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

9. Information Memorandum From the Deputy Assistant Secretary of State for Near Eastern and South Asian Affairs (Jernegan) to Secretary of State Rusk¹

Washington, March 20, 1964.

SUBJECT

• Iran as a Country in Transition from Aid to Self-support

On March 18 we in NEA were surprised to learn for the first time that Iran is one of the fourteen countries described in the President’s foreign aid address of March 19 to Congress² as in transition from reliance on aid to self-support. Before Iran’s inclusion in this group of countries, it had been our understanding that the contemplated transition period was one or two years, and we were thus most concerned that a decision seemed to have been taken without our concurrence to end aid to Iran within so brief a time. We informed A.I.D. of our concern.

We now concur in Iran’s inclusion on the list of transition countries, having been assured (1) that the list is not limited to countries to which we plan to end our aid within a year or two and (2) that there has been no change from the position agreed upon in the Country Assistance Strategy Statement for Iran signed by Mr. Bell on December 30, 1963. This statement calls for continuation of Development Loans to Iran through June 1965, after which the further continuation or termination of concessional rate lending will depend upon economic trends in Iran and the availability of U.S. funds. As for technical assistance through Development Grants, our aim is described as termination of this program in four or five years “if, as anticipated, Iran succeeds in obtaining assistance it needs through the international agencies and if our technical assistance activities are successful in building up the competence of the GOI to manage its development drive more efficiently.”

We agree, and we are pleased, that Iran does in fact appear now to be in stage of transition which it may be hoped will lead, if present trends continue, to eventual self-reliance. However, we believe it would be a very serious mistake to withdraw our aid presence abruptly from Iran, the most vulnerable country on the Soviet perimeter and the key member of CENTO. The progress of the past eighteen months should not hide the fact that Iran is still a weak country periodically in need of reassurance. It would be short-sighted, possibly tragically so, to become committed too far in advance and without adequate study to a position which would deprive us of an important means of providing such reassurance. Moreover, our assistance strategy should not ignore the fact that strategically located Iran still remains hospitable to our military and intelligence sites at a time when other countries are obliging us to remove or limit such facilities.

1. Source: Department of State, NEA/IRN Files: Lot 69 D 30, Iran 1964, AID 1, General Policy, Plans, Coordination. Confidential. Drafted by Thomas and cleared by Director of the Office of Near Eastern and South Asian Regional Affairs Guy A. Lee. Copies were sent to Bell and Macomber.
2. For text of the President’s foreign aid message to Congress on March 19, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1963–1964, Book I, pp. 393–398.