350. Memorandum From the Under Secretary of State (Hoover) to the Deputy Director for Operations, International Cooperation Administration (FitzGerald)1
SUBJECT
- Budgetary Assistance to Iran
The President decided at the National Security Council meeting this morning that we should proceed without delay to provide to the Government of Iran $20 million, over and above sums already provided for that Government, to assist in meeting its urgent budgetary problems.
As you know, the Shah and the Iranian Government have been pressed by the Embassy and the ICA Mission to Iran to undertake as a matter of urgency self-help measures which will contribute substantially to the capability of the Iranians to meet their budgetary requirements from their own resources. We have been informed of several measures taken and contemplated which will be helpful in this regard, but there nevertheless remains a substantial gap between anticipated expenditures and revenues.
The urgency in making known to the Iranians our decision to help in this respect derives from two factors: (a) their need to know what we are prepared to do in order that they can plan with intelligence; and (b) the desirability that the Shah be given this additional evidence of American support before he departs for India within the next several days where he will be undergoing very heavy pressures from Prime Minister Nehru, who has been violently opposed to the Baghdad Pact and to Iranian adherence thereto.
I would appreciate it if you would take such action as is necessary to permit the allotment of $20 million to Iran for the above purpose, so that appropriate instructions can be telegraphed to the Embassy and the ICA Mission at Tehran with the least possible delay. As to whether this aid should be rendered to Iran on a grant or loan basis, I suggest that this question might be left for later determination in consultation with the Iran Country Team. My tentative views are that the reasons for providing this assistance suggest that the greatest benefit to the United States would accrue if it were made available on a grant rather than a loan basis.