Office of the Historian

888.10/2–1054

No. 421
Memorandum by the Director of the Office of Greek, Turkish, and Iranian Affairs (Richards) to the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Byroade)1

secret
Washington, February 10, 1954.

Subject:

  • Export-Import Bank Loan for Iran.

You will recall that Iran recently inquired whether the U.S. was prepared to activate an Export-Import Bank loan before the actual conclusion of an oil settlement.2 Following this, Ambassador Henderson was asked whether or not a loan at this time would lessen the incentive for the Iranians to conclude an oil settlement (Deptel 1673).3 Ambassador Henderson in replying (Embtel 1734)4 argues in favor of extending the loan now, pointing out the psychological advantages of demonstrating that we are not applying pressure against Iran at the time when an oil settlement is under negotiation and that we are not weakening in our resolve to support the present Iranian Government. From an economic standpoint he points out the advantages of minimizing delays in actually accomplishing projects by getting started at once. He concludes that extension of the subject loan would not lessen the incentive for the Iranians to resolve the oil controversy.

On the other hand, Mr. Herbert Hoover, Jr. has indicated that while he has no strong feelings about the loan, he is “mildly opposed” [Page 922] on the grounds that it is not designed to meet Iran’s present need.

Recent experience with this problem leads us to believe that unless NEA is prepared to present a strong case in favor of extending an Export-Import Bank loan now, we are unlikely to make much progress in the matter. One difficulty is that Treasury is opposed, as a matter of general principle, to the Export-Import Bank granting any more development loans except in unusual circumstances. I would appreciate your views as to whether you are inclined to endorse presenting the Iranian case as exceptional for warranting an Export-Import Bank loan.5

  1. Drafted by R. B. Crowl of GTI.↩
  2. The Embassy in Tehran reported this request in telegram 1470, Jan. 6. (888.10/1–654)↩
  3. Not printed. (888.10/1–654)↩
  4. Not printed. (888.10/2–854)↩
  5. The following handwritten response to this final sentence appears on the source text: “Yes—I think we should try. B[yroade]”.↩