ONI CONTRIBUTION TO NIE-102 PROBABLE DEVELOPMENTS IN IRAN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A003200030025-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 22, 2016
• Document Release Date: September 20, 2012
• Sequence Number: 25
• Publication Date: October 5, 1953
• Content Type: MISC

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5 October 1953
I. CAUSD5 Nw1 CiRCU IITANGE3 01' Fj.M-. D Q S DOWNI'J.LL
Aa Cages o.i Mossadeges declines What brought about the division and
- weWe-i i sti i;he forces behind Mossadeq in the months prior to his
downfall? How and to what extent did 14ossadegv s acts and policies
diminish his power? 'What was the political effect of Yaossadeggs
failure to resolve the oil problem, of his dissolution of the Majlis,
and his increasingly dictatorial methods? What influence did.
Mos~adeq's policies have upon the loyalty of the security forces?
What was the political. effect of J4ossadeges dependence upon the
support of Tudeh?
For thirty years 111ossadeq had been a negative and frustrated political
0
.personality in Iran. His opposition to the various governments had little
e.1 f ect o However the murder of Razasaar?a,s the upsurge of nationalism., the
explosion of anti-British sentiment and t ",:e na"t.:.onalization of the oil in-
dustry provided him iith an opportunity to exert his demagoguery and to
capitalize on popular issues on which a number of different= political
elements could make common caused This led to the creation of the National
Fr?ontm Hossadeq may have been imbued initially with an unselfish patriotism
in which personal power and ambition had l ittle place o However, he was soon
surrounded by a group of self-seeking politicians most of whom were inept$
inefficient and biased, and whom he was soon able to dominate through his
conenrimate skill as a politiciano They represented, however, a new force
in Iranian nation]. life and could have been directed to constructive endsa
However, Mossadegcs erratic, imperious and stubborn personality asserted it-
self together with an unsuspected ambition to rule and it is this factor more
than any other which resulted in the division and- weakening of the popular
iGURI TY INFCR iP TION ?~7 Et co siaens ia;oust cn of CIA
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moves onto Failure to convince: individuals within this group that his way.
was the best and the only way to proceed led him to suspect each one in
turn and then to alienate each through intimidation and political machinations
Thus I3aghai, Niakki9,, and finally Kashani, demagogues in their own right,,
gradually broke with him and became his bitterest opponents 'a Some of the
issues upon which they parted company were external 'such as solution of the
oil question, collaboration with'the Tudehs relations with the U R0 Others
were domestic and affected each vitally in some res,~ects, the dissolution of
the Senate; reorganization of the array; the new electoral law; insistence
upon having plenary powers and ruling by decree; the dissolution of- the.
Ntajlis; the emasculation of the monarchy; the imposition of martial law and
mass arrests of-pOlitical opponents; and financial manipula;,ions Failure to
reduce British opposition to ineffectiveness, to break through the U Jo
economic blockade, to obtain U ? a financial aid and to solve the oil problem
despite repeated and exorbitant promises were also factors in his political
downfall,, They gradually realized that all these efforts succeeded only in
keeping Mossadeq in powers, endangering the national safety by flirting
dangerously with the Tudeh and the US R, undermining the morale of the Armed
Forces, alienating the U05 o .and plunging the country into financial z ank-
ruptcyo . .
Co Circumstances of'Mossadeq's overthrows To what extent and in what
manner F.TerQ t e events o ' ~iurrus ?9 anticipated and Planned by
Ira:ni.ai s and to what extent were they spontaneous? How important
was the role of General. Zahedi, the Shah, other prominent persons'?
'dJhat.was the role of the security forces,, and how were they brought
to play it? What was the composition. and character of the various
mobs involved in the events leading to Triossadegf s overthrow? Why,
did the mob turn against kossadeq? Why did it turn to the Shah? What
was the reaction of the tribes to these events? What was, the roles of
Tudeh and the USSR? .
