Foreign Relations of the United States, 1961–1963, Volume XVII, Near East, 1961–1962

168. Report of the Chairman of the Iran Task Force (Talbot)⁰

Washington, January 18, 1962.

In the seven months since the initial recommendations of the Iran Task Force were approved, the Amini regime has avoided the immediate political and economic disasters which were then threatening Iran, and has made a cautious start toward carrying out essential social and economic reforms and establishing a political framework more conducive to the emergence of non-extremist leadership.

Specifically:

1. It has surmounted the immediate political crisis which brought it into office and has fought off extremist pressures from all sides. It has retained the Shah’s support in domestic matters and has supported his pro-Western foreign policy.

2. It has taken the first steps to reduce inefficiency and corruption within the government; high-level dishonesty has decreased sharply and dozens of former officials are being tried, punished, investigated, or exposed.

3. It has waged an effective but difficult and unpopular fight against inherited problems of inflation and foreign exchange shortages, involving restrictions on imports, bank credit, government spending, and wage increases. It is tooling up for the Third Economic Development Plan, and is widening and accelerating the land reform program.

These are significant, if limited, gains. They have been achieved through the efforts of Amini, the acquiescence or sporadic support of the Shah, and a judicious combination of United States advice, pressure, and financial assistance.

These accomplishments have not, however, cured the underlying malady of the country. Iran remains politically sick and economically disorganized, and a synthesis of moderate political forces is not yet in sight. Despite the Shah’s good intentions, patriotism, and intelligence, he remains essentially mystical, vain, and suspicious. As reflected in Annex C some concrete progress has been made but the Shah is either unwilling or unable to take the difficult and, to him, distasteful measures which would enlist the full confidence and enthusiastic support of the majority of his more politically conscious and articulate subjects. At best he can be induced to consent to the efforts of Amini or a like-minded successor. At present the political drives of the Mosadeq-oriented “Nationalists” and their immediate following among the educated and semi-educated are largely destructive and unrealistic, and are directed almost exclusively toward obtaining supreme power as an end in itself. Nor is there in existence or in prospect any effective group which can occupy the middle ground between the Shah on the one hand and the heirs of Mosadeq on the other. With insignificant exceptions the conservative element in Iran is hopelessly short-sighted and is concerned only with its private vested interests. The Iranian military has not produced imaginative political leadership and is not likely to do so.

Although there are variants in between, fundamentally, for the foreseeable future, the United States will continue to be faced with the hard choice between two basic strategies:

1. To support the National Front as the current embodiment of a revolutionary element which will probably sooner or later come to power. The day may come when the United States could well be forced to this policy as an alternative to chaos or an overt communist takeover of Iran. Were this element to assume power now, however, the almost inevitable result would be the breakup of CENTO, the expulsion of the United States military mission, the loss of Iran as an intelligence base, the denunciation of the Oil Consortium agreement, Soviet economic penetration, and a resurgence of the domestic communist movement which could not be checked by a weak and fragmented power structure.

2. To continue to support governments acceptable to the Shah, whose character is such as to make his years as the ultimate repository of power almost certainly numbered. In any fundamental sense the Shah appears unwilling or unable to make the changes necessary to assure the support of the “Nationalists” over the coming decade, if such support is at all possible. His pride, his reputation, and his openly pro-Western attitudes are perhaps insuperable barriers. Heavy pressure by the United States or other friends to force the Shah into a major attempt to compromise with these critics would involve risks of his retiring to Europe or seeking an accommodation with the USSR, of strengthening the determination of the “Nationalists” to seize power, and of precipitating a conservative coup, thus leading to the developments foreseen in the first strategy alternative.

Faced with these fundamental choices, it is my judgment that United States policies in Iran will be best promoted by continued support of a government acceptable to the Shah, emphasizing in the strongest possible terms at the same time the need to press forward with social and economic reforms. Only by pursuing this course of action can we hope to avoid a major political defeat and concurrently maximize opportunities for a more favorable reshaping of the basic political and economic situation in Iran. This is the basis of our support for the Amini Regime and why his program must remain the center of our efforts in Iran. The test of this policy is whether we have successfully assured, at the lowest political cost, the Shah’s acceptance of the best government in sight (at present the Amini Regime) and at the same time found the most effective way to push that government—without shattering it—in directions that could provide cynical and disturbed young Persians with a spark of enthusiasm, hope, and confidence. Every policy decision turns on how we play this game—without overplaying it.

