308. Monthly Report Prepared in the Directorate of Plans, Central Intelligence Agency1
A. General Developments
1. The fall of the Mossadeq government overshadowed all other activities and operations in Iran. The successful outcome of the efforts of General Zahedi and his supporters to gain control of the government and the return of the Shah to Iran have undoubtedly paved the way for increased internal stability and closer relations with the U.S., and have created a favorable atmosphere for CIA operations in the country. As a result of the change of government CIA contacts in key government and military circles have been greatly increased; few losses were sustained.
2. Experience has proven, however, that the Iranian internal political situation is given to rapid and drastic change. While CIA should capitalize to the fullest extent on the present favorable situation it should at the same time prepare itself to cope with problems arising under new and possibly unfavorable conditions.
3. The greatest assurance for the maintenance of the present government in power and internal stability lies in a rapid improvement of the country’s finances and economy. Prompt initiation of new labor giving projects under the long-range developmental program, known [Page 741]as the Seven Year Plan, would create popular confidence. This action, if properly propagandized, could be developed into a nation-wide popular appeal, having the effect of reducing the appeal of extreme nationalism and communism.
4. U.S. aid now contemplated may tide Iran over financially for the time being and also provide means for starting developmental works, but in the long run the solution lies in a settlement of the oil problem.
5. The new government wasted no time in clamping down on the Tudeh Party by raiding cells and publications and making arrests. It has established its control over the country generally through the Army and civilian appointments. There is no information on the residual strength of the now latent, extreme nationalist and other pro-Mossadeq elements.
6. The Qashqai who appeared to be on the point of rebelling against the new government at the time of its accession to power, are quiescent at least momentarily, and with a consolidation of the new government it is unlikely that they will take action against it. The Shahsevan and at least a part of the Bakhtiari have given their allegiance to the new government. Other tribal elements appear to be quiescent, except a few minor groups who frequently take advantage of unsettled conditions to raid and plunder.
B. Station Synopsis
[Omitted here are paragraphs 7–12.]
C. Operational Summary
Political and Psychological Warfare
13. Although the anti-Tudeh activities continued, PP operations were largely directed in support of bringing about a change in government.
[4 paragraphs (11 lines) not declassified]
18. There were no important developments in the paramilitary field during the month, as Iranian political developments compelled the station to concentrate its efforts on political and psychological warfare activities.
[1 paragraph (5 lines) not declassified]