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although rumors of an impending coup
were rife in Tehran prior to 15-19 Augusts events which took place during
the period appear to have been-completely spontaneous, When it became known
that the Shah had. fled the country and that'Nossadeq had refused_to,honor
a fireman deposing him as Prime ZZii.rd.ster and another aplainting Zahedi,
crowds, inspired -by about 300 people led by the pro-Shah ZoiiAger family,
began to move out of the bazaar .district towards Mossadegv s house a En
route they were joined by armed units and the tide began to turn. Zahedi,
who had come from the south they day before, together with a few of his co-
workers in the original plot, quickly capitalized upon the situations after
being alerted by General. Guilanshah,, ex-Chief of Staff of the II.F* The
Shah had fled to Rome and stayed there until the situation was under control,
then returned in triumph,
Despite orders of the Chief of Staffs Riahi, and a few company commanders,
security forces quickly came to the sup -ort of royalist elevents, seized'
Radio Tehran and attacked Nossadeq?s residence as well as staff and police
headquarters, Except for a stubborn fight by kossadegss guards, there was
little active resistance to the ?rime'iinisteres overthrow,
The businessmen and the general public were pretty well dissatisfied
with Mossadeq and his policies, He had not solved the oil problem and his
vituperative addresses on the radio against the British and the foreign
agents no longer carried.the same weight for being repeated so often,
Inflation had set in and the economic pinch was beginning to strike home.
Mossadegfs most serious mistakes however,, was attacking or permitting the
Shah to be attacked in his person,.and especially his rights.as a monarch,
The Shah has always been a symbol of strength and unity and permitting his
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and his fatheroe statues to be torn down and his pictures de::troyed aroused
feelings of revulsion against Nlossadeq and his regime. The man in the
street liked the young King, and condoned his obvious failings as a ruler,
Reaction of the tribes was similar to that of the masses in urban centers.
The Shah had made several trips throughout the provinces and had always
been acclaimed, so much so that Mossadeq forbade him to'go to-Azerbaijan
and Kurdistan. With the exception of .the Qashgai, whose leaders supported
Miossadeq, all the tribes pledged their loyalty and offered to march on
Tehran, The Tudeh, caught by surprise, and overwhelmed by the upsurge of
popular feeling in favor of the Shah, quickly dispersed and went under-
ground. They offered no effective resistance because of their disorga-
nization, lo..s of leadership, and lack of money and arms. The USSR, which
had been making good progress.in negotiations with Niossadeq on the trade treaty
and other outstanding issuese was also caught by surprise. Unfortunately for
them, Sadchikov, their experienced ambassador had just been replaced by
Lavrentiev who was unable to cope with the new turn in events. While
obviously disappointed by the fall of Mossadeq Tudeh-supported re ;f.rue,
they evidently decided that this was not the time to interfere in Iranian
affairs,
II. SITUI--TICN Oi 71-I?' SUCCESSOR GOVERM-iE'NT
A Extent of chap a produced by the downfall of mossade To what
extent may epo c orces and pop r at u es c acteristic
of the Mossadeq era be expected to persist? What are the principal
new elements in the political situation introduced by the over-
throw of Mossadeq? What influence have recent events had upon the
position and attitude of the Shah?
The National Front is.a thing of: the past but the spirit which sparked it
it still very much alive. Royalist elemeets have the upper hand and are no
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less nationalistic than the Mossadeq regime. However, the Tudeh, the Iranian
Party, the Third Force, the pro'Mossadeq independents, the anti-monarchist
groupsg regardless of how dispersed they may be, are capable of forming a
new united Front against the Shah and Zahedi. Fatemi and other political
leaders including Tudeh members are still at large and could conceivably
arouse public support V they can find vulnerable spots, of which there are
many in the government's armor.
The Shah is more popular than he ever was and his attitude of being a
weak and vacillating playboy appears to have changed. His first actions
have been manly and constructive, and for the first time he is assuming a
position of leadership. Providing that he does not overplay his role, by
undermining his prime minister and insisting on having his own way in all
matters, he should develop into a leader whom the'popvlace will highly rem
spect. However, he has a tendency to listen to reports emanating from all
sources, and his judgement in knowing what to accept and reject is highly
questionable. Once the Legislature is re=established the Shah must get
used to the idea of exercising only those powers which are vested in him
by the constitutions and if he tries to interfere in the normal legislative
processes, he will run into trouble. Otherwise, he must be strong enough
and have support enough to rule as a dictator.
H. Character and comt~osition of nromyoyernment forces; What are the
various parties and groups that now support the government? What are
the reasons for their support? How homogeneous is the combination?
Are there any important incompatibilities or antagonisms among pro-
government groups?
The Government has the support of the armed and security forces . and-with
the exception of the Qashgai, the tribes. It also has the support of several
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rightist splinter groups such as the Somka Party, the. religious groups,
the retired army groups, and the'mass of the popula;.io'no This is a.
heterogeneous combination which may crack upon almost any issue.- the oil
settlement, elections, army organization,. social and economic reforms.
