301. Paper Prepared by R. Bernard Crowl of the Office of Greek, Turkish, and Iranian Affairs1
SUMMARY OF TEHRAN’S TELEGRAM 1905 OF MARCH 172
The country team, composed of the Embassy, USOM/I and MAAG express serious concern and request Washington review of the proposed 1956 aid request, which reduces the total for Iran to slightly more than half of the field’s original recommendation.
Included in the arguments for increased aid are the following quotations:
- 1.
- “In our judgment would be unwise at this stage developments to reduce aid below minimum level sufficient attain US security objectives Iran, provide essential financial support to Shah and his government, and continue technical cooperation program that has established firm basis for economic progress Iran.”
- 2.
- “US influence still in ascending phase. A momentum exists that coincides US interests. Would be costly error however to overestimate this momentum and to assume both continued political stability and foreign policy developments increasingly favorable to US viewpoint in disregard of Soviet pressures if need and expectations US aid so severely disappointed as to create serious economic and financial problems and impair confidence in continuity US interest in Iran.”
- 3.
- “Order of magnitude US aid needed by Iran not large in terms of what is at stake. Nor is period long in which budgetary support and other substantial financial aid estimated as necessary. But consequences of failure to extend adequate aid in this transitional period could be painfully severe both for Iran and for West, inasmuch as political balance Iran delicate, stakes high, and Soviets ready to aggravate any deterioration our position this area.”
As indicated in the attached table,3 an additional $12.1 million is requested for FY 1956 ($4.5 million for technical assistance and $7.6 million for defense support funds). This request assumes that an additional $9.5 million of direct forces aid, recently requested, will be forthcoming. (Washington has not yet replied to this $9.5 million request.)
On the basis of estimates regarding rial and foreign exchange receipts and expenditures, if U.S. aid in the amounts requested is forthcoming, the Bank Melli’s holdings would increase by about $15 million. Against this increase, a requirement of about $18 million to permit a note [net] increase of 1.5 billion rials, is described.