IRAN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002900090002-9
• Release Decision: RIFPUB
• Original Classification: T
• Document Page Count: 12
• Document Creation Date: December 27, 2016
• Document Release Date: February 25, 2013
• Sequence Number: 2
• Publication Date: July 1, 1947
• Content Type: REPORT

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MUD
IRAN
I. General Situation
(a) Basic Forces. Traditionally, a tenuous condition of stability
has been maintained in Iran by a balance of Russian and British power
through a spheres-of-influence regime. Under this regime, which was
formalized by treaty from 1947 until 1921 and maintained in fact be-
tween.1941 and 1946, Russia enjoyed relative freedom of action in
northern Iran and Britain in southern Iran. The decline of British
imperial power east and west of Iran might well encourage the Soviet
Union to test British strength in southern Iran, with consequent
adverse effects upon Iran's internal stability. Present social and
economic conditions in Iran are such that only a very small percentage
of the population has any decisive influence on the life of the
country. However, the seeds of a labor movement and of social reform
have taken root. The present control of the country is concentrated
in the hands of the-Shah (Commander-in-Chief of the Army), Ahmad
Q,avam (Prime Minister), and the tribal leaders. They are united in
desiring internal security, freedom from foreign interference, and
the development of the country's resources. They differ greatly
over the means to be employed to gain these ends.
(b) Soviet objectives. The Protocol of the Russian-German Non-
Aggression Pact of August 1939 states that Soviet territorial aspirations
extend southward in the direction of the Indian Ocean. There is no
indication that the Soviet objective of dominating Iran has been changed.
It is to be expected that the Soviet Union will exert strenuous pressure
to assure the ratification of the Soviet-Iranian oil arrangement, con-
cluded in April 1946, when the Majlis convenes about mid-July, or,
failing ratification, attempt to bring about the establishment of a
"friendly" government in Iran. It has been increasingly clear that the
Russians, in seeking an oil concession in northern Iran, are motivated
more by
CONFI E T!.A r
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more by political than by economic considerations and intend to use
any such concession as a means of penetration and eventual domination
of the entire country. The Soviet Union is laying the ground-work for
renewed pressure by maintaining a vigorous press and radio campaign
impugning the motives of the US and attacking "reactionary" Iranians.
(c) British O 1ectivee. Iran is a vital source of petroleum to
Great Britain, representing 40% of the total oil resources controlled
by Britain. Although Britain will doubtless defend the Anglo-Iranian
oil Company concession arekn southwestern Iran, as vital to her
national interest, economic difficulties in the United Kingdom are
expected to impair the ability of Britain to influence markedly poli-
cies of the Iranian Government, leaving the Soviet Union more nearly
free to exert pressure upon the Iranian Government. The British,
realizing their dependence on southern Iranian oil, might possibly
agree to a Soviet-dominated northern Iran in exchange for a British-
dominated southern Iran.
II. Analysis of Assistance Already Received, Including Most
Recent Data Available.
(a) Premises on which Economic Aid Was Based. It appears that
a positive United States policy of support of the integrity of Iran
provides the best assurance that "appeasement" will not take place.
Iran calls for limited preventive measures to assure that the Iranian
situation does not deteriorate to the point of requiring extensive
curative assistance. The longer Iran remains economically backward
and politically a vacuum area, the more likely it Is that the country
will move.into the Soviet orbit of satellite states.
(b) Summary of Economic Aid G1ven since VE Day.
(1) Lend Lease aid was extended to Iran on a cash reimburse-
able basis in the amount of approximately $11,200,000. On December
21, 1945, an arrangement was concluded whereby Iran undertook to
liquidate
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liquidate this obligation by a series of installment payments to be
completed in 1948. All payments due under this agreement to date
have been made in the amount of approximately $5,200,000. There
remains outstanding an Iranian obligation of approximately $6,000,000.
(2) Persian Gulf Command property totalling approximately
$24,100,000 has been sold in Iran to the Iranian Government, munici-
palities, and private interests. Of that amount, approximately
$21,500,000 has been paid in dollars, local currencies, and properties
and other rights. There is outstanding an obligation of approximately
$2,600,000 covered by an FLC credit agreement with the Iranian Govern-
men roviding for payment in three installments dum in 1948, 1950,
and 1952.
(3) Funds appropriated by the United States Congress for
aid to foreign countries since mid-1945 have affected Iran only to the
extent of the general information and cultural program. Since VE Day,
the United States has continued two small advisory military missions
to Iran.
(c) Political and Economic Assistance Pending. Negotiations are
now in process with respect to the purchase of some $25,000,000 worth
of equipment and supplies for the Iranian security forces. Arrange-
ments are now being made under the provisions of the Fulbright Act, to
expend in Iran $200,000 per year, over a period of 10 years for edu-
cational exchange.
