Foreign Relations of the United States, 1964–1968, Volume XXII, Iran

65. Memorandum From the Deputy Director of the Office of Greek, Turkish, and Iranian Affairs (Howison) to the Assistant Secretary of State for Near Eastern and South Asian Affairs (Talbot)¹

Washington, January 18, 1965.

SUBJECT

• Your Appointment with Howard Parsons, AID Mission Director for Iran 10:30 a.m. Tuesday, January 19, 1965

In your meeting with Mr. Parsons you may wish to draw on the following talking points.

1. Our security interests are too compelling for us to allow favorable indications of Iran’s increasing self-reliance to obscure its continuing vulnerability and basic weaknesses or to conclude too early that U.S. objectives can be achieved without significant participation in Iranian affairs. Iran is in transition, deeply engaged in the process of difficult adjustment to the initiation of basic reforms and the effort to achieve rapid modernization. Although progress in this respect is encouraging it is not yet self-sustaining and does not insure continued internal stability.

2. Our leverage in the past has stemmed in large measure from the inputs of our economic, technical and military assistance. These modes of assistance on a large scale have contributed significantly to the forward movement experienced during the past decade and secured our entree into key administrative, economic and military avenues. Fortunately, there is considerable acceptance among the present ruling society of the value of Iran’s ties with the West and increasing agreement with the stress which we have placed on orderly modernization and socio-economic development. Under a continuance of present circumstances therefore we need not look forward to a drastic loss of influence as our material sources of leverage disappear.

3. However, apart from military matters, where we may expect some years more of close dependence on U.S. advance and support, we shall be drawn less closely into the government’s future decision making process and shall probably adopt more nearly the role of trusted ally rather than that of responsible senior partner.

4. We should exercise the influence and capabilities which derive from our technical and economic assistance programs to lessen the impact of our preponderantly military loan assistance and diminish our vulnerability to the charge that the United States is pursuing a militaristic policy in Iran with little concern for the economic and social betterment of the Iranian people.

5. Although the administration of Iranian economic affairs has improved, we shall want to continue to exercise our available influence to persuade the Iranians to maximize their increasing resource allocations for development and to take the difficult political decisions involved in such critical areas as overhauling the tax system and improving public administration.

6. We should endeavor to maintain flexibility in our aid policy so as to assist in preventing the dissipation of important economic advances, as well as to safeguard our own national interest by developing for U.S. industry an appropriate share of the growing market for capital goods which we have helped to create through our soft loans and other assist-ance of the past. This is essential not only because of our balance of payments problem but also as a further means of preserving American influence and our presence in key undertakings in the Iranian economy.

7. In the transitional period ahead, with Iran counting heavily upon the success of a land reform program which initially, at least, is adding to a now chronic shortfall of wheat production, our PL-480 programs should assume greater significance. In order to derive maximum benefit from this type of assistance, both as a marketing aid for the United States and as an instrument of foreign policy, we shall have to work hard at both ends in streamlining the bureaucratic procedures associated with PL-480.

1. Source: Department of State, NEA/IRN Files: Lot 69 D 426, AID Iran 1965, AID-1, General Policy, Plans, Coordination. Confidential. Drafted by Mulligan (NEA/GTI). A handwritten note on the memorandum reads: “GTI—A good paper. T.”