TRANSMISSION OF PROGRESS REPORT ON NSC 5402, 'UNITED STATES POLICY TOWARD IRAN'

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01731R003000020002-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 20
• Document Creation Date: December 15, 2016
• Document Release Date: April 23, 2004
• Sequence Number: 2
• Publication Date: April 14, 1954
• Content Type: MF

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TOP SECRET
OPERATIONS COORDINATING BOARD COPY
WASHINGTON 25, D. C.
MEMORANDUM FOR THE EXECUTIVE SECRETARY
NATIONAL SECURITY COUNCIL
April lb, 15,5I4
SUBJECT; Transmission of Progress Report on NSC 5102,
"United States Policy Toward Iran"
There is attached the first Progress Report on NSC 5102, "United
States Policy Toward Iran" covering the period through March 29, 1954.
This report was approved by the Operations Coordinating Board on April.
1b, 1954.
The OCB recommends that the date of April 1, 19511 in paragraph 15c
of NSC 51102 be changed to June 1, 19511, Because of the status of the
current negotiations for the settlement of the Iranian oil problem, the
date of April 1, 1954 did not appear to be a feasible time to begin a
review of this problem for consideration by the National Security Council.
The OCB feels that the date of June 1, 19511, while necessarily an arbi.
trary one,, does allow sufficient time for the conversations in Iran to
get under way and for some indication for their probable outcome to become
apparent. Similarly, it allows time for expert studies, which are being
undertaken, of alternative ways and meant to get substantial revenue
from Iranian oil should current negotiations fail. Such studies could be
completed or sufficiently developed by June 1 to provide the basis upon
which to undertake a review of United States policy at that timed
The National Security Council will note that this report covers onlj
the period through March 29. Since that date, an apparent impasse in
negotiations in London with the AIOC has been broken; Mr,, Herbert Hoover.:'r,
has gone to Tehran; and the consortium team has also arrived there. Thi3
successful outcome of the negotiations with the British was made possibl.
by an agreement between the U,S. and the U.K. Governments for separate,
but concurrent, negotiations between the British and Iranian Governments
on the problem of compensation to AIOC,
NSC REVIEW
COMPLETED,
10/31/03
Elmer B, Staats
Executive Officer
Progress Report on NSC 5102 (Iran),
dated March 29, 1954.
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OPERATIONS COORDINATING BOARD COPY
WASHINGTON 25., Do Ce
April 12, 19,4
MEMORANDUM FOR THE OPERATIONS COORDINATING BOARD
SUBJECT: Transmission of Draft Progress Report on NSC SiO2,
"United States Policy Toward Iran"
There is attached the first Progress Report on NSC 51:02 (Iran)
prepared by the OCB fdorking Group and reviewed by the Board Assistants,
This report covers the period through March 290 1954.
Attention is invited to the one suggested change in the basic NSC
paper which the OCB is asked to recommend to the National Security Course:..
Paragraph 15c of NSC 5402 reads as follows:
"15o c, If such a settlement has not been reached by April 1, 19513
review U.S. policy toward the problem in the light of circumstances
then existing, including giving consideration to taking independent
action with Iran, in order to bring about a resumption of revenues
from its oil resources as a stabilizing influence in the Goverment
of Iran tending to obviate the need for U.S. emergency eeonomin
assistance."
It is proposed to change the date of April 1 to June 1, 1954. Heoa'Ase
of the status of the current negotiations for the settlement of the Iranin
oil problem, the date of April 1, 1954, did not appear to be a feasible
time to begin a review of thisproblem for consideration by the National
Security Council. The Working Group feels that the date of June 1, 1954,
while necessarily an arbitrary one, does allow sufficient time for the
conversations in Iran to get under way and for some indication of their
probable outcome to become apparent. Similarly, it allows time for expaa
studies, which are being recommex,ded, of alternative ways and means to
get substantial revenue from Iranian oil should current negotiations fail,
Such studies could be completed or sufficiently developed by June 1 to
provide the basis upon which to undertake a review of United States policy
at that time.
