891.51/11–246: Telegram
The Ambassador in Iran (Allen) to the Secretary of State
[Received 3:07 p.m.]
1431. Minister of War called on me yesterday to say he had received word from Ambassador Ala that favorable consideration was being given in Washington to granting of credit of 10 million dollars to Iran for purchase of military supplies.15 He was not clear whether loan would be for purchase of surplus supplies in US as well as abroad, but he hoped credit might be available for purchase of new equipment from factories as well as surplus. Ala reported that my recommendation in matter might be important.
I said I had heard nothing of such a loan other than efforts by General Schwarzkopf to work out 2 million dollars supply purchase for Gendarmerie and General Ridley’s efforts to obtain spare parts for trucks. Ahmedi said Iranian Army Purchasing Mission in Washington was active in matter. I have discussed question with Generals Grow16 and Schwarzkopf and we are agreed that US military missions to Iran cannot succeed unless some means is found to replenish army and gendarmerie noncombat supplies which are practically exhausted. Iranians have formed great expectations of US Army mission under Grow and are already talking about request that it be doubled in size and giving it more responsibility. Russians are waiting on doorstep to furnish all sorts of supplies, combat material included, and recently made generous offer to Qavam during southern troubles. Qavam wisely refused because he knew strings would be attached and Soviet advisers to Iran army would follow shortly thereafter. Soviet Army Officers on Persian Gulf and Indian border is not pleasant to contemplate, but as Grow points out, Iranians may turn to USSR in desperation if their army runs out of trucks, shoes, uniforms and blankets.
I realize need of Iran for such credit can be argued from standpoint foreign exchange holdings and metallic reserves of Bank Melli, on which Treasury probably possesses very able reports from Glendinning,17 but in my opinion political factor overshadows economic. Also question arises whether Iran is good enough political risk to [Page 545] warrant credit, but same question is involved in our maintaining military mission here at all. We have to take some risk and we increase odds in our favor by giving Iran support. Embassy recommends as sympathetic consideration as feasible to Iranian request.