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 (3) Furnish additional arms aid. to appropriate Middle East countries so as to eventually enable them to possess the strength to secure their frontiers against effective communist infiltration. The Joint Chiefs of Staff keep this matter under continuous review.

b. Economic: It is doubtful that any increase in the present level of MDAF and Point Four programs ($66.6 and $20. millions, respectively) would be Justified if the Iranian situation became more unstable. If economic conditions in Iran continue to deteriorate as a result of the continued instability of the government and its inability to market oil, it is possible that a situation might arise where it would be in the U.S. interest to give the National Front Government direct financial assistance should such a request be received. The Department of State has recommended that a contingency fund of $45 million be set aside for this purpose, and the matter is currently under consideration by the Bureau of the Budget. This action would be consistent with NSC 136/1, but would have to be Justified in the light of the situation existing at the time the request is made.

c. Diplomatic: An attempted communist seizure of power would probably be designed to exploit the increasing economic and political difficulties facing Iran. Thus U.S. diplomatic landing in such a situation requires continued efforts on the part of our Ambassador in Tehran to negotiate a settlement of the oil controversy between Mosadeq and the U.K. and in the event of an attempted coup to urge positive action, including the prompt use or security forces, upon such Iranian authorities as may be capable of such action with a view to preventing a communist seizure of power.

d. Psychological: The PSB on January 15, 1953, approved a "Psychological Strategy Program for the Middle East" (D-22) which includes within this broader framework guidance for psychological operations in Iran. When prepared plans for specific psychological measures in the event of an attempted communist coup in Iran will be consistent with this program and with the approved PSB policies contained in‘ "A Strategic concept for a National Psychological Program with Particular Reference to 'Cold War' Operations under NSC 10/5" (D—31).

e. Special Political Operations: Current special political operations in Iran which are directed toward counteracting and reducing Tudeh influence, would be continued and if circumstances permit, intensified in the event of an attempted communist coup. These operations are designed to:

(1) Influence specific political, military and religious leaders to speak out strongly against the Tudeh threat.