before he became Prime Minister).

The significant change since then is that Mossedegh is now Prime Minister, which introduces an unpredictable factor at the outset of any operation which depends upon his actions.

This has more to do with the timing of the Shah’s action than with the program itself, since the essence of the plan is that the Shah take control from the outset and thereafter determine the course of events, regardless of who is his Prime Minister.

The Shah must be ready to act instantly when circumstances favor the proposed action. He can be expected to have his own ideas on this, and perhaps will know best because of his own knowledge of the top military officers and other key men upon whom he must rely.

It might be expected, however, that such situations as the following would provide the circumstances most favorable for him:

(a) Mossedegh’s retirement as Prime Minister, for any reason; i.e. death, illness, resignation, deposition.

(b) Severe rioting or other outbreak of violence which would furnish ostensible justification for declaring martial law.

(c) Refusal, with conspicuous demonstrations, of any group to comply with an official and legitimate decree or proclamation, again as an ostensible justification for declaring martial law.

(d) Possibly, although this must depend upon conditions which we cannot be sure of and which the Shah himself might best appraise, Mossedegh’s own decision or willingness to collaborate with the Shah [Page 332]to save himself and whatever he stands for, from Kashani and the Tudeh forces.

In any event the decision as to whether Mossedegh would remain as Prime Minister or be replaced, must depend upon his importance as a leader at the time of the Shah’s action, and upon his own readiness to support the Shah’s program. It is readily conceivable that Mossedegh might accept such a course as a way out with honor, perhaps remaining as Prime Minister only long enough to insure that his own personal followers will support the Shah, initially at least.

In the event that Mossedegh neither disappears as Prime Minister nor can be relied upon with certainty to collaborate with the Shah, when other circumstances furnish a favorable opportunity for the Shah to take over, he and his principal lieutenants would have to be regarded as in the same category with other “leaders” whose actions threaten the national security.

For the Shah’s success the first requirement is that he have his own resolution to succeed fortified by our assurances, and preferably those of the British, that we will approve and defend the propriety and necessity of his actions before world opinion, and that we are prepared to assist his new government economically and technically in carrying out agreed upon reforms.

These assurances on our part should be supplemented, in private and realistic conversations, with any helpful advice that we can give both as to the initial conduct of his program and as to the probable consequences if he should fail to establish responsible rule within his country.

Our part would be limited to our private contact with the Shah prior to the establishment of his government, and normal channels thereafter.

The steps which the Shah might and probably would have to take within the first twenty four hours of his program are as follows:

(1) Declare martial law, subject to his orders. (This would include use not only of the army but also the National Police and the Gendarmérie, which are in effect part of the country’s armed forces.)

(2) Arrest and hold in safe confinement a certain list of group leaders and others of subversive influence, subject to trial in appropriate courts.

(3) Dissolve the Majlis and exercise his right to rule by Royal Decree pending the installation of a new Majlis, in due course, elected under new (decreed) election laws.

(4) Forbid and prevent subversive mass meetings.

(5) Close subversive newspapers and arrest their editors.

(6) Appoint Ministers to essential cabinet posts.

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(7) Decree certain high priority reform laws (e.g. relating to the judiciary, taxes, public elections, etc.)

(8) Arrest for orderly trial a considerable number of government officials or ex-officials who have been conspicuous for misappropriation of public funds, and against whom there is substantial ground for indictment.

(9) Make known through all available propaganda channels that it is his intention to exercise his constitutional powers and Royal prerogatives to establish responsible government within the country, aimed at the security and well being of the people.

Immediately following these initial acts by the Shah must come our own public statement, from the President or Secretary of State, in the effect that the Shah’s democratic views and sincere interest in the welfare of his people have long been known, and that after a considerable period of admirable restraint while allowing the politicians and government officials an opportunity—which they had failed to take—to meet the recurring crises threatening the country, he had at last exercised his constitutional powers and his responsibilities as Sovereign in a manner that earns the commendation of all freedom loving peoples.. . . or equivalent).

A corresponding statement by the British would be desirable.

The Shah and his new Government must then actively undertake the program discussed elsewhere, aimed at changing the psychological climate from despair and hostility to hope and confidence, in preparation for the material economic reforms in which we would aid.

