356. Memorandum From the Deputy Director of the Office of Greek, Turkish, and Iranian Affairs (Kitchen) to the Deputy Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Rountree)1

SUBJECT

  • Political Situation in Iran

Reports from our Embassy [less than 1 line of source text not declassified] and comments by Iranians visiting the U.S. present a disturbing picture in Iran of political corrosion, evaporating public confidence, loss of governmental momentum and chronic royal indecisiveness. These developments are having an important impact on the position of the Shah, are adversely affecting prospects for the future of the monarchy and call into question the viability of the present disposition of power. They have serious implications for U.S. interests in Iran and the Middle East.

The following conclusion to a recent Embassy despatch2 represents only the most recent and most succinct formulation of a problem which has been developing during the past year: [Page 817]

“As long as the Shah was towering behind the Government, possessed of power and prestige but not really using it except in emergencies, Iran had great latitude for experiments in governments and governing personalities. But the factor which has made for this latitude, this freedom of action, this political insurance, is slowly melting away. Time is running short.

“The question arises: Should the United States rely entirely on the Shah’s Government, if danger signs are already appearing that it might not last?”

1.
The removal of Zahedi signaled the Shah’s assumption of near-dictatorial power to an extent not seen since his father was Shah. Since responsibility must follow power, the failure or discrediting of the present regime will signify the failure of the monarch. It may be doubted that the institution (let alone the present Shah) can successfully withstand such a failure.
2.
The Shah has staked his future on four things: (a) his own qualities of political leadership, (b) social reform, (c) economic development and (d) the support of the United States.
a.
Political leadership—In this field the Shah has been a notable failure. He has vacillated through the entire political spectrum. At times he has flirted with Nationalist reformist elements and at others has entertained capitulation to the wishes of arch-conservatives. He has angered the clergy, the liberals, and the landowners. He threw fear into Majlis deputies by threatening to dissolve that body. Later he virtually promised to extend the Majlis term from two to four years. Next he planned the election of a whole new and highly liberal Majlis. Now, in fact, he is re-electing 85% of the present Deputies. He oscillates between military dictatorship, cynicism and cowardice. As the Embassy states, “the shah is living off his political capital—the enthusiasm of the 28th Mordad (overthrow of Mosadeq) and the traditional respect for the monarch. The first of these reservoirs is already empty and the level of the second is dropping.” Political elements of all stripes express the fervent wish that the Shah would withdraw from active leadership and resume his status as a reigning constitutional monarch.
b.
Social reform—Despite oft-repeated and widely publicized promises, very little has been accomplished. Land reform is nearly dormant. Conservative elements have been angered by tax reform laws but the people see no improvements. Although there have been no major scandals, corruption and sloth continue throughout the bureaucracy. The present elections are blatantly “fixed” and clumsily managed and, as a result, ten enemies are created for every friend retained.
c.
Economic development—Iran is stirred by two great urges, nationalism and the desire for a better life. Iranians accepted the humiliating defeat of Mosadeq’s nationalism in the hope that an oil agreement would at least obtain a better economic standard of living. The Plan Organization is the instrument for obtaining this objective. But after two years the people are beginning to doubt the effectiveness of the Organization which seems only to compound long-range plans while sitting on millions of dollars. The Shah has staked his future on [Page 818] Ebtehaj who is widely hated and must be counted a political liability. If, within the next two years, the Plan Organization could capture the people’s confidence and imagination by starting construction projects, the Shah’s political credit could be replenished. But to capitalize on this hope, a high degree of speed is required for which the Government of Iran is ill-prepared.
d.
The United States—U.S. political and economic support has contributed heavily to the support of the present Government. But despite this aid, Iranians are disillusioned with and cynical about the present regime. In order for U.S. influence to continue to shore up the Iranian Government, under present conditions, it is necessary that there be a continuing series of U.S. steps to deflect the attention of Iranians from their troubles and dissatisfactions. But this continuing need for new dramatic U.S. measures only highlights the inadequacies of a regime which cannot stimulate the basic internal progress necessary to maintain the confidence of the people. Furthermore, in view of financial limitations on the U.S. Government, the changing nature of the Cold War and the inhibiting effects of the Arab-Israel dispute, it may be doubted that the U.S. can continue indefinitely to provide the stimuli necessary to substitute for the deficiencies of the Iranian regime.
3.

After a brief élan, stimulated by the overthrow of Mosadeq, the negotiation of an oil agreement, the crippling of the Tudeh apparatus, extravagant (but unredeemed) promises of reform and economic development under the leadership of the Shah, and adherence to the Baghdad Pact, Iran is settling back toward the dead center where it stagnated for many decades.

However, the present situation differs from former times:

a.
The Shah now is held personally responsible, while lacking the qualities to discharge the responsibility.
b.
The forces of opposition to and dissatisfaction with the status quo are stronger and are increasing steadily.
c.
The experience of the Mosadeq era and the current shift of Soviet policy show clearly that Iran can no longer exist indefinitely, vegetating in a trough between balanced Russian and British influences. It is on a razor’s edge and must move one way or another.
d.
The end of Mosadeq’s prison term on August 20 will provide anti-status quo elements with a popular center of political attraction.

4.
The U.S. is identified with the downfall of Mosadeq and the return of the Shah to power. A disaster in Iran is a disaster for U.S. interests in the M.E. Considering the disturbed state of the Arab World, the new Soviet political and economic initiatives, and the frailty of the Baghdad Pact, the U.S. can ill afford to allow the present drift and stagnation in Iran to result in upsetting the stability of one of the few countries in the Middle East which is intimately associated with us.
5.

Courses of action might include the following: [Page 819]

a.
Continue the present policy of supporting the Shah’s Government but begin to seek ways to reduce our dependence on him, and other ways of facilitating U.S. eventual cooperation with other elements which may take over political leadership.
b.
Try to stimulate and induce the Shah and Ebtehaj to redirect the Plan Organization with a view to capturing the initiative through a more dramatic and immediate program of urgent public works.
c.
Convey to the Shah our estimate of the seriousness of the situation and obtain his agreement to support and protect an impact program of industrial development sparked by U.S. private companies in partnership with Iranians, the object being to start a rising spiral of productivity which would help to meet the as yet unsatisfied rising expectations of the Iranian people.
d.
Strengthen the military forces by a greatly-expanded military aid program, both bilaterally and through the Baghdad Pact, with a view to creating military forces which can maintain the Shah in power despite his political weaknesses.
e.
Endeavor to persuade the Shah to retire to the proper position of a constitutional monarch and to give a free hand to some strong and vigorous young Prime Minister.

(All of the above have some disadvantages and are only suggested as illustrations.)

6.
We propose to initiate discussions of this subject in the OCB working committee in an effort to determine what U.S. courses of action might improve the situation before it is too late and/or how U.S. policy objectives in Iran could be revised to take into account the trends outlined above.
7.
This summary is prepared primarily for information, although we would welcome any guidance and suggestions you may choose to provide. We believe that the interest of the United States would be served by the immediate inauguration of working level studies on this problem rather than waiting for the situation to reach the point where urgent high-level decisions are required. We anticipate that the results of such studies will certainly appear in the semi-annual Progress Report on NSC 5504 which must be completed by July.
  1. Source: Department of State, GTI Files: Lot 59 D 654, Iran 1956 Memoranda. Secret. Drafted by Hannah.
  2. Despatch 892 from Tehran, April 21. (Ibid., Central Files,788.00/4–2156)