The Acting Secretary
of State to the Embassy in the United
2642. Definitive reply to Mosadeq’s recent request (urtel 2432 Nov 202) for direct financial assistance will not be made for some time if at all. While Dept position not yet final it is unlikely assistance of this type will be granted unless and until it becomes clear such aid is essential to preserve Iran for free world and preferably to govt more cooperative with us and more realistic on oil issue [Page 286] than present govt. In any event no more aid wld be granted than bare minimum to keep IranGov going so pressure to settle oil dispute wld not be relieved. Dept has given no encouragement to Irans that aid will be forthcoming, however, Irans apparently have deliberately misconstrued courteous language of Pres’s reply to Mosadeq to create impression he is not returning empty-handed and possibly to force US hand. We are trying to correct this impression.
We contemplate proceeding with aid programs under MSA. These include mil assistance in neighborhood $34 million and econ aid of Pt Four type with some econ development projects in amount of $23,050,000. These programs have been discussed with Brit here and in Tehran who have put forth no objections. Only request of Amb Shepherd in Tehran was that econ aid not be granted in lump sum and this is, of course, not contemplated. Exim Bank loan has been discussed with Mosadeq’s del by Bank but Irans have not been encouraged to expect immediate action since they have not yet met previously stated requirements for implementation loan.
Shld it be found necessary to render Iran budgetary support of type requested by Mosadeq, Brit will of course be informed in advance and be given every chance to express their views.
Dept has no particular desire support Mosadeq regime since Dept believes he has by his own actions taken his country down road to disaster. Dept is of opinion however that both in proposals made through Ala in Sept and in recent discussions here he moved some distance from earlier attitude and that while agreement with him wld be extraordinarily difficult, it is not impossible. Brit did not, however, make counter proposals to objectionable points in Dept suggested basis for settlement and Mosadeq returned to Tehran convinced that Brit had no intention of ever dealing with him. While we understand Brit position, fact remains Brit must share some responsibility with the Irans for impasse we have now reached.
- Drafted by Ferguson and cleared by Bonbright, Thorp, and Matthews. Repeated to Paris and Tehran.↩
- In telegram 2432 Ambassador Gifford asked for information on the form and scope of aid for Iran that was then under consideration in Washington, emphasizing the bad impression which any policy that seemed to perpetuate Mosadeq’s regime would create in the United Kingdom. (888.10/11–2051)↩