Foreign Relations of the United States, 1955–1957, Near East Region; Iran; Iraq, Volume XII

391. Memorandum of Discussion at the 312th Meeting of the National Security Council, Washington, February 7, 1957¹

Washington, February 7, 1957

[Here follow a paragraph listing the participants at the meeting and items 1. “The Human Effects of Nuclear Weapons Development” and 2. “Significant World Developments Affecting U.S. Security.”]

3. U.S. Policy Toward Iran (NSC 5504; NSC 5610;² NSC Action No. 1624–c;³ Memo for NSC from Executive Secretary, subject:

“Report by the Interdepartmental Committee on Certain U.S. Aid Programs”, dated December 5, 1956;⁴ NIE 34–57;⁵ NSC 5703; Memo for NSC from Executive Secretary, same subject, dated February 6, 1957⁶)

Mr. Cutler briefed the Council in great detail as to the military and economic assistance programs—past, present and future—for Iran. (Copies of Mr. Cutler’s brief had been distributed to the members of the Council prior to the meeting, and a copy is incorporated in the minutes of the meeting.)⁷

The President interrupted the briefing to refer initially to the new proposal to conduct the military defense of Iran against external aggression at the Elburz Mountain line in northern Iran as opposed to the Zagros line, from which point the defense of Iran was to be conducted under the previous policy. Apropos of this, the President inquired whether the natural route of a Soviet invasion of Iran would not be along the west of the Caspian Sea. When Admiral Radford replied that this would be the likely route, the President looked at the map and asked why, in this case, the Soviets would not readily succeed in outflanking and turning the Elburz Mountain line. Admiral Radford then explained the concept of a defense of Iran on the Elburz Mountain line. He pointed out that he had flown over this entire region, and he himself believed the Elburz line superior to the Zagros line for the defense of the country. In any case, he added, the Iranians will not make any military plans with us at all if our plans do not appear to involve the defense of their country, which would not be the case if the defense was based upon the Zagros mountains in the extreme south of the country. He added, finally, that he was optimistic about Iran’s ability to support itself in the future if it made sensible use of its very ample natural resources.

Mr. Cutler then resumed his briefing, pointing out that the Planning Board had accepted the JCS statement of missions for the Iranian armed forces. He then went into the basis of the Planning Board recommendations to the Council that it adopt NSC 5703. Some of these arguments of the Planning Board would appear legitimate to Secretary Humphrey, notably the first three. Others would doubtless seem illegitimate to the Secretary of the Treasury. In concluding his briefing, Mr. Cutler apologized for the length of his remarks, and then asked that Secretary Robertson or Admiral Radford comment on the possibility, which had been brought to his attention last evening, that there might be a reduction in the hitherto estimated costs for military construction and for airfields along the Elburz line.

Secretary Robertson stated that the Council might find it desirable to postpone any finalizing of the figures for our military assistance program for Iran until such time as we could reach a decision [less than 1 line of source text not declassified]. This decision, perhaps, could be reached in another few months, and would naturally have an effect on the size of the military assistance program deemed desirable for Iran.

Admiral Radford pointed out that once the Joint Resolution⁸ had passed and we could sit down and talk over our plans with the Iranians, we might be able to convince them of the desirability of reducing the size of our military assistance program; but he warned that we certainly needed the Iranians on our side. He also expressed himself again as hopeful that a real economic development could be achieved in Iran as a result of the ever-increasing oil revenues which that country would enjoy.

The President inquired whether, when we thus sat down with the Iranians, we could bring up with them the question of those islands which the Arabs are insisting that the Iranians have wrongly seized and occupied.⁹ Secretary Dulles believed that this was a possibility, [1½ line of source text not declassified].