The Board will note that this Report covers only the period through
March 29, Since that date, an apparent impasse in negotiations in London
with the AIOC has been broken; Mre Herbert Hoover, Jr., has gone to Tehra ;
and the consortium team has also arrived there. This successful outcome
of the negotiations with the British was made possible by an agreemt?nt
between the U.S. and the U.K* Governments for separate, but concurrent,
negotiations between the British and Iranian Governments on the problem
of compensation to AIOC.
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It is recommended that the Board approve the Progress Report and
forward it to the National Security Council under cover of the attached
draft transmittal notes
or Be Staats
Executive Officer
Attachments:
1. Draft Memorandum to Exec. Secretary,
NSC, from Exec. Officer, OCB0
2,j, Progress Report on NSC 5402 (Iran),
dated March 29, 19511
OCB File Na. 36
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CONFIDENTIAL
OPERATIONS COORDINATING BOARD
WASHINGTON 25, D. C.
January 29, 1954
MEMORANDUM TO THE OPERATIONS COORDINATING BOARD
SUBJECT: Terms of Reference for Working Group on
Coordination of NSC 5402 (Iran)
The Operations Coordinating Board,, by vote-slip action
completed January 18, 1954, approved the attached terms of
reference for the Working Group on Coordination of NEC 5402,.
2
.Elmer B. Staats
Executive Officer
Attachment:
Approved Insert in Standard
Terms of Reference for
Working Group on Coordination
of NSC 5402 Iran), dated 1/29/54
OCB File No. 36.
OJF DENT .AL
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CONFIDENTIAL
OPERATIONS COORDINATING BOARD
WASHINGTON 25., D. CV
January 2$e, 1954
Reference NSC 5402
NSC Action No. 998
Terms of Reference for ?Jorking Gros, on
Coordination of NSC 5402 (Iran)
1, The President has directed the implementation of NSC 5402
by all appropriate executive departments and agencies, and has desig-
nated the OCB as the coordinating agency.
2. To assist the Board in this taskp representatives of the fol-
lowing agencies, and a representative from the OCB staff, will constittr 2
a working group, chaired by the Department of State:
a. Department of State
be Department of Defense
c. Foreign Operations Administration
d, Central Intelligence Agency
e. U. S. Information Agency
f. Treasury Department and Department of Justice have
been requested to designate representatives upon
whom the Working Group can call if and when nec-
essary and appropriate.
3. The working group will follow standing OCB instructions (Annex
"Alt)
4. The first report under paragraph 4 of Annex "A" is due on Jr
about April 1, 1954? Subsequent reports are due at intervals of aporox-
imaterly six months thereafter.
5. In view of the fact that PSB D-22 contains material of interest
and importance to attainment of U.S. objectives in Iran, the working
group is to take pertinent portions of D-22 into account in its operation s
and reports.
OCB FILE NO. 36
CONFIDENTIAL
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"CLASSIFIED
ApffGvedr- OF
ROUTING AND RECORD SHEET
INSTRUCTIONS: Officer designations should be used in the "TO" column. Under each comment a line should be drawn acr .neat
and each comment numbered to correspond with the number in the "TO" column. Each officer should initial (check mark ins cient)
before further routing. This Routing and Record Sheet should be returned to Registry.
FROM:
ROOM
NO.
FORM NO. 51-10
APR 1953
OFFICER'S
INITIALS
SECRET CONFIDENTIAL
FEB 1 1954
f.ovERNME6 K- K.% OFFICE
RESTRICTED UN`- SSIFIED
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TOP SECRET
OPERATIONS COORDINATING BOARD COPY
WASHINGTON 25, D. C.
Larch 29, 19!,14
PROGRESS REPORT ON DISC 51402,
"UNITED STATES POLICY TO1'/ARD IRAN"
A. SU1VARY
la Fbllowing the President's directive assigning the coordination
of NSC 5402 to the Operations Coordinating Board, there was established a
working group. This group has been charged with direct responsibility at
the working level for coordination of these policies and has been active
since its establishment in January 1954. Negotiations with the British have
been carried forward directly under the guidance of Mr Herbert Hoover., Jr.,
both in London and Washington, While the course of negotiations has mot
always been smooths progress has been made and there is still hope of some
successt Negotiations with Iran have not yet begun but there are some pro.-
pects for ultimate success in Tehran, Meanwhile, emergency economic aid
has necessarily continued with an additional grant of $6 million. A rr litvi7r
aid program of an additional $19 million has been approved, Planning for
the contingencies envisaged in paragraphs 25, 26 and 27 of NSC 5102 is beitg:
carried on by interested departments and agencies.
