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 social unrest. At the same time, nationalist failure to restore the oil industry to operation has led to near exhsustion of the government's financial reserves end to deficit financing to meet current expenses, and is likely to produce a progressive deterioration of the economy at large.

3. It is now established that communist forces will probably not gain control of the Iranian government during 1953 .Nevrtheless, the Iranian situation contains very, great elements, of instability. Any US policy regarding Iran must accordingly take into account the danger that the communists might be enabled to gain the ascendancy as s result of such possible developments as a struggle for power within the National Front, more effective communist infiltration orﬁhe government then now appears probable, government failure to maintain the security forces and to take effective action against communist activity, or a major crop failure. It is clear that the United Kingdam no longer possesses the capability unilaterally to assume stability in the area. If present trends continue unchecked, Iran could be effectively lost to the free world in advance of an actual Communist takeover of the Iranian Government. Failure to arrest present trends in Iran involves a serious risk to the national security of the United States.

4. For the reasons outlined above, the major United States policy objective with respect to Iran is to prevent the country from coming under communist: control. The United States should, therefore, be prepared to pursue the policies which would be most effective in accomplishing this objective. In the light of the present situation the United States should adopt and pursue the following policies:

a. Continue to assist in every practicable way to effect an early and equitable liquidation of the oil controversy.

b. Be prepared to take the necessary measures to help Iran to start up her oil industry and to secure markets for her oil so that Iran may benefit from substantial oil revenues.

c. Be prepared to provide prompt United States budgetary aid to Iran if, pending restoration of her oil industry and oil markets, such aid is necessary to halt a serious deterioration of the financial and political situation in Iran. NSC 136/1