Most land owning groups and business groups. will support- thegovernment until
measures are taken to collect income taxes and other revenues rider laws
never effectively enforced. Some tribes may resent this policy and other types
of interference by the government.,
C. Public opinions What are the most significant, public. attitudes
toward the present goverment? What are the principal symbols
and ideas which incline the public to favor or to oppose the
government? How effectively is the government managing its
relations with the public?
The government so far, due to-the disorganization and confusion wrought
in the ministries, has failed to sell its program to the public, It is
making sarie successful beginnings in this. direction but much remains to be
done,-and it must be. done quickly or a loss of confidence will ensued
De Character and abilitt of overnment leaderst Who are the most
nen a por an pers. es n e government and
pro= "T M
yang its supporters? What are their probable future roles?
How well do they cooperate and how do their abilities measure
up-to their tasks? What-is the role of General Zahedi, and how
well is he adapted to-it? Is his authority disputed? What is
the relation between Zahedi and. the Shah? between the Shah and
other government leaders?
With the exception ofthe Shah and Zahedi there are no outstanding
political personalities in the new government. Both _~ave very definite ideas
as to what should be done,. and they often work at cross purposes. Zahedi is
loyal to the Shah and the Shah has not yet grown suspicious of him or
attempted to underminehimo But with,regard to the army the Shah is determined
that no one will, come between him andt e Armed Forces. As Commander in Chief,
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he makes appointments without consulting his Prue Kinister, and marj army
o~ficers dispute Zahedies authority and that of his Minister of Defense.
This disagreement over control of the ,army may grow as individuals and groups
bring pressure to near on the principals However,,both Zahedi and the Shah
are aware of this danger and may compose their differences, which are
perhaps not as great as reported*
and is-in daily contac'L.with him.
The-Security
Ea The. security forces What is the relation between the government
security forces? How firm is the government. s control of
the security forces? "What has the government done to insure the
support of the security forces? Evaluate the leadership and the
loyalty to the Shah. and/or the government of the several elements
in the security forces*. (enlisted men, junior officers, senior
officers).
Relations- between the govern :nt and the security forces are somewhat
obscure at the present moment. 'The Shah and the Prime } inister apparently
have the support of 95% or more of the Army, Air Ibrce, Navy, Gendarmerie
and Police, There are, however, elements within these groups that are
dissatisfied witr the present organization, in addition, there are Tudeh
elements as well as pro4iossadeq groups which can be classed together as
subversive in the sense that both are anxious to overthrow the Zahedi regimen
There is also disagreement between the Shah and the Friine Minister
Zahedi e s son; is a favorite of he Shah
with regard to control of the Army and the reliability. of the present Chief
of Staff and other key officers in the security forceso This difference of
opinion is taking on the aspect of a public quarrel:, and-could eventually
lead to a.ser_ous split between the two men as individuals capitalize on the
situation to further their own ends. The Shah is anxious to assert his new
stature and to reassert his constitutional powers as Commander-in-Chief of
the Armed Forces, whereas the Prime Nii.nister as a former. Army officer has
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many ties with the service and is anxious to gain support for his regime by
recalling officers forcibly retired by Mossadeq, and also by placing some
of his cronies in sinecures. The junior officers and sore senior ones who
publicly took a stand against Mossadeq and who now feel that.they should be
rewarded are unhappy at these appointments, and could quickly turn against
the-regime if a new leader appeared, especially if their aspirations remain
unfulfilled,' The Iranian Armed Forces were top heavy with high-ranking
officers without a mission and should have been cleaned out. Any attempt to
restore the old order either by the Shah or Zahedi will arouse dissatisfaction
and possibly disaffection. The enlisted men and non-commissioned'officers
usually follow their superior officers. It should be noted, however, that
during the 16-19 August crisis, both men and officers refused to obey orders
of their commanding officers, and that this atypical behavior could result
again unless the Shah and Zahedi wed out disaffected elements in advance.
They live under slightly better conditions than the ordinary civilian and as,
long as they eat and are,eventually paid, they will probably support the
government, Attempts by the Tudeh at subverting them have not been very
effective, although some conscriptees who are intelligent and educated to a
certain extent may spread?dissatisfaction.ana unrest among their particular
groups. .Although the Mossadeq government was using inflated currency., it
did manage to pay the security forces quite regularly. The new government
must do the same, and it is attempting to obtain an additional loan from the
U.S. to improve the living conditions of the Armed Forces and their families
by paying-them regularly, increasing their pay, and building suitable houses
and barracks, Both the Shah and the Prime Minister realize that their
,government depends upon the loyal support and. the efficiency of the Armed
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Forces and, although they may disagree on certain phases and individuals,
.they will no doubt attempt to bury their differences when the chips are down.
