Foreign Relations of the United States, 1958–1960, Near East Region; Iraq; Iran; Arabian Peninsula, Volume XII

245. Memorandum From the Special Assistant for Mutual Security Coordination (Barnes) to the Deputy Under Secretary of State for Economic Affairs (Dillon)⁰

Washington, July 24, 1958.

SUBJECT

• Further Assistance to Iran and Turkey

In connection with the President’s concern¹ as to whether the United States was doing all it could, under present circumstances, to assist Iran and Turkey, the Secretary has asked you to review the conclusions of an ad hoc group of the interested agencies established on Tuesday² to probe thoroughly the question of whether we were extending the optimum amount of assistance which might be desirable from a military, political or economic point of view; and if not, what further assistance might be recommended in any field.

I have been in touch with representatives of the Department of Defense, the Joint Staff, the Central Intelligence Agency, the International Cooperation Administration and the Bureau of Near Eastern Affairs. We have met twice to consider the above assignment, have recommended and prepared several additional background papers for the Baghdad Pact Meeting, and herewith wish to submit conclusions as of this date. In addition to the particular questions raised with respect to Iran and Turkey, we have also considered briefly the possible related consequences which might flow from additional assistance to those countries, and these points are noted as well in this report.

I. Findings

1. Iran

a. Military Assistance. In addition to programs of military assistance which have been approved through FY 1958, we have now agreed to assist in a program to be initiated in FY 1959 designed to (a) bring all authorized units to full strength, requiring the addition of about 37,000 men; (b) expand our training facilities to accomplish this end objective; (c) expedite deliveries of military equipment to accomplish this buildup; and (d) consider further build-up when the process described above is completed.

Discussions looking toward early implementation of this program are already in progress between the respective planning officers of the MAAG and the Iranian Supreme Commanders Staff. The Shah, when informed of our new approach, was reported to be in general accord with both the material on hand and the present proposal to concentrate on training new recruits. While pleased with the new offer of tanks, he expressed some regret over the fact that new planes were not F–100’s instead of F–86’s and that the anti-aircraft defense was still not adequate.

The ad hoc group is firmly of the opinion that the presently planned program represents the maximum that Iran has the capability of effectively absorbing and utilizing at this time. We feel that the most important objective, from the military, political and economic points of view, is to accomplish effectively this proposed build-up. In this connection we have noted the conclusion of the Ambassador and the MAAG Chief that “if we continue to take the initiative and push the Iranian military to do their utmost with what they have been furnished and what is now in the pipeline, we may be able to postpone any major requests for additional material (with the possible exception of fighter aircraft) for a year to eighteen months during which time the situation may have materially changed.”

b. Economic Assistance. During the past year the United States extended $26.6 million in economic assistance and a program of $29 million was proposed for FY 59 largely in military construction and technical cooperation. No PL 480 assistance was extended and none is needed during the coming year. The Development Loan Fund has issued a letter of advice covering loans for planning organization projects, to be determined, in an amount of $40 million.

There is no immediate economic problem or need for further United States assistance. However, the proposed expansion of the military forces will lead to increased costs in the defense budget and there have recently been increases in military and civilian pay. While the Iranian Government has the resources to meet these additional costs, it could not do so without some reduction in its current development program.

The United States would have to consider therefore at the beginning of the next Iranian fiscal year, but within the present U.S. fiscal year, whether further economic assistance (defense support) should be extended. The Iranians will undoubtedly also expect a further loan of $40 million or more from the Development Loan Fund during their next fiscal year.

c. Internal Security. [2 lines of source text not declassified] the country team has recommended a program to strengthen the general police administration in order that the military may be relieved to the extent practicable from internal security functions. There is serious question among the agencies in Washington as to whether such a program would have sufficient utility and priority to justify the use of limited resources at this time. A somewhat similar program to strengthen the border patrol has also been considered.

The ad hoc group is of the opinion that a firm decision on these internal security programs must be reached in the near future but consider favorable decisions now would not particularly satisfy the Shah and that it is preferable not to attempt to reach a final decision while negotiations for the expansion of the military forces are in progress.

[Here follow sections on Turkey, Greece, and Pakistan.]

II. Conclusions³

1. No additional military assistance for Turkey and Iran beyond the measures detailed in sections 1(a) and 2(a) above appears necessary or advisable at the present time. Emphasis should be placed on moving forward as rapidly as possible to implement present programs.

2. Top priority must be given to the successful conclusion of the proposed Turkish economic program under consideration in the OEEC next week.

3. There is no immediate need for additional economic assistance in Iran but this question should be kept under continuing study with a view to determining what new requirements there may be in the next Iranian fiscal year beginning in March.

4. The agencies concerned should attempt to submit recommendations to W on the Iranian internal security program by August 15.

5. Recommendations should be developed with respect to Greece and Pakistan for consideration during the reprogramming of FY 1959 Mutual Security funds. In addition, Pakistan should be offered immediately, at U.S. initiative, an acceleration in deliveries of equipment programmed through FY 1958.

0. Source: Department of State, Central Files, 788.5–MSP/7–2458. Secret. Barnes sent copies of this memorandum to Reinhardt and Rountree and received concurrences from DOD/ISA, the Joint Staff, NEA/GTI, NEA/SOA, and ICA.
1. According to a memorandum of a telephone call to Dulles, July 16, “The President then said that he felt strongly that we should assign first priority to increased military and economic aid for Turkey and Iran. They should have all the assistance they can absorb. The Secretary said we had had trouble with Defense about going further than the 10 divisions for Iran, and the President answered that we should get those 10 divisions fixed up fine.” (Eisenhower Library, Whitman File, Eisenhower Diaries)
2. July 22.
3. Dillon passed this memorandum to Dulles on July 25 and noted that he agreed with the conclusions. He also added two additional observations on Iran: (1) The speed up in the military program for Iran will require an additional $20 to $50 million and (2) anything that “effectively promoted internal security in Iran should have a relatively high priority.” (Department of State, NEA/GTI Economic Files: Lot 60 D 4, Assistance to Iran and Turkey)