Mosadeq-oriented elements will seize on the slightest sign of United States disapproval of the regime to mount massive efforts to undermine and overthrow it. The Shah himself has a breaking point which could mean his abdication and flight, leaving chaos behind him. Relations between the Shah and his Prime Minister are delicate, and could be broken if the Shah were to feel that the United States was supporting a potential threat against him. Ambitious military men and greedy conservatives who are masters of political intrigue will attempt to take advantage of any strain in relations between the United States and the regime. Communist propaganda will exploit every opportunity to convince the public that national sovereignty has been abandoned to a foreign power.

Many forceful measures are of dubious value in this brittle situation. What is required is a skillful mixture of enticement and prodding, of periodic involvement and occasional seeming withdrawal, of patience and decisive action. The authority to act must be adequate to the problem. The actions themselves must be shrewdly conceived and flexibly executed.

Officials in Washington and our Ambassador in Tehran are functioning according to these dictates. When the day comes that they need more extensive powers than they now possess, these powers will be requested. For the task immediately ahead, the initially approved Task Force recommendations appear still largely adequate. Certain modification in the initial Task Force Recommendations should, however, be noted, as reflected in Annex A to this report. I have concluded, therefore, it is not necessary to request additional authority from the National Security Council at this time. The most effective steps possible to strengthen and broaden the base of the Amini government and to keep prodding it into forward motion will continue to be taken.

Discussion

It has emerged from the Task Force’s deliberations that there is no significant divergence of opinion with the United States Government as regards United States objectives in Iran. To prevent Soviet domination of Iran must be our immediate and overriding objective. This requires the continuance in power of a pro-Western regime, for the most likely ultimate alternative is a weak neutralist government which could not withstand Soviet pressures and maintain Iran’s independence. The pro-Western regime has been maintained and is no longer immediately endangered, although many longer-term weaknesses remain. Prime Minister Amini has succeeded in overcoming a near-crisis situation and thus continuing Iran’s pro-Western alignment. He has, however, been unable fully to pursue his program of vigorous reform measures designed to lead to a more permanent resolution of these basic weaknesses.

The Prime Minister has had to retain the confidence and support of his somewhat reluctant monarch. He has been faced with political pressures from the fanatical Mosadeqist opposition, and with the sniping of ambitious and discontented conservative leaders. The implementation of the vital economic stabilization program has intensified these difficulties by infringing on the interests of various special groups. The basic inadequacy of the administrative tools available to him, which can be improved only slowly, have further limited his freedom of action.

The first Iran Task Force Report stressed that the United States should actively and vigorously, albeit discreetly, press for political, economic, social, and institutional reforms in Iran which would provide the indispensable foundation for true and lasting social and economic development. The Third Development Plan which embraces the total economy and takes account of both social and economic requirements is scheduled to begin in September 1962. It must be the primary vehicle to initiate the fundamental political and economic progress needed in Iran. The intervening period will be of critical importance in laying the necessary foundations for the implementation of this Third Plan.

In October the Task Force found that additional United States resources, beyond those allocated in accordance with last spring’s Task Force Recommendations, would be required to enable the Amini Government, or a like-minded successor, to surmount the political and economic difficulties which it faced and which it will face between now and the beginning of the Third Plan. Discussions within the Task Force disclosed divergent views as to the means by which the introduction of those resources could best accomplish United States objectives. The possibility was explored of supplementing our continuing diplomatic efforts by developing a package action program with the Government of Iran involving other international sources of economic assistance so that desirable public conditions could be agreed upon for the provision and use of development resources in the context of a joint cooperative and effective effort to solve Iran’s basic economic problems. Alternatively, it was held that the same objectives, given the complexities and fragilities of Iranian society, could best be accomplished by the private and discreet exercise of United States influence and pressure. It was agreed with the Agency for International Development that the provision of the necessary additional assistance, amounting to $15 million in Supporting Assistance and $20 million in development lending, should be made conditional upon a clear understanding by the Iranian Government that it must undertake seriously certain self-help measures. Our Ambassador has informed the Prime Minister of the additional assistance, and has obtained appropriate assurances from the Iranian Government.

A recent and spectacular example of the implementation of the Task Force Recommendations was the finesse with which the U.S. and U.K. Ambassadors, working with the Prime Minister, dissuaded the Shah from dumping the Prime Minister or reducing him to puppet status. This course was being urged on the Shah by jealous and apprehensive courtiers, conservative business men, landlords, and reactionary military officers. This effort backfired on its instigators, with the Shah publicly reinforcing his support of the Prime Minister, increasing the powers of the Cabinet, and backing a positive and specific program of reforms. Extremist conservatives are as a result beginning to attack the Shah himself.

