Memorandum, State Department Summary of Telegrams

NLT(Naval Aide/242 THE SECRETARY OF STATE WASHINGTON DECLASSIFIED E.O. 12065, Sec. 3-402 September 12, 1951 State Dept. Guidelines, March 6, 1982 By DEB NLT, Date 9-5-85 TOP SECRET SUMMARY OF TELEGRAMS IRAN Following the Department's instructions, Ambassador Grady yesterday communicated to Prime Minister Mosadeq the Department's position on the Export-Import Bank loan to Iran: namely, that we feel it is premature for Iran to send a mission here at present to conclude the loan; that Iran's economic situation has changed con- siderably since last year when the loan was offered and the question now arises as to how local costs, upon which the success of the program depends, would be financed; that the Eximbank cannot proceed with the loan in the ab- - sence of Iran's ability to provide such funds. In an effort to dispel any idea that we were using the loan as a political tool Grady also pointed out, on our instructions, that we are proceeding to implement our Military Aid and Point IV programs, and that we remain ready to proceed also with the loan when- - ever Iran can show that plans have been perfected to meet local currency and foreign exchange requirements. Mosadeq became angry and said that our government was working with the British Government to boycott Iran in order to force an oil settlement. He said he would at once write to the Majlis (the lower house) to drop the loan matter and would make a statement to the press. Grady attempted to dissuade Mosadeq from such hasty action and reassured him, to no avail, that his allegations were untrue. Mosadeq insisted that Grady give him a written statement of what he had said in this conversation (which Grad y later did). USSR M. Vyshinsky yesterday called the French Charge in Moscow to the Foreign Office and handed him a lengthy note protesting French policy directed toward the rebuilding of German mili- tary might. The note says that this policy is contrary to both the Franco- Soviet treaty of December 1944 and in violation of Potsdam. The principal targets of the note were the Pleven Plan, which allegedly fostered remilitari- zation of Germany, and the Schuman Plan, which allowed the development of an economic military potential. The note criticized French cooperation with the US and the UK on this trend of developments in West Germany, and re- - ferred to the alleged American restoration of the German economy after World War I and Anglo-French toleration of Hitler. TOP SECRET