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180. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, November 2, 1966, 1150Z. /1/Source: Department of State, Central Files, POL 7 US/HARRIMAN. Secret; Priority; Limdis. Repeated to Paris for Harriman and to Moscow. 1964. Shah-Harriman Talk. 1. Noting he coming at behest of President Johnson, Ambassador Harriman in two hour session evening Nov. 1 outlined to Shah purport of Manila Conference. He stressed it was impressive demonstration of unity of purpose of seven countries with troops fighting in Vietnam to repel aggression. At same time conference concentrated on pacification program as well as determination for negotiated peaceful settlement. Harriman stressed we want South Vietnamese left free to make their own decisions and referred to six months withdrawal pledge. He noted that appeals for US to stop bombing come from same sources which prompted 37-day pause year ago with only result being increase of North Vietnamese infiltration and military build-up. He added US ready cease bombing if there any indication willingness on part of NVN achieve just settlement. Unfortunately, such indications lacking. Meanwhile, USG and its six fighting allies determined neither to escalate the conflict nor to shirk their responsibilities. 2. Shah said USG has no alternative but to continue what it is doing. He reviewed development his own position. In March 1965 during trip to South America he stressed there is clear case of aggression against South Vietnam and USG doing right thing in taking military action to repel it. In June 1965 during his visit to Moscow Shah stressed if Chinese not stopped by Americans in Vietnam all of Southeast Asia would be overrun and in any case Soviets contradict themselves by endorsing Nasser's military actions in Yemen. This past summer in East Europe Shah had stressed that US doing job UN should be doing, that it is unfair and illogical to ask one party to withdraw unilaterally, and that attention should rather be focused on getting all parties to peace table. Shah cited improved situation in Indonesia as tremendous success and reason why solution in Vietnam could be negotiated settlement rather than military victory. 3. Harriman pointed out that there is no chance of Communists gaining victory and in fact their capability and morale being steadily reduced. Nevertheless Peking and Hanoi give no signs wanting peace, apparently delighted keep US bogged down and hoping one day Americans will become discouraged and pull out. Since there no chance of securing Peking's support for peace, chief hope lies in getting Soviets to bring decisive influence to bear on Hanoi. This hope been slightly reinforced by attitude displayed by Gromyko during his recent Washington talks. 4. Shah said his trips convince him neither Russian nor East European countries want war. They all determined improve welfare their people because their people demanding it. Moreover, Soviets strongly oppose Chinese expansion. He had that day seen report that Hanoi is asking Soviets and East Europeans to provide "volunteers" as envisaged in communiqué after recent Moscow conference of Socialist countries. Shah convinced this Hanoi ploy is inspired by ChiComs to put Soviets on spot. He said President Ayub describes ChiComs as being motivated by intense nationalism. 5. Asked by Ambassador Harriman his impressions of attitudes of various East European countries, Shah said Romanians only ones close to Chinese but this is card Romanians playing in their game with Russians. Despite CPR-Romanian ties, Shah convinced Romanians can have no influence on ChiComs re Vietnam. Only hope is, as Ambassador Harriman had indicated, via Russian influence on Hanoi. Shah said he had seen another report to effect special Hungarian envoy is en route to Hanoi on peace mission. Shah believes Hungarians, Poles and Czechs so keenly interested in promoting Vietnam peace they might have salutary influence on Russians toward this end. Shah also had strong impression from his East European visits that Poles, and others fear Germans more than Russians and this factor deters them from acting as independently from Moscow as they would like. 6. Ambassador Harriman commended Shah for 25-member medical team in Vietnam and said they doing outstanding job. Shah said he been receiving reports from team and is gratified that they able to assuage suffering, even of some Communist casualties. 7. Ambassador Harriman said Americans delighted that Iran making such fine economic and social progress under Shah's leadership and also believe his developing fruitful relationships with East Bloc countries is useful. Word of caution, however, is in order, Ambassador Harriman said, noting that while communism as a system is no longer marketable commodity, Soviets still actively support "wars of liberation." They not beyond dusting off Tudeh Party one day and causing Shah trouble. Thus while detente with East Bloc is good, it well to keep guard up. 8. Shah fully endorsed Harriman view. Russian objectives he said are historic. He recalled post-war Soviet efforts to get positions in Dardanelles, Libya and Eritrea. Now they seeking bases at Alexandria, Djibouti and Yemen. As far as Iran concerned, Shah said he under no illusions. Daily clandestine broadcasts make clear Soviet designs to oust Shah and his regime. Also indicative are vicious propaganda attacks Moscow is making against Islamic "understanding" concept which Faisal and Shah had discussed. Soviet tactics, Shah said, have, however, changed. Any crossing of Iran's border by Soviet troops would mean world war. Soviets realize this and accordingly are working via Egypt and Syria, both of which wittingly or unwittingly are staging areas for Soviet designs for achieving Mideast warm water ports. Asked if he really convinced Nas-ser under Soviet control, Shah said Nasser doing better job for Soviets in Cairo than if they had "someone there by name of Popov or Litvinov." 