Foreign Relations of the United States, 1952-1954, Iran, 1951–1954

67. Memorandum Prepared in the Office of National Estimates, Central Intelligence Agency¹

Staff Memorandum No. 211

Washington, March 28, 1952.

SUBJECT

• Effect of Recent Developments in Iran on Mossadeq’s Regime

1. The oil negotiations between the Iranian Government and the IBRD, which began on 14 February, were suspended on 16 March because of disagreement on four issues:²

a. Iran refused to permit British oil technicians to return to Iran. The Bank refused to discriminate against the British in this way, not only on general principles, but also on the grounds that there were not sufficient oil technicians of other countries available to operate the Abadan refinery efficiently. Moreover, the Bank assumed that the UK would not have accepted a settlement which barred the return of British technicians to Iran.

b. Iran demanded that the Bank concede that it would be managing the oil industry “on behalf of” Iran. The Bank adopted the position that it would be acting on behalf of both UK and Iran and that to accede to the Iranian demand might affect legal aspects of the controversy, in which the Bank did not want to become embroiled.

c. Iran demanded a price formula which would have given it proportionately higher returns from its oil resources than the other oil producing countries in the Middle East are now receiving. The Bank maintained that Iranian oil would be non-competitive under the Iranian price formula and suggested various formulas approximating the 50–50 profit-sharing standard in effect in Saudi Arabia, Kuwait, and Iraq.

d. Iran demanded the right to sell 30 percent of its production directly to independent buyers. The Bank supported the British position that in any settlement the marketing agent (i.e., AIOC) must have the right to buy practically all Iranian production.

2. While Mossadeq might have been willing to compromise on the other issues, he made it very clear that he could not permit British technicians to return to Iran under any circumstances. There is little likelihood that Mossadeq or any other National Front leader will retreat from this position or that the British would accept a settlement that barred the return of British technicians to Iran. Thus, although the talks have not been formally broken off, there is little chance that they will be renewed so long as a National Front regime remains in power in Iran.

3. While public opinion in Iran, even among politically conscious groups, is difficult to assess, there appears to have been considerable disillusionment at the breakdown of the negotiations with IBRD. Opposition to Mossadeq in a significant proportion of the press is more intense than ever before, and there has been a notable absence of pro-Mossadeq demonstrations. Civil servants, members of the armed forces, and the business community (at least in Tehran) are beginning to appreciate more fully the critical nature of the government’s fiscal position and are undoubtedly aware of the possibility that within a month or two the government may be unable to pay salaries and meet other payments. The payment of government salaries, which constitutes 80 percent of the budget, has fallen a little more in arrears each month. The payment of bonuses, a traditional practice at the beginning of the No Ruz (New Year) holidays, which this year began on 21 March, has not been made. The government is heavily in debt to government contractors and has made few payments to them in recent months.

4. The increasing concern of more conservative elements with the trend of events has been reflected in the Senate, which before it adjourned on 19 March seriously considered calling for Mossadeq’s resignation. Its failure to act can be attributed largely to the Shah’s refusal to support such a movement at this time. The Shah actually advised against it because he continues to believe that Mossadeq must be completely discredited before being forced from office. At the same time, however, the Shah has displayed much more confidence in his own ability to act decisively “at the right moment” and apparently believes that Mossadeq’s popularity is really on the wane and that circumstances will soon permit him to bring about a change of government. It is evident, however, that the Shah is unlikely to act against Mossadeq unless a majority of the deputies in the new Majlis, which convenes about 10 April, organize an effective opposition movement.

5. Much of the Shah’s self-confidence probably results from the fact that the armed forces have recently displayed increasing antagonism towards the National Front and demonstrated their loyalty to him. Army leaders have been antagonized by Mossadeq’s attitude blocking US arms assistance and his refusal to renew the contracts of the US military mission.³ Their opposition to the National Front has been clearly demonstrated during the current elections. While the army exerted its influence discreetly and concentrated its efforts in provincial areas, it was instrumental in defeating a number of government candidates and in effecting the election of anti-National Front candidates. Morale in the armed forces has recently improved as a result of a purge of Tudeh sympathizers in the air force and as a result of the Shah’s action in dismissing the government-appointed Chief-of-Staff of the air force and replacing him with an officer in whom he had full confidence. These developments suggest that any further attempts of the National Front regime to undermine the strength of the armed forces will almost certainly result in counteraction by army leaders, as well as by the Shah; it is extremely unlikely that either these leaders or the Shah would passively submit to government measures which would weaken the armed forces to the extent of preventing them from effectively maintaining internal order. If, for instance, the government attempted to cut the army budget significantly or failed to meet army salary payments over a protracted period, the Shah and the army leaders would probably act decisively to remove Mossadeq from power.

