The reason for that is obvious. Those were the countries directly confronting the Soviet Union which had been subjected to the greatest pressures. They had a number of points in common as far as the execution of U.S. policy was concerned. Jack remained as Director of the Office of Greek, Turkish and Iranian Affairs a few months after I returned, and in May 1950 I took over as director.

Q: Next you move on to Iran to serve in all three of these countries in the field as Deputy Chief of Mission at an extremely interesting time in Iran. And, of course, I refer to the Mossadegh revolution and the aftermath of that. Can you tell us something about the revolution, the U.S. role and the oil companies?

ROUNTREE: During my earlier period as Director of the Office of Greek, Turkish and Iranian Affairs, Mossadegh rose to power. The political situation in Iran had been very shaky for several years. You might recall the unsuccessful negotiations between Prime Minister Razmara and the British, with the Iranians endeavoring to amend the terms of the Anglo-Iranian oil agreement. [Ali Razmara] Finally, the assassination of Razmara added to the turmoil within Iran. A series of Prime Ministers were appointed by the Shah, including his closest confidant, Hossein Ala, but none succeeded in establishing stability and an atmosphere conductive to successful negotiations with the British. [Ala was the only Premier between Razmara and Mossadegh]

During this tumultuous period Mossadegh, who had always been in opposition and never in power, attracted an increasingly wide audience and supporters. The Shah finally felt compelled to turn the government over to Mossadegh, and I think it was the Shah’s general expectation that Mossadegh’s inability to come to an agreement with the British or to organize the economy would bring about his early departure. [The Shah didn’t select him, he was voted in by the Majles 79-12]

This was not to be the case. Mossadegh’s hostile attitude toward the British was manifested in many ways. His unwillingness to meet the British half way became evident. We became increasingly concerned over events in Iran and endeavored in every possible way to be instrumental in bringing about a resolution.

President Truman asked Averell Harriman to go to Iran and try to serve as a catalyst to bring about a resumption of negotiations between the British and the Iranians. I went with him and we spent several weeks in Iran, during which he held many talks with Mossadegh. He finally persuaded Mossadegh to receive a British delegation, which was promptly dispatched to Tehran. Various proposals were discussed but all were unacceptable to Mossadegh, who seemed quite adamant in his position that the Anglo-Iranian Oil Company would not return.

So the Harriman mission left without any substantial progress. The Iranian economy continued to deteriorate. Continued sporadic efforts to find some means of resolving the problem were unsuccessful and it was in this atmosphere that Mossadegh came to Washington for a series of discussions with the President and other officials in Washington, but they also were without concrete results.

Shortly after Mossadegh’s visit to Washington, both George McGhee and I left for Turkey. While I was in Turkey various interesting events occurred in Iran, one of which was an effort to unseat Mossadegh, in which CIA was involved. This failed and the position of the Shah became untenable. He was forced to leave Iran for Italy. [He is now describing the events of August 1953, but placing them impossibly in late 1951.]

After his departure, however, an almost spontaneous revolution occurred on the streets of Tehran. It began with a public demonstration by a health club—or exercise club—lifting barbells and chains and that sort of thing. These clubs often demonstrated on the streets. But on this occasion they began shouting anti-Mossadegh, pro-Shah slogans and proceeded to march through the streets. Many others joined them, and soon there was a substantial demonstration in favor of the Shah and against Mossadegh.

Shouts of “Long live the Shah” spread throughout the city and the crowd went in the direction of the building housing the Mossadegh cabinet. Meanwhile General Zahedi, who had been one of the principal figures in the earlier attempt to overthrow Mossadegh, came out of hiding and he and other military officers gave leadership and direction to the mobs on the street, and they succeeded. [Fazlollah Zahedi]

I might say, parenthetically, that one of the reasons for the relatively easy success was that Loy Henderson, who was our Ambassador in Tehran, had complained bitterly to Mossadegh about harassment of Americans on the street by communists and other of his followers. He said that if this continued he’d have no alternative but to order the evacuation of Americans from Iran.

This Mossadegh did not want and he instructed his people, including the communists, to stay off the streets. After this tremendous demonstration had gained momentum it was too late for the communists and other Mossadegh followers to offer any effective opposition. The result was the success of the pro-Shah, anti-Mossadegh demonstration, or revolution, and the members of the Mossadegh cabinet were seized. Mossadegh himself, after initially escaping the crowds, was seized but treated far more gently than his associates. [He turned himself in the next day.]

At this point a situation was created in which the Shah could return. He did so, and appointed General Zahedi as Prime Minister. [The appointment was made Aug. 16th, at the behest of U.S. and British spy agencies] This created an entirely new situation in Iran.

