788.00/8–1253: Telegram

No. 341
The Chargé in Iran (Mattison) to the Department of State1


300. Embassy estimate current Iranian situation follows:

With completion country-wide referendum organized on ground “popular will” above constitution,2 Mosadeq will eliminate Majlis which aside from press last remaining forum for opposition. Action will graphically demonstrate truism of his regime that as opposition and discontent have mounted, Mosadeq has moved steadily in authoritarian direction using technique of mobocracy to maintain his hold on power and to eliminate influence Shah.3 Embassy thinks following dissolution Majlis Mosadeq will clamp down in manner designed neutralize present open parliamentary opponents. Action taken by police in raiding and removing printing equipment of opposition newspaper could foreshadow procedures against any paper in future daring assail regime. Hence if opposition figures such as Kashani take religious asylum on issue declarations against Mosadeq, no means would be available in Iran for public to be informed.
While Mosadeq appears clearly embarked upon personal authoritarian rule, at same time he confronted with several internal weaknesses that could make his role progressively more difficult. Prime Minister’s continued appeals to street, culminating in referendum, dangerous expedient which could boomerang against him. While he heads authoritarian regime, he lacks any real authoritarian organization aside from armed forces. Mosadeq may seek to utilize Tudeh machinery as partial compensation for this. It clear Prime Minister making careful play for Tudeh support. One small example illustrative in that he covertly authorized issuance at least forty passports to Tudeh members attend Bucharest Youth Congress. Non-Communist Government followers believed jarred despite their adherence Mosadeq, by US official statements of regimes association with Tudeh. As they increasingly realize truth [Page 743] this fact, become discomfited by American attitude toward regime and by Prime Minister’s efforts associate with USSR, even if only for maneuver purposes, dissatisfaction could mount once again within government ranks. Embassy receiving reports that third force party in dispute over whether it should continue align itself with government in view latter’s cooperative attitude toward Tudeh. Lastly, although this may be peering too far ahead under Iranian conditions, it difficult to see how Mosadeq could, even through most careful handpicking, evolve new Majlis which would remain completely subservient to him under all circumstances or at time when he might truly require its support. Example of Seventeenth Majlis election, when presumably only Mosadeq’s supporters were to be selected as favored candidates, illustrative.
Although Iran’s economic and financial situation continues deteriorate, several avenues are open which might enable government remedy situation on short-term basis. Government has thus far refrained from utilization gold reserves largely through fears opposition would be given effective weapon and adverse psychological effect on population as whole. With reinforcement Prime Minister’s political position as result referendum, these fears lessened. However, government still inclined utilize gold only as last resort stave off acute financial crisis. Brightest spot in present situation is export prospects, particularly carpets, rice and barley. Government estimates exports may be increased as much as 50 percent by volume over last year, thus providing exchange necessary financing essential imports. Third factor which may ease situation is apparent Soviet willingness expand barter trade with Iran and make some concessions on Iran’s financial claims against USSR. If USSR makes available some gold or dollars claimed by Iran, believe Government would have no hesitation utilizing these for current expenses. However, increased reliance on USSR would doubtless entail reciprocal concessions in political realm by Iran. Thus far, real financial pinch felt principally by salaried class, chiefly civil servants. Laboring class, as shown by spot strikes, increasingly affected. Government could by additional printing bank notes increase civil servants salaries and diminish inflationary effect this action by utilizing some of gold reserve for imports and increasing imports from USSR. If government fully exploits possibilities of utilizing gold reserves, increasing exports and expanding trade with USSR acute financial crisis may be averted for indeterminate period.
At present Mosadeq regime appears face future challenge from two potential sources: From split within itself over unforeseen future issues and from armed forces. Position of latter is imponderable as described service attachés estimate “control of armed forces [Page 744] of Iran” (OARMA, Tehran M–175, August 10),4 while Embassy believes for near future schismatic factors within regime may lack sufficient strength manifest themselves. Any tactic of potential opposition in boring from within regime would take some time. On this point, however, it should be emphasized that Tudeh has consistently followed this tactic with increasing success among Mosadeq’s entourage.
Mosadeq has tried through suppression opposition to make reality of his theme to West that it must choose between him and Tudeh. It believed that deterioration of country, Tudeh infiltration state administration, and growth discontent at all levels population make this rationale untenable today. Embassy thinks under current conditions so long as security forces remain substantially unaffected by Tudeh infiltration, despite latter’s program designed capture civil authority, that these forces, together with non-Communist elements in Iran, still could offer alternative to Mosadeq other than Tudeh Party.

  1. Transmitted in two sections; repeated to London and Beirut for Ambassador Henderson.
  2. According to despatch 99 from Tehran, Aug. 14, the voting returns from Mosadeq’s referendum on the 17th Majlis in Tehran were nearly tabulated, with 166,607 favoring dissolution and 116 opposed. With 98 percent of the returns counted in the provinces, 2,350,000 favored dissolution and 700 opposed. (788.00/8–1453)
  3. The Embassy in Tehran reported on Aug. 15 that press sources were saying that Prime Minister Mosadeq sent a letter to the Shah requesting the issuance of a Royal Decree to commence elections to the 18th Majlis, since the 17th had been dissolved by the referendum. (Telegram 326; 788.00/8–1553)
  4. Not found in Department of State files.