Our Ambassador in Tehran has recommended that the Shah be invited to the United States on a state visit, in order that His Majesty be informed of the nature of U.S. support for Iran and specifically that he be told of plans for U.S. military assistance for Iran over the next five years. Approval of Country Team Tehran’s recommendations as to the nature of this program was a precondition of the state visit as recommended by the Ambassador; a final decision has not been made and approval of the Country Team’s plan is doubtful. Therefore, and in view of other rapidly changing political factors, I am inclined to believe that the Shah’s visit should follow the successful initiation of the Third Economic Plan, to begin in September, 1962. I am consulting with our Ambassador on this problem.

Difficult decisions remain in the shaping of the future of the United States military assistance program to Iran and in the preparation of political and military contingency plans for Iran. However, the various aspects of these problems are under consideration in the regular channels of the Government, and no NSC is necessary at this time. (See Annex A, items 5 and 7, for details.)

Guided by the approved recommendations, specific guidance for United States actions in Iran has been drawn up setting forth the goals toward which our assistance, encouragement, pressure, and advice should be directed. (See Annex B.)¹ This has been made available to the Ambassador and will provide a framework for United States actions. During the past seven months, considerable progress toward these goals has been achieved. (See Annex C.)

Annex A²

MODIFICATIONS OF APPROVED IRAN TASK FORCE RECOMMENDATIONS³

Approved Task Force Recommendations 1, 2, 3, 6, and 8

These recommendations should continue as basic policy guidance to the United States Government. These and portions of other recommendations have provided the indispensable basis of our detailed action goals in Iran (See Annex “B”) and of the progress made recently toward those goals (See Annex “C”).

Approved Task Force Recommendation 4

This recommendation continues to be valid. The actions called for in subsections (a) and (b) have been taken, and the funds reserved under subsection (b) have been absorbed in the latest tranche of United States assistance.

Approved Task Force Recommendation 5

A joint State-Defense working group has studied the problem intensively and has concluded that the deployment of specifically earmarked forces is not feasible unless and until it is decided that Soviet military aggression against Iran is probable in the near future, and then only if other and overriding military requirements do not prevent such a deployment. The working group has also recommended to me that in the light of assurances already made to Iran and in view of certain dangers which further assurances and specific information as to United States military planning would imply, no such fresh assurances or additional information should be supplied to the Government of Iran at present. I have accepted these recommendations.

Approved Task Force Recommendation 7

This recommendation should be amended to include the words “as feasible” between the words “encourage” and “the formation”. The immediate situation is such that United States action to stimulate the immediate formation of broadly-based political parties would probably be counterproductive, although we, along with moderate political elements in Iran, recognize the need for action in this direction whenever the situation of the moment will permit it.

Approved Task Force Recommendation 9

The purpose of the recommendation has been accomplished, and the problem to which it refers has entered a new phase within the established mechanisms of the United States Government.

In accordance with this recommendation, planned expansion of the Iranian Armed Forces was halted and they have remained at a manpower level of about 200,000. The Military Assistance Steering Group under Mr. Kitchen⁴ is in the final stages of a review and modification of the five year MAP plan for Iran. Their tentative recommendation is that the manpower ceiling should be further reduced to 150,000 during the Fiscal Year 1963–67 planning period, but with the recognition that, in addition to the bare minimum of military requirements, a certain amount of “sophisticated” material will be needed to make up a package sufficiently attractive to the Shah to gain his approval for a cut in forces. The Shah must be persuaded, however, that great danger lies in internal security and special efforts must be made to meet the high priority requirements for economic and social improvement in Iran. Reduction in forces and military budgets would in themselves be politically popular in Iran and constitute a favorable step in the right direction.

Approved Task Force Recommendation 10

The CENTO study is now in its final stages, having gone through the formal planning mechanism of the government. Specific phased recommendations as to actions to further United States interests through CENTO will be forthcoming within a few weeks. Established channels, rather than the Iran Task Force, will be utilized.