I was asked to transfer directly from Ankara to Tehran and become Deputy Chief of Mission under Ambassador Henderson. I think this was because of my previous experience as Director of the Office of Greek, Turkish and Iranian Affairs in which position I handled various matters relating to the problems of Iran. Ambassador Henderson’s former Deputy had recently left, and I was delighted again to be working with Loy, who had become my close friend as well as mentor.

The main objectives when the Shah returned were to reestablish order, get the economy going again and, very importantly, effect the return of the British diplomatic mission, which had been expelled by Mossadegh, and the beginning negotiations which would permit the resumption of Iranian oil production.

Q: Before we get on to that, if I’m understanding you correctly, what you’re saying is that the CIA has gotten a lot of undeserved credit for bringing back the Shah and that they really didn’t play a significant role.

ROUNTREE: Oh, I don’t think it was undeserved. The CIA did remarkably well in creating a situation in which, in the proper circumstances and atmosphere, a change could be effected. Mind you, they had been working with General Zahedi and his people. Quite clearly the matter did not work out as they had anticipated, or at least hoped, but it did work out in the end, and I wouldn’t deprive them of credit for playing a major role if indeed they sought credit.

However, it is clear that the responsibility for and the success of the revolution are due to Iranians. Our people could only supplement the efforts of others with the approval of the Shah, and could not replace such efforts.

Q: What about Turkish attitude toward Mossadegh at the time?

ROUNTREE: I don’t recall any notable aspect of Turkish attitudes toward Iran during this period. Relations between Turkey and Iran during the period were acceptable and the Turks continued to work with the Shah in the context of the Baghdad Pact, but I don’t recall any particular demonstration of favorable or unfavorable attitudes at the time of the counter-revolution which effected the Shah’s return.

Q: What about our American thinking at the time? Was the Mossadegh nationalization and his alliance or use of the Tudeh party, was this Iranian revolution seen primarily in the context of the Cold War and a possible Soviet encroachment into Iran or was the Iranian nationalist movement seen as the primary force? How were we looking at the Iranian revolution at that time?

ROUNTREE: From the outset there was no hostility by the United States toward Mossadegh. We were not fundamentally opposed to Mossadegh. We were, however, deeply concerned by his inability to work out an agreement with the British, and get the oil revenues again flowing. We were concerned about the state of the Iranian economy, the extent to which Mossadegh had resorted to the printing press to meet all financial needs.

There had been predictions early in his administration that the Iranian economy would collapse within six months. Well, it didn’t collapse, and it probably would not have collapsed in a considerable period of time because of the unique character of the Iranian economy and the ability to survive in circumstances which would have been catastrophic for many other countries. There was a reversion to a primitive type of economy. We actually undertook various types of programs to help the Iranian government under Mossadegh. This included a Point Four Program and a willingness to provide Export-Import Bank loans. We were anxious to avoid an economic catastrophe in the Mossadegh regime.

I think most people recognized that the situation in Iran would be highly precarious until Mossadegh or someone could find a means of resuming oil production in conditions acceptable to the international oil market. Even if they could produce the oil, companies and not countries are for the greatest part the customers, and so long as Iranian oil was produced under the onus of expropriation, big companies which would normally provide the markets for the product were unwilling to take it; thus the economy suffered.

We made every effort through the Harriman mission, through discussions with Mossadegh when he came to Washington, through continuous efforts of our Embassy under Henry Grady and, more recently under Loy Henderson, to find the means of rendering the sale of Iranian oil acceptable to the international community. But all of these efforts failed, and it seemed to us that stability in Iran would require a change in government; that Mossadegh simply should not continue indefinitely.

Q: What about the role of the American oil companies? Surely they were very upset by the precedent that Mossadegh’s nationalization set in Iran and what it would mean for their concession throughout the Middle East.

ROUNTREE: They were indeed upset. American oil companies were initially unwilling to even consider replacing the Anglo-Iranian Oil Company. This was a matter of principle. It was a matter that concerned them as businessmen. They were also aware of the likely effects which the successful expropriation of oil facilities would have on their own interests elsewhere.

After the Shah returned it was clear that there was no possibility of a return to the status quo ante, that is the return of Anglo-Iranian. It became increasingly clear that the best alternative would be an international approach to the operation of the Iranian oil industry under arrangements acceptable to the British. American firms were not waiting to jump in. The first step in the world’s most complicated business negotiations was to achieve the agreement of the American firms among themselves to become a part of an international consortium. You can imagine the difficult negotiations involved in even this one of many steps.

Q: Were the British quite willing to accept them?

