Rescue Operation

Twice last week, U.S. Ambassador Loy Henderson closeted himself with Iran's new Premier Fazlollah Zahedi for discussions of "urgent matters," meaning dollars. Then he hurried back to the big, red brick U.S. embassy in Teheran, where his staff, in shirtsleeves, worked full speed. Messages winged between Teheran and Washington, between Washington and London. The West's diplomats faced an opportunity they had muffed once before. The challenge: to convert Iran's wondrous reprieve into a sustained survival. The need: to support Iran's economy until it can support itself.

Twenty-eight months of Mossadegh had left Iran a mendicant, left its finances $544 million in the hole, inflated its prices perilously, and set the country running into debt at the rate of $5,000,000 monthly. Iran needs $200 million in the next two years, $10 million forthwith.

The Handout. Where would the money come from? The commonsense answer: from the sale of its oil. But this involves a matter that no Iranian politician dared talk about yet, an agreement with Britain. Iran had ousted Mossadegh, but not outgrown him. Even the mild-mannered Shah last week said: "Let there be no mistake. There has been no change in the national movement."

Iran's survival therefore depended directly on a U.S. handout. President Eisenhower, pleased at the turn of events in Iran, was yet aware that they were also going to play hob with his attempt to cut down foreign spending. The State Department tentatively decided that the best it could offer at the moment is about $20 million out of a special emergency MSA fund. Before the U.S. threw Iran this life preserver, it wanted to discuss the rescue operation with Britain. Called in, British Ambassador Sir Roger Makins said that he realized the importance of keeping Iran in the anti-Communist camp. Still, it would not do to advance aid so quickly or generously as to relieve Iran of the pressing necessity to negotiate the oil issue with London. The British therefore strongly endorsed the idea--one of several considered in Washington--of doling out U.S. aid to Iran month by month and keeping up the pressure for a new oil deal. The British counseled moving slowly.

The Hangover. But how much time is there? From Teheran. TIME Correspondent James Bell reported: "There is increasing pro-Mossadegh talk now that the shock of the coup has abated. No one I've talked with outside the Cabinet and court had a bad word to say about the old man. He still enjoys enormous personal popularity as one of the country's most honest, sincere and courageous patriots. One western-minded Iranian, critical of Mossadegh in the past, now says: 'There were some very bad men leading Mossadegh astray. But compare them to some of the people Zahedi has just named to his Cabinet and they don't look so bad.' "

General Zahedi still has things under control: Mossadegh's chief lieutenants have fled to the hills, and the underground Tudeh Communists to their holes. But, though he has ended chaos, Zahedi must now restore stability. One who talked fairly confidently of the future was the young Shah, back on his throne. He told a group of Mullahs: "While returning from Rome in my plane, I had a feeling that I was a completely new man in every respect."

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