Iran lies in the long space between the two areas — Europe and the Far East — where American interest has been centered since the war. I think it warrants more attention than we as a Nation have been giving it. Iran is a country about the size of our Southwest, and, like it, rather sparsely settled by around 15 million people. Most of these people are farmers living in poverty and illiteracy in the few parts of the country where there is now sufficient water for agriculture. The only industry of any size is oil which is located along the Persian Gulf. The country has great potential wealth. Its oil reserves are tremendous: there are good indications of other minerals and the land will blossom like our Southwest if the use of farm machinery, irrigation, and modern techniques can be developed. And the Iranian, though now untrained and unskilled, is a hard and intelligent worker.

Unfortunately the economic, social, and political structures of the country are so undeveloped that its wealth and manpower yield only a small return. One survey showed that the average per capita income of the rural population — including what the peasant grows for himself — is only the equivalent of about $50 a year. The relationship of peasants to landlords is reminiscent of feudalism. While the forms of democracy are observed, only a small fraction of the people have yet been brought into participation in it. These blunt facts I mention not in a spirit of criticism, but to show how much needs to be done.

Iran with its oil, warm-water ports, and position as a buffer area offers a glittering target to the Russians. And to make it easier for the Soviets Iran possesses social unrest — and a 1,500-mile border with Russia.

Russia’s pressure on its little neighbor has two prongs — fear and promise. As to the first, the Russians need do nothing. The fear that the Russians will sweep down on them grows naturally out of the historical attitude of Russia toward Iran, and, more recently, out of Russia’s actions in Eastern Europe, in the Far East, and in Iran itself in 1945. This fear is deep and almost silent.

As to the second prong — promise — the Soviets are quite active. Through propaganda from across the border and through the Communist-inspired Tudeh Party within the country, there is a constant campaign along the familiar lines: “You are being exploited by the Anglo-American imperialists and by the corrupt landlords. Communism would end your poverty and oppression, and give you equality and a decent living.”

What has been the American answer to this pressure? Frankly a small one.

We delivered surplus arms under a $25 million loan in 1948 and 1949, we began free deliveries of arms under MDAP in 1950. [Mutual Defense Assistance Program] The initial amounts under MDAP have been modest in comparison with allotments to European countries, but have been as large as our American military advisers thought the Iranian Army and Air Force could usefully absorb. Under guidance of these American advisors the armed forces have shown considerable improvement in the last several years, and have attained greater skill in the handling of modern equipment.

The armed forces are now capable of using increased amounts of military equipment.

The Iranians have no intention of building up an Iranian Army which can unassisted repel a full-scale invasion. The primary purpose of the Iranian Army is to safeguard this little country against the type of satellite attack used in Greece and Korea, and to guard against internal disorder fomented by foreign enemies. It is hoped that in time to come this army will be a strong partner in the world-wide defense of the free world.

On the economic side our material assistance to the country has consisted only of a small point 4 program. [Point Four] This is a village program designed to improve education, agriculture, health, and sanitation in the rural areas where 80 percent of the people live. The work is done through demonstration villages with American and Iranian technicians in agriculture, irrigation, rural education, public health, and sanitation showing farmers how to improve their production and standard of living.

We Americans who live in Iran — and I am speaking not just of Government officials but of businessmen, missionaries, journalists, doctors, and soldiers — all agree that education in the practical things of life, such as the village program gives, must come before democracy can take deep root in the country. The Iranians themselves, whether they be our friends or critics, educated city people or illiterate villagers, are enthusiastic about the program.

The third part of our American approach is the information program of USIE. [United States Information and Educational Exchange] Since this essential program is being presented to you at another time I will not go into it here.

So much for our efforts up to now. And now for a few comments.

There is a unanimous feeling among Iranians that our military aid should be accompanied by economic aid, and if forced to choose between the two, most Iranians would take the economic aid. Their reasoning is that an army is of very limited value if its country is weakened by poverty, illiteracy, and lack of strong social and political structures. I think we Americans agree with this principle. We have given it public recognition by assisting in the rebuilding of the European economy through ECA before embarking on a military program under MDAP. [Economic Cooperation Administration] However, due to accidents of timing our military aid in Iran has preceded our economic aid, thus subjecting us to some well-deserved criticism. In our point 4 program we have begun to correct this, and the proposal now before you — balanced between economic and military — will carry us forward along the lines thought best by both Iranians and Americans.

In former consideration of economic aid for Iran the objection has sometimes arisen that the aid might be misused. I would like to meet this objection head-on. The Iranian government, it is true, is less able to administer an aid program than the governments of Western Europe. But this is not the point. We are granting aid where the need is greatest and not just where it will be administered the best. In fact, the same conditions which create the need for aid may also create a propensity for less efficient administration of the aid. If we hang back because the government is not all that we desire, we get nowhere. And furthermore, I am confident that we can help Iran to administer any economic aid so that it will be well spent.

In describing what our program has been I have in effect described what we plan our program to be in the future. The funds which we are requesting now will be used to carry on our past program with one modification. On the military side to attain the objectives stated we will use the money in roughly equal parts for new equipment, spare parts, and ammunition. On the economic side the technical-assistance program will be greatly expanded so that we will be reaching a sizable segment of the country rather than trying to do the job through a few demonstration centers. The new element in the program is that some funds will be used for capital improvements wells, agricultural machinery, sawmills, and similar projects. This part of the program is really an extension of the technical aid, since the capital expenditures will be in close connection with our village instruction.

In addition to telling the Iranian farmer that a well or a steel plow is a good thing, we will make available through his Government a few wells and plows so that the demonstration will be practical as well as theoretical. Our capital-improvement program will be modest and, while it will produce some direct benefits in increased production, its primary purpose will be to teach, to show what can be done and to lead the way.

Iran is in a period of reawakening and nationalism. She is trying to catch up with the Western World in dozens of fields, and in this she needs help. Furthermore — and this is important — she needs some concrete demonstration of American interest in her welfare at this critical moment. She does not want a heavy hand of direction from any outside power, but she will welcome technical assistance, educational help, and engineering advice given in good spirit. In the last century the United States has gained a reputation in Iran for good intentions and impartiality. We have an opportunity to continue this reputation and to assist Iran to develop into a healthy partner in the free world.