8. Memorandum From Robert W. Komer of the National Security Council Staff to the President’s Special Assistant for National Security Affairs (Bundy)0

McGB:

We have lost Amini,1 at least temporarily, but the problem which led to his downfall remains—that of an uncovered budget deficit of at least $110-120 million. The new Alam cabinet (tantamount to direct rule by Shah) will probably be even less able than Amini to cut this down to size.

Therefore, we still face the issue of how to answer the inevitable plea for help. Holmes, supported by State, says let the Iranians come to us before we say “no”, thus not entangling ourselves too much in Iranian affairs. However, this "wait and see” attitude has already contributed to the loss of one government. Bill Gaud and I argue that we should grab the ball and tell the Iranians again that they will have to cover the budget gap themselves (the only difference between Bill Gaud and me is my sense that if Iranians cut their deficit to $20-30 million, US will have to cover this gap if no other alternative). We're being blamed by the Iranians for this crisis anyway, and I'd rather be hanged for a goat than a sheep.

Biggest single part of the deficit is a whacking increase in the local military budget (far more than necessary to compensate for lack of $15 million US budget support). We should tell the Shah specifically that he ought to cut this back at least to last year’s level. It won't happen unless we insist on it. Indeed, one reason we lost Amini is that we didn't back his play for a military budget cut.

Am working on Phil Talbot because of my strong belief that latest Iran crisis isn't over; in fact, it’s just beginning. But it may take Presidential intervention to get State to override our Ambassador. Is JFK sufficiently annoyed by Amini’s complaints about US aid to say he wants us to tell Iranians again that they'll have to bail themselves out?

Bob K.
  1. Source: Kennedy Library, National Security Files, Meetings and Memoranda Series, Staff Memoranda, Robert Komer. Secret.
  2. On July 18, the Shah of Iran accepted the resignation of Amini and his Cabinet and appointed Asadollah Alam as Iran’s new Prime Minister. The Embassy in Tehran attributed Amini’s fall to his inability to reduce the deficit in Iran’s operating budget to manageable proportions. (Telegram 78 from Tehran, July 18; Department of State, Central Files, 888.10/7–1862) When reports appeared that Amini was blaming his downfall on U.S. refusal to provide sufficient economic support, the Department of State issued a press statement noting that during Amini’s administration the United States had provided $67.3 million of economic assistance in grants and loans and had committed an additional $20 million for a development loan. (Telegram 50 to Tehran, July 18; ibid., 788.13/7–1862)