174. Memorandum From the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Byroade) to Secretary of State Dulles1


  • Proposed Discussion of Iran in the National Security Council, March 11

Developments of the past few weeks in Iran have been very confused. In this situation it is difficult to plan policy action for the future. We feel we must be prepared for all eventualities but can hardly take a firm decision upon a course of action until we see who wins out in the present internal political struggle in Iran and what the Iranian position will be on the oil question and other matters affecting the West.

At the moment, it appears that Mosadeq is gaining the upper hand. He has indicated to Ambassador Henderson that he will turn down recent oil proposals and will attempt to place the blame upon the United States. He asked Ambassador Henderson whether the U.S. Government, in the absence of an agreement regarding compensation between the British and the Iranians, (A) would buy Iranian oil; (B) would encourage private American firms (1) to purchase Iranian oil and (2) otherwise assist Iran in production and export of oil; (C) would extend immediately to Iran a loan to be repaid subsequently in the form of oil.

It is our recommendation, in the present fluid situation, that we consider the adoption of Henderson’s recommended “Course C”, an analysis of which is attached (Tab 1).

On March 4, NSC suggested three possible courses of action in regard to Iran (NSC Action No. 729).2 Brief notes which you may wish to see in an oral response are attached (Tab 2).3

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Tab 1



  • Ambassador Henderson’s Recommended Course of Action to be followed should Mosadeq reject recent oil proposals

Ambassador Henderson in his telegrams 2865 and 2866 treats of policies which the United States might pursue in a new situation which would be created by the rejection on the part of Dr. Mosadeq of recent proposals to settle the Anglo-Iranian oil dispute. He arrives at a conclusion that what he calls Course C should be followed:

Course C: U.S. Government not to purchase Iranian oil in the absence of a compensation agreement and not to encourage or discourage U.S. firms in this respect. The U.S. Government not to furnish Iran financial assistance in such circumstances. The U.S. Government would continue, however, to give TCA and military assistance and perhaps a certain amount of economic development assistance so long as Iran desired such assistance and appeared to benefit from it.”4

Ambassador Henderson points out that if Course C is followed the question remains whether it should be a matter of fixed policy or whether it should be only a tentative position pending determination of definite policy in light of subsequent developments. He recommends adoption of Course C “just as fixed as any U.S. policy can be in the present political situation” immediately after Mosadeq rejects the proposals. His reasons are that postponement of determination by the U.S. of its policy will be regarded as vacillation resulting from timidity or lack of firmness in supporting the principles on which the decision is based. Hesitation, followed by decision not to buy oil or give financial aid, may so blur fact that we are acting on principle, not expediency, that decision when reached may create more resentment than one made now. He points, however, to grave risks which will be involved in adoption of Course C. There is a possibility that Mosadeq and other Iranian political leaders may in their disappointment and resentment take steps to stimulate increased Iranian hostility against the West in general and the U.S. in particular. In their efforts to cause us to change our policy, they might encourage anti-West and pro-Soviet movements in Iran to such an extent that Iran would lose its balance completely and topple into the Soviet orbit. Indications of concern on our part that these acts are leading Iran to destruction might merely encourage them to take additional rash measures.

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The Iranians might assume attitudes toward TCA, military missions, and U.S. Consulates which would leave us no choice other than to withdraw. They might create so many difficulties for the Embassy that it could no longer function properly. They might harass U.S. officials, missionaries and other U.S. nationals in Iran to such an extent that life would be almost unbearable. They might tolerate demonstrations against the U.S. which would develop into violence against U.S. nationals and property. They might make exceptionally friendly gestures toward the Soviet Union or other members of the Soviet bloc, possibly including sales of petroleum or other products which would bring Iran into conflict with Battle Act legislation.

Nevertheless, regardless what occurs, Ambassador Henderson believes we should continue to stand firmly and calmly on the rock of principle. In his opinion, if we do not permit ourselves to be goaded by Iranian actions into some ill-tempered impulsive action of retribution, eventually we shall obtain more respect from Iran, if Iran survives as an independent state, than if we capitulated before Iranian threats to go over to the Soviet bloc. He points out that Dr. Mosadeq has a theory that Iran’s advantage is served when there are international rivalries among great powers. He thinks that Iranian leaders will have more regard eventually for the U.S. if they become convinced that they cannot, by playing on conflicts between it and the Soviet Union, prevail on it to jettison principles upon which intercourse between nations is based. He fears that if we embark on any other course we may be deserting the firm ground of principle for a morass in which as we proceed we shall become progressively more deeply entangled.

  1. Source: National Archives, RG 59, GTI Files, Lot 57 D 529, Box 40, NSC 1951–1954. Top Secret; Security Information. Drafted by Stutesman. Printed from an uninitialed copy.
  2. See footnote 5, Document 171.
  3. Attached but not printed.
  4. The quotation is from telegram 2865 from Tehran, January 24. (National Archives, RG 59, Central Files 1950–1954, 888.2553/1–2453) Telegram 2866 from Tehran, January 24, is ibid.