ROUNTREE: The second aspect was discussions and agreement between the Americans and the British with respect to the circumstances under which Anglo-Iranian Oil Company would relinquish its claims in Iran. Negotiations between the five American oil companies and the British, Dutch and French companies were held to complete the international consortium. In order to preclude the appearance of unfair practices, a percentage of the consortium was made available to smaller American oil companies. My recollection is that this amounted to five percent.

After completing their negotiations, the consortium then sat down to negotiate with the government of Iran. We were very fortunate in many respects, one of which was that Loy Henderson was an excellent negotiator in setting up the arrangements for the consortium meetings with the Iranian negotiators. Secondly, the Administration obtained the services of Herbert Hoover, Jr. to help facilitate the negotiations. He came to Iran and remained throughout the negotiations. He was invaluable.

Thirdly, the negotiating team designated from the consortium members, was excellent, and was headed by an official of the Standard Oil Co. of New Jersey, Howard Page. Page represented the consortium as a whole—at least he was the principal consortium representative and was surrounded by many officials from other companies. He proved himself to be extraordinarily able.

Finally, the Shah and his government desired to find a reasonable and politically acceptable solution which would permit the early resumption of oil revenues. After a period of a good many months this rather incredible agreement was reached, thanks to the outstanding qualities of the negotiators.

Q: Was the U.S. government role in all of this a promotion, I mean a normal kind of promotion, protection of American interests, in the interest of American oil companies? Or were there serious differences of opinion between the U.S. government and how it saw its larger interests and the American oil companies, or were they basically together in negotiating with the British and with the Iranians?

ROUNTREE: The U.S. government role in this matter could best be described as one of facilitating agreement among the various parties concerned. Naturally, our interest in the protection of American firms is always there. Once the momentum was created and the basic decisions made, once it became clear that the U.S. companies were comfortable with their prospective roles in the consortium, among themselves and with the British, Dutch and French firms, then special interests were substantially lessened.

To a much greater extent the negotiations were between the consortium and the government of Iran, and whatever arrangements they were able to make would likely be agreeable to the United States government. Throughout this whole process we had the advantage of having Herb Hoover there to help, to advise, to assist. He was very helpful.

Q: Was there, as in the early days of dealing with OPEC, the early 1970s, was there at this time a waiver of the Sherman Anti-Trust Act for the oil companies to work, collude together?

ROUNTREE: I don’t remember the exact legal framework in which this was done, but, yes, this was always borne in mind. I don’t remember what instrument was issued or what policy statement was made, but at no time were the oil companies operating contrary to U.S. law or contrary to any established policies in the U.S. government.

Q: During the remaining period of your tour in Iran through October 1955, what kind of relationship, if any, did the Embassy have with the religious establishment in Iran— relations with the uluma, if any?

ROUNTREE: Our relations were limited, although we did make an effort to keep in touch with all elements in Iran, particularly the leaders of various groups. I met on several occasions with religious leaders. Separately and always quite privately, other members of the Embassy staff did so on a more regular basis. At that time, the importance of religious leaders in Iran was extremely limited. The Shah was at times rather undiplomatic in his relations with the religious leaders opposing his regime. Iranian authorities left no doubt in the minds of the diplomatic corps that they felt the religious leaders presented no present or potential problems in Iran. In retrospect, the Shah clearly underestimated this aspect and did far too little to understand the hopes and aspirations of religious elements.

Q: Is there anything else about your service in Iran I haven’t asked about that would be of interest?

ROUNTREE: It was one of the most interesting assignments that I had in my Foreign Service career. Most of the efforts of the embassy during my period there, either as Deputy to Ambassador Henderson or, following his departure, as Charge d’affaires were concentrated on economic matters, the resumption of oil revenues, the implementation of development programs, including our extensive Point Four Program, and, generally, efforts to undo the vast damage that had been done to Iran and the Iranian economy under the Mossadegh regime.

Q: What was your impression of the Shah at that time?

ROUNTREE: The Shah was, during that period, filled with renewed confidence. He felt that he had the backing of his people. He displayed a new determination to carry out his development programs formulated over a period of years with the help of a group of American specialists.

The Shah was a courageous man, and his intentions were superb. But as one of our previous Ambassadors to Iran commented: “In Iran good intentions sometimes pave the road to hell”. His capacity to organize the government to carry out programs, and to choose the right people for the right jobs, was obviously limited. As a result, much of the progress that could have been made faltered. Later, the Shah concentrated heavily upon military matters and, in the opinion of most, expended far too much of Iran’s resources on the military. Apart from that, on the whole, Iran had a leader that in the right circumstances could have brought the country forward from their economic depression. He made a lot of progress, but obviously not enough.

Q: What about corruption? Was corruption a problem? This was before the big oil money had started to pour in.

ROUNTREE: I think there is no doubt that corruption in Iran was one of the major problems that the Shah should have coped with but did not.

