348. Telegram From the Department of State to the Embassy in Iran 1
1344. Several subjects Ambassador’s letter January 31 to Rountree 2 under active consideration and will be covered in separate telegrams.
[Page 800]FYI re question additional military aid we now exploring with Defense possibility obtaining at least some portion end-item list submitted by MAAG for 1956 but which not included in Department Defense 1956 military aid program. Also exploring possibility additional economic aid to assist Iranians meet budgetary deficit through end this US fiscal year (Deptel 1335).3 We hopeful any favorable decisions can be made known to Shah before he leaves for India.4 We well aware advantage leaving him in no doubt re our determination support Iran. End FYI.
In your talks with Shah and Government you no doubt are emphasizing that our desire support Iran as strong today as ever. Our ability be of assistance depends in large measure on reports concrete steps Iranians have taken put their financial house in order and further measures they firmly intend to take. Passage of bill authorizing allocation ten percent oil revenues to general budget, and clear determination that income from additional oil production will go to general budget would be very helpful our consideration of matter. While increased income from these sources (estimated at approximately $20 million) would not close budgetary gap, clear application principle of self-help most important. (FYI This connection we were awaiting further status report and recommendation from Embassy. End FYI.)
Re Baghdad Pact our position further elucidated and set forth in connection recent conversations with British Prime Minister and Foreign Secretary.5 Separate cable reports on meeting Foreign Secretary with Pact countries’ ambassadors in Washington. We think it would be well to restate to Shah our present thinking. If he concerned failure US adherence, could be recalled that at time Shah made his decision join Pact there was no indication US intended soon to join and Iranians raised no specific question this connection. Our position is to support the Pact and to encourage members in developing collective security organization and in obtaining benefits which accrue in economic, political and cultural fields from such association. However question of US adherence at this time involves many considerations, including fact that we attach great importance remaining in position effectively influence settlement Arab-Israel dispute. We feel that too hasty action re joining pact would jeopardize chances success in this matter which is of great concern to Free World as whole. US interest and support Pact has been demonstrated in many ways, most recently in joint communiqué following British-American talks. Notwithstanding fact non-member [Page 801] Arab states strongly opposed, we included in communiqué unequivocal assertion our firm intent to support and encourage Pact. Additionally we are giving constant consideration to Iranian economic and military problems but Iranians must give clear and recognizable indication of firm intention put their fiscal house in order. Nearly quarter billion dollars US aid to Iran since 1951 is no small indication interest of US. There absolutely no reason for Shah or Government to doubt continuing interest and concern of US.
Informal Russian offer four-power guarantee should be transparent to Shah and Government. Guarantee would provide nothing not now provided by UN Charter to which Soviets and Iran have both adhered. Offer clearly designed undermine Iran’s confidence in policy course which it has set. Very proposal shows Soviets still entertain concept of right of great powers to guide destiny of small nations.
- Source: Department of State, Central Files, 788.5–MSP/2–856. Confidential. Drafted by Kitchen and Rountree, cleared by Baxter, and approved by Rountree.↩
- In this letter from Amini to Rountree, the Iranian Ambassador enclosed a 6-page survey of the income and expenses of the Government of Iran, the causes of the budget deficit, and measures adopted to achieve a balanced budget. (Ibid.)↩
- Dated February 7, not printed. (Ibid., 788.5–MSP/10–2655)↩
- The Shah left Iran on February 16 for a State visit to India and returned on March 9. En route home from India on March 9, the Shah met with Secretary Dulles, who was attending the SEATO Council Meeting at Karachi. For a report of their conversation, see Document 352.↩
- See Document 345.↩