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[Page 582]

215. Memorandum of Conversation1

SUBJECT

  • Economic Aid to Iran

PARTICIPANTS

  • Mr. Norman Paul, DMS
  • Mr. Robert Black, DMS
  • Mr. Arthur L. Richards, GTI
  • Mr. R. Bernard Crowl, GTI
  • Mr. John H. Stutesman, Jr., GTI

At their request, Mr. Paul and Mr. Black called on Mr. Richards following instructions from Mr. Stassen to open conversations with the Department regarding increased economic aid to Iran.

Mr. Paul stated that he was informed that Secretary Dulles and Mr. Stassen in Karachi had discussed the Iranian situation and had come to the conclusion that it was not practical to press for a solution of the Anglo-Iranian oil dispute at this time. They were of the opinion, however, that Iran’s agrarian economy should be kept afloat and that perhaps $15 or $20 million should be added to the presently-proposed TCA and economic aid programs for Iran in FY 1954. The thought was that Iran’s essential foreign exchange requirements might be met in some degree in ways such as purchasing vehicles, spare parts, and similar commodity items for Iran. The conversations between DMS and State should determine (1) a general level of the FY 1954 program, and (2) the kind of items necessary to include in the program.

Mr. Richards stated that he expected Ambassador Henderson’s arrival on consultation this week to give rise to high-level policy discussions regarding Iran. He pointed out that it was still somewhat unclear whether our government policy was to endeavor to keep Iran’s economy afloat even though Dr. Mosadeq’s government might thereby be strengthened. He pointed out that there was an influential body of opinion that any assistance to Iran beyond the present level could only serve to keep Mosadeq in power and remove certain pressures upon the Iranians to come to an early settlement of the oil dispute.

Mr. Paul said that they have no intention of “running with the Ball” but would appreciate being advised when a policy decision has been taken in regard to increasing presently-proposed levels of economic aid for Iran.

  1. Source: National Archives, RG 84, Tehran Embassy Files, general classified records, Box 14. Secret; Security Information. Drafted by Stutesman.