Approved Task Force Recommendation 11

This recommendation has been overtaken by and included in broader military and political contingency planning studies which were set in motion by a series of reports to the effect that the USSR might be preparing to launch a military attack on Iran in the near future. A relatively low estimate of probability was later assigned to these reports. Existing approved military planning in Iran covered only United States action against hostile elements other than the Red Army. A study by the Joint Chiefs of Staff on the problems posed by possible United States military action in Iran to counter direct Soviet aggression led to the following conclusions:

1. Commitment of United States forces in sufficient time to counter a Soviet advance into Iran requires use of the only two airborne divisions presently in the United States Strategic Reserve and all of the airlift capability including the Civil Reserve Air Fleet, resulting in a serious dilution of the capability to respond to other contingencies.

2. Because of limited combat capability of Iranian forces, and the limiting concept of the CENTO alliance, United States commitment with available forces could be successful only against a limited Soviet intervention or limited probing aggression.

3. Owing to inadequacies of road and rail facilities in Iran, a United States force of only two Army divisions and Marine and USAF combat elements can be supported in northern Iran in addition to Iranian forces. By extensive use of United States air transport capabilities about two additional battle groups could be supported. In light of limited Iranian capabilities this force is too small to cope with substantial Soviet aggression.

4. Any chance of success requires immediate authorization to conduct air attacks against air bases in Russia directly supporting operations in Iran. These attacks would employ nuclear or conventional weapons as appropriate to the military situation.

5. Any commitment of United States forces in Iran against overt Soviet involvement must be preceded by a decision to employ whatever degree of force is required to achieve United States objectives in the area and to preserve the integrity of United States forces, to include the use of nuclear weapons or the initiation of general war if the Soviets persist in spite of United States action.

6. It is feasible to conduct military operations in Iran against limited Soviet intervention and probing aggression; it is not feasible to conduct limited war in Iran against substantial and determined Soviet aggression under present conditions and in light of worldwide commitments.

It is the opinion of the Joint Chiefs of Staff that subject to these conclusions, and assuming that the President would declare a state of national emergency and that authorization for the use of nuclear weapons would be given as required to achieve United States objectives in the area, certain measures of limited non-nuclear response could be taken in Iran by United States forces to counter limited Soviet intervention and probing aggression.

Contingency planning for political and political-military measures to deter Soviet military attack, direct or indirect, on Iran is under way through a State-Defense working group. A phased list of possible United States actions and supporting information is in the final stages of a clearance among the agencies and offices involved. This study has involved the following pertinent conclusions:

1. The maintenance of an Iranian will to resist is an indispensable element in deterring Soviet attack.

2. Soviet tactics of threats and military aggression would be counterproductive for the USSR in terms of the present Soviet tactic of fomenting revolution by a broad coalition of discontented elements.

3. There are no significant deterrent measures open to the United States at present which would not be counterproductive in terms of our present efforts to reverse the disunifying trends being utilized by the Soviets in their current tactics in Iran.

4. Deterrent measures must in large part be taken if and when our estimate of Soviet intentions and tactics in Iran is revised, or in response to ad hoc Soviet political actions.

5. Should it become necessary to act to deter a Soviet military attack on Iran, a basic decision will be desirable as to whether the United States is willing to go to general war if all else fails in order to protect Iran from Soviet military aggression, and, if not, whether the United States is willing to go to any lengths at possibly high costs to its prestige in an attempt to convey to the USSR an impression that it is so willing. Such a decision should be reached as early as may be feasible in the process of implementing deterrent measures.

Annex C⁵

PROGRESS TOWARD UNITED STATES ACTION GOALS

Pursuant to the Iran Task Force Recommendations approved by the President on May 16, 1961, the following progress has been made as a result of the continual encouragement, support, and pressure exerted by the United States Government through all its various instruments;

1. The Shah has remained confident, pro-Western, and anti-communist, and has withdrawn to an encouraging extent from the exposed political position he has occupied in recent years, and has delegated important powers to his capable Prime Minister. He has constituted the entire Royal Estates as an irrevocable religious trust, the profits of which will be devoted to charity and the financial details of which will be publicized. The Shah has shown interest in a dynamic internal reform program, although his interest in technical military matters is still strong.

2. Iran has maintained a firm but non-provocative attitude toward the USSR, insisting that as a prerequisite to improved relations the USSR cease its massive and abusive propaganda campaign against Iran. Neutralist sentiment remains widespread but apparently is not expanding. Internal security and respect for minority rights remain excellent by Middle Eastern standards. Iran continues to stand by CENTO, despite pressures from the USSR and domestic neutralists; in the Kuwait crisis, on the Shatt-al-Arab, and in the Pakistan-Afghanistan crisis Iran has behaved in a restrained and helpful fashion.