. . . . . . . . . . . . . . . . . .

Q: What do you consider your greatest accomplishment in your long and distinguished career, or a couple of greatest accomplishments?

ROUNTREE: The things about which I have felt the greatest sense of accomplishment have not necessarily been those for which I have had primary responsibility. That is, some activities in which I have participated, not necessarily those I have directed, are among my fondest memories.

For example, my involvement in the Greek-Turkish Aid Program is a source of very great satisfaction to me. I was a part of a vast new undertaking, a new departure in American foreign policy that proved to be highly successful in containing international communism at a critical time. I felt that my personal contribution made a real difference then, as it did later when Greece and Turkey were brought into NATO. I also take a great deal of personal satisfaction in the resolution of the oil controversy in Iran following the ouster of Mossadegh. Not that I played a major role but because I was a significant part of a mechanism that brought about great things. In my initial assignment to the Middle East as a part of the Anglo-American Middle East Supply Center, we were working with the British in war-time operations that were of considerable importance to them and to us. I claim no credit for miracle cures, but I did feel that I was an important part, however small, of a machine that was highly successful in achieving war-time objectives in that area.

And so it is with the Foreign Service, generally, which on the whole has done an enormously good job, has served American interests and purposes extremely well. Being a part of that. That has given me great satisfaction, but never more than during the period of several years in which I served as Assistant Secretary of State in charge of one of the most active bureaus in the State Department. During my term of office we dealt with a couple of dozen crises of various degrees of importance and danger, and I had the satisfaction of feeling they generally were well-handled. Certainly President Eisenhower and Secretary Dulles made me feel so. It is good to be able to say after all those years that I was a part of it, that I was glad I was a part of it, and that I feel I made some useful contribution.

Interview with William M. Rountree
September 20, 1989
Conducted by Niel M. Johnson, Harry S. Truman Library [link]

ROUNTREE: I was unaware that any less attention was focused on Greece and Turkey and Iran as a result of the Korean situation. But events in those countries, such as the end of the guerrilla war in Greece, the withdrawal of Soviet forces from Azerbaijan, and diminished pressure on the Turks resulted in less public attention being focused on that part of the world and those particular situations. But I don’t think the essential purposes and objectives of the Soviets had changed.

Q: Apparently, we did not have plans for military intervention in the Middle East for the first two years of a general war. Were we not still kind of relying on Great Britain to be the policeman there in the Middle East? Were we still relying on them more than upon ourselves for any direct military intervention?

ROUNTREE: We were aware that the British had a continuing interest and responsibility in many of the countries of the Middle East during this particular period. The results of the war and the changed position of the British were, however, evolving.

Q: Did you have to coordinate much with the British or did you communicate and talk to them a good deal?

ROUNTREE: There was relatively little coordination with the British with respect to the Greek-Turkish aid program, although we were always in touch on important aspects. In other aspects of the Middle East, consultation with the British in greater depth was necessary and desirable. For example, problems in Iran included disagreements between the Iranians and the British with respect to the Anglo-Iranian Oil Company.

The Iranian Prime Minister at that time, a gentleman by the name of [Ali] Razmara, was attempting, with little success, to negotiate changes in the Anglo-Iranian Oil Company agreement.

We were concerned that the British and the Iranians should come to an agreement because we felt this was terribly unsettling with respect to the security of Iran. We consulted with the British on a regular basis, with respect to all matters relating to Iran.

During this period Razmara was assassinated and there ensued a series of government crises, in which one Prime Minister followed another. At one point the Shah’s closest associate, Hossein Ala, was named Prime Minister but remained in office for a relatively short time. Meanwhile, pressures from the Iranian parliament, led by Mossadegh, increased.

At last the Shah felt compelled to name Mossadegh as Prime Minister, whereupon Iran’s dispute with the British became critical. Mossadegh nationalized the oil company, and diplomatic relations with the British were broken. So, during the entire period in which Mossadegh was Prime Minister, and in which our concern with Iran greatly intensified, we were in constant touch with the British and made a number of efforts to bring about some kind of solution. Indeed, in an extraordinary move, President Truman sent Averell Harriman over in 1951 to try to solve the problem. I went with Harriman.

Q: How did that operate then? What was your experience with that Harriman mission?

ROUNTREE: I had very great respect for Averell Harriman, and felt that he made a valiant effort. I was at the time Director of the Office of Greek, Turkish and Iranian Affairs. In addition to myself, Harriman took along an oil expert by the name of Walter Levy, and Vernon Walters, who served as interpreter but was considerably more than that. We spent a number of weeks in Iran, during which Harriman had a series of talks with Mossadegh. Eventually it was arranged that we would be joined in Tehran by a specially appointed British delegation. At various times during the course of our meetings with Mossadegh, we felt that some progress was being made, but in the end the mission failed.

