343. Monthly Report Prepared in the Directorate of Plans, Central Intelligence Agency1
A. General Developments
1. The government of General Zahedi has engendered several points of serious opposition represented by some old-time power seekers, several groups of Mossadeq supporters including the Tudeh, and several hundred bazaar merchants. These opposition factors have found rallying points around the tardiness of the government in the prosecution of Mossadeq and Tudeh leaders, delays in using impact portion of U.S. emergency aid, and public uncertainty over the oil problem.
2. The Shah and General Zahedi have proposed that U.S. military aid be increased to permit the development of the Iranian Army as a frontier screen of defense rather than only as an internal police force. The U.S. Ambassador has endorsed the idea and our Station has urged strong support by CIA as a potent factor in solidifying public opinion behind the Zahedi government and scattering the opposition.
3. The major elements of opposition to the Zahedi government have so far failed to present any insurmountable problem to the government since they have lacked any cohesive effort and no one element is believed to have financial support capable of amounting to a positive [Page 823] threat. Furthermore the Zahedi government is taking significant steps to eliminate the problems which constitute the grounds for opposition.
4. Intra-government discord continues chiefly on the dissatisfaction of General Zahedi with Chief of Staff General Batmangelich and his top aide, and the latter’s overtures to the Shah derogatory to General Dadsetan’s effectiveness in prosecuting the Tudeh leaders.
5. The Mossadeq trials were scheduled to begin the 22nd of October but were subsequently postponed to the first half of November. The government has been continuing its mass arrests of Tudeh members, though reports continue that major leaders have been able to escape arrests by means of bribery.
6. There have been no significant developments on the oil question, though the visit of Herbert Hoover, Jr. to Tehran as a U.S. State Department consultant has been well noted in the Iranian Press.2 The Zahedi government is still endeavoring to reveal the facts of the situation to the Iranian public and it is believed that some headway has been made in the government’s efforts to condition the public toward acceptance of an early oil settlement. There have been significant exchanges between the Iranian and British governments regarding the resumption of diplomatic relations but Zahedi also reportedly believes that the oil question must be resolved prior to re-establishment of diplomatic relations with Britain.
7. The situation remains generally very favorable for the prosecution of CIA activities in Iran.
[Omitted here is operational detail.]