fir 2. The policies and courses of action set forth in NSC 51102 are con-
sidered to be adequate, timely and to require no important changes. It is
recommended, however, that, in view of the status of the current negot .atic;r:3
with the British and presumably in a short time with the Iranian Government,
the date of April l as set forth in paragraph 15c for the review of the
United States policy be changed to June 1,
3. The Departments of Treasury and Justice have appointed full-time
members to the OCB TJorking Group on NSC 5402 (Iran) and have broad interest,.
in this problem, They are not participants in the contingency planning
called for in paragraphs 25, 26 and 27.
B. PROGRESS BY PARAGRAPHS
Paragraph 15 - Facilitate Iranian Oil Settlement
a. Assist Iran again to obtain substantial revenues from its oil
b. Assist in every practicable way to effect an early and equitaole
settlement of the oil controversy between the UK and Iran.
0CB File No. 36 - 1
F-.
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c:
If such a settlement has not been reached by April li 1954, review
U,S,& policy toward the problem in the light of circumstances #then
existing., including giving consideration to taking independent
action with Irani in order to bring about a resumption of revenues
from its oil resources as a stabilizing influence in the Government
of Iran tending to obviate the need for U.S. emergency economic
assistance,
In implementing actions under b or c abovep seek to avoid
establishing any precedent which would adversely affect U.S.
interests in Middle Fast resources;
There have been certain significant developments in the direction of
settlement of the Anglo-Iranian oil dispute since approval of N3C 5402.
Considerable progress has been made toward the establishment of a
consortium of oil companies (140% AIOC; 40% Am Arian companies; Royal
Dutch Shell and Compagnie Francaise des Petroles sharing the remainder on
a basis not yet determined) which, when organized,, will open negotiations
with the Iranian Government to return Iranian oil to world markets and
thus provide Iran with substantial revenues from its oil resources,
UK.
Normal diplomatic relations have been restored between Iran and the
The Parliament which existed at the time of the Mos3adeq Government
has been dissolved and a new Parliament has been elected under close super-
vision by the Zahedi Government.
An eminent American oil experts Mr. Torkild Rieber, has been hired
by the Iranian Government as a special adviser for oil matters,
Although there are still great political and psychological factors in
Iran which could disrupt any oil agreement which would appear reasonable
to international oil companies, there now exists in Iran the most favorable
atmosphere for such a settlement since nationalization of the oil industry
at for the foreseeable futures
There is some evidence that Iranian leaders have acquired greater uncer-
standing of the domplexities and realities of the international oil bu.sines..
during the past months of "education" by Mr. Herbert Hoover, Jr,, U4%
Ambassador Henderson and an extensive propaganda campaign conducted by
USIA4
As to the question of considering unilateral action with Iran if there
is no oil settlement by April 1, 1954, it would seem that such action, ever.
if practicable, would be out of order while the current negotiations --re
in progress and should only be considered when It appears that the ne-
tiations have failed,
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Paragraph 16 - Continue Emergency Economic Aid Pending Reestablishment
of Substantial Revenues
Since the approval of NSC 5402,.Iran has been granted $6 million
additional emergency economic aid. This brings to a total of 451 million
the emergency aid granted the Zahedi Government by the U.S.
As to the desirability of providing economic aid in the form of loans,
it was not possible, in view of the urgency of Iran's need in March to
await election of a Majlis to consider accepting a foreign loan. It-is
the law of Iran that foreign loans must receive Majlis approval. The
Majlis which had been convened under Mossadeq had been disbanded and the
new Majlis had not been convened when the need for additional aid war
most pressing. In addition, it is probable that it would be political-
ly unwise to propose consideration of a foreign loan as the first business
of the new Majli.s.