6. The new Majlis, at least initially, will be heavily weighted in favor of the government. Approximately 60 deputies, out of a total of 136, have already been elected. Of these, probably about 25 are active supporters of the present National Front leaders, and about 15 are definitely opposed to the National Front. Most of the remaining 20 would undoubtedly support the government on the oil issue, but might well vote against the government on other issues if an effective opposition movement developed in the Majlis. An analysis of the elections so far completed indicates that of the 25 hard-core supporters of the National Front, 12 come from Tehran and 8 from Tabriz. In Tehran, Tudeh constituted the chief opposition and would undoubtedly have elected several deputies if the elections had been conducted honestly. The 8 hard-core National Front deputies from Tabriz are personal followers of the religious reactionary Kashani, and 3 of them have had connections with Tudeh in the past. Three or four personal followers of Kashani were also elected in other parts of the country. The chief opposition in the Tabriz area came from the wealthy landowners and tribal elements, who were astonished at their defeat by, in some cases, impoverished and unknown mullahs. The elections, which started in December, have progressed slowly, primarily because of attempts by the government to block the election of opposition candidates. There appears also to have been some rivalry between different factions within the National Front, particularly between candidates supported by Kashani and candidates claiming the support of Mossadeq. In many districts the counting of ballots has been stopped and new elections called. Violence has been unusually widespread even for an election period, and at least 35 deaths have resulted. Because of the government’s fear of Tudeh strength in Abadan and other oil centers in Kuzistan province, martial law is still in force there and elections have not even begun. Disturbed, however, by the recent opposition activity of the Senate and by the possibility of the Shah’s acting to dismiss them, the leaders of the government have recently speeded up the elections in certain districts in order that at least a quorum of 69 deputies, which would enable the Majlis to convene, will be elected by the end of the No Ruz holidays. A number of tentative conclusions can be drawn from the elections so far:

a. The National Front government had to use fraud in Tehran, and will have to use fraud in Abadan, to prevent the election of a significant number of Tudeh deputies.

b. Kashani will have a personal following of about 15 deputies.

c. Outside of Tehran, Tabriz, and possibly a few other large towns, local notables (wealthy merchants, landowners, and tribal leaders) have controlled, or will control, the elections. These provincial leaders are generally unsympathetic to the National Front program, except on the oil issue. Their representatives will probably win most of the seats for which elections have not been completed.

d. While the government has been able to prevent the election of a number of its more outspoken opponents and has increased the number of its hard-core supporters, a large bloc of deputies in the new Majlis cannot be relied upon to support the government except on the oil issue and, at least in theory, has the strength to overturn the National Front regime. Moreover, the relative strength of the National Front deputies will probably decline as the elections are completed.

7. These developments would appear to require some change of emphasis in a number of the conclusions in NIE–46, “Probable Developments in Iran in 1952 in the Absence of an Oil Settlement.”⁴ The major conclusions of NIE–46, and the way in which they are affected by recent developments in Iran, may be briefly summarized as follows:

a. Mossadeq or some other National Front leader will continue as Prime Minister “at least for the present.” There now appears to be at least an even chance that Mossadeq will fall from power within the next two months and some possibility that he will be supplanted by a non-National Front Prime Minister.

b. The parliamentary position of the National Front will be strengthened by the elections. Borne out by recent developments.

c. The Shah is unlikely to influence events “in the immediate future.” Recent developments suggest that the Shah will almost certainly play a significant part if there is a change of government within the next two months.

d. Continuation of National Front strength will depend primarily on the government’s success in solving critical financial problems. Continues to be valid.

e. Iran is unlikely to obtain significant oil revenues either from the Soviet bloc or from the rest of the world. Continues to be valid.

f. The Mossadeq Government can meet its essential obligations until the beginning of April or May by resorting to various expedients. Continues to be valid.

g. It can probably obtain Majlis support for emergency fiscal measures which would avert a fiscal breakdown at least through the summer of 1952. The decline in Mossadeq’s popularity suggests that, even with stronger National Front representation in the Majlis, he may not be able to obtain Majlis approval for emergency fiscal legislation “which would avert a fiscal breakdown at least through the summer of 1952.” Such legislation would probably be opposed by the increasingly vocal conservative elements and by the Shah.

