Truman Library, Truman papers, PSF–Subject file

No. 147
Memorandum by J. S. Earman, Executive Assistant to the Director of Central Intelligence, to Rear Admiral R. L. Dennison, Naval Aide to the President

top secret

The Director of Central Intelligence asks that the attached memorandum be shown to the President.1

J. S. Earman


Memorandum by Paul A. Borel, Office of National Estimates, Central Intelligence Agency, to the Director of Central Intelligence (Smith)

top secret


  • 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 [Page 329] 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
  1. The following handwritten notation appears on the source text: “I do not think that we should make this advance now. H[arry] S. T[ruman]”. The following typed notation also appears on the source text: “1–25–52—President said he talked to the Secy. of State—no letter necessary. Rose A. C[onway].” For the Department of State instructions to Tehran conveying the President’s wishes, see Document 152.
  2. See footnote 2, Document 145.