3. The Prime Minister has successfully defended those of his officials, particularly in the Justice Ministry, under attack from rightist forces as being too “moderate”. The National Front, however, has refused to respond to the Prime Minister’s invitation to cooperate in a reform program. Distribution of Crown Estates land is nearing completion, distribution of public domain land continues, and a new program of model experimental distribution of private estates is under way. The Prime Minister, at great cost to his health, continues personally to solicit the support of all types of non-elite groups through personal contact and radio addresses. A massive adult literacy campaign has been launched. Public trials of high officials accused of corruption in the past have begun, investigations and the preparation of cases against others continue, and high-level corruption has been sharply reduced, all within a pattern of strict legality and the protection of the rights of the individual. A basic civil service reform statute has been drawn up and is under consideration by the Cabinet.

4. Recent agreements by the United States and Germany to provide new loans to the Plan Organization give promise that the essential elements of Iran’s Second Plan will be completed. Formulation of a Third Plan to capitalize on major investments made during the Second Plan and to maintain an average 6% growth rate is moving forward rapidly. The IBRD expects to dispatch a team to Iran in January 1962 to prepare a full report on the Third Plan for presentation to potential members of a financing consortium for the Plan. In spite of stiff opposition the Prime Minister has enforced an unpopular stabilization program which includes a sizeable cutback in credit expansion and the prohibition of luxury imports. The shake-out in the economy has been severe but most of the strong enterprises seemed to have survived, the rising cost-of-living has leveled off, and Iran’s foreign exchange position is beginning to recover slowly. The Central Bank has begun to exercise increasingly effective control over the banking system, and measures to direct capital to productive investments have been instituted. Public sector expenditures have been held down and a major public buildings program has been eliminated from the current budget. In response to United States prodding, the Prime Minister has given us written assurances that Iran will develop a consolidated budget for the coming year. He has also promised to undertake tax reform measures to improve tax collections and is examining ways to improve the tax structure. Cordial relations with Western oil companies have been maintained, and a number of outstanding technical and financial problems have been settled amicably in recent talks with the oil consortium in London. Oil revenue for Iran in 1961 will be approximately 7% ($20 million) over 1960, or a total of $305 million.

5. In the current Iranian budget (ending March 21, 1962), military costs have been held down for the first time in almost a decade, and manpower increases have likewise been halted. Plans now under consideration in the United States Government provide for manpower decreases with a concomitant increase in military capability through a restructured United States MAP Plan. More senior officers are being retired than promoted, and promotion lists appear to be based largely on merit rather than influence. Vocational training in the armed forces continues to be limited by the availability of funds.

6. The lack of communication between the Shah and the leaders of the “Nationalist” opposition continues, and there is little hope for improvement on either side. Opposition criticism of the regime continues to be almost entirely irresponsible and destructive. Recent developments, including publication of proof obtained by the security forces that a respected National Front student was a communist, have apparently increased “Nationalist” awareness of the dangers of Tudeh penetration. The “Nationalist” opposition force continues however to be intractably bent on the seizure of power as a primary aim, and the complete lack of understanding between it and the Shah continues to be a very dangerous factor. The United States is beginning a new and major effort in the field to analyze “Nationalist” leadership to ascertain the feasibility of an attempt to influence it in the direction of greater responsibility.

0. Source: Department of State, Central Files, 611.88/1–1862. Secret. Drafted by Miklos on January 13 and retyped in S/S-RO on January 15; approved by Talbot. The report was written in response to NSAM No. 67. (Ibid., NSAM Files: Lot 72 D 316, NSAM 67) The report was transmitted to Bundy at the National Security Council under cover of a memorandum from Battle that reads: “In response to your memorandum of August 7, 1961 regarding the implementation of U.S. policy in Iran as set forth in the Iranian Task Force’s report of May 15, 1961, there is attached a report by the Chairman of the Task Force, Assistant Secretary Talbot, which covers the activities and progress made by the cooperative efforts of the U.S. and Iranian Governments in the intervening period. The report concludes that the appropriate branches of the present Administration have been given sufficient authority to carry out U.S. policy in Iran and that no further action by the NSC seems to be required at this time.” Regarding the May 15 report, see footnote 2, Document 49.
1. Annex B, “Goals of United States Action,” which is the same as Annex B to Document 127, is not printed.
2. Top Secret.
3. The numbered Iran Task Force Recommendations that appear in Annex A correspond to those in NSC Record of Action No. 2427, Document 51.
4. See Document 169.
5. Secret.