The most serious problem the Task Force sees is long-term in the sense that,
unless Amini finds the way to acquire
broad political support, one or another of Iran’s burgeoning problems will
sooner or later unseat him. Possible courses of action on the part of the
United States to assist him to do so are limited and in a very sensitive
area of internal politics.
The Task Force examined at length a series of proposals contained in the
aforementioned Departmental study. It was agreed that these proposals be
forwarded to our Ambassador in Tehran for comment. Assist-ant Secretary
Talbot, the Chairman of the Task
Force, fortuitously will be in Tehran from August 20 to August 28. This will
provide an opportunity to obtain the considered views of both the Ambassador
and Mr. Talbot regarding the current
situation and what further might be done.
The Departmental study of possible United States actions which we are sending
to Tehran covers a broad spectrum. There is attached a partial list of the
principal areas which should be further explored.
In view of the foregoing, this memorandum should be considered as only an
interim reply to Mr. Bundy’s August 7
memorandum to the Secretary on this subject.
The Task Force is of course prepared to meet with the President at any time
to discuss its work. It would suggest, however, that consideration of this
possibility be deferred until after the Ambassador’s response and Mr.
Talbot’s personal observations
have become available.
Enclosure 1
Washington,
August 11,
1961.
Copy of Letter to the American Ambassador, Tehran from the
Acting Assistant Secretary for Near Eastern and South Asian Affairs5
Dear Julius: Iran continues to be the subject of
attention and some anxiety at the highest levels both here in the
Department and in the White House. Accordingly, the Iran Task Force has
been asked to go over and to approve this letter. I am very pleased that
Mr. Talbot, the Chairman of the
Task Force, will be with you in Iran shortly, and the Task Force hopes
that, through full discussions with you, he will be able to bring back
with him a more detailed picture of your thinking than we could hope to
obtain through correspondence.
We were gratified by the general excellence of the Third Plan frame as
presented to the IBRD by Mr.
Farman-Farmayan. The reaction of the IBRD is tentatively favorable, and we have every reason to
hope that the Third Plan will become the base of a long-range
Consortium-type lending approach which will reflect in classic form the
basic foreign aid policies of the Administration.
As you have noted, the news from Bonn appears to be surprisingly
favorable in connection with the Federal Republic’s contribution to the
financing of the Second Plan gap, and we believe that we will be able to
come through, if it should prove necessary, with development lending to
make up some relatively small portion of the gap which the Germans may
not be able to cover.
Although our view of the Iranian budgetary problem for 1340 is by no
means frozen, we do believe that the GOI
has overestimated its deficit by a very large margin. No doubt careful
probing of some of the large expenditure increases, such as the increase
for the Cereals Department, would reveal areas where cuts could be made
without serious economic damage. We are inclined to believe, however,
that estimated expenditure levels are generally reasonable and should be
accepted at face value.
On the revenue side, however, we are persuaded that the GOI’s estimate of customs revenues falls
about a billion rials short of what can be reasonably expected. Starting
from this point, we visualize a potential budget deficit of $23 million
(1.7 billion rials). Assuming (as now appears likely) that the Germans
provide a loan of $10 million for NIOC
projects and assuming that about $7 or $8 million of such a loan could
be
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used during this Iranian
year, the deficit could be reduced to about $15 million. As you know,
$13 million of the estimated deficit is to be used to retire public debt
so that credit expansion in the private sector can rise beyond the
Stabilization Program ceiling of $39 million (3 billion rials).
In view of your recent report (despatch #60, July 26)6 that the public debt was reduced by $45
million in the first quarter of the current Iranian year, it strikes us
that the GOI is unduly concerned about
its ability to meet this goal. Should we assume, however, that further
experience and later information shows that the GOI’s concern is justified, we are informed that the IMF would be prepared to consider a
revision of the Stabilization Program to permit private credit expansion
of $52 million (4 billion rials) without an off-setting reduction in the
public debt. In sum, it would appear from the foregoing that Iran should
be able to carry out its 1340 budget as now constituted without U.S.
budgetary assistance in addition to the $15 million already given. We
recognize, however, a strong possibility of future emergency
requirements for our earmarked $5 million or even more.