We returned to Washington, but our very strong efforts continued from there under the direction of George McGhee. George later had many hours of talks with Mossadegh in Washington and Iran, but both of us left Washington in 1952 without having found a means of bridging the gap between Mossadegh and the British. George went to Turkey as Ambassador and I followed shortly after his deputy. For the time being I was out of direct touch with the Iranian negotiations.

The Eisenhower administration took office while we were in Turkey. George left Turkey and Government service temporarily, later to return in the Kennedy Administration. I was transferred from Ankara directly to Iran in 1953, at the time of the confrontation between Mossadegh and the Shah, in which the Shah was forced to leave the country. The Shah returned to Iran after a successful counter-revolution in which the Mossadegh forces were ousted.

Q: You not only coordinated with the British but apparently you were in frequent touch with American oil representatives, with American oil industry leaders. I notice, for instance, in May 1951, that you and Mr. Ferguson representing the GTI, as they abbreviated it, were involved in a discussion of the Anglo-Iranian Oil Company problem with the U.S. oil company executives operating in the Middle East. [Vaughan C. Ferguson] My impression is that the American executives of oil companies operating in the Middle East were taking a harder line than the State Department in terms of nationalization, that is in opposing nationalization, and therefore perhaps they were a little more oriented toward the British approach which some have characterized as very stubborn or even intractable. What was your feeling about the British position at the time in these controversies?

ROUNTREE: It’s fairly easy in retrospect to say the British should have done thus and so, and even at the time we felt that they could and should have made a number of concessions to the Iranians and averted the crisis which was extremely expensive to them as well as to Iran. They were always prepared to make concessions, but never quite soon enough; usually they were six months behind.

I don’t believe it is true that the State Department was less concerned about nationalization particularly when the effect was expropriation. Our concern about expropriation was always very firm. Nationalization with effective compensation was one thing; expropriation was another.

American companies, although there had been feelers put out by the Iranians from time to time, were concerned that they should do nothing to undermine the position of the Anglo-Iranian Oil Company. Above all, they wished to avoid any situation which would make it appear that nationalization would pay off. Once the AIOC’s concession was cancelled and the Iranians took over the oil facilities, the oil operations in Iran came to a virtual standstill. The international oil community was not willing to assist in carrying out nationalized oil production in Iran in the absence of British concurrence.

In the confrontation between the Shah and Mossadegh it appeared initially that the Shah had lost. Revolutionary forces favoring the Shah then threw out Mossadegh and his people. When the Shah returned . . .

Q: Did you have anything to do with Kermit Roosevelt and his operation?

ROUNTREE: Roosevelt is a long-time friend of mine with whom I had official contact over many years in matters related to the Middle East. His involvement in Iran before I was assigned there; I was in Turkey. However he did come to Iran from time to time while I was there after the counter-revolution which brought the Shah back. The circumstances in which the Shah returned were described, I think, in some detail by Loy Henderson.

There was a demonstration in the center of Teheran by a sports club, strong men who exercised with chains and clubs and that sort of thing. They compete with other clubs, sometimes publicly. In this particular appearance in public they suddenly shouted pro-Shah, anti-Mossadegh slogans, and were joined by others in the street. The numbers soon became overwhelming, and the Shah’s supporters eventually took over direction of the crowds. To make a long and extremely interesting story short, Mossadegh’s people were simply overwhelmed. General [Fazlollah] Zahedi, who had been in hiding, emerged to assume leadership, and the Shah was returned from his temporary exile. While this was an Iranian manifestation, it was greatly facilitated by aid and advice provided by the CIA.

Once the Shah was back, and the Government under General Zahedi was in operation, the first order of business was to get the British back in and oil production restored. The British Charge’ d’Affaires arrived fairly soon after the Shah. As I said, I was transferred from Turkey to Iran as deputy chief of mission under Loy Henderson, who at that time was American Ambassador in Iran.

Q: During about two years there was very little oil produced in Iran. American oil companies were refusing to buy their oil, since they were boycotting Iranian oil. Was there an attempt by the Soviet Union at that point to try to fill in this vacuum? Do you know of any attempts by the Soviet Union to move into that situation?

ROUNTREE: Actually, there were not only attempts by the Soviet Union, but there was considerable interest on the part of Mossadegh in the Soviet market and marketing facilities as an alternative means of selling his oil. As it turned out this was quite impractical. Transportation was always one of the reasons. Once conditions were established in Iran whereby negotiations could take place, it became clear that the negotiations would not include resumption of the old relationship with Anglo-Iranian. That concession had been cancelled by Mossadegh, and would not be restored by the new government. The possible alternatives included the creation of an international consortium, consisting of companies from various countries including Britain and the United States.

