239. Memorandum From Secretary of State Dulles to President Eisenhower0

SUBJECT

  • Your Talks with the Shah of Iran

The Shah of Iran, who arrives in Washington on June 30, 1958, for a three-day visit, is scheduled to have substantive talks with you at the White House on the afternoons of June 30 and July 1.

Of primary importance to him at the present time is the state of his country’s defenses as a member of the Baghdad Pact and as a country sharing a long common border with the Soviet Union. He believes that Iran should have considerably larger indigenous forces with which to fulfill its commitments under the Pact and to defend itself against possible Soviet aggression. In my talks with him in late January, I made an effort to convince him that the deterrent strength of the United States constituted the primary obstacle to Soviet aggression in the area. He remained convinced that if he had an opportunity to discuss military strategy with you, additional United States military assistance would be provided.

While military matters are his main preoccupation at present, he may also mention his desire for United States economic assistance over the next five years, after which time he expects Iran to have sufficient resources from oil to meet all its needs.

I am enclosing some background information on these subjects in the form of a brief memorandum. There is also enclosed a briefing paper prepared by the Joint Chiefs of Staff1 which we were asked to sent to you.

JFD
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[Enclosure]2

BACKGROUND INFORMATION ON THE VISIT OF THE SHAH OF IRAN

(June 30–July 2, 1958)

The Role of the Shah

The Shah of Iran will be in Washington June 30 to July 2 on his third visit to this country. He was last here in early 1955. The Shah is a loyal friend of the United States and is a firm supporter of the Free World, but he is much occupied these days with problems of defense and we hope that his stay in Washington will serve to give him assurance and new confidence in the extent of the measures we have taken and can take in his interest.

The Shah is very intelligent and sincere. He has greatly matured in recent years and is deeply mindful of the important role that he plays in Iran, where virtually all authority is concentrated in his hands. He has voluntarily aligned his country with the East through membership in the Baghdad Pact and his support for Free World policies, especially in the United Nations. He is now pushing ahead with a vast economic development program and other reforms designed to bring lasting political stability and social progress to his country. The Shah’s primary weakness stems perhaps from his fears, real and imaginary, for the security of his own position and the security of his country.

Origin of Visit

During the Secretary’s visit to Tehran in January, 1958, he found the Shah greatly concerned with his military problems. He was convinced that Iran’s membership in the Baghdad Pact—unless much larger Pact forces were created—did not provide adequate guarantees for his country’s defenses. He strongly favored full United States membership in the Baghdad Pact and insisted that Iran must have stronger forces both to carry out its obligations under the Treaty and to provide for its own protection. The Secretary made an effort to convince him that the deterrent strength of the United States constituted the primary obstacle to Soviet aggression in the area, and that, while Iran should certainly maintain national military forces as a contribution to mutual defense, it might be a mistake to build up these forces at the expense of the country’s economic development and social progress. He reiterated his desire for extensive [Page 564]aid from us in order to build up his military strength and remained convinced that, if he had an opportunity to discuss problems of strategy with the President, additional United States assistance would be provided. It was under these circumstances that the President authorized the Secretary to invite the Shah to Washington, where he might have an opportunity to discuss matters of military strategy with the President.

Objective of Visit

Our objective during his visit should be to persuade the Shah:

(a)
that the support and assurances of further support we have given the Baghdad Pact will greatly enhance the security of his country;
(b)
that the greatest obstacle to Soviet aggression against Iran is the deterrent power of the United States; and
(c)
that to overemphasize the buildup of separate powers around the Soviet Bloc may be such a costly undertaking that it will jeopardize the strength of the Free World and end with security nowhere and bankruptcy everywhere.

At the same time we should sympathize with the Shah’s very earnest desire for some additional military help and should indicate to him what new equipment and training we can provide.

Iran and the Baghdad Pact

To achieve our objective of bolstering the Shah’s morale and his confidence in our friendship, we should refer to the record of our firm support of Iran, especially during the dangerous period of the Azerbaijan crisis in 1945–46 and should reiterate to him that “if Iran should again be the victim of Soviet aggression, the United States will not stand idly by.” We should add what we said in January 1958 at the Ankara meeting of the Baghdad Pact to the effect that United States forces which came to the support of our friends in the Pact would be equipped with the most modern weapons.

While for many reasons we have not considered it wise to accept formal membership in the Baghdad Pact, we have taken other measures which provide such a degree of support for the Pact and its members that our relations to the Pact may be worth as much to it as our actual membership. There are, among other things, the Joint Resolution on the Middle East,3 our statement of November 29, 1956,4 in which we said we would view with utmost gravity any threat to the independence of the members of the Pact and our active membership in the military, economic and counter-subversion committees of the Pact.

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The Shah’s contention that his obligations under the Pact require a great enlargement of his forces is based mainly on his interpretation of a recommendation by the Combined Military Planning Staff of the Pact that 16 full strength divisions are needed to defend adequately Iranian territory. The Shah thinks that these must be Iranian divisions. Our Joint Chiefs of Staff have determined that 10 divisions would be sufficient for Iran since the retaliatory power of United States forces constitutes the main deterrent to Soviet aggression and since additional Iranian forces would be a serious drain on available manpower and resources. The most effective counter-argument that we can use to persuade the Shah that we are not neglecting his requirement is that the United States has already undertaken to modernize existing Iranian forces as rapidly as Iran can absorb new equipment. In this connection, the Joint Chiefs of Staff have suggested that we inform the Shah that, as part of the modernization program, the United States is prepared to provide 272 M–47 tanks, 14 new reconnaissance aircraft, two additional mine sweepers and 52 F–86 jet aircraft to replace by 1961 existing LT–6G and F–84G aircraft.

Economic Aid

The Shah will raise with us also his desire for further economic assistance. He has great confidence that there will be a sharp increase in Iran’s revenues from oil during the next few years. He wishes, therefore, to press ahead with his development program and at the same time take other domestic measures—military and civil—that require an increase in his budget.

He believes that within 5 years his country will receive approximately $500 million annually from oil revenues and by 1968 as much as $1 billion. While the Shah’s hopes may be exaggerated, Iran now has $210 million in annual oil revenues and prospects are for a steady increase. The Shah has hailed enthusiastically the recent conclusion of an oil agreement with Standard of Indiana. He has asked us to provide as much as $250 million in loans over the next five years until Iran can support its military, economic and social programs from its own resources. We have informed the Shah that the Development Loan Fund might be able to provide $40 million in loans in the current year if justifiable development projects are submitted. Current negotiations between an Iranian delegation and representatives of the Fund indicate that it will be possible to lend Iran a substantial portion of this amount in the current year and to have a credit available for the remainder. We have pointed out frequently to the Shah and to other Iranian leaders that Congress appropriates funds on an annual basis and that the United States Government cannot make commitments for future years.

  1. Source: Eisenhower Library, Whitman File, International File, Iran. Top Secret.
  2. See Document 237.
  3. Secret.
  4. Also known as the “Eisenhower” or the “American Doctrine.” For text, see American Foreign Policy: Current Documents, 1957, pp. 829–831.
  5. For text, see ibid., 1956, pp. 699–700.