The ~:a45 million emergency aid allocation has been an important t'actcr
in countering the sharp inflationary trend of the past year. In song
cases, such as sugar, price reductions resulted from the actual receipt
of imports by Iran. In other instances the psychological effect of knowing
that additional funds were available for increased imports resulted in
price reductions. In addition, of course, local currency generated from
the use of the ;)45 million has enabled the Government to meet its current
operating expenses including salaries of Government employees and part
of the funds needed for armed services pay. While a relatively smaller
part of the local currency generated has been used for the purpose, the
FDA Mission and the Iranian Government have been in a position to finance
a number of "impact" projects, that is, projects such as low cost housing
construction and road and street repairing, which is evidence to the Irari;n
people, though scanty, it is admitted, that the Zahedi Government intendh
to live up to its promises to alleviate unemployment and iatpravu- liling
conditions.
The 445 million aid allocation, as originally tendered, was not rel#_t3d
to any specific period, It was later scheduled to carry through March 21,
1954 (the end of the Iranian year). Latest indications are that the oris,,`.aal
allocations plus an additional 46 million made available to Iran this moi.ti,
will be sufficient to meet Iran's urgent requirements through the en-.1 of h:s
present U.S. fiscal year. This estimate, however; is based on the asmrq,)-?
tion that Iran will revalue x$13 million recently placed in the note rese-1r.
Fortunately, the Bank Melli' s holdings of local currency have improved
sufficiently to enable the Government to sell foreign exchange to the Banc
Melli for local currency. This procedure was adapted in the case of the
recently allocated $6 million. The dollars are available to finance impo;-ts
through regular commercial channels to meet the demand for exchanges Thhui
far, for various reasons including the fact that importers expect a furtm~,r
drop in the exchange rates the demand for exchange has not reached expect_
Lions. As a result there has been a substantial increase over the serio 319
depleted reserve position of the Bank last Augusta
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To meet the Iranian budgetary deficit between the end of the U.S.
fiscal year and such a time as the next fiscal year appropriation becomes
available the IvUssion in Tehran has recommended providing a grant of
from 37.5 to $9 million. No FOA/Washington position has been determined
as yet on this question.
As indicated above, presently allocated aid will, in certain circum-
stances, suffice for the period ending June 30. In any event short of
a resumption of oil revenues, it is quite likely that additional aid will
have to be made available in May or June in order that the Zahedi Govern-
ment will be in a position to meet its budgetary requirements in the periu i
immediately following June 30. For planning purposes, it is probably
necessary to assume a requirement for emergency economic aid of approximattty
5 million per monthb Furthermore, it must be recognized that this e:nergta:ay
economic aid accomplishes its purpose only as it can be translated into the
acquisition of local currency by the Iranian Government. Hence the proce-
dures under which the aid is made available are extremely important and
unless the special procedures employed in connection with the recent
Pb million grant are applied to future aid, dollar aid will have to be made
available several months in advance of the date when the Government of Iran
is expected to require the rials.
C araraph 17 ~ Continue Limited Technical and Economic Aid
The technical assistance program, embodying an economic aid componen`,.
has progressed at a more rapid pace thanks to the early receipt of funds
this fiscal year, the delegation of greater operational authority to the
field,, the assignment of needed personnel and the Mission's policy to giv 3
as much support to the Zahedi Government is consistent with the U.S. desire
to see Iran compelled to enter into definitive negotiations for an oil
settlement..
Another segment of the technical assistance program, the Community
Development field, was turned over under contract to a private organizati-),
the Near East Foundation. This move will broaden the resources in technic:.
competence now available to the FOA Mission in operating the program in
Iran. USIA continues its efforts to, call this aid to the attention of Irer-l.ane.
Paragraph 18 - In Implementing Above Courses of Actions Consult Witt--
U.K. Without Impairing UxSo-U~K. Relations, Without Permitting U.t,Ve -
of U.So Actions and Seek-i.nLU.Ko Agreement to Solution Oil ?robleas
While Supporting; Zahedi Government
Full consultation has been maintained with the UK on all significant
U.S.. move toward settlement cf the oitl dispute and provision of economic
and technical aid to Iran* Although here are certain outstanding gttestic>s
in regard to Iran still under discussion between the U,,S,and U.K, Govern-
ments, U.S,-U.K, relations have not been unduly impaired.