(d) Political and Economic Effects of the Aid. The extension
of Lend Lease aid to Iran helped to maintain the internal stability
essential to the functioning of our aid to Russia program during the war.
The sale of surplus property has helped to provide imported materials
required for internal economy, but unavailable during the war. The
two advisory military missions have established a ground-work upon
which more efficient security forces can be established. The
cultural and information program has increased and strengthened understanding
In Ir..a
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in Iran of the United States.and has developed a substantial group
of influential Iranians on whose sympathetic support we can count.
III. U.S. Objectives in Iran. The Joint Chiefs of Staff consider
that as a source of supply (oil) Iran is an area,of major strategic
interest to the United States; that as.a cushion of distance and
difficult terrain Iran offers opportunities for defensive and counter-
offensive purposes, vis-a-vis the. Soviet Union; -and that Soviet
domination. of Iran would have adverse effects upon the United States
strategic interests throughout the Near and Middle East. Its position
on,the eastern flank provides social, political, and psychological
contributions to the integrity of Turkey. Iran is both sensitive to
and effective'in the transmission of political impulses, either demo-
cratic or. totalitarian, throughout the adjacent area and its political
stability contributes to a condition of security throughout the Near
and Middle East..
In the Declaration Regarding Iran of December 1943, the United
States Government was-committed to continue economic assistance to
Iran and to respect'the maintenance of Iranian independence, sover-
eignty, and territorial integrity. In December 1946, the United
States Government informed the Iranian authorities that this Govern-
ment is prepared, so long as the Iranian Government demonstrates
a willingness to stand up for its sovereign rights against external
pressure, to support the independence of Iran not only-by words but
also by "appropriate acts". The President has-stated that"totali- -
tarian regimes imposed on a free people, by direct or indirect aggression,
undermine the foundations of international, peace and hence the
security of the United States. $ It is a proper objective, therefore,
to deny the spread of Communism in Iran and, through Iran, into
adjacent
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adjacent areas. It is felt that this objective can be achieved
by preventive action.on.the part-of the, United .States, in supplying
Iran the limited assistance needed to assure its continued independence
and friendly relations with the United States. It' is the policy of-
this Government to alleviate economic discontent in Iran by fostering
an expanding economy, thereby strengthening' the country's resistance
against.the development of a totalitarian economy sponsored by the
IV. Alternative Means of Reaching Objectives._-Another test of
Iranian ability to maintain its 'independence in the face of Soviet
pressure may be imminent. Soviet interference in Iranian affairs
has not ceased since the Security Council suspended. consideration of
the Iranian case early-in 1946. It has merely been more restrained
with a view to its intensification'at a propitious moment.
It is considered that present United States Influence in Iran
is very substantial. In the final analysis, it was United States
support of Iran before the Security Council during the past year which
was largely responsible for Iran's maintaining her sovereignty and.
integrity in the-face of Soviet pressure.., It'was_al-so the advice and.
moral influence furnished by the United States to the. Central Govern-
ment of Iran which strengthened-its wavering ,policy into a fir-mt
determination to take-the steps which led to re-establishment of
Central Government authority over the province of Azerbaijan.
To attain the objectives .outlined above,' the United States,
Government must not only continue to urge the" Government of Iran
to maintain and increase its confidence in the United-States and the
United Nations, but must provide-practical and timely assistance in
the development of an expanding' economy. It is suggested that any
United States aid extended unilaterally to Iran, technical or other-
wise, should be in line with eff9rts the United States makes through
the United Nations to secure international agreements on general
problems
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of the .Xranian. seeourit - forces responsible for-the maintenance of law
. and ,order within the country. Singe Iran does not have. and cannot
produce the., equipment neoeaeai 7 for the. -maintenance of internal.
security, this must be supplied , from abroad. It is important
the. stability of the, Near. and Riddle East' that Iran. be assisted An
preventing internal. disturbances which might. invite ' foreign inter
vention.
In considering possible use of the faoilitiele, of the. United Nations
and its specialized agencies, account would, hare' :to. be taken of the -tact
that Iran ' i* .a Member of the United. Nations, the International Labor.
Organization,-International Civil Aviation Organisation,. International
Hank for
and' world
agencies
s existing
acilitee.and for the ; Implementation,- of
Organization, - but -is not a member of two specialized
d. Nations Economic .,and, Social. Council and Food and
Agriculture Organization.
International' Civil Aviation Organization
(Aviation),- Food s and Agriculture Organization (modernization. off`
agriculture), and United Nations Economic and Social Council (mass
education), would appear to have services of particular usefulness
to Iran,
V. ' Ma itude -Nature and Tirn
o
ea. ee to v Years.
(a) ;ngagmig?