Secretary Dulles then pointed out that, as NSC 5703 made clear, the great lack in Iran was the lack of a competent administration, and this was a problem which was centuries old. Accordingly, perhaps the most important work being done in Iran was the work of our technical assistance program in the production and training of good administrators. The Shah, of course, could not produce such administrators by a fiat or a decree. We are doing a good training job, and once we complete this job Iran will have enough natural resources to be self-sustaining. It will take time, however, warned Secretary Dulles, and in the meantime we cannot say to the Iranians that we are simply going to let them go, even though, of course, we must keep the pressure on them to reform their ways. Secretary Dulles was also hopeful that once the Joint Resolution has been passed we could persuade the Iranians, as Admiral Radford had suggested, that they do not need military forces on the scale that they have hitherto been insisting they required. Secretary Dulles then referred to his recent conversations with the Crown Prince of Iraq on the general problem of the desire of so many governments for “prestige” military equipment.¹⁰ He had explained his views to the Crown Prince on the unfortunate effect of too much such equipment, and insisted that we must keep on constantly preaching the desirability that weaker nations put greater dependence for their defense on our U.S. retaliatory capability and less dependence on large indigenous forces and the latest military equipment. This general approach, said Secretary Dulles, offered the only hope of safely cutting down the heavy expenses of the U.S. military assistance program worldwide. The President commented on how very difficult it was to sell such a doctrine as that advocated by Secretary Dulles to people like King Saud. He described the King as [less than 1 line of source text not declassified] introspective, and said that he had given him quite a lecture on the subject of military forces and military equipment, not only with respect to their initial cost, but the heavy costs of maintaining this equipment once it had been secured. The President showed exasperation over the fact that King Saud had insistently demanded new and additional military equipment from the United States in return for every concession which he might be willing to make to the United States.

The President then turned to Admiral Radford and asked whether Iran would be a practical area for his task force to operate in; that is, both planes and ships. Admiral Radford replied in the affirmative, but the President then inquired whether the Soviets invading Iran would not immediately capture airfields close to the border along the Elburz line; and after all, these airfields were very difficult to destroy, even with nuclear weapons, and once they had been seized, the Soviets would be in a position quickly to restore them to operational use.

Mr. Hollister said he thought it was his duty to call the Council’s attention to a domestic political problem involving our aid programs to Iran. He said that he was referring to the savage attack by a Congressional subcommittee on the past administration of our aid programs in this country.¹¹ The attack was largely unjustified, but nevertheless Mr. Hollister predicted that the situation would plague us when we came up to Congress with our future aid programs for Iran. Mr. Cutler also called attention to the highly critical article on the administration of our aid to Iran in past years in the current issue of the Readers Digest.¹²

The President replied philosophically that whatever we have done, good or bad, in our assistance programs to Iran in the past, we can at least have the satisfaction that we have saved Iran from Communism and kept it on our side against the Soviet Union. This should be cast in the teeth of the politicians who criticize our aid programs to Iran. Secretary Dulles commented that he had pointed out this very thing at a recent Congressional hearing. He nevertheless thought we ought to get somebody in Mr. Hollister’s shop to write a vigorous reply to these criticisms of the Iranian program.¹³

Secretary Humphrey said he had two things to comment on with respect to the proposed new policy toward Iran. In the first place, the financial figures with respect to the new policy don’t mean too much. For example, on military aid the size of the figures depends to a large degree on how we price military equipment, and for all practical purposes you can price this material about any way you want to. Mr. Cutler pointed out that the figures in the Financial Appendix were based on the depreciated value of the items of military equipment. However, Secretary Humphrey went on to say that as far as “real money” was concerned, this was his second point, and he wanted forcibly to support the suggestion earlier made by Defense that the figures for the military aid program not be firmed up and finalized at the present time. As he had often done in the past, Secretary Humphrey insisted that we should not act on individual military aid programs for one country at a time. This was a very dangerous proceeding, and the Council ought instead to go over such individual country policies tentatively, and then file each one of them until we had secured a complete and composite picture of our military programs world-wide. Secretary Humphrey said he had two reasons for making this recommendation. The first reason was that this particular country, Iran, was bound to have a lot of money in the next four or five years as the oil market in Europe developed. Secondly, we were facing other very serious matters of which we must take account before acting on Iran. Enlarging on this second point, Secretary Humphrey indicated that two of our principal allies, Britain and France, are on the point of going broke. In fact, Britain just escaped this time as a result of our action, and we are going to face a terrible problem with France in the next few weeks. In point of fact, the French are just going down the drain. As for the British, our only recourse will be to ask Congress for a thorough readjustment of the terms of the British loan. This will mean, actually, that the United States will supply Britain with a $1 billion loan over a period of forty years either with no interest whatsoever or not more than 2%. If we add the French situation to this, you can see what terrible problems we are facing.

