234. Report by the Operations Coordinating Board0

OCB REPORT ON IRAN (NSC 5703/1)1

This report covers the period August 21, 1957 through April 2, 1958. Although little progress toward our objectives can be reported during this period, no policy review is deemed necessary.

The two most notable developments emerging from this report center around the Shah, and may be summarized as follows:

1.
His own internal political position has weakened; and
2.
He has become increasingly difficult to deal with.

With respect to the former, the Shah has increasingly become the target of mounting domestic political opposition as he has assumed a greater degree of personal direction of the government and as progress toward internal reforms has been minimal. This opposition has been accentuated by indiscriminate arrests (which, incidentally, were coupled [Page 548]with hints of U.S. implication in conspiracies against the Shah, although these have recently been played down). The Shah also was apparently severely shaken by the discovery of an alleged plot to overthrow him, involving a trusted and high-ranking army officer.

With respect to the increasing difficulty of dealing with the Shah, this period has seen the development of an apparent doubt on his part that the U.S. can prevent the growth of Soviet influence in the Middle East, coupled with a growing tendency to be bemused on occasion by soft Soviet diplomacy.

Paralleling the development of these attitudes on the part of the Shah during this period have been increasing criticism of the level of U.S. aid to neutralist countries and other Baghdad Pact countries as compared to that given to Iran; marked reluctance to accept U.S. advice; exorbitant demands for U.S. military assistance (often based on contradictory theories as to his strategic problems); and the manifestation of his conviction that the dependence of the West on Iranian oil is such as to afford him greater bargaining strength.

The Shah will visit the U.S. at the end of June. He has made it known that he expects to meet with greater success in Washington in terms of support for additional Iranian forces than he receives from our Ambassador and our Military Mission Chief in Iran—and also has made it known that unless this is so his forthcoming visit will have proven fruitless. He is also continuing to press for U.S. budgetary support ($50 million for next year) for what he terms the next three “crucial years” of Iran’s economy.

Notwithstanding this decline in the stability of the Shah’s regime and of his utility in the achievement of our objectives, certain important facets of the over-all Iranian picture have continued to progress favorably. The Plan Organization has achieved unquestioned accomplishments in such fields as transportation, telecommunications, river development, and municipal development. The Iranian army has demonstrated an improved level of operational capability.

In January 1958, in connection with the Secretary of State’s visit to Tehran immediately prior to the Ankara meeting, Prime Minister Eqbal, without receiving any commitments, was told that it might not be unreasonable to expect Ex-Im Bank or DLF loans on the order of $40 million. At that time, also, additional military aid was offered in support of the Iranian army ($13.9 million), and the U.S. has recently informed the Shah that it would provide $6.5 million to construct minimum airfield facilities at Qom.

K.G.H.2
  1. Source: Eisenhower Library, Whitman File, NSC Records. Secret. Harr used this report to brief the NSC at its 365th Meeting on May 8. The memorandum of that discussion, prepared by Gleason on May 9, noted this report and Harr’s briefing as NSC Action No. 1906, approved by the President on May 9. (Department of State, S/SNSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)
  2. Dated April 2. (Ibid., S/SNSC Files: Lot 63 D 351, NSC 5703/1)
  3. Printed from a copy that bears these typed initials.