The Ambassador in Iran (Grady) to the Department
2692. Had luncheon Sat with Shah. He feels better but is still concerned about his health. He feels quite unhappy about oil legislation, and selection Mosadeq, but on basis past procedure, he had no alternative but to accept both. He indicated he did not expect Mosadeq to last long. He is pessimistic with regard to a satisfactory solution of oil question. I never find him confused as we have reported several times Shepherd does. He is very clear and sound in his thinking. He said little to me about the Brit, but Ala tells me he has lost faith in them and fears what they may do. I have told the Shah and other Iranian leaders that the Brit approach is conciliatory and that if they are met in the same spirit an agreement on oil matter can be reached satisfactory to all concerned. A number of Iranians have expressed to me gratification Morrison’s last speech in Commons.
I had mtg Sat evening with group of Senators, including Ala (Embtel 2488, Apr 192). They assured me Mosadeq wld not move precipitously on oil matter. They agreed with me that the comm soon to be appointed shld take time to get all the facts and all the technical assistance needed. They felt, especially Taqizadeh, that Mosadeq’s selection might prove a blessing in disguise for he is the only one who can present a program to the Majlis that has any chance of acceptance.
The group felt that everyone, including the Brit, shld try hard to work with Mosadeq and direct him along sound lines. Of course, I agreed. We all agreed that Mosadeq himself has not the capacity to come to real grips with this problem or probably any other. He is also unreliable as he completely misquoted to Shah my conversation with him but he does seek the best interests of his country as he sees them. All agreed that the oil question is a symbol for the [Page 47] expression of the present intense nationalist drive. Iranians can for the first time defy the powers that have dominated them in the past. The fanaticism is a reflection of the “independence” complex which I have seen in a number of countries. This is not by any means all bad as it also affects their attitude toward Russia. The right kind of patriotism cld pull this country out of its despair. Ala told me Mosadeq had offered him the Ministry for FonAff but when they discussed their views, Ala cld not accept Mosadeq’s “neutrality”. Ala insists on a strong pro-West position. Mosadeq believes Iran must “appease” Russia so Ala was not appointed FonMin. I am not pessimistic about the future of Iran. Despite harsh criticism of US at times, the Iranians believe in US. They know we seek here nothing but their welfare and independence. They are genuinely disappointed that our aid has been so slow and is as yet so small, but we can make up for that in the months ahead. Russia is doing nothing for them, so time is on our side, despite insidious and well organized Sov propaganda here against US.
The whole group agreed that Mosadeq wld not be sympathetic to our Exim Bank loan—too little and too late. The Shah urged me not to press the loan matter until a more sympathetic govt was in. I am more convinced than ever that we shld have given Razmara a loan of $100 million to dangle before the Majlis. The conditions I recommended wld have protected us. What if they did say we promised them $100 million when they are already saying we have promised them $250 million. Even placing the dangers of accusations of unfilled promises against the hazards we ran and are now facing, there can be little doubt as to the sound choice. I am disturbed that the President’s program for grant aid will be announced before I can get Mosadeq to act on the loan. I cannot from the standpoint of Amer prestige press him though I will see him shortly on the matter.
My group discussed what shld happen if and when Mosadeq’s govt fell. All were emphatic that to put in “a strong man” and have govt by decree wld be a fatal mistake. It wld, in their opinion, cause revolt against the Shah and throw the country into chaos.