888.10/4–1852: Telegram

No. 177
The Secretary of State to the Embassy in Iran1

top secret

2742. Problems raised urtel 3999 Apr 182 which have been lent emphasis by urtel 4540 May 24 have been receiving careful consideration. Fol reflects current thinking: [Page 387]

Dept agrees that shld Mosadeq be replaced by Govt with strength of purpose to defend itself against external communist aggression or internal subversion and willing and able realistically negot for oil settlement with Brit, US shld do utmost assist such Govt in installing stability and in developing economy in such a manner as to reduce danger loss of Iran through internal communist subversion.
Since it will be necessary for West to act promptly and vigorously in event such a Govt comes to power, we have been urging Brit at all levels to complete preparation proposal for long-range settlement to be offered immediately moment is ripe. We have been exploring possibility extending finan aid to tide Govt over until oil revenues are resumed. We wld also seriously consider to extent permitted by legis and fund availabilities such increases in existing programs as might be urgently required by Iran, although uncertainties both as to specific amts of aid Iran might need and as to Cong action upon pending aid legis render it impossible to make firm plans or commitments. Assuming (a) reasonably favorable Cong action on pending MSA legis and (b) replacement of Mosadeq by dependable successor willing settle oil controversy, max order of magnitude aid to Iran which Dept, after consulting DMS, can today envisage for FY ’53 is $30 to $35 million milit (including packing handling and shipping); $25 million Pt Four; and possibly up to $60 million finan if an emergency exists sufficient to justify transfer from other titles and other country programs (this wld involve Presidential findings and Congressional consultations). In addition $25 million Exim loan might under certain circumstances be made available.
Irans have often expressed resentment US treatment of Iran has never been as favorable as US treatment Greece and Turkey and are inclined invidiously to compare aid rendered Iran with that under the Grk-Turk programs. Fact is that concepts Truman Doctrine apply equally to Iran as to other countries which we aid. Extent and nature of aid to each country however is based not upon what others receive but upon such factors as (a) their needs, taking into account their own resources, and (b) the extent to which such assistance can be effectively utilized. If by “no less favorably” Emb means aid programs to Iran at approximately levels in Greece and Turkey, ans question 4a Embtel 39993 wld probably be that while US prepared apply similar criteria in establishing Iran needs, such needs wld be less than those of Greece or Turkey. This is particularly true in view fact by settling oil controversy, Iran requirement for fon finan aid wld be limited except in initial stages resumed operations, and absorptive capacity Iran armed forces as effective instrument free world strength far less than Grk or Turk. This connection pls confirm whether Dept’s understanding is correct that you and mil mission believe mil aid of roughly $30–$35 million is max Iran cld make effective use for FY ’53.
In view complications vis-à-vis UK, finan aid to Iran must perforce be contingent upon Iran willingness and ability negot realistically for settlement oil controversy. It is difficult to say at this time exact nature of assurances which might be required from IranGovt, but firm statement intention negot plus tangible action to demonstrate that a feasible deal is possible might be adequate. On complicating angles US–UK relations Dept will tel you fol Secy’s return from Europe, where he might have discussed Iran problem with Eden.

It is recognized it will be impossible for you at this juncture to give Shah advice which he has requested through Ala. Complicating factors are: (a) We do not know Brit intentions re proposals to successor Govt; (b) uncertainties of Congressional action upon pending MSA legis; and (c) necessity for informing Brit of new important policy decisions bearing directly or indirectly upon oil matter which we might communicate to Shah. However, Dept agreeable at ur discretion and if you believe it wld have beneficial results ur taking fol line with Shah and/or Ala now, which wld be largely to reassure them sincere interest of US in Iran and our willingness render all practicable assistance:

Emphasize that our concern for independence, sovereignty and territorial integrity of Iran is no less than our concern for independence, sovereignty and territorial integrity of Greece and Turkey. US has made this clear on number of occasions, including several public statements by top US officials (cite for instance Secy’s statement of Mar 18, 1949).4 Today, because of immed danger Iran’s current unhappy situation, our concern for Iran’s integrity is even more in forefront of our minds than our concern for Greece and Turkey. Thus far, however, opportunities for our aid being effective, because of conditions in Iran, have been far less in Iran than in Greece and Turkey, although very appreciable assistance—totaling roughly $125 million—has in fact been given or is in process and substantial additional Pt 4 and mil aid are being considered for FY ’53. The oil controversy itself has, as they will recognize, been a severe handicap in this respect. Were these conditions to change, we wld be prepared to give prompt attention to possibilities of increasing scope and magnitude of our aid.
Form and amount of such aid wld be determined (1) by Iran’s needs after taking into account such actions as Iran itself cld take to facilitate resumption its oil revenues, (2) by degree to which Iran cld effectively and constructively use aid which might be supplied—a consideration involving not only material factors but also Iran’s strength of purpose to defend itself against external aggression or internal subversion, and (3) by limitations established by US Cong on volume and form of aid which US is authorized to make available.
US however does not believe it can advise Shah re dismissing Mosadeq. We wld like to point out however regardless rights or wrongs of matter, it is clear there can be no solution Iran’s most pressing problems in absence oil settlement and it appears there can be no settlement with Mosadeq. (Dept’s suggestion for line to be taken re Mosadeq’s successor contained Deptel 2682 May 24.5)

Figures in para 2 above FYI only. Comments Emb Tehran and London will be appreciated.6

  1. Repeated to London. Drafted by Rountree and Ferguson and approved by Matthews.
  2. See footnote 3, Document 175, and footnote 3 below.
  3. Henderson, in paragraph 4a of telegram 3999, Apr. 18, asked the Department if the United States desired to have Iran cast its lot with the free world, and, if so, if the United States was prepared to treat Iran as favorably as it had Greece and Turkey. (888.10/4–1852)
  4. Presumably the reference is to the Secretary of State’s statement, which was not released to the press until Mar. 23, 1949. For text, see Department of State Bulletin, Apr. 3, 1949, p. 432.
  5. See footnote 2, Document 175.
  6. On June 4 the Embassy in London responded that American officials there agreed with the policies outlined in telegram 2742 to Tehran, but suggested that the United States insist that the Iranians first settle the oil dispute before they were given substantial increases in economic and financial aid. (Telegram 5510; 888.10/6452)