Office of the Historian

405. Memorandum From the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Rountree) to the Secretary of State1

Washington, September 7, 1957.

SUBJECT

  • Progress Report on Iran (NSC 5703/1)

Discussion

You will find attached for consideration by the National Security Council at its meeting on September 12, 1957, a paper entitled “Progress Report on Iran (NSC 5703/1).”2 The report was concurred in by the Operations Coordinating Board on August 21, 1957 for transmittal to the NSC. U.S. Policy toward Iran (NSC 5703/1) has been found to be consistent with National Security Policy (NSC 5707/8).3

Your attention is invited to paragraph A,1,a headed “Iranian Strength and Stability” and paragraph B,2 and 3, relating to the role of the Shah in Iran. He now appears determined to exercise strong, direct and continuing control over his government. His disinclination to assume the role of a constitutional monarch and the consequent criticism [Page 941] directed at him, rather than against his government and ministers, may serve to weaken his position and that of the monarchy over a period of time.

The paper, in paragraph A,1,e, refers to an agreement between AGIP, a subsidiary of the Italian Government oil agency, and the National Iranian Oil Company. This agreement appears to involve a 75–25 distribution of profits from oil revenues in favor of Iran without a commensurate capital contribution by the latter. This apparent departure from the existing 50–50 international formula, now prevalent in the Middle East, might lead to repercussions in other oil-producing states. Our Embassy has reported that the agreement was passed by the Iranian Senate on August 24, 1957, and signed by the Shah.

Recommendation:

That you recommend Council approval of the Progress Report on Iran at the Council’s meeting on September 12, 1957.4

  1. Source: Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5703 Series. Secret. Drafted by Howard Ashford and cleared by Jones.↩
  2. Dated August 21, not printed. (Ibid.)↩
  3. Vol. XIX, p. 507.↩
  4. The NSC noted the Progress Report. (Memorandum of discussion at the 336th meeting of the NSC, September 12; Eisenhower Library, Whitman File, NSC Records)↩