The consortium approach having been agreed upon, a series of enormously complicated consultations took place. Negotiations among a number of American oil companies occurred under arrangements assuring non-violation of anti-trust laws; extensive consultation between the American oil companies and the U.S. government were necessary; arrangements were concluded between the American oil companies, the Anglo-Iranian Oil Company and the British government. All of these entities had to negotiate with the Royal Dutch Shell and the French companies.

The way was then cleared for the ensuing negotiations between the consortium and the government of Iran. All of these were enormously complicated, and many aspects created wholly new approaches in international oil arrangements. For this situation, President Eisenhower and Secretary Dulles asked Herbert Hoover, Jr., who had considerable experience in oil matters, to serve as a special advisor. He came to Iran and provided an enormously useful function in the U.S. government’s relationship to the consortium.

Q: You think he was effective in that job?

ROUNTREE: Very effective. He was highly regarded by the representatives of the oil companies and the Iranian government. His operation was very useful as far as Loy Henderson, our Ambassador, and I as deputy chief of the mission, were concerned. He so impressed President Eisenhower and Secretary of State Dulles that he as asked to serve as Undersecretary of State.

The negotiations were headed on the consortium side by Howard Page, a vice president of Standard Oil of New Jersey, who was assisted by a battery of lawyers and specialists from all of the companies involved. They finally hammered out an agreement which provided the basis for the resumption of Iranian oil production. At that time, and in those circumstances, the agreement was, I think, about as good as could have been reached.

Q: Was that a 50-50 arrangement, between the companies and the host nation?

ROUNTREE: Essentially, but I don’t remember the precise financial division. I do know that it was a formula which would enable the American and other oil companies involved to accept nationalization without regarding it as expropriation. It was a mutually acceptable arrangement.

Q: A satisfactory arrangement for compensation.

ROUNTREE: And it resulted in a return to full production. This all took place during the Eisenhower administration and has gotten us into areas beyond the Truman administration.

Q: Was the Anglo-Iranian Oil Company still a key factor, or a key player, in this arrangement?

ROUNTREE: As one of the participants in the consortium, yes. The consortium initially consisted of five American companies, plus Anglo-Iranian, Royal Dutch Shell, and the French company.

Q: So all those companies now brought technicians into Iran to operate and to explore for new oil. Also at the same time, we had a Point IV program going in Iran, which presumably was entirely separate from the oil.

ROUNTREE: It had nothing to do with oil. In addition to settlement of the oil problem, we had from the outset of the Shah’s return, new and rather vital relationships with him. We had had a Point IV program in Iran for several years while Mossadegh was in office. It was useful then in maintaining American influence. After the Shah’s return it was more successful in carrying out an economic development program.

There had been in operation in Iran for a number of years, an organization of American specialists and advisors known as Overseas Consultants. This group provided the Shah with material for his various development plans, usually on a seven-year basis. A great deal of thought had been given to Iranian development, and with the resumption of oil revenues following the consortium agreement, Iran had considerable resources to devote to those programs.

Q: Had Point IV helped them weather that period where they had virtually no oil revenues? Was it Point IV that helped them bridge that gap, and were we giving them other aid during this period, direct aid?

ROUNTREE: During the early stages of the Mossadegh regime in when we were making great efforts to encourage a solution of the oil controversy between Iran and the British, we were also trying to create a situation in which American influence in Iran could be more constructive. We undertook, when money was available under the Point IV program, to carry out an economic mission working directly with Mossadegh and his people. This mission was under the leadership of William Warne, who I think had an interview here.

Q: Yes.

ROUNTREE: Because of the importance of Iran and the complications of the Iranian situation, it was decided by the administration to ask Henry Grady, who had been enormously successful in Greece, to leave Greece and go to Iran as American Ambassador. It was hoped that he could employ in Iran some of the experience that he had in Greece.

The difficulty from the outset of his mission in Iran was that, whereas in Greece he had considerable resources under the program of aid to Greece and Turkey, he had limited resources in Iran. Point IV was a relatively small program at that time and provided minimal funds for capital investment, budgetary assistance and that sort of thing. We endeavored over a period of many months to negotiate Export-Import Bank loans to Iran. Even if we had been successful in doing so, it would not have provided the kind of resources or the flexibility necessary to be of very substantial aid in bolstering the Iranian economy. It can be said frankly that the efforts in this direction fell far short of success, though our technical aid was of value in the long run.

At the same time, with the lack of oil revenues, the currency printing presses in Iran continued to operate overtime. Inflation set in. Economic predictions were that the Iranian economy would collapse in six months, in eight months, a year, or whatever time the evaluating economist might have established. It never collapsed. It’s a very primitive economy in many respects, and it held together as long as Mossadegh was there.