Currently the Shah is in complete control of the Army and is unlikely to make.
any concession which may weaken his power. The Armed-Forces in. turn are loyal
C
to him. While Zahedi feels that he should. be informed of the Shah's orders
and changes in?command and maybe hurt by the Shah's bypassing him, he too is
loyal to the Shah. The Army also is.loyal to Zahedi but at a different level.
Roth the Shah and Zahedi are making every effort to gain the favor of the
Armed Forces. They disagree on the Chief of Staff but so does most of the
Army. A change satisfactory to both sides will probably be effected.
F. The opposition: What are the various elements in the opposition to
the government, and what effect did Tfossadeq?s overthrow have upon
them? What action is the government likely to .take with reference
to MMossadeq, and what will be the probable effect of such action?
What is the present position, strength,, and policy of Tudeh?
Evaluate the resources and prospects of the National Front, the Pan-
Iran Party, the left-wing Third-Force, and of other significant
anti-government groups. what are the prospects for a combination
of Tudeh and other anti-government elements, and what would be the
consequences of such a combination? 'How much influence do. opposition.
groups have in the security forces, and what are the prospects"for
its further development? ~-'hat.kind of support can the Soviet Union
be expected to give to Tudeh and for what ends?
Among the elements in opposition to the present iovernment are the
Tudeh Party, the National Front, the Pan-Iranian Party and the Third Force.
Mossadeq?s overthrow temporarily disorganized these elements but they have
not been eradicated. They have a potential which may reassert itself in some
form, not necessarily that of a ,military coup. Nevertheless they do have
'friends in the security forces, and if dissatisfaction'grows with conditions
in general the unity of the security forces and their support of the govern-
went may be undermined. There is no indication as yet that any serious.
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danger to the government threatens.
The Government has been slow in bringing Mossadeq and his'supporters
(officers who adopted anti-Shah positions) to trial. The trials may event-
uallUy be held but they will probably be ineffective . Mossadeq may be given
the death penalty, but the Shah. will probably commute his sentence and banish
him from Iran.
The USSR may be expected, through its covert leadershipgto reorganize
the Tudeh Party and reassemble its units, possibly under one or pore new names.
The Soviets will also probably provide badly needed funds, printing presses,
paper and other propaganda essentials. The possibility of smug?ling arms into
Iran for Tudeh should not be discounted, but it is unlike:iy that the USSR will
intervene openly.in the situation or attempt to introduce guerrilla forces
into Iran. The USSR, however, will probably attempt to widen Zahedi-Shah
differences through agents and spread disaffection.in the armed forces and
populace. It will also continue to negotiate with the Iranians in an attest
to consolidate gains made under Vossadeq, and further close relations by
making new offers on the gold question, the border issues, and also perhaps
bring about some settlement on the cost of installations be used in the
Caspian Sea fishing industry.
G. internal stability: Is the government now able to maintain public
security and stability? What is the attitude of the tribes toward
the government likely to be?-7hat are the principal threats to,
internal. security? How would the government respond to an attempt,,
on the part of. opposition groups to organize a seizure of'-power?
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What-is the policy of the government toward native Communists? Now
will this policy be carried out"' Estimate the probable capabilities
of the security forces to respond promptly in support of the govern-
ment.
The '.Z.,ahedi government is able to' maintain aublic :
security and stability. Its position, however, is not completely consolidated
as many. leaders of the Tudeh, the National Front, and the Iranian party have
not yet been apprehended and might conceivably unite their supporters in a
common front to cause disorders and embarrass the government. Stability, to
a large extent,. is built upon faith that the new government will re-establish
order.and that it will do something effective to better the lot of business
men and the people. In the present disorganization and confusion, especially
in finances, the public places great stress upon the fact that the Shah and
Zahedi can obtain the aid and support of the U.S. In this respect their
expectations may not be ,fulfilled to the extent-desired.,-and this may cause
some disappointment, but whatever is done will be a source of strength to
the Zahedi government.
Most of the tribes have expressed their loyalty to the Shah and the con-
cept of the monarchy. They will probably continue to support the government
if the central administration does not interfere too deeply with their tribal
life and customs, and especially if the Army and Gendarmerie are not permitted
to exploit and brutalize tribal elements.