Although there are still great obstacles to overcome efforts to find
a practical and equitable solution of the oil problem at the earliest
possible moment have been marked by success on the following major points:
a, AIOC invitation to five American oil companies, Royal Dutch
Shell and Compagnie Francaise des Petroles to form a consortium
to handle Iranian oil.
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b. AIOC acceptance of not more than a 10% share in the consortium*
C. British acceptance of the principle that the total British share
(including British interest in the Shell Compary's share) may
not be a controlling percentage of the consortiums,
d. British acceptance of the American proposal that the total value
of the new consortium be set at one billion dollars.
British acceptance of the method of payment to AIOC proposed by
the American companies and Shell,
Agreement that the British Government will negotiate with the
Iranian Government regarding AIOC claims for compensation from
Iran.
On several occasions since approval of NSC 5302, the U.S. Government
has received assurances of full UK support to the Zahedi Government. Thera
is a clique of Iranian politicians, who have local reputations of being
British agents) who have not concealed their antagonism to Zahedi and their
desire to replace him with one of 'their number. In the considered judgment
of U0S. Government observers, it is likely that those Iranian politicians
are merely acting on their own initiative in pursuance of their personal
ambitions.
On January 23, 1951, the Attorney General expressed the opinion that
participation of American oil companies in the specified proposed consortial:,:
to contract with the Government of Iran within the area of the former AIOC
concession for production, refining and acquisition of petroleum and petro-
leum products, would not in itself constitute a violation of the anti-trust
laws. This made it unnecessary for the President to use his authority to
approve voluntary agreements and programs under Section 708(a) and (b) of
the Defense Production Act of 1950, as amended,
Paragraph 19 - a) Provide Grant Military Aid to Iran to Maintain Internal
Security and Provide Some Resistance to External revs=;,r
and b) to enhance the Prestige of the Monarchand the Moral
of the Iranian Government and -Militar
Since the approval of N.SC 5102, $19 million additional military aid
has been granted Irani Five million dollars of that sum was expended, at
the urgent request of the Embassy and U.S. Military Missions in Iran, for
clothing, medical supplies, tents, bedding,, housing for Army and Get :rrmeri.-s
personnel and items such as vegetable oils, drugs., stationery, cleaning
materials, and range repair. The FOA Mission in Iran cooperated with the
military in seeking to obtain the maximum benefit from these expenditixres.
While the effect of such aid is difficult to measure,, nevertheless, it
can be assumed that there was some subsequent improvement in morale among
the armed forces, The remaining x,11 million will be programmed following
receipt of recommendations requested from Chief of MAAG1 Iran.
The U.S. Military Missions in Iran have reported some increased recep-
tiveness on the part of the Iranians to advice for improvement of operatics
and reorganization of the military establishments There is continued prese=ire
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by American military advisers upon the Iranians to use U.S. aid and advice
to achieve further improvement of their ability to maintain internal iecur,.-;
and provide some resistance to external aggression.
The provision of additional military aid to Iran is intended to
assist in enhancing the prestige of the monarchy and morale of the govern-
ment and armed forces. As the Shah is Commander-in-Chief of the Iranian
armed forces) improvement in the organization, equipment) leadership and
morale of the armed forces is bound to reflect some credit on the shah.
The provision of certain t{tV.::tun equipment such as tanks and medium artil7.pry
is viewed by the Shah as adding to his prestige. Also) it can be expected
that the Shah and his armed forces will react favorably to demonstrations
of U.S. policy to help Iran to defend itself against external aggression.
The Department of the Army has prepared and forwarded to the Chief of the
ARMISH, Iran, an amendment to his terms of reference taking into account
the mission of assisting the Iranian armed forces to provide some resistance
to external aggression.