On' the basic
the idea a ea Re uired Within '
each he, s 0 'l'ea
e..9e.
of present information it is believed
Iran does not require finanoial assistance to.maintain and re
the . coats of which ' are' well within - Ir
-States counter, the et enuoue propaganda efforts of
the Soviet Union.
with an - intensive . information program against background of factual
problems of eeonomio' development. It is essential that the United
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reporting of world news not' rnished by any other source.
technical and advisory aseis'tan s+ is also essential for the effigy
operations of ' Iran
the long-range a rel+ amont program, a well Vie for the proper ope ion
habilitate its present economy.... This involves small.-scale projects,,
Lstructi+n and Development, International Monetary Fund
CON
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of:Iran to, support the Govern ,ent
The maintenance.'of the independence of Iran 'in'the.:ne
.resources and earn . 1ga,. although some change n the present 100 peg
currency reserve svstem and acme 'curtailment of nonessential tm
will be
required to make these resources fully.' available. The
mentation. or, the longer ri afge
will prdbab y require foreign
arge--scale eoononite tle~velopme t pro
finanola . assistance, .
The Irahiaa
Government e announced in general terms ,the nature. of its program
from the International Bank for Reconstruction and Development,
and, has mentioned its. intention of requesting. a, loan.'ef ' $250,000,,.001
the preeeztb tie a to_'.determine i1bat part ot, the expense would -equirr
the abeanoe Of any. detailed..e'stimates' of costs, it . s impossible
b po~:it.ogl Qonstant effort must `be.made through diplof
outside ft
p~i sal
channels to maintain, on
adequate 'interest of the Governmen ~,,0
the efreot .ve execution ca-
long..range,development program and to
educate and stimulate. the. people
will' -be greatly laClfltated? If the United Rattona can 'foMe - r l d
attefltion upon .any possible acts of 'Soviet, aggression. towards Iran as
well as ' i on the backward' aspects o the social, political and ;economic
life -of Iran.
sensitive to
opinion ioh may -0e11' Mourn nut to be the most
effective stimulus in the execution of.the Government's program,
complaint in Scu'ity t oe u mil in `the event of further Soviet
Both . the Government and the people .. of Iran are very,
security Council remains 'seized of the question of soviet
Iran' a . interrnal affairs, it', is likely that the. United
State; or .some ` Other 'Member of the. United Nations would Pilo a nlv
interference, .While there . and other means
by Ihich United States
action under the Charter of the tnited' Nations might prevent or stop
such .interference,. this complaint might be. based speoifioally upon
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interference in Iran or upon a broader pane involling the over-a. . .
pattern of Soviet . interference in Eastern Europe and the ,ddle
East.
The Economic' and Social Council of the United Nations and a,
types of.proposals. for cooperation iri the,. ,economic field which any ,bell
-number or- tts oommi"esione and committees have under disoussidn Several
of speoi ? oonoern to xaran It is suggested that , in In .tiat siu
program of eoonomio aid to' Iran ' which may Involve development of any
important resources of tie country during the next three to five years,
the United States should attempt to see 'that the terms of such aid are
consistent with the principles of international economic .cooperation
which the United States may be eudvooating and attempting to establish
through v'arioue Organs of the United Nations.
If United States aid to Iran is considered at the same time as
the overall. European aid program, the relation of. the United. Nations
to the Iran program should be considered in the light of the
(e? Other Measures, Like most underd&veloped countries ?Iran
has a scarcty of, trained and experienced technicians ' and adnnietr
relations. of the United Nations, to the larger program:
tore. If Iran is to meet her economic problems the U. S. should
make every effort to nsbist Iran in obtaining the services of a
substantial number of ' teehnioal. experts. and advisors and to xL&kr
the way of meeting Iran's reasonable reque=sts for assistance,.
be sought to rove the legal and practical obstacles' which stand in
American education available to. more Iranian ' students. , Means ehb
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-United States military-missions-to the Iranian Army and Gendarmerie
have made very considerable improvement of the security forces.of
Iran..'If the benefits of their years of constructive effort.are not
to be lost-to the-United States at this crucial time, the missions
must be continued. .
The Iranian- Army '"As a force of sp'proximately 85; 000 men, the
Gendarmerie of approximately ' 23, 000. 'The equipment and training -are
inferior in terms of modern military standards. Obviously this force
could provide no defense against direct Invasion-by a major military
power, e.g. the Soviet Union. On the.other hand it is considered of
adequate.size to maintain internal order In the country and cope with
anti-Government activities. This Government has already authorized
the provision on credit-of combat material up to an amount of
$10,000,000 and of non-combat material*in reasonable quantities. The
bulk of the proposed purchase consists of medical supplies, engineer
and communication equipment, and clothing and shoes. It is estimated
that the total cost will be approximately $20,000,000 reimbursable
from 1950 to 1961.