When the Shah returned to power with the government under Zahedi, they began from a very low economic level and with many pressing economic problems. Those problems could be solved only with far more resources than could provided under our own limited aid programs. The economy urgently needed the resumption of revenues from the oil operation. When they did resume following the consortium agreement, Iran was in a pretty good financial position.

There is no question that over a period of time the Shah and his various governments devoted very substantial resources to economic development. For example, they provided impressive resources for education, including the sending of Iranian students abroad for higher education, tens of thousands each year. It is also true that they devoted great resources to military purposes. While military expenditures are certainly legitimate, there has been criticism of the Shah for misusing oil revenues to build up his military forces to an excessive degree. I’m not at all sure that in the circumstances all of this criticism was justified, taking into account the security threats which Iran faced.

Q: Well, we did not apparently do with Iran what we had done with Greece and Turkey, that is, we did not make massive grants of economic and military aid in the late 1940s or ‘50s.

ROUNTREE: No, we had very limited funds. This, I might say, was one of the great frustrations for Henry Grady. He could perceive very useful American influence in Iran, provided we had resources to assist the Iranians in the achievement of their objectives. But unfortunately, we simply were never able to provide that level of aid.

Q: But how about the Iranian society itself? Was it not a feudal type society with some very large landowners, many of whom were absentee landlords, living in luxury in Switzerland.

ROUNTREE: Yes.

Q: We were concerned about the Tudeh party and, you know, Communist influence, but did we pay sufficient attention to the Mullahs, the grassroots Islamic agitation that was going on apparently? We didn’t seem to pay much attention to that, did we?

ROUNTREE: When you say “we”, do you mean the United States or the Shah?

Q: Well, either, or both.

ROUNTREE: I think the Shah’s primary concern had for many years been far more the Tudeh party, and the Communists, than the Mullahs, the Islamic leaders. He always considered himself able to deal with any kind of internal dissidents. I don’t think many Iranians had realized the extent to which the Ayatollah [Khomeini] might have captured the imagination of so many of the Iranian public when he returned and took over.

Q: Was Khomeini the top religious leader there in the 1950s when you were there?

ROUNTREE: No, he was not, in the ‘50s. There has been for many years criticism of the Shah from the religious element, but it never manifested itself in critical proportions until shortly before the Shah fell. It might be that if the Shah had not been in ill health, if he had not become weakened physically, he might have ridden this storm [in 1978] as he had all others.

Q: There were socio-economic changes going on, were there not? Did you notice, when you were in Iran, any resentment by the peasantry, by the majority of the peasants, toward the land-holding class and its privileges?

ROUNTREE: I’m sure there has always been that resentment. Over the years the Shah devoted a good many resources to education. He and his governments made it possible for many impoverished young people to attend the university. When they came to Teheran, to the University there, many of them, we found, were susceptible to blandishments of the Communists, the Tudeh party. Many of them become Communists. During the same period, thousands of Iranian youth were sent abroad, educated abroad. A large number of those have returned to Iran and became members of the Communist party.

Now, this may answer your question as to whether there has been, over the years, substantial resentment on the part of the youth of Iran to the landowners and other members of the privileged class. It was often said that the reason they do become Communists was that once they were educated, they realized that their possibilities within the economy and the social structure were extremely limited, and they looked for other ways of achieving their aspirations.

Q: As far as public education is concerned, it seems that something like 90 percent of the Iranians were illiterate. In other words, there was no local education except perhaps for the Mullahs who taught religion. Is that true?

ROUNTREE: I don’t know the exact percentage of illiteracy, but it was very high.

Q: So the Shah’s investment in education was mainly at the upper levels, it seems. Is it true that almost all of the oil revenues were used to run the government in Teheran, and that not much of that revenue ever got out to the villages?

ROUNTREE: This is a criticism that has been leveled against the Shah, I believe to an exaggerated degree.

Q: Did you notice that when you were there in the mid-‘50s?

ROUNTREE: When I was there in the mid-‘50s there were efforts being made to carry out development programs under the seven-year plan. It is certainly true that the vast majority of the resources available to the Shah and to his governments were spent for governmental programs which were not getting all the way down to the villagers in the most remote regions of Iran.

Q: About 89 percent of the people lived in the villages, didn’t they?

ROUNTREE: Yes.

Q: Then, after your service as Counselor and Deputy Chief of Mission in Teheran from 1953 to ‘55, you became Deputy Assistant Secretary of State and Assistant Secretary of State for Near Eastern, South Asian and African Affairs from 1955-59. So you were still working with those problems apparently in what was called the “Northern Tier.” Was that term used in the State Department in those days? Did they refer to that as the Northern Tier, those three countries?

