Max Thornburg on Iranian Affairs
July 5, 1951 Discussion at the State Department

Arash Norouzi
The Mossadegh Project | August 14, 2020                     


Max W. Thornburg, Petroleum Advisor to the State Department Max W. Thornburg, Petroleum Advisor to the State Department, offered his views on the economic and political situation in Iran to Secretary of State Dean Acheson and William Rountree, Director of the Office of Greek, Turkish and Iranian Affairs.

Thornburg had recently returned to the U.S. after years advising the Iranian government on its economic development. He asked Acheson to read the notes he made in preparation, which formed the basis for much of the discussion.

U.S. State Department Documents on Iran | 1951-1954




DEPARTMENT OF STATE
Memorandum of Conversation

DATE: July 5, 1951


SUBJECT: Iran

PARTICIPANTS: The Secretary [Dean Acheson]
                                     Mr. Max W. Thornburg [Petroleum Advisor]

                                     Mr. Rountee, GTI [William Rountree]

COPIES TO: S/S
                          S/P [Policy Planning Staff]
                          G [Deputy Under Secretary of State]
                          EUR [Bureau of European Affairs]
                          NEA [Assistant Secretary of State for Near Eastern, South Asian, and African Affairs]




Mr. Max Thornburg, who recently returned to this country after serving for several years as head of the Overseas Consultants Inc. group which advised the Iranian Government on its economic development program, called on the Secretary to give his views on the situation in Iran.

Mr. Thornburg handed the Secretary a copy of the attached notes which he had prepared for the discussion and suggested that the Secretary read them. Mr. Thornburg’s subsequent comments were largely an elaboration upon this written summary.

The Secretary commented, after reading Mr. Thornburg’s summary, that the present situation in Iran is probably due partly to Western ideas which had been started in that country, but which Iranians are unable for various reasons to carry through. As a result, there are a good many “unemployed intellectuals” who have picked up the theme of nationalization and are pressing it without an adequate understanding of how to bring it about in an orderly manner or how to use it for the real benefit of the country.

Mr. Thornburg agreed and said that it is necessary for us to apply our statesmanship toward the creation of the type of government in Iran that can handle the situation. The Shah is sincerely interested in the welfare of his people and lacks only the courage needed to take action required by him. He could be given the encouragement to go forward with a constructive program if he is assured of United States and British support, in the absence of which he will do nothing. Mr. Thornburg expressed the view that a high-ranking American should go to Iran now to have private conversations with the Shah. This should be preceded by talks with the British so that he can give the Shah assurance that both Great Britain and the United States would be fully behind him. In Mr. Thornburg’s view Dr. Mosadeq would make a suitable Prime Minister for Iran if the pressure against him were removed. By starting effective implementation of a far-reaching economic development program, it would be possible for the Shah to remove these pressures. One of the first steps would be for the Shah to have some of the bad elements, both in the Majlis and elsewhere, arrested and thrown in jail. He should then require the Majlis to pass legislation essential to progress, and if the Majlis should fail to act it should be dismissed and new elections held in due course.

Mr. Thornburg said that if they had a good government in Iran no more than two hours would be required to settle the oil controversy. As to steps which should be taken at this time, Mr. Thornburg thought that the British should begin gradually to move out of Iran and allow operations to slow down or come to a halt. This would have a salutary effect upon the situation and would minimize dangers that a blow-up would occur. The various opposing elements in Iran would then fight against each other, but Mr. Thornburg thought the army to be capable of dealing with this problem. The Shah could then take measures needed to set up a good government which could work out a reasonable agreement with the British interests.

In reply to the Secretary’s question, Mr. Thornburg expressed the view that the county could hold together for a considerable time if the oil operation should be closed down. He said that only five hundred thousand people of the total population of seventeen million received direct benefit from the operation of the company. The oil revenues otherwise go into the hands of the ruling group and the general public have never profited by having one of the world’s largest oil industries.

Mr. Rountree referred to the fact that at the present time a considerable portion of the government’s internal budget has depended upon oil revenues, and that the balance of international payments is maintained very largely as a result of oil revenue. The cessation of oil revenue therefore would render it difficult or impossible to maintain government expenditures even for the salaries of civil servants and the army, and would very seriously affect imports of essential goods. Mr. Thornburg agreed that failure to pay the army would create a serious situation but felt that other aspects of the problem were not of particular importance, at least for the time being. He referred to the substantial sum held by the British in London which will be due the Iranian Government, and said that releases of funds from this account would keep the country going for a long period.

