Iran’s Shah says his country is desperate for financial assistance, so desperate that he does not care whether Russia or the United States furnishes the help. Of course allowances must be made for both the stress under which Shah Pahlevi is laboring and his desire to avoid angering Moscow. [Mohammad Reza Pahlavi]

The Shah is known to be fearful and suspicious of the Communists. Before Mossadegh deprived him of his authority, the Shah leaned on the United States for advice and for assistance. Our military missions are still in Iran and the weapons the Iranian army carried when Mossadegh and the Communists were driven from power are American weapons.

That Iran, now that the Shah is back, would greatly prefer to deal with America cannot be questioned. Therefore we must decide what to do about the plea and not sit back to see how Moscow reacts.

As far as surface indications go, Washington is in no hurry to reply to the Shah’s appeal. But apparent situations are sometimes misleading. President Eisenhower is not pressed to go on record for good reason. Only a few days ago he responded to an appeal from Mossadegh for money and his reply is as good today as it was then. [June 29th] Iran has been assured by our government that its financial needs would be considered only when the petitioner’s own resources had been utilized to the fullest extent. [Eisenhower in fact granted financial aid to Iran despite the unresolved oil dispute.]

Mossadegh’s dispute with Great Britain over Iranian oil fields developed by the British is costing Tehran one hundred million dollars a year. The flow of revenue can be restored to the Iranian treasury and until tangible evidence of employment of the asset is seen the United States cannot logically advance credit, the bankruptcy of Iran is self-inflicted. Of course settlement of the controversy will not be swift. But judging from terms reached by Iran’s neighbors with British oil companies, fair terms are available if only the Persian government will be reasonable.

American help to Iran must wait upon a display of good faith by the Shah and his government. This is not a requirement designed to help an ally; the British are getting along quite nicely without Iran’s oil fields. The truth is that the world oil channels disrupted by Mossadegh’s insane nationalism will have to be reorganized in order to open markets to Iran’s yield. We must have from the Iran government guarantees of good faith in international dealings before we venture to deal with Tehran. Self-interest prompts us to help a friendly government and avoid forcing Iran to turn to Russia. But Mossadegh taught us that good will is not always reciprocated.