h. The Mossadeq Government will be under increasing pressure to satisfy hopes for social and economic benefits; failure to provide these benefits would be likely to lead many National Front supporters to turn to the Tudeh Party. There is as yet no evidence that Mossadeq has made any attempt to improve social and economic conditions or that disillusion and opposition growing out of his failure to do so has led to any increase in Tudeh strength. This is not to say that Tudeh influence may not increase in the future as a result of this or other factors, whether or not Mossadeq stays in power.

i. National Front leaders will have difficulty in agreeing on reform measures and in obtaining Majlis support for them. Consequently, the National Front would probably be forced to adopt authoritarian methods. While there is some evidence of cleavages in the National Front, particularly between the Kashani and Mossadeq factions, they have certainly not resulted from differences over possible “reform measures.” Nor is there any indication that the National Front regime is considering the adoption of authoritarian methods. Mossadeq has relied heavily on Majlis support. It is difficult to envisage how the National Front could resort to authoritarian rule without first obtaining control of the army, the leaders of which have once again shown, in the elections, that they are almost exclusively anti-Mossadeq.

j. A conservative government would also be forced to rule by authoritarian means and to make concessions to nationalist sentiment. While a conservative regime would probably have to make concessions to nationalist sentiment and take forceful measures against a number of National Front leaders (and against the Tudeh Party), it might well rule without martial law and through the Majlis, if, as recent developments suggest, the Majlis itself is instrumental in causing the fall of the National Front regime.

k. Thus, barring the establishment of authoritarian rule, Tudeh potential would increase. While Tudeh capabilities would obviously be restricted under authoritarian rule, it does not automatically follow that the Tudeh potential will increase in the absence of authoritarian rule. (See h. above.)

8. In summary, recent developments suggest that Mossadeq’s chances of remaining in power are not as good as was indicated in NIE–46, although it is extremely difficult to estimate who might succeed him. If Mossadeq were to resign voluntarily while the National Front still controlled the Majlis, it is possible that an even more extreme and uncompromising National Front leader, such as Kashani or Makki, might come to power. However, it now appears more likely that Majlis opposition to Mossadeq’s fiscal program would be the immediate cause of his fall from power, in which event a more moderate National Front leader or even a conservative might come to power. While such a successor government might not act with sufficient energy and forcefulness to achieve a settlement of the oil controversy or prevent continued economic and political disintegration in Iran, it would be more likely to do so than the present regime.

9. A further complicating factor in estimating future developments is the possibility that Mossadeq or the Shah will be assassinated. The terroristic Fedayan Islam organization has been more active during the past month and was responsible for the recent near-fatal attack on a former deputy prime minister to Mossadeq. In the current tense atmosphere other groups or individuals may adopt the same tactics. The assassination of Mossadeq would probably be successfully exploited by the National Front extremists to maintain themselves in power, although it is also possible that, by symbolizing opposition to the bankruptcy of the National Front program, it would lead to the return to power of more moderate and conservative leaders. Similarly, the assassination of the Shah might result in the collapse of the monarchy and the establishment of a republic; however, it is also possible that it would result in the establishment by army leaders of a military dictatorship. By their very nature, such possible developments are unpredictable, although the possibility of their occurring would probably have an important influence on the actions and attitudes of the leading figures on the Iranian political scene.⁵

John H. Leavitt

1. Source: Central Intelligence Agency, DDI Files, Job 79T00937A, Box 1, Folder 3, Staff Memoranda—1952 (Substantive). Secret; Security Information.
2. For documentation on the oil negotiations between the Iranian Government and the IBRD, see Foreign Relations, 1952–1954, vol. X, Iran, 1951–1954, pp. 354–370 (Documents 159–169).
3. See Document 60.
4. Document 63.
5. In Staff Memorandum No. 214 (Revised), April 14, Leavitt suggested that Iran intelligence specialists agreed that developments did not warrant revision of this estimate. While they conceded Mosadeq’s popularity had declined during the past 2 months and that there was a revival of anti-Mosadeq agitation by more conservative elements, they “continue to believe that Mossadeq will once again be able to rally sufficient support to remain in power. In particular, they still believe that Mossadeq will probably succeed in assembling a Majlis quorum and in obtaining legislative authority for the issuance of new money ‘which would avert a fiscal breakdown through the summer of 1952.’ They continue to consider that the Shah is unlikely to take any initiative in overthrowing Mossadeq, even though they agree that during the past two months he has seemed more self-confident and has indicated a determination to retain control of the armed forces.” (Central Intelligence Agency, DDI Files, Job 79T00937A, Box 1, Folder 3, Staff Memoranda—1952 (Substantive))