364. Telegram From the Embassy in Iran to the Department of State 1

393. Ebtehaj asked Gregory and Kerr to call on him Sept 10 to seek their assistance in resolving following issue:

In connection with IBRD insistence that Plan Org oil revenues be pledged against proposed IBRD loans, Amb Amini was instructed seek waiver of EXIM prior claim. (Art 6 of EXIM agreement appears contain relevant language.2) Stambaugh3 of EXIM refused. Ebtehaj considers [Page 846] Amini misrepresented facts, maintains essentially that Plan Org share of oil revenues is not part of govt’s revenues, being allocated by legislation not to govt but to Plan Org. Comparably, Ebtehaj maintains state railways are not part of govt.

Ebtehaj explained that proposed line of credit is exceptional for IBRD and, to protect itself against other borrowers, IBRD must insist on first-priority pledge of oil revenues. He pointed out it is widely known that his principal business during forthcoming Washington visit is to negotiate line of credit with IBRD and is imperative he be able announce on return that this credit will be granted.

Ebtehaj requested Gregory and Kerr to pose issue to Washington now, urging all possible sympathetic consideration be given prior his visit Sept 23 to Oct 8 since he will have no time for extensive discussions this subject. He agreed first need is determine whether IBRD prepared extend credit if EXIM refuses renounce prior claim on oil revenues, said he would query IBRD directly but time is short and he lacks code facilities for telegram. Kerr therefore offered request Dept seek answer this question from IBRD.

It is relevant to describe Ebtehaj’s manner in this conversation. Although Gregory and Kerr were calm and noncommittal in exploring Ebtehaj’s position, he worked himself into [less than 1 line of source text not declassified] a state of fury [less than 1 line of source text not declassified], proclaiming that if US does not wish help him it should at least not hinder and if EXIM persists in maintaining petty legalistic attitude he will ignore them because he will not permit either US Govt or EXIM to stand in way of his development program.

Allen Dulles was subjected to milder version of emotional tirade on same subject at my reception for him few days ago and I am informed he proposed send telegram re impression Ebtehaj made on him.4

Ebtehaj’s [less than 1 line of source text not declassified] fury over this issue may possibly be explained as follows: He has stated to Shah, Cabinet, and leading members Parliament that IBRD credit is a certainty and has attributed this to his personal prestige with Black of IBRD and others. Therefore, if line of credit not forthcoming, he would suffer such loss of face, particularly with Shah, that he might well be forced to resign.

  1. Source: Department of State, Central Files, 888.2553/9–1156. Confidential.
  2. On March 31, 1955, the Iranian Ambassador in Washington and General Glen E. Edgerton, Managing Director of the Export-Import Bank, signed loan agreements, part of which was an understanding in principle that the Bank would make available to Iran a line of credit of $53 million for economic development. According to article 6 of the agreement, the Iranian Government would agree not to pledge any of its assets or revenues as security for other loans unless any outstanding Bank loans were equally secured. From May 12 to 26, 1955, Bank officials visited Tehran for discussions with Iranians on the details of the loans. On June 15, 1955, a formal agreement on the $53 million line of credit was signed by Iran and the Bank. (Telegrams 1997 and 2332 from Tehran, March 31 and May 26; Ibid., 788.5–MSP/3–3156 and 888.10/5–2655, respectively) A text of the June 15 agreement is Ibid., 888.10/6–2155.
  3. Lynn U. Stambaugh, First Vice President and Vice Chairman of the Export-Import Bank.
  4. Not found.