Paragraph 20 - The Amount and Rate of Military Aid to Iran Should Take Into-"
Account Itan's Attitude Toward the Aid and Cooperation with
the Free World and Iran's Ability to Absorb the Aid an
is Wi.liingness to Formalize Contracts for Milita A and
Training
There has been little improvement in Iran's demonstrated ability satis-
factorily to absorb military equipment and training, A total of $52.7
million in military equipment had been shipped to Iran as of 31 December
1953. As of that same date, ;w91,8 mi .lion in equipment had been progr immec ._
The Iranian Cabinet decided on March 17 to extend "formally" the con-
tract with the U.S. Advisory Mission to the Iranian Army. In case the
Shah and Prime Minister approve this decision) Ambassador Henderson is
authorized immediately to agree to an extension of the contract on previouz y
existing terms,
Paragraph 21 -. Encourage Iran to Cooperate Militarily with its Neighbcrs
Ambassador Henderson has been instructed to inform the Shah that the
U.S. and UK are in agreement that Iran's armed forces should have capabili-
ties beyond those of maintaining internal security. Such forces should be
developed gradually and with due care not to overburden Iran's economy.
As to Iran's joining in regional defense arrangements) the Shah has
made clear in conversations with Vice President Nixon) Ambassador Henderson
and U.S, military advisers that it is premature for Iran to enter such
arrangements. However, he has expressed a hope that, as Iran's armed foro*v
develop a capability to make a significant contribution to regional defense.
it will be possible to move in the direction of military cooperation with
Iran's neighbors? The U.S.) UK and Turkish Governments agree that this is
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Nov not an appropriate time to press for?immediate and, of necessity, public
Iranian participation in regional defense arrangements. However, it is
being pointed out to the Shah that U.S. Congressional approval of further
military aid to Iran will undoubtedly be influenced by regional defense
as well as by individual country defense considerations,
Through the provision of grant military aid and training, the U.$.
Government is assisting Iran in developing military capability which would
enable it to enter into military cooperation with its neighbors
and to enter into any regional defense arrangements which may be developed
for the Middle East.
Paragraph 22 .6 Attempt to Direct Iranian Nationalist Feeling to Construc-
tive Channels and Bear in Mind Desirabilit Hof Stren then
thIranians to Resist Communist Pressure
Ambassador Henderson and his Embassy staffs constantly in contact with
high levels of the Iranian Government, bear in mind the desirability Of
strengthening in Iran the ability and desire of the Iranian people to
resist communist pressure, The effect of their influence cannot be measures
but it is noteworthy that the Shah, Prime Minister Zahedi and most leafing
members of the Government are fundamentally anti-communist.
The Shah and Zahedi both realize the need to demonstrate to the Iranian
public the benefits of a pro-western attitude and the importance of direction.:
nationalist feelings into constructive channels. Major obstacles to a
successful program in this direction are:
a. Failure so far to improve the extremely low levels of living of
the great bulk of the population,
b, The historical concentration of the control of political and
economic activities in a comparatively small number of leading
families who have consistentlyp although disunitedly, resisted the
efforts of politically ambitious urban middle class elements to
broaden participation in the control of these activitiess
c. The political inexperience and lack of discipline of the Majlisi
the members of which for the most part represent the ruling
aristocracy, and tend to support individuals rather than progr,ims
or principlese
d.
The Shah's deep suspicions of any strong Prime Minister and his
resistance to Majlis attempts to control the Executive Branch of
the Government.
The FQA Program has contributed to implementation of this aspect of tl
policies of NSC 54O2 by giving constructive employment to young educated
Iranians who might otherwise have been frustrated) unemployed and prey for
agitators,
USIA has expanded its program to include the assignment of officer
to the three consulates in Iran and step up its program in the field of press
relat1one, Approvee I-oo eo easee44O1/ b GsIPA 0l* 4t31 AO%O t2~
- 7 00 TOP SECRET
 Approved For Release 2004/07/08 : CIA-RDP80R01731 R003000020002-9
TOP SXRST
difficult to measure the full effect of this program, but it is clear that,
through U:3IA efforts, a significant amount of material which is considt3red
useful to U.S. purposes in Iran is distributed and read or listened to by
the local people.