The first few months would be devoted to extensive organizational work in administrative, and executive agencies, and to the prosecution of the program aimed at our first “psycological” objective. Substantial progress must be made toward this objective before we can shift from “psychologic” to “economic” criteria to guide our efforts (or those of the Shah).

Until emotional hysteria has subsided to a point where it no longer determines national behaviour, and no longer provides subversive interests with a powerful instrument in opposition to orderly government (and to our own aid efforts), it will be futile to attempt a reasonable settlement of the oil dispute and unwise to endanger the broader program by raising the issue.

If the British are prepared to accept the program outlined here (or a generally equivalent one) they may be prepared also to extend financial assistance as necessary to carry the Shah’s program along to a point which makes an oil settlement possible, provided of course that this intention on the Shah’s part (and our own) from the beginning.

Whether the British contribute financially or not, we would have to help the Shah restore a reasonable measure of financial stability within his country, pending the resumption of oil revenues.

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Since the intention, by all concerned, to resurrect the oil industry on some reasonable basis is taken as a premise in this argument, it should be possible to make certain moves in that direction in part solution to financial problems, as soon as it becomes evident (or probable) that the Shah’s program will succeed. Thus sales of crude oil might be started, perhaps under the trusteeship of the World Bank, even before—and without prejudice to—subsequent negotiations aimed at settlement of the major dispute. This would be practicable only if the British agreed, in which case the major oil companies would be almost certain to comply with any reasonable requests made upon them by our or the British governments. Their cooperation would greatly facilitate such an operation.

It is probable that the resumption of oil dispute negotiations on a rational basis will subject the popular temper to its severest test, hence this should not be done until there is a basis for assurance that the population is psychologically prepared. Even then a step by step solution may be necessary.

Broadly, the following “principles” might have a part in determining the ultimate oil settlement: (1) Substitution of private for HMG ownership in Company operations within Persia; (2) Recognition of legality of nationalization with compensation; (3) Offset compensation due Company by rentals due Government under an operating contract between them which provides for operation by Company and preserves its equities, arranging division of profile and other terms conformably with recent oil agreements elsewhere; (4) Create new Company corporation to operate within Persia under foregoing contract, to separate old Company from new picture. This might mean separate new corporations for producing and for refining, to provide for different degrees of Persian control.

  1. Source: Central Intelligence Agency, Office of the Director of Intelligence, Job 80B01676R, Box 41, Folder 20, Shah of Iran Operations. Confidential. The memorandum is attached to a letter from Dulles to Bruce, September 3, which is itself attached to a memorandum from Dulles to Roosevelt, also September 3. In his letter to Bruce, Dulles commented about Thornburg’s memorandum: “I would point out that the memorandum of 22 August 1952 and very possibly the section on Iran in his memorandum enclosed with his letter of 28 August were prepared before he had information regarding the latest developments resulting from Mossadegh’s attitude to the joint proposals.” In the Deputies’ Meeting held on August 20 at the Central Intelligence Agency and chaired by DCI Smith, Dulles reported “that (1) Max Thornburg, an expert on Iran, was in the city and he expected to seem him today; (2) he would furnish a report of his conversation with Thornburg to the Director; (3) Thornburg had submitted a plan for Iran which has been sent to NE for study.” (Ibid., Folder 10, Minutes of Deputies’ Meetings)
  2. Presumably a reference to telegram 1168 from Tehran, June 21, 1950, describing Prime Minister Razmara’s reform program. Richards, Counselor of Embassy, commented favorably and wrote that “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.” (National Archives, RG 59, Central Files 1950–1954, 788.00/6–2150) In a memorandum to Jernegan on September 10, 1952, Richards wrote that the Razmara program “was idealistic and was proved to be utterly impracticable. There has even been suspicion that Razmara, who could play the game of intrigue as well as Thornburg or better, deliberately allowed this Utopian plan to be created in order to impress the Americans that he was a good man to support.” In connection with Thornburg’s proposals of August 1952, Richards commented that “his reliance on the Shah as the ‘key’ to the situation seems to me ill-informed and unrealistic. The Shah’s inability or unwillingness to act forcefully during the July 21 riots provides to our mind a good example of his weakness which would probably appear again in any similar situation.” (Ibid., 788.00/9–1052)