The primary American technical and economic aid program in Iran, the Point Four agreement, was signed in October 1950 as part of the International Cooperation Administration (ICA) or US Agency for International Development (AID). It was also administered under the titles of Technical Cooperation Administration (TCA) and United States Operation Mission (USOM). This organization focused on technical aid in the fields of agriculture, health, and education.
Dual use projects such as upgrading of communications capabilities to provide a nationwide telephone and teletype telecommunications network were also supported.
According to the program’s first director, William E. Warne
Point Four was designed to help strengthen Iran’s economy and to help underwrite her political integrity.
The State Department went further, however, noting the relationship between Point Four and American private investment.
As in Taipei, President Truman described a symbiotic relationship between the technical, managerial, and scientific aspects of the program and the creation of productive enterprises.
So far as the administration was concerned, MAAG and Point Four were related not only to military assistance and rural improvement but also to American capital investment which would benefit US corporate interests.
The State Department, on the other hand, saw things differently. A State spokesman (in 1950) asserted that:
The primary objective of our policy is to prevent its domination by Soviet Russia, and to strengthen its orientation toward the West. Our policy lays the first emphasis on economic and social development to strengthen the country’s resistance to communism. Principal reliance in this connection is placed upon the Iranian seven-year program which is expected to draw largely upon the country’s own financial resources for implementation. American aid to Iran in the economic and social fields, as now planned, will be confined to technical assistance.
By 1954, the US was claiming success noting that:
. . . if it had not been for what the MAAG and the Army mission had done in creating confidence and friendship among the Iranian armed forces, that Iran today would be behind the Iron Curtain.
Early claims of success were misleading, however, for, by 1956, the effort in Iran was charged with financial irregularities and the misuse of funds. In addition:
the sudden transfusion of American dollars and advisers into Iranian society, coming after the overthrow of Musaddiq and the signing of the 1954 consortium agreement, understandably alienated many Iranians.
In essence, the Mosaddegh crisis serves as a breaking point regarding US support for Iran. From 1949 to 1953, total military assistance to the shah amounted to only $16.7 million in contrast to the period from 1953 to 1961 when Iran received $436 million. There were changes in economic aid also, with receipts from 1949 to 1952 totaling $16.5 million but jumping to $611 million from 1953 to 1961. (Of this amount, $345 million was grant, and the rest was loan.)
While aid to Iran had increased since the earliest Cold War years, despite Soviet aggression in Azerbaijan and the Kurdish regions, Iran had not received assistance on the scale of that offered to Taiwan. Apparently, during this period, Iran was not considered to be of special importance to the superpower. Instead, America’s attention was focused on Western Europe, the Eastern Mediterranean, and East Asia.
A survey by the Joint Chiefs in mid 1947 listed sixteen nations that were important to US security. Iran’s name was not among them.
In contrast, after the Mossadegh crisis, in addition to greater amounts of military and economic support, Iran was also able to acquire surplus agricultural sales.
It was agreed that some of these monies would be used to procure military equipment, materials, facilities, and services for the common defense as well as to extend loans to Iran to prompt its economic development. Accordingly:
US military aid to Iran increased sharply between FY 1956 and FY 1957 (which ended on June 30, 1957), enabling Iran’s military expenditures to increase by 69 percent. This sharp increase in military aid was offset by a reduction in economic aid. The number of US military advisers in Iran also grew rapidly after 1956, as did the number of Iranian military personnel being trained in the United States. Of the $240 million in US military aid earmarked for Iran in early 1957 for FY’s 1958-60, 47 percent was to be spent on military equipment and supplies, including more F-84G fighters and other aircraft, naval vessels, tanks, armored cars, trucks, artillery, communications equipment, small arms, and a thirty-day supply of ammunition. A further 39 percent was to be spent on military construction projects, including access roads, barracks, and airbases in Tehran, Dezful, and Qom. The remainder was earmarked for training and shipping costs.
On December 14, 1959, President Eisenhower visited Tehran, praising the contribution of Iran to regional stability in the Middle East and the country’s solid friendship with the US.
Expanded aid in the late 1950s, followed by the 1959 agreement, succeeded in ending a thaw in Soviet-Iran relations. After Iran’s accord with the US was finalized, Khruschev engaged in personal attacks on the shah, followed by a propaganda attack against Iran. These actions constituted a “war of nerves” which “dominated Soviet-Iranian relations most of the time until 1962.”