Paragraph 23 - Encourage Iran to Adopt Necessa Financial Judicial,
Succession to the Crown
The U.S. Embassy at Tehran has been requested to report upon Iranian
Government planning to carry out or propose for new legislation any firnan-
cial, judicial, administrative and other reformat Since the Zahedi Govern-
ment.has been primarily concerned with the establishment and maintenance
of security throughout Iran and with preparations for negotiating a settle-
ment of the Anglo-Iranian Oil dispute, it has been unable to give much atten-
tion to reforms, The&nbassy has been instructed to encourage, whenever
possible, the preparation of an Iranian Government reform program to present
to the Majlis when it convenes. There are available from the reports of
previous advisory missions to Iran and from tax, land reform and similar
experts now in the employ of FOA, plans and programs which could be used
by the Iranian Government as a basis for preparation of necessary legislatior,.
With reference to the question of succession to the Crown, no one has
been designated and no definitive method of selection determined. Probably
the main reason that the Shah has not designated a successor is his suibpicio
of any such successor. Ambassador Henderson has been instructed to press
upon the Shah, whenever an appropriate occasion appears, the desirability
of designating a successor. To date, however, there is no indication that
the Shah will do so.
The conduct of the U.S. program, both the technical assistance the
the economic aid phases of it, have brought about somewhat naturally a
number of reforms or innovations in the Iranian Government structure. #here
are now in existence, for example, a public health cooperative, a statistics
cooperative, and agricultural service, which, there is every reason to
believe, will become integral parts of the Iranian Government. Iranian
officials are becoming more willing, moreover, to follow the mission sug-
gestions for improvements in Iranian Government administration to a point
where they have requested U.S. specialists in taxes, budget, government
procurement, organizational methods, auditing, accounting and accounting and
government personnel matters and commercial accounting,
In cooperation with the various ministries, the Mission has developed
a plan for a master joint fund and joint administrative machinery to conduct,
the complete responsibility for the program by the Iranian Government.
While the Mission's recommendations for financial reforms have not yet
been fully adopted, the Mission's close cooperation with the Ministry of
Finance and the Bank Melli in the administration of the economic aid progran
have strengthened the hand of the financial authorities so that the necassary
changes are almost certain to be made as soon as a Majlis is formed,
Administrative and Other Reforms and to Provide rderl
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Paragraph 25 - United States Should Pre are Plans to Meet the Con-
tingency of an Attempted or Actual Communist Seizure
of Power One or More of the Provinces in Tehran
There is in existence a filar which was in
accordance trith directions from the Joint Chiefs of Staff. This plan takes
into account possible military action in Iran in support of a non-Communist
Government in the event either an attempted or an actual Communist seizure
of power in cue or more of the provinces of Iran or Tehran.
While plans for U.N. action in the contingency foreseen in paragraph 25
are being studied in the State Department, it has been considered undeEir-
able at this time to discuss such plans with other friendly Delegations
at the U.N. or with the Secretary General of the U.N.
As a situation develops in which it is considered desirable to consult
with other nations on plans for possible U.N. action, we would probably
first raise the matter on a confidential basis with the UK Government.
Since both Turkey and Pakistan would undoubtedly be concerned at signs of
increasing Communist influence in Iran, it might also be desirable, as the
situation deteriorates' to consult with Turkey and Pakistan in regard to
concerted plans for U.N. action in the contingency foreseen in paragraph 25.
As affairs grow progressively serious in Iran, and there is evidence
of increasing Communist subversion, it might be desirable to advise the
Iranian Government to prepare and submit a short "Status Report" to the
Security Council,, for the information of all U.N. Members, under the
heading of the "Iranian Question" which has remained since 1946 on the list
of matters with which the Security Council is seized. Such a report, r op Secret
within the CIA and will remain attached to the document until such time as it is downgraded, destroyed, or tr::nsmit o. tside of
CIA. Access to Top Secret material is limited to those individuals whose official duties relate to the material. Ea =h alte t or assist.
ant Top Secret Control Officer who receives and/or releases the attached Top Secret material will sign this form sp:.d ind- r per=.od of
custody in the left-hand columns provided. The name of each individual who has seen the Top Secret document and th a .t a of han-
dling should be indicated in the right-hand columns.
`e$a
APB
1954
NAME AND OFFICE SYMBOL [ AT
NOTICE OF DETACHMENT: When this form is detached from Top Secret material it shall be completed in th_ approp fate al 1 Below and
transmitted to Central Top Secret Control for record.
PATCHED (OUTSIDE CIA) TO
IANM NO. 38-13