Secretary Humphrey repeated that he did not see how we could say “yes” to the French on their request for a $500 million loan, nor yet how we could say “no”. But in any case, instead of approving this new aid program for Iran we could put that in the deep freeze. And above all, let us not talk about assistance programs with any foreign government whatsoever. If we do, they will insist that we have made commitments and will accuse us of bad faith if subsequently we find that we cannot appropriately carry out such commitments.

Secretary Dulles pointed out that in spite of everything Secretary Humphrey had said, we were simply obliged to talk with some foreign governments. For example, if you refuse altogether to even sit down with the Iranians, you may as well say goodbye to Iran. Secretary Humphrey responded that if Secretary Dulles were right, perhaps the best thing for the National Security Council to do was to sit down here together for the next thirty days and work out every single one of our individual military assistance programs in order to see what the whole thing looked like. Secretary Dulles pointed out that, after all, a ceiling on what we could spend on Iran would be set by the FY 1958 budget. Secretary Humphrey stated that he was not convinced by this argument because, for one thing, the figures in NSC 5703 covered the period from 1957 through 1960.

Mr. Cutler reminded the Council that the figures given in the Financial Appendix for this or any other policy were not binding on anyone, and were merely an estimated order of magnitude. The crucial paragraphs in NSC 5703 were paragraphs 18 and 19, dealing with the military and economic assistance programs for Iran. These were necessary in order to provide guidance, and Mr. Cutler read the paragraphs to the Council. He stated that he believed the guidance in these paragraphs was sound, and that the Council could approve them as guidance, while at the same time placing a ceiling on expenditures under these programs, at least until such time as our people have talked with the Iranians subsequent to the passage of the Joint Resolution. For example, pending these conversations we could agree that expenditures to carry out the programs in NSC 5703 were not to be larger than they had been in the last Fiscal Year. Secretary Humphrey said that he could not approve of Mr. Cutler’s suggestion for the reason that he did not believe that the expenditures for the assistance programs to Iran last year represented an acceptable minimum, as apparently Mr. Cutler believed.

Secretary Dulles commented that with respect to the British currency problem to which Secretary Humphrey had just referred, we faced a situation that required immediate action. In reaching a decision we did not wait until we got the financial figures pertaining to all our aid programs for all the countries all over the world that we were assisting. Secretary Dulles said he believed that we must deal with Iran in much the same fashion that we had dealt with the British, and not await the returns from all the other military assistance programs. Secretary Humphrey said that there was no analogy between the British and Iranian cases because we were not facing a crisis in Iran as we were in Britain. Secretary Dulles said he was very glad indeed to hear that we faced no crisis in Iran. This was news to him. He added that perhaps a precise knowledge of Iran was outside the ken of the Secretary of the Treasury, for there certainly was a critical situation in Iran. When Secretary Humphrey indicated that he knew a fair amount about the situation in Iran, Secretary Dulles replied that all he really wanted to say was that if we refuse for three months to sit down and talk with the authorities in Iran on our programs for military and economic aid, we will certainly lose Iran.

The President turned to Secretary Humphrey and warned him that he must not forget [less than 1 line of source text not declassified] this great struggle which was going on between the United States and the USSR [1½ lines of source text not declassified]. He pointed out that King Saud had given him a long and detailed list of offers by the USSR to provide Saudi Arabia with military equipment. Saud had informed him that he had held out against all these Soviet enticements, but that there was the heaviest kind of pressure by his own people on him to secure arms from the United States. He had indicated that he would face a genuine crisis in Saudi Arabia if he did not secure the latest military equipment from the United States. There ensued a brief discussion of the problem [2 lines of source text not declassified].