The only exception to date has been the .ashgai. Living in semi-autonomy
in Fars, they have always resented interference by the Central Government and
reportedly have made threats to set up their own state and even to,march'on
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Teheran. The 'ashgai are closely knit and well organized, and have. been firm
supporters of Mossadeq and the National Front, especially on the issue of
ridding the country of British influence and on the nationalization of the
oil industry. The Army has the capability of sealing them off in their own
territory and cutting off supplies like tea and sugar, which they prize; but
in such an action the Uahedi regime would be obliged to transfer Army units
from Teheran and other northern areas, which might give the Tudeh and other
anti government groups an opportunity to stage a coup. There is, however, no
good reason why they should not cooperate with the government, except perhaps
the fact that the Mossadeq government did not attempt to tax their Wealth.
The new government has given indication of doing this, and this may account
or the present -On-conformist attitude of the tribe. The Tudeh may be
expected to capitalize on any differences to foment a rebellious attitude.
However, chances are that the Qashgai will not attempt any overt action
against the government; If they did, the Baktiaris, who are loyal but unarmed,
could be armed by the government and probably used to suppress any revolt as
they are bitter enemies of the ':ashgaio
Although disorganized and dispersed for the time being, the Tudeh Party,
which is the only well organized opposition group with able leaders and a
definite program, is the greatest n.otential threat to the government. The
pro-Mossadeq group with its extreme nationalists, its hero worship--of the
leader, its hatred of the British and the foreigner is also a strong
nucleus of.oppositiono The anti-monarchists, who have been developing a
program in recent months can also be counted upon to oppose the government.
Large landowners, who fear income taxes and land reform, are probably opposed
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to the Shah's newly acquired ideas for social and economic reforms. Unreli-
able and selfish independent politicians interested in their own welfare and
in patronage are also threats. to stability. Splinter political groups of
both rightist and leftist persuasions are factors of importance. Religious
extremists should also be included. While none of these elements is by itself
capable of overthrowing the government so long as it has Army support, never-
theless, by pooling their strength on one or more issues, they could undermine
and perhaps remove the Shah and his new regime. The present security forces
could not cope with an organized and widespread simultaneous uprising of'a
combination of these forces. As uncertain of itself as it is todaay, it is
doubtful whether the government-could take strong.and effective measures to
prevent opposition groups from seizing power. Its ability and will to fight
the opposition will develop in the measure that life returns to normal and
people go to work. Protracted delays in obtaining aid or oil.revenues will
undermine the faith of the leaders in themselves and will quickly spread to
their adherents. Given the volatile and unstable Iranian temperament, it is
as easy for the Teheran mobs to turn against the Shah as it-was to oust.
Mossadeq when he failed to satisfy their aspirations. The government would
probably take initial strong measures to put down a revolt and at,this stage
would probably succeed; but against a determined group, it r:i'ht give way.
The government has initiated strong; measures against the Tudeho The
sincerity and effectiveness of this campaign is'open to question. Very few
real leaders have been arrested., although some 1,300 rank and file members
have been jailed, their cells disrupted, and their newspapers and propaganda
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temporarily suppressed,. However, the Tudeh has infiltrated into high places,,_
and although the government has the names and information on the activities of
certain Army members, politicians, intellectuals and other leaders, it will
probably be slow to take steps against these persons because of their families,
and the intricate political and financial relationships involved. This domestic
attitude'toward.-the problem is typically'Iranian and is based on a long history
of corruption, inefficiency and apathy on a government level. However, there
is little doubt that.the Shah and Zahedi will fight the Tudeh, which they have
reason to fear, and also because they know that unless they do. something to
curb Tudeh Party activities and Soviet influence, they are likely to lose. U.S.
financial and military support,.' As the party is already illegal, the security
forces will probably be instructed to arrest known leaders, to ferret out cells
and'caches of arms, limit the printing and sale of papers, and curb demon-
strationso This can be done by a competent police force and det.ermined'leader-
ship, but chances of such a program being even 75% effective are remote.
While enthusiasm for the Shah and Zahedi are still high, the security
forces would probably respond promptly and effectively in support of the
government. They have the strength and the equipment to cope with rebellious
elements unless these, gain widespread support through the dissatisfaction of
the-people with the government's ineffectiveness and internal bickerings. All
they need is leadership, confidence in their leaders and the realization that
the Shah and.Zahe'di are trying to improve their lot and conditions in the
country.