VI. Probable Availability of Economic Aid from Existing $ources
Under. Present Policies. It seems probable that Iran can provide
from its own resources a. substantial part of the financial requirements
for its seven-year program of?economic and social development. It is
believed that the Soviet Union is prepared to supply equipment required
for the security forces (probably at-far less cost than United States
equipment), to supply personnel and. financial aid, should Iranian
Airways (an internal service with .10 percent TWA participation) face.
bankruptcy, and to supply personnel and operating funds, should the
proposed agreement for a joint Soviet-Iranian oil company be approved
by the Iranian Parliament. It is believed that,the award to British
companies of contracts for certain irrigation and telephone projects
will be contingent
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will be contingent upon?the?granting of. British loans. If the agree-
ment to purchase military equipment is signed, the United-States will
become Iran's creditor in-the amount of , age proximateiy C25, 000, GOO.
'Iran may possibly also purchase civilian Items tkirough War. . Assets .
Administration and may conceivably benefit from crea?its obtained by
American companies from the Export-lImport Bank. 'The-. only. remaining
source from which Iran could probably obtain a loan is the:Inter-
national Bank for Reconstruction and Development. As'a step towards
.the achievement' of- the objectives .outlined, it is clear that the United
States should support a reasonable T plication by Iran-to the Inter--
national. Bank.
VII. Additional Measures Required from the.United States. If the
United-States is to make every effort to make available to Iran the
services of American economic;' administrative and military experts
and advisors, the passage of the'Mundt-Bill (to-permit'the assignment
of United States Government civilian personnel to countries outside
the Western Hemisphere.and to provide for iriformation 's.nd educational
exchange) and?of the Military Missions Bill (permitting' the detail of
United States personnel to countries outside. the Western Hemisphere
beyond the-period. of the existing emergency) is essential. Funds-for'
an educational foundation would also be made available under the Fulbright
Act from the local currency proceeds of surplus property sales.
VIII. nature of Arrangements with the Government, of Iran to?Assure
Accomplishment of our Objectives in Taking such Measures.
United State_c influence in Iran is now unusually ..strong in spite of
the determined efforts .of the Soviet Union to? discredit our interest..
It is unlikely that'.the Government or the people'of Iran would accept
,.any significant foreign direction in the execution of its program.
Our main means of assuring the achievement of our objectives would be
pressure
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pressure exerted through diplomatic. channels and through s.n inform tion
and educational program. Another means is the exertion of the pressure
world opinion through the United Nations. While some measure of
economic interference would. probably be acceptable to the Government
of Iran, political interference would. be vigorously.opposed.
IX. Effects upon ran and upon United States Fore i..n '.Pollc in. the United
States of Refusal to Grant Aid or of Failure of.Program Undertaken.
Failure to aid the Government of Iran in its attempts to decrease die--
content and increase stability will probably lead to the fall., of the
Government, internal strife and chaos, the rapid spread of Soviet
domination, and the appearance of a serious threat to the oil resources
of Iran and the Persian Gulf area. The absorption of Iran into the
Soviet orbit would have repercussions in Turkey, Iraq, Afghanistan,
and India, of vital importance to the security of the United States.
The same results would follow if the failure of the United States
tog1ve aid led. to its acceptance by Iran from the Soviet Union.
The failure of the program would be equally disastrous. While there
is no guarantee that the program will succeed, the least that can be
anticipated with assurance is that it will. delay Soviet domination,
with a reasonable possibility that the delay will suffice to prevent
such domination.
X. Possible Emergency. Situations Which Should Be Anticipated and
Recommended Course of Action hf . the United States. At.'the present
time th ere . ir; a precarious balance in Iran. between the Shah (backed by
the ,Ar y he Government (headed by prime Minieter.C,avam), and the
leaders of sevoral strong tribes,Nhose.Interests hold. them together.
If the Governs ent can solve the problems of unemployment and the high
cost of living and can .successfully start its program for social
and economic r.6form, this balance is likely to continue with, a, gradual
lessening of tension. Such a, development would also make it easier for
the Government
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the Government to resist Soviet pressure, though-the resistance must be
constant and vig lent.- Should the Government
organized labor. Sucha development we uld be accompanied by. an increase
of Soviet. influen e and the attraction of some of the liberal `eiements
of at least temporary disturbances `with' the tribes and` provably among
bi-lity of the emergence ?f -.military rule under the Shah, with a. period
the country, to the Soviet cause. ketual Scviet s,r.nied, .interventiozz
recourse would be to theIInited at ons. ': e only.. action the -United
s e e ms:.'un'likely in the forseeablc future..: If it ' occurred the only
States: cou .d take upon- thezerergence of military dictatorship, wo d. be
to use`a'll its influence- to prevent. excesses ar-d to-bring-about a
return to 'conatitutionai ;overnment at the ear lest possible moment.
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