The Director of Central Intelligence asks that the attached memorandum be
shown to the President.1
[Attachment]
Memorandum by Paul A.
Borel, Office of National Estimates, Central
Intelligence Agency, to the Director of Central Intelligence
(Smith)
top secret
Washington, 17 January 1952.
Subject:
- Mosadeq’s Demand for
Emergency US Aid
On 13 January Premier Mosadeq
presented US Ambassador Henderson
with a demand for immediate US emergency financial assistance to cover
his government’s current budgetary deficit of approximately $10 million
monthly.2
Mosadeq asserted that without this
assistance “Iran would collapse” within 30 days and the Tudeh would take
over the government. Mosadeq added
that if US assurances of aid were not given soon (he first mentioned
five days), he would be forced to seek Soviet assistance.
Emergency funds now available to the government will almost certainly be
exhausted before mid-February. Although Mosadeq
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could in theory avert a
financial crisis for a considerable period after that without foreign
assistance, it was to be expected that he would make a strong plea for
US emergency aid because: (1) the internal measures necessary to avert a
financial crisis would evoke strong political opposition; (2) emergency
US aid on his terms would strengthen his political position,
particularly against the conservative opposition, and postpone the
necessity of his coming to grips with the oil question; and (3) US aid
would tide him over until after the scheduled elections when he would be
in a stronger position to obtain Majlis support for the fiscal measures
required to ease the government’s financial position. These
considerations, therefore, may have induced Mosadeq to couch his request for US aid in the strongest
possible terms in the hope of convincing the US that immediate financial
assistance to the Mosadeq regime
is the only alternative to Communist control of Iran.
Although Mosadeq may have
exaggerated the urgency of the situation confronting him, it is most
unlikely that the Mosadeq
government will be able to meet its financial obligations beyond the
beginning of March unless it adopts effective internal financial
measures or unless it receives aid from the US or the USSR.
If denied US aid, Mosadeq almost
certainly will press forward with negotiations now under way with
Czechoslovakia and Poland for the sale of some two million tons of
Iranian oil, and will probably also seek oil deals with other members of
the Soviet bloc or with the USSR itself. However, it is unlikely that
the Soviet bloc could provide enough tankers to move financially
significant quantities of oil from Iran, and thus the sale of oil to the
Soviet bloc would probably not provide Mosadeq with a lasting solution of his financial
problems. Moreover, although the USSR might be willing to provide
Mosadeq with limited advances
against future oil deliveries in the hope of scoring a major
psychological triumph which would improve Tudeh’s chances of ultimately
coming to power, we do not consider it likely that the USSR would be
willing to give Mosadeq sufficient
financial assistance to enable him to stabilize his position.
If Mosadeq fails to get prompt
financial assistance from the US or the Soviet bloc, an internal crisis
will probably develop rapidly, even if not within the next 30 days.
Mosadeq has only an even
chance under present conditions of obtaining Majlis authorization for
the necessary emergency financial measures and there is an increasingly
strong probability that he may not even attempt to do so. He might well
postpone such action until conditions have deteriorated to the point
where he could no longer control the situation.
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We do not believe that such a crisis would result in immediate assumption
of power by Tudeh, as Mosadeq has
intimated. It is unlikely that the Tudeh will gain enough strength
during the next two or three months to take over the government by
force. There remains an even chance that the Shah and the conservative
elements would take over the government in the event of Mosadeq’s downfall in the next month or
two as a result of a financial crisis. If the conservatives do not act,
however, or if they do not adopt sufficiently strong measures to control
civil disturbances, the opportunities for Tudeh seizure of power in
parts, or all, of Iran would substantially increase.
Unless Iran’s oil revenues are restored, emergency US aid would do little
more than postpone a crisis, and the trend toward economic and political
deterioration in Iran would continue, even though at a reduced rate. It
is unlikely that receipt of US emergency aid would induce Mosadeq to cooperate with other US
measures for strengthening Iran economically or militarily. Moreover,
such US aid to Mosadeq would not
only tend to alienate the British but might discourage the Shah and the
conservative opposition, thereby reducing the chances for a more
amenable government’s coming to power.
Ambassador Henderson has suggested
that US emergency aid might be made subject to an oil agreement on terms
somewhat more generous to Iran than those previously discussed. Such a
solution would require strong pressure being brought to bear on the
British, the AIOC, and the other
Western oil firms. Moreover, we believe that in view of Mosadeq’s increasing obduracy not only
on the oil question but toward the UK and the US, there is only a remote
chance of obtaining his agreement to a proposal which did not meet all
his previously stated demands.
For Assistant Director, National
Estimates:
Paul
A. Borel
