257. Monthly Report Prepared in the Directorate of Plans, Central Intelligence Agency1
A. General Developments
1. July developments suggest that a major political crisis is brewing in Iran. The opposition’s success in preventing action in the Majlis on Mossadeq’s requests resulted in the surprise resignation from the Majlis of all government supporters, leaving that body without a quorum. Mossadeq now proposes holding a national referendum, on 3 August in Tehran and 10 August in the rest of the country. The referendum will seek national approval for the dissolution of the present Majlis and also revocation of the Shah’s power to appoint prime ministers by royal firman. It is generally conceded that Mossadeq would receive overwhelming popular support on these proposals.
2. Mossadeq’s increasingly open espousal of communist support has alarmed some of his erstwhile staunchest supporters, most notably the Qashqai brothers and the powerful Amini family. This alarm was heightened by the fact that the Tudeh demonstration in celebration of the first anniversary of the overthrow of Qavam on 21 July so completely overshadowed the demonstration staged by Mossadeq’s National Movement.
3. Mossadeq and his supporters were given a clear indication of the U.S. government’s concern over the mounting communist strength in Iran by Secretary Dulles’ recent statement to the press.2 They also were served notice, through President Eisenhower’s letter to Mossadeq,3 that the Iranian government would not be bailed out of its economic difficulties by the U.S. so long as it demonstrated no sincere interest in achieving an oil settlement with the British.
B. Station Synopsis
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C. Operational Summary
Political and Psychological Warfare
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[1 paragraph (3 lines) not declassified]