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224. Notes on the Remarks of the Ambassador to Iran (Henderson) to the National Security Council Planning Board1

In March 1952 we didn’t see how the Mossadegh Government could last out the summer. It had great financial problems. It apparently could not expand its currency and it was without the heavy revenues from oil. As a matter of fact, the government did fall in July and Qavam became Prime Minister. But the Shah did not back Qavam and the mobs forced him out in two days. The Shah apparently withheld his support because he hoped for a leader better from his point of view than either Mossadegh or Qavam. Mossadegh came back to power and [Page 600]was very much stronger than before. He was granted full powers for six months by the Majlis, the legislative assembly. Mossadegh, in order to finance the government, started issuing currency. We estimate that so far he has issued about 3,500,000 rials.

When I (Mr. Henderson) spoke to the Planning Board last November, I was hopeful that an oil agreement would be achieved which would preserve the basic existing principles of international commercial intercourse.2 The U.S. favored a lump-sum settlement which would not detail reasons, to avoid the argument of whether compensation should be made for loss of future profits. By mid-January of this year Mossadegh’s statements gave us some hope, but then he and his three advisers, all of whom are unfriendly to the West and very nationalistic, considered the plan and rejected it. They offered counter-proposals. On February 20 we presented the most liberal proposal so far. On March 20 it was rejected.3

Mossadegh did not listen to the other political leaders in Iran, and this alienated them, including Kashani. Mossadegh came to believe that the Shah was backing these oppositional elements. In January, therefore, he began making demands on the Shah. First, he demanded that the Shah give up his role as commander-in-chief of the armed forces. Secondly, he attacked the use the Shah was making of Crown lands. The Shah was using the funds from these lands for charity in the name of the Crown, and giving the lands away gradually in a land reform movement. Mossadegh, a big landowner himself, believes in the traditional landowning institutions and didn’t like this royal example. He demanded that the Crown lands be turned over to the nation, and that the profits be given to charity in the name of the nation rather than in the name of the Crown. Thirdly, he demanded that certain religious shrines in the custody of the Shah, from which considerable funds are derived, be turned over to an appointee of the Prime Minister. A man named Ala is one of our best friends in Iran. He was at one time the Iranian Ambassador to the U.S. and for many years Court Minister (adviser to the Shah), but has now been forced out of power. This man advised the Shah not to give way to Mossadegh’s demands. The Shah was [Page 601]unwilling to accede to Mossadegh, and yet was unwilling to test his own power. He planned to leave the country on February 28. The Communists (Tudeh Party) put out anti-Shah leaflets. We believe that the Shah, despite his weaknesses, is a factor for Iranian stability. And so, as the hour for his scheduled departure came closer, I telephoned the Shah. He said he expected to leave in two hours. Then I called Mossadegh, and asked him to remove the pressure on the Shah to leave. Mossadegh charged me with interfering with Iranian internal affairs, but we both understood each other. Mossadegh did not budge. A large mob, favorable to the Shah, surrounded his palace, kept him from leaving, and then attacked Mossadegh’s residence. Mossadegh went to the Shah and asked him what they should do. The Shah decided to leave the question up to the Majlis and his indecision again cost him the situation. Mossadegh told me later that there had been an attempt on his life, but I don’t take this seriously as the Shah has “old-fashioned ideas against assassination”. After this crisis blew over, Mossadegh presented a memorandum to the Majlis transferring the powers of the Shah to him. It still has not been acted upon.

An important time for Iran is near. Next month a new president of the Majlis is due to be elected. The incumbent president, Kashani, is opposed by Mossadegh. Having only 30 votes out of 80 in the Majlis, Mossadegh’s National Front is going to prevent a quorum by absenting themselves.

I saw Premier Mossadegh the day I left and was asked for U.S. aid. This despite his previous declaration that he would never ask the U.S. for aid. The reason for this change of heart is that, while the internal situation in Iran is satisfactory, the foreign exchange balance is critical. Last year a good crop helped this foreign exchange picture. And Point Four has been very helpful to Iran, giving it sugar which otherwise would cost scarce dollars.

It is impossible for the U.S. to give further aid to Iran at this time because of what it would do to our relations with the British. A real crisis again is impending. But it is hard to say what will happen, because the Iranians are very lucky. For the last hundred years they have made out somehow, despite their own ineptness. Right now the Communist “peace offensive” is helping them, since it is relaxing the pressure from the Tudeh Party.

It is my opinion that there is no hope of settling the oil problem so long as Mossadegh is in power.

[This concluded the statement by Mr. Henderson.]4

  1. Source: Eisenhower Library, Special Staff File, Box 4. Top Secret; Security Information. There is no drafting information on the notes.
  2. An apparent reference to Henderson’s participation in the NSC Senior Staff meeting of December 6, 1952. See Document 150.
  3. In telegram 3296 from Tehran, February 20, Henderson reported on Mosadeq’s reaction to the Anglo-American joint proposals for settlement of the oil dispute presented to the Iranian Government on February 20. “Referring to proposals in general he said he was afraid he would have to reject them primarily because of terms reference; nevertheless he did not (rpt not) wish do so without discussion with his advisers.” (National Archives, RG 59, Central Files 1950–1954, 888.2553/2–2053) Despatch 780 from Tehran, March 24, contains the text of Mosadeq’s radio address of March 20 discussing the oil dispute and the reasons for his rejection of the February 20 proposals. (Ibid, 888.2553/3–2453) See also Document 157.
  4. Brackets in the original.