We would appreciate your comments on the above analysis, along with any
further data which may be developed and which would affect our
conclusions. Be assured that we and the Iran Task Force feel strongly
that we should stand ready, within our resources, to assist Iran in its
budgetary problems to the extent that there is real need for such
assistance. In view of the above, however, I am sure that you agree that
we are acting in the GOI’s interest, as
well as our own, by waiting to get a clearer view of the problem.
At present, we in Washington are more concerned over political factors in
the Iranian situation than over current and future economic problems.
Many problems may arise in the economic sector but, granted a
continuation of the economic competence which the Prime Minister and his
advisors have shown and granted the approval of the Administration’s
foreign-assistance legislation now before the Congress, we believe that
the Prime Minister will probably be able to avoid economic catastrophes
and that Iran will be able to enjoy that minimum of economic stability
and development which will enable the Prime Minister to devote himself
to the political and psychological problems which confront him.
Furthermore, it appears to us that the Iranian Government faces no
immediate and crucial political crisis involving possible revolution.
Rightist anxieties have been quieted, the Shah appears to be continuing
his support of the Cabinet, and the National Front and its allies are
being quietly but effectively repressed without unnecessary brutality
and
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without bloodshed. There
are no indications that the security forces will waver in their loyalty
to the regime in the near future, although the long-term elements of
dissatisfaction are undoubtedly still at work.
Our primary concern at this time, and the primary purpose of this letter,
revolves around the longer-term political outlook. As you recall from
your work with the Task Force a few months ago, we have been acutely
aware of a growing gap between the burgeoning and largely neo-Mosadeqist
elements of the urban middle class and the more traditional and
conservative elements of society. We felt, and we still feel, that
amelioration of this disunifying trend through the creation of a
moderate “bridge” embodying a new and Centrist political synthesis is
the most promising (and perhaps the only) alternative to increasing
disunity and eventual political collapse. We decided that the Shah,
despite his many admirable qualities, had not and probably would not
display the political creativity and flexibility needed to overcome this
trend. We pinned our hopes on Prime Minister Amini.
Our reading of the political situation in Iran is most disquieting in the
light of the points mentioned above. It appears that the Prime Minister
has lost a great deal of his early grip on the imagination of the public
by failing to carry out expected changes, and that while he has reduced
the threat of attack from the Right and from the Shah himself, he is
drawing away from, and not toward, the moderate leaders of the urban
middle-class, and is, in effect, assuming a posture similar to that of
earlier Prime Ministers who have despaired of coming to terms with the
urban opposition. He is, of course, technically far more competent than
his predecessors. But we suspect that honesty and technical competence
alone are not going to result in a solution of Iran’s long-term
psychological problem in less than a decade, and we feel most strongly
that as long as the half-Westernized and strategically placed forces in
Iranian politics are implacably hostile to the Government, Amini and the Shah will not have many
years before the slow dry rot, which has been spreading for the past six
years, will penetrate the security forces to such an extent that the
daily survival of the regime will become a matter of conjecture. This
process would almost certainly involve an increase in direct Tudeh
influence on (if not control of) the organized opposition and would
increase potentialities for the Tudeh to operate and expand in the
atmosphere of a successor regime.
To judge from his most recent statements, Amini has apparently begun to despair of making any
immediate progress in winning over the urban middle-class opposition and
is instead planning to repress them as gently as possible while ruling
through the bureaucracy, with the Shah and the Army in support, in such
a fashion as to demonstrate to the heirs of Mosadeq that his way is
better than theirs. It may well be that
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this decision is the only one open to him; we are
not prepared to state categorically that he is taking the wrong
tack.
What can Amini do and what can we
do—in the way of help or pressure—to escape from this blind alley—if,
indeed, the long-term political problem admits of any other approach
than to play for time and hope for the best? The attached study examines
a number of very tentative suggestions of possible courses of action. I
admit that none of them appear to hold much promise of a brilliant
solution to Amini’s dilemma. I
also realize that Amini himself,
aiming for the same long-range goals which we envisage for Iran and
being personally a political realist, may be presumed to be far more
capable than we of judging their applicability and promise. We realize
further that Amini’s freedom of
action is severely limited by economic realities and by the necessity of
staying in office from day to day and of retaining at least a minimum of
tolerance and support by the Shah and the security forces.
Nevertheless, we are still concerned over the continuing gloomy
long-range prospects of the regime, and are eager to receive the
Embassy’s assessment of what we can do to cope with this most
disquieting trend.
Sincerely,
