349. Memorandum of Discussion at the 276th Meeting of the National Security Council, Washington, February 9, 19561
[Here follow a paragraph listing the participants at the meeting and items 1. “Significant World Developments Affecting U.S. Security,” 2. “Nuclear Energy Projects and Related Information Programs,” 3. “Background and Status of Small Output Reactor,” and 4. “Security Requirements for Government Employment.”]
5. U.S. Policy Toward Iran (Progress Report, dated January 18, 1956, by OCB on NSC 55042)
At the conclusion of Mr. Anderson’s briefing of the contents of the Progress Report on Iran, Secretary Dulles stated that it would be relevant to the problem for him to explain what distress he and Admiral Radford both felt over the slippage in the deliveries of military matériel to Iran under the MDA Program. The mechanics of delivery were painfully slow and contrasted sadly with speedy Soviet action in [Page 802] the same field. In support of this contention, Secretary Dulles cited the figures in the Financial Appendix to the reference Progress Report. He also noted that his complaints applied to other countries than Iran.
The President interrupted to agree heartily with Secretary Dulles, and to point out that the Egyptians have already received thirteen shiploads of arms from the Soviet Union. Secretary Dulles went on to say that he did not know where responsibility for these slow deliveries actually belonged, but that it was obvious that there were too many hands involved in our program. Deliveries must be speeded up. To that end Under Secretary Hoover was creating a small group.
Admiral Radford said that the first point he wished to make was that it was absolutely essential to clear the $20 million which we were proposing to provide Iran by way of budgetary support to meet the Iranian payroll up to June 1956. Failure to meet this deadline would mean trouble. The Iranians were estimated to be likely to run out of cash by the first of March.
Secondly, said Admiral Radford, he had felt that his recent visit to Iran was one of the most important of his trip around the world. He had been briefed at length both by the country team and by American Embassy officials. Admiral Radford expressed great sympathy for the Shah’s plight. His civil service was much too large and included too many lazy and incompetent officials. The pay was poor. A smaller and better-paid civil service would be highly desirable. The Shah also suffered from an excess of senior officiers in the army. The President interrupted to say “What army does not suffer from such an excess?” (Laughter) Admiral Radford went on to point out that when officers were discharged from the army as over-age, there was no place in the Iranian economy which could absorb them. It was for reasons such as this that the Shah was insisting on the great importance of the long-term plan for the economic development of Iran. The country team seemed to agree with the Shah’s position. Nevertheless, some of the advice which we wished to give to the Shah was useful and should be taken seriously. Accordingly, it might be a good idea to send some very distinguished American official to Tehran to make a thorough study of Iran’s short-term and long-term economic problems. In any case, we should realize that the situation in Iran could “go bad” again very quickly, despite the fact that Iran had very considerable natural resources which were not being exploited. Pressure from Russia had also been quite heavy of late. Accordingly, Admiral Radford repeated his insistence that we make the decision promptly to provide Iran with the $20 million necessary to meet the payroll through June. After that we should attempt to assist Iran to decide what proportion of the growing oil revenues should be devoted to current budgetary support and what proportion to long-term economic development.
[Page 803]Thirdly, Admiral Radford said, he was inclined to take issue with the statement in the Progress Report that Iran’s military capabilities were such that Iran could only maintain internal security and would be incapable of delaying any external aggression.3 This latter might be true if Iran was left to act alone without any outside assistance, but this was unlikely. Admiral Radford noted that our Military Assistance Advisory Group (MAAG) had been doing an outstanding job in Iran under very adverse circumstances. The MAAG were quite optimistic about the development of the Iranian armed forces, though they were worried because the Shah seemed to be seeking the wrong kind of military equipment—that is, equipment which would contribute more to prestige than to practical military use under probable conditions of warfare.
At the conclusion of Admiral Radford’s comments, the President asked the Director of the Budget why we were faced with a continual slippage in our deliveries of equipment under the MDA Program. Director Hughes replied that over a long period of years our planning for the deliveries of military equipment had always been in excess of what actually could be delivered. Moreover, our planners had long been aware of this discrepancy.
By way of further answer to the President, Admiral Radford pointed out that our largest MDA Programs—those, for example, concerned with our NATO allies—were based on appropriations covering a program of several years. For Iran and other countries planning was on a year-to-year basis. This applied to economic assistance as well as to military assistance programs. Director Hughes commented that the Bureau of the Budget favored Congressional appropriations on a longer-term basis for the aid programs, but that the Congress did not.
After further discussion of the reasons for the slippage in our delivery of military equipment, Secretary Robertson explained that the Department of Defense was making strenuous efforts to solve this problem. To that end the new Assistant Secretary, Mr. Gordon Gray, had called in a firm of management engineers. The result had been the creation of a whole new organization to deal with military assistance. The set-up in the Defense Department would now correspond with [Page 804] the divisions in the State Department. This would help to cut the time required to resolve issues between State and Defense. Moreover, Mr. Gray would have much greater coordinating responsibility than had his predecessors.
The President said that he had one more question. Had this $20 million problem been staffed through the Executive Branch? If so, why should it not be sent today?
Secretary Humphrey pointed out that Iran was fortunate in having a very able Minister of Finance. The oil royalties were still meager, but when they begin to rise, as they soon will, more of these funds can be used to support current budget charges without adversely affecting Iran’s long-term economic development. Certainly we should help promptly by advancing the $20 million. The President asked Director Hughes to look into the matter at once. He did not wish us to “fool around” with this problem.
The National Security Council:4
- a.
- Noted and discussed the reference Progress Report on the subject by the Operations Coordinating Board.
- b.
- Discussed the necessity of finding means to expedite and keep up to date deliveries under the Military [Mutual] Defense Assistance Program.
- c.
- Noted the President’s directive that the Director, Bureau of the Budget, assure the immediate allocation of $20 million additional budget support for Fiscal Year 1956 to Iran.
Note: The action in b above subsequently transmitted to the Secretaries of State and Defense. The action in c above subsequently transmitted to the Director, Bureau of the Budget.
[Here follow items 6. “U.S. Objectives and Courses of Action in Korea” and 7. “United States Policy Toward Italy.”]
- Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Drafted by Gleason on February 10.↩
- Not printed. (Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5504—Memoranda)↩
- Reference is to
paragraph 17 of the January 18 Progress Report, which reads as
follows:
“Defensive Delaying Capability. The Army and other security forces are deemed capable of maintaining internal security. There is presently, however, little defensive delaying capability. The role of Iranian forces in Middle East defense will be determined by the Baghdad Pact Council, and the capability of the Iranian Army for defensive delaying action can be determined from reports to be received from U.S. Army training teams. The present MDAP program, therefore, is the first step in the training and equipping of Iranian armed forces for participation in Middle East defense. Any assignment of mission within the context of the Baghdad Pact Organization is likely to require a significant increase over the amount of military assistance presently contemplated.”
↩ - Paragraphs a–c and Note that follow constitute NSC Action No. 1518, approved February 10. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)↩