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SEX URITY INFORMATION
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SECURITY Il'FOILMATION
III. GOVERMENT INT71?TI0111?s A ?M
CAPAETLITPS . ITII R'CSP`CT TO ! ACTOR 7-0BLEPMS
Cov, exm and politics: What is the publicly professed political-"
philosophy and what are the official objectives-of the government?
How do these correspond with reality? How is the present .govern-
went of Iran organised? Who. exercises authority and how? ; What is
the attitude of those in power toward constitutional government, the
role of the Shah, the Ma?1lis, the Senate, and future elections? How
effectively are the various government operations being performed?
Has the government made it nossible'for the most competent civil
servants and the most promising new political talent to assume
responsibilities? Vhat.is the relation between the government and
the formerly dorr.inant class of conservative landowners? What is
the relation of the government and'the Court? What is.the role of
political parties?
The government wishes tore-establish a democratic form of government'
under terms of its constitution, but the people are hardly prepared for the
full implementation of these principles. It had made some progress along
these lines,before Mossadeq-destroyed the whole structure piece by piece.
For a time at least Iran will continue to be ruled by decree, a benevolent
dictatorship with power wielded by the Shah and.Zahedi. The Shah controls
the security forces and Zahedi is attempting to restore legislative procedures..
There is no Senate, no workable Ma.jlis and no Court.- except the military
courts. The Senate has been dissolved, while the remnant Majlis has no
quorum. Zahedi wannts.to hold elections immediately to fill the places of
the deputies whom 11ossadeq.persuaded to resign; while the Shah wants to
dissolve the remainder of the Vajlis and prepare for new elections which she
can control to some extent. The Shah fears a new Majlis.will bring in un-
desirable elements. At least they are.agreed that a Majlis is to be establish-
ed and that it should be more representative and higher in calibre than the
17th. The Senate can then be restored, half-by appointment and half by
election. Government operations are at.a standstill as all decisions must be
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S T I M E
S RITY IRNFOPMfl:TION
made by the Shah and/or the Prime Minister,' Some of the new ministers are
young and capable but will meet opposition from an expanded bureaucracy. The
Government and the land owners both desire stability and a sound currency.
However, control of,.the government by the landowners is probably a thing.of
the past. The masses. and the tribes will probably insist upon proportionate
representation. The government may also take action against the landowners
to enact social and economic reforms and certainly attempt to enforce the tax
laws. This will lose the government considerable support but even the land-
owners realize that a revolution has taken place in Iran and that they were
lucky to escape having their properties.and wealth confiscated by a Tudeh-
controlled government, They probably also realize that the danger still
exists until the government can be stabilized. They may fear some of the
Shah's social reforms but also know that leftist and socialist forces have
gained a foothold in.Iran and that they are not likely to escape scot-free.
They may therefore cooperate.
The government and the Court are. working closely together at presents
but the Court-is not readily accessible to the ministers or government
functionaries. It has its own circle and-favorites. For the time being the
Shah's sisters and the Queen Mother are out of the country and that should
help the situation as they are inveterate intriguers.
The political parties have no role. at the present time. New ones will
probably be formed and'old ones recon3tituted, but with the exception of the
illegal Tudeh Party none has a well organized program.
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U .'1J1lL'/1 ~. .^f 1~
SECURITY INFORNILATION
B. Financial and economic problems: What is the current financial
position of the Iranian Government? What are the prospects for
government finances, with and without foreign aid? What is the
current economic position of Iran? What are Iran's principal
economic problems and economic needs? What economic policies
and programs are likely to be put forward and with what effect?.
What is Iran's capacity to absorb foreign aid' 'What would be
the financial and economic effect of such a settlement of the
oil dispute as now seems possible and of economic aid in such
magnitude as 'nor seems possible? What are government intentions
with respect to economic and social reform and development?
What are the prospects that these intentions will be implemented,
and what would be the effect of such implementation?
The Government's financial position is. precar3 U:Is . It cannot - hope to
continue, in power without foreign economic aid, the-settlement of the
oil dispute, and. the rehabilitation of the oil industry. Although Iran is
largely agricultural at least 20% of its population depends upon outside
revenues, and the state cannot support .itself-and defend itself on an oils
less economy. Many plans for social and economic reform have been advanced
but with the exception of Point IV programs nothing definite has been
accomplished. Iran's fiscal and economic structure needs a thorough over-
hauling and modernization. It needs not only foreign economic aid and
capital investment but financial and technological advice.
C. The oil problem:
1. Settlement of the oil dispute: What -are the government's
intentions with regard to a settlement with the U and the AIOC
of the dispute ovc