In reply to the Secretary’s question, Mr. Thornburg said that it would be better to find some temporary basis for keeping the operation going if it is possible to do so without causing an “explosion.” He felt, however, that it would be impossible for Mr. Mosadeq to make any agreement which would permit operations to continue under conditions prevailing in Iran. He felt, therefore, that the British should get out before any unfortunate event should occur, such as the massacre of British citizens by irate Iranians, which might lead to a major crisis.

In referring to past events, Mr. Thornburg said that Ambassador Grady’s weakness in Iran had been in trying to apply economic remedies to political ills; in trying to get economic reform before political reforms have been accomplished. [Henry F. Grady] He said that the failure of the Seven-Year Plan Organization was that there was no political order in the situation and the Iranians responsible for implementation of the plan were guilty of widespread corruption which has gone completely unpunished. Before any progress could be made in improving the low economic standards of the Iranian people political reforms are essential, and will be accomplished only if the United States and Great Britain are prepared to back the Shah in the strong measures which must be taken. Ambassador Wiley, Mr. Thornburg said, had a different approach. [John C. Wiley] He is a political expert rather than an economic expert but is an “anti-political interventionist”; he did not think it proper to try to influence the political shape of the country.

In elaborating further upon how the Shah might obtain a new government set-up, Mr. Thornburg said that he needs to appoint a strong man as Prime Minister. If Mosadeq is not the man, perhaps Qavam would be, since he is a ruthless operator. [Ahmad Ghavam] His weakness, however, is that the Shah does not trust him. Mr. Thornburg felt that if we participated we could give the Shah assurances that Qavam would be going in as Prime Minister per se and that he would not be permitted to realize any ambitions which he might have in the direction of a dictatorship or in replacing the Shah as Chief of State. In addition to Qavam there are a dozen others who could serve as Prime Minister if they had merely to carry out reform programs. The Shah would have to pass bills through the Majlis and this could be done with proper guidance. He would have to put decent men in the Cabinet and avoid letting the old-line political machine get control of the Seven-Year Plan Organization. [Formulation of a Seven Year Plan for economic development began in 1946 under Premier Ghavam, an “old-line” politician] Mr. Thornburg said that the Iranians would require technical assistance of the nature provided by the Overseas Consultants Inc., and discussed at some length the necessity for Point Four aid which would reach the maximum number of villages in the shortest possible time.

The Secretary commented that Mr. Thornburg’s statements would indicate his view that the essential elements of a solution to the Iranian situation are (a) to get a good man like Razmara as Prime Minister, (b) to introduce essential reforms and require their enactment by the Majlis or, failing this, by decree, and (c) to prevent the “old crowd” from continuing to exercise undesirable power and influence. Mr. Thornburg said that if from five to twenty-five of the worst men were thrown into jail that would be enough to “put shivers” in the whole lot.

In the course of the discussion Mr. Thornburg criticized Ambassador Grady for having asked him to leave Iran because of his (Mr. Thornburg’s) participation in the AIOC matter. [Anglo-Iranian Oil Company] His particular complaint was that the Ambassador had later told Mr. Ala of his request, which placed Mr. Thornburg in an embarrassing position. [Hossein Ala] With his departure the Iranian Government had no oil advisor to turn to and as a result had been compelled to make decisions without adequate knowledge upon which to base judgment.

The Secretary thanked Mr. Thornburg for his kindness in giving him the benefit of his views in connection with this most difficult problem.

Attachment:

     Notes for Discussion


• Declassified on March 27, 1985. [Annotations by Arash Norouzi]

Max Thornburg Talks Iran With Dean Acheson, William Rountree (July 5, 1951)

Max Thornburg Talks Iran With Dean Acheson, William Rountree (July 5, 1951)

Max Thornburg Talks Iran With Dean Acheson, William Rountree (July 5, 1951)

Max Thornburg Talks Iran With Dean Acheson, William Rountree (July 5, 1951)


What Went Wrong in Iran? | Amb. Henry Grady Tells All (1952)
What Went Wrong in Iran? | Saturday Evening Post, Jan. 5, 1952

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Related links:

Amb. Henry Grady Reports on Mossadegh Meeting (July 29, 1951)

U.S. Oil Kings Air Iran Concerns With State Dept. (Oct. 10, 1951)

Political Prospects In Iran | CIA Report, July 29, 1953



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