ROUNTREE: Occasionally.

Q: Was that still the focus of your attention— Greece, Turkey, and Iran?

ROUNTREE: No. During my service as Assistant Secretary of State, my concern was broadened considerably. I was responsible for a vast area which included the Near East—the Arab states and Israel.

Q: The Suez crisis, for instance, and Egypt.

ROUNTREE: Yes, my area also included South Asia; that is, Afghanistan, Pakistan, India, and Ceylon.

Q: Did that include Indochina?

ROUNTREE: No. My area also included the continent of Africa and GTI—Greece, Turkey and Iran. Certainly, while the matters with which I was concerned as director of GTI, and later as deputy chief of our Embassies in Turkey and Iran, continued to concern me, I had other problems as well, including the various facets of the Arab-Israeli dispute; the Cyprus problem; difficulties between India and Pakistan; the disputes between Pakistan and Afghanistan; various crises on the Arabian peninsula; and then the problems of the emerging states of Africa.

Q: Had your hands full.

ROUNTREE: Yes, I was concerned with various parts of a very active region.

Q: That takes you up to 1959, and then you became Ambassador to Pakistan in 1959-62. Was that when Henry Byroade was also our Ambassador in Afghanistan?

ROUNTREE: During part of my period in Pakistan, Byroade was Ambassador in Afghanistan, yes.

Q: And there was some contention, was there not, between Afghanistan and Pakistan over Pushtunistan.

ROUNTREE: Yes. Actually during the latter part of my stay there there was some military conflict between the two countries. A long-standing argument between Pakistan and Afghanistan erupted and we exerted great efforts to bring about a peaceful settlement.

Q: Well, I suppose we should just summarize quickly too that you then went to Sudan in 1962 and were there until ‘65 as Ambassador, and in South Africa from 1965-70 and in Brazil from 1970-73. Did you retire then in ‘73?

ROUNTREE: I retired in 1973.

Q: Okay, just looking back quickly again, the Iranian situation, of course, is certainly one oof the most difficult and one of the most important problems you had to deal with, at least until you became Ambassador to Pakistan. Did you feel that we really had much influence with the Shah, and if we did have such influence, do you think we, in hindsight at least, were giving him proper advice?

ROUNTREE: We always had influence with the Shah but not compelling influence. That is, the Shah always valued his relations with the United States, and enjoyed, during his life, remarkably good relations with every American administration. Many people overestimate the extent to which American influence can be effective in any given country. Our advice to the Shah over the years could have been better, but on the other hand, if the Shah had adhered to the advice which he received from us, Iran would have been in a much better position at the time of the his demise. In other words, I do not go along with the idea that his failure was the result of the lack of good advice from the United States.

Q: Does that include land reform? Did we advise him to go much farther than he did with land reform?

ROUNTREE: We have given advice to Iran, most of which has been good. The extent to which advice is taken, and acted upon, depends upon many circumstances, which can be evaluated only by the leaders of the country concerned.

Q: Because of his strategic position, was it not a constant concern on our part that they not be attracted into the Soviet orbit? Because of this constant concern about their strategic position, did we tend to bend over backwards to accommodate the leadership in Iran because of its strategic position?

ROUNTREE: I don’t think the United States ever felt that there was any real danger of the Shah becoming unduly influenced by the Soviet Union, but every American administration clearly attached great importance to maintaining a good relationship with Iran.

Q: Did we think that another Mossadegh could get into power, or the mullahs in particular? Did we foresee what the mullahs were going to do at all?

ROUNTREE: I don’t think anyone could have predicted the events as they actually transpired, but everyone having responsibility for relations with Iran over the years has been aware that there was a very delicate situation related to the religious element, and there were various potentialities that could result in situations inimitable to United States interests.

Q: For instance, didn’t they have a very large increase in population partly as result of Point IV programs which reduced disease? Didn’t the population of Teheran in the 1950s virtually double, and this meant a high unemployment rate and many dissatisfied youth apparently coming into Iran from the countryside, from the villages? Was that a problem that became fairly explosive later on?

ROUNTREE: Well, one of may philosophize on this sort of thing. The population explosion in Iran derives from many of the same reasons that populations in under-developed countries throughout the world increased when you carried out public health programs to eradicate disease, food programs to avoid starvation, and effective measures to limit wars, all of which traditionally have limited population growths. The greatest increases in population have taken place in underdeveloped countries. In Africa, for example, the population explosion is tremendous.

In Iran not only did the general population increase, but larger numbers of people came to Tehran and other population centers seeking to benefit more directly from the development programs which were being carried out.

Q: Did we ever feel free to advise the Shah or the Iranian government on birth control?

ROUNTREE: I don’t really know.