Secretary Humphrey returned to his earlier suggestion that in the circumstances perhaps the sensible thing to do was for the NSC to devote itself to nothing else than our assistance programs for a period of the next thirty days. He warned that in its present mood Congress might well cut our foreign aid programs in half or eliminate foreign aid altogether. The President observed that if they did so, our own military programs would have to rise commensurately, with which point Secretary Humphrey expressed agreement.

At this point Mr. Cutler again made his suggestion for approving paragraphs 18 and 19 of NSC 5703, but putting a ceiling on expenditures in behalf of these programs. Secretary Humphrey repeated his opposition to Mr. Cutler’s proposal. Admiral Radford then suggested that perhaps what worried the Secretary of the Treasury was the very wide distribution which would be given to the Financial Appendix to NSC 5703. Would it not be possible to limit or cut out the distribution of the Financial Appendix? Mr. Cutler agreed with Admiral Radford’s suggestion, and asked the Council to agree to approve the policy statement in NSC 5703, to omit the Financial Appendix, and to state that there should be no increase in the level of expenditures for assistance to Iran for a period of three months after Admiral Radford and the Joint Chiefs of Staff would have held their conversations with the Iranian military authorities.

The President accepted this proposal, and stated that he was beginning to feel a very deep sympathy for the ancient Israelites who had tried to make bricks out of straw (laughter).

The National Security Council:¹⁴

a. Discussed the draft statement of policy on the subject contained in the reference report (NSC 5703), prepared by the NSC Planning Board pursuant to NSC Action No. 1624–c, in the light of the views of the Joint Chiefs of Staff transmitted by the reference memorandum of February 6, 1957.

b. Adopted the statement of policy contained in NSC 5703, subject to deletion of the Financial Appendix thereto pending the Council’s action under c below.

c. Agreed that no commitment as to a new or additional military assistance program for Iran based upon NSC 5703 should be made pending Council consideration of a study by the Department of De-tense of the military implications for the Middle East of the Joint Resolution (such study to be completed not later than July, 1957).

Note: NSC 5703, as adopted and approved by the President, subsequently circulated as NSC 5703/1,¹⁵ together with the action in c above, as approved by the President, for implementation by all appropriate Executive departments and agencies of the U.S. Government, and referred to the Operations Coordinating Board as the coordinating agency designated by the President.

The action in c above also referred to the Secretary of Defense for preparation of the study referred to therein.

[Here follows item 4. “The Suez Canal Situation.”]

S. Everett Gleason

1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret; Eyes Only. Drafted by Gleason on February 8.
2. See footnote 7, Document 367.
3. NSC Action No. 1624–c, approved October 31, 1956, directed the Planning Board to review the military and nonmilitary foreign aid programs for, among others, Iran and recommend to the NSC appropriate revisions. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)
4. This memorandum transmitted Document 372 to the NSC.
5. Document 381.
6. This memorandum transmitted the views of the JCS, in the form of a memorandum to the Secretary of Defense, to the NSC. The JCS gave their opinion that NSC 5703 was “acceptable from a military point of view” and recommended that the Secretary of Defense concur in its adoption. (Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5703 Series)
7. Document 3870.
8. See footnote 4, Document 376.
9. Reference is to Arabi and Farsi Islands; see footnote 2, Document 376.
10. See Document 452.
11. Reference is to the Hardy Committee report; see Document 385.
12. By Bernard S. Van Rensselaer, in the February 1957 issue of The Reader’s Digest, pp. 25–30.
13. Deputy Assistant Secretary of State for Public Affairs Burke Wilkinson transmitted to Herter on February 19 an ICA paper for Cutler dated February 15, on what the ICA was doing about the Van Rensselaer article. (Department of State, Central Files, 788.5–MSP/2–1957)
14. Paragraphs a–c and Note that follow constitute NSC Action No. 1667, approved by the President on February 8. (Ibid., S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)
15. Infra.