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374. Quarterly Report Prepared in the Directorate of Plans, Central Intelligence Agency1

IRAN

July–September 1954

I. Summary of PP/PM Action

[6 paragraphs (30 lines) not declassified]

II. Summary of Results

[1 paragraph (3 lines) not declassified]

The 28 Mordad celebration was an outstanding success and contributed materially to enhancing the prestige of the Zahedi Government. It also gave the public further evidence of harmony between the Shah and Zahedi at a time when rumors that “Zahedi would be replaced” were impeding the effectiveness of the present government.

Large-scale propaganda exploitation of the Tudeh roundup has resulted in reducing some of the public’s previous antagonism towards [Page 929]the Zahedi government’s security measures and has heightened public recognition of the Tudeh menace.

III. Significance of Results

While the expected passage of the oil ratification bill successfully culminates a major Station effort, it remains to be seen whether opposition to Zahedi will continue to mount. The Shah has stated that he will continue to support Zahedi if the latter takes steps to raise the general standard-of-living in Iran and pushes through necessary government reforms. Active “politicking against Zahedi by some cabinet members, certain high military officials and various Majlis and Senate members is increasingly evident, but it is the consensus that, barring unforeseen circumstances, Zahedi can remain in power as long as he continues to receive the Shah’s support.

While the uncovering of the Tudeh plot has temporarily increased the prestige of Zahedi’s government, any direct evidence substantiating rumors that the government is utilizing this exposé for “political assassination,” will boomerang strongly against the government.

In sum, although the probable ratification of the oil agreement has greatly enhanced the chances of maintaining political stability in Iran, such basic issues as the low standard-of-living, corruption in government, and nationalist resentment of foreign influence and strong government measures against any form of political opposition, are all factors threatening the continued stability of Iran. The Government’s success in coping with these issues will to a large extent determine its fate in the coming months.

[name not declassified]
Chief, NEA–4
  1. Source: Central Intelligence Agency, DDO/IMS Files, Job 81–01061R, Box 3, Folder 5, CS Quarterly Report, July–September 1954. Top Secret.