89. Telegram From the Embassy in Iran to the Department of State1

265. 1. I opened conv with Qavam this morning by congratulating him on his appt, stating that I was sure that he was accepting it for patriotic reasons since he must be aware heavy responsibilities which he was incurring. His name was familiar to American Govt and American people as Iran statesman who had always supported coop between our respective countries and I sure I speaking for them when I wished him success in accomplishment difficult tasks awaiting him. He replied he had accepted new post reluctantly. He had been Primin so many times that position had no (rpt no) attractions for him. He had accepted in hope he might be able render some services to Iran even in old age. He had always considered US as disinterested friend of Iran. In his younger days under Qajar dynasty when Iran was in difficult position, he had appealed to US for aid and US had saved country by arranging for loan of $2 million. On occasions too numerous to list US had proved to be true friend to Iran. He therefore was encouraged again to ask for US aid. He need not (rpt not) describe finan situation of country. No (rpt no) public funds available. Past due and current govt wages and salaries as well as other urgent bills against govt must be paid at once. He hoped within few months restore Iran’s credit and solvency but country must have immed foreign finan assistance if it was not (rpt not) to move into chaos. US was only country to which he cld turn. He had sent msg to me yesterday re Iran’s urgent needs and he understood that I had already telegraphed Wash. He hoped that his request for help was being recd with sympathy and that he wld have favorable answer in immed future.

2. I told Qavam I quite sure US Govt fairly well informed Iran’s finan situation and that his request for help wld be recd by US Govt with understanding and sympathy. I had no (rpt no) idea, however, whether US Govt wld be in position to extend such assistance urgently, particularly now that Congress was adjourned. First question to which US Govt must find answer was whether it had funds available without Congressional legis to use for aid this kind. Second question was whether it wld be possible in case such funds were available to extend [Page 276] finan aid to Iran in circumstances which wld be acceptable to public opinion of three countries: US, Iran and UK.

3. I said US not (rpt not) accustomed to extending finan or budgetary aid except in emergencies. On several occasions Mosadeq had asked for Amer finan aid and it had not (rpt not) been given him. Amer Govt and public had been of opinion that kind of emergency which wld justify budgetary aid did not exist when request from Mosadeq was recd. There was widespread belief in US that if Mosadeq had taken what US Govt and public considered to be reasonable attitude resolution oil problem Iran wld have been able overcome its budgetary difficulties without finan help from US. It was clear that Amer public opinion was against giving finan aid to Iran in circumstances which wld make it appear that such aid was in fact subsidizing what it considered to be unreasonable attitude of Iran Govt. It seemed to me personally that situation at present was somewhat different. It was my understanding that present govt was anxious solve oil prob on basis which wld be fair and reasonable to all concerned and which at same time wld safeguard Iran’s rights and promote welfare Iran people. Present Iran Govt moreover was in urgent need finan help during period which must elapse before oil problem cld be solved and Iran’s oil resources cld begin again produce badly needed revenues. Yesterday, therefore, I had recommended to US Govt it consider request from Qavam in somewhat different light from requests heretofore recd.2 I told Qavam that such recommendations as I had made had been for aid of limited character. I had recommended limited aid because I did not (rpt not) believe that Amer or Brit public opinion wld look with favor upon extension at this moment of financial aid to Iran in amts greater than might be needed to tide country over period longer than perhaps two months. I had, therefore, urged that US Govt give favorable consideration to extending finan aid to Iran sufficient to enable govt to function until, say, Sept 20, by which time it wld be possible reasses situation in light achievements govt and progress made in solution oil prob. It had seemed to me that by Sept 20 if Iran Govt pursued energetic measures its finan house might be in sufficiently good order, and its progress resolution oil prob might be sufficiently satisfactory to effect restoration Iran’s solvency to such extent it wld be able satisfy its future finan needs thru existing internal and domestic channels.

4. I particularly stressed that if finan credit was to be extended attn must be particularly paid to Amer public opinion. US Govt had no (rpt no) desire interfere in selection members Cabinet. Primin must realize however that US public opinion wld be more favorable if Cabinet members wld so far as possible be men whose integrity and ability wld [Page 277] be unquestioned. Furthermore, domestic program of govt wld also influence US opinion. It wld be helpful, for instance, if US public opinion be convinced that Iran Govt was really serious in its intention to effect certain finan and econ reform which every intelligent Iran knew was badly needed. Furthermore, it important that US public really believe that Iran Govt was sincere in its desire to settle oil prob on reasonable and fair basis. I was quite aware that govt cld not (rpt not) prove sincerity its intentions prior to US decision re granting finan aid to Iran. Nevertheless, what might happen in next few days was important and even after aid was extended it was still more important that Iran Govt follow policies which wld not (rpt not) embarrass US Govt in face US public opinion. Similar sensibilities UK Govt and UK public opinion must not (rpt not) be overlooked. It wld be harmful to US, to Iran and to free world in gen if US and UK shld have serious divergencies re Iran. It was in interest all three countries that there shld be cooperation among them on basis mutual confidence. I hoped new govt wld find it possible to convince Brit Govt and public opinion that it really desired Brit friendship. Neither shld Iran public opinion be overlooked. Any finan aid which US might be able extend to Iran must be given in such circumstances as not (rpt not) to arouse suspicions among Iran people that Iran Govt was in any way sacrificing their interest in order obtain needed funds. Also, every effort shld be made not (rpt not) to give color to charges certain to be made that US was aiding or subsidizing some particular Iran Govt rather than country of Iran. I was sure Qavam himself understood that any finan aid which US might give to Iran at this time was not (rpt not) being given to help him personally or to aid his particular govt. It was being extended for purpose of enabling Iran Governmental apparatus to carry on and for Iran to continue to exist as independent state.

5. I told Primin I hoped he was not (rpt not) disappointed at limitations which I had placed on my recommendations. Also, I wanted again to make it clear that I had no (rpt no) idea whether my govt wld find itself in position to act favorably on my recommendations. I was talking with him with extreme frankness because I believed our relations in future wld be more satisfactory if we were frank and specific and did not (rpt not) waste time in mere generalities.

6. Primin said he was appreciative my frankness, he fully agreed in that it was important that any aid which US might be able extend Iran shld be arranged in such way as to be acceptable to public opinion of US, UK and Iran, and he was anxious to cooperate. He was confident that if we cld give enough aid to permit govt function over period next two months, accomplishments his govt during that period wld more than satisfy American public opinion that its money had been well invested. He did not (rpt not) ask whether by end Sept his govt wld be [Page 278] fully solvent; nevertheless, he believed that by that time both people of Iran and peoples of other friendly countries wld have more reason to trust in future Iran than they have at present. He intended to move just as fast as conditions wld permit in solving oil problems on reasonable fair basis. Qavam added that situation was extremely urgent and he hoped have some kind indication US Govt attitude within next two or three days.

7. It was agreed between Primin and myself that his request for help wld be maintained for time being in complete secrecy. He said, however, that he expected inform Shah of details our conversation.

  1. Source: National Archives, RG 59, Central Files 1950–1954, 788.13/7–1952. Secret; Security Information. Repeated to London. Received at 11:53 a.m. Telegram 265 was transmitted subsequent to telegrams 263 and 264, but is a fuller report on Henderson’s initial meeting with Prime Minister Qavam.
  2. See Document 86, footnote 4.