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*NATIONAL ARCHIVES AND RECORDS BERVICE* AIDE-MKMOIRE The American Government considers that the situation in Iran has become most critical and that it is essential that immediate steps be taken in an effort to prevent the loss of Iran to the West. There seems little likelihood that the Shah or conservative elements will recapture political influence from the nationalist government of Mosadeq. lieanwhile, the danger of communist capture of power is increasing. Unpalatable though it is, there seems no reasonable alter- native to supporting the present government. Such support must be in a manner which will not relinquish British claims to compensati on for the nationalization of the Anglo-Iranian oil Company in Iran. Furthermore, it must be done in such a way as to be justifiable to both British and American public opinion. Also there must be some prospect that Iran will benefit from the resumption of oil revenues to the end that budgetary financial aid will