9. Shah went on to outline his thesis, developed more fully within last year or so, that it is not wise for country like Iran to consider dependence on even as good a friend as U.S. as "essential part of our defense policy." Great power intervention anywhere these days is "more difficult," (he obviously thinking of Vietnam). It therefore imperative for Iran to develop capability of taking care of itself in deterring or coping with regional threats, even though he must pay high U.S. prices for equipment. Danger, he said, will be at its height within next five years, particularly after 1968 when British withdraw from Aden. Ambassador Harriman agreed that British withdrawal was unhelpful, particularly since expense of keeping British forces in place is relatively small. Shah felt Iran's capability for handling regional disturbance is as much in USG's interest as that of Iran. 10. While agreeing that Iran have adequate self-defense, Ambassador Harriman made strong point of keeping military expenditures down. He stressed that economic development and prosperity are as important if not more so in preservation of Iran's independence and integrity. Shah agreed, provided that minimal defense requirements are met. 11. Shah then launched into his usual argumentation on need for increased revenues from oil consortium in order to maintain 8 percent growth rate for Iran. He noted that while he is told that his demands are exorbitant oil lifting from several other countries are well above 17 percent annual increase which Iran must have. He added that these other countries have small populations and do not know what to do with their excessive incomes while for Iran, which is largest of these countries, 17 percent increase is critical. Ambassador Harriman repeatedly urged Shah to be reasonable and avoid repetition of 1951 "tragedy." Shah said he did not wish 1951 be repeated but he should not be forced into corner. He alluded to proposals which he had forwarded to U.S. via Alam (Embtel 1932)/2/ and expressed hope they would lead way to solution. He noted his request for crude been reduced to 2,000,000 tons. Ambassador Meyer took occasion to refer to likelihood Romanians selling refined Iranian crude to West Germans (Embtel 1952)./3/ Noting this would be self-defeating for Iran, Shah insisted it would not occur but he would check into it. Perhaps safeguard provisions, he said, could be incorporated in any agreements. This portion of discussion was closed with expression of gratification that Shah has taken steps to avoid further public discussion of oil problem so that atmosphere most conducive to reasonable negotiation can prevail. /2/Dated October 31. (Ibid., PET 6 IRAN) /3/Dated November 1. (Ibid.) 12. Shah spoke of his high hopes for Iran's future. Only Japan and Iran have possibility of attaining within next 20 years state of development reached by European countries, he said, adding Iran has more abundant natural resources than does Japan. Ambassador Harriman congratulated Shah on progress made and expressed delight that so many American firms are entering into joint enterprises here, e.g., petrochemical industry. 13. At conclusion, conversation returned to Vietnam. Ambassador Harriman earlier had noted that so many countries privately support U.S. but refrain for domestic political reasons from coming out openly. In departing he referred to De Gaulle's Cambodia speech which demanded US withdraw but demanded nothing of Vietnam. Similarly, Nasser, Indira Gandhi and Tito had just few days ago in New Delhi made similar public demands. Ambassador Harriman pointed out that such public pronouncements, besides not being impartial, have tragic effect of making Hanoi more intransigent. Shah concurred. 14. At beginning and throughout conversation, Ambassador Harriman made clear that purpose of his visit was to exchange views with leader whose special friendship President Johnson and USG have long valued. Shah was obviously gratified. He asked Ambassador Harriman to convey his warm wishes and abiding friendship to President Johnson. 15. Comment: Discussion was everything hoped for. Shah obviously delighted that USG still considers him important friend. Having known Ambassador Harriman since 1942, he was speaking with trusted friend. At times, he sounded almost like Shah we knew in days before present ballyhoo about "independent policy." Under circumstances, this talk tended to bring Shah back to moorings which are deeper than vagaries of current Afro-Asian politics. This does not mean there will be any turning back from Iran's present "independent" posture. But it may mean that swing of pendulum may be a little slower than it has been since Shah's East European visits. All in all, stopover here was decided success. For Ambassador Harriman it was a long day, he having started from New Delhi early in morning, lunched with Ayub, and still having four hour journey to Rome prior to heavy round of talks there tomorrow. We grateful he agreed to this extra task which was accomplished so effectively and look forward to his early return./4/ /4/Harriman's November 28 report to the President on his trip to Iran and nine other countries following the Manila Conference is ibid., POL 7 U.S./HARRIMAN. Meyer
181. Telegram From the Embassy in Italy to the Department of State/1/ Rome, November 3, 1966, 0941Z. /1/Source: Department of State, Central Files, POL 7 US/HARRIMAN. Secret; Limdis. Repeated to Tehran. Passed to the White House on November 3. A November 3 report from Wriggins to Rostow on that day's cables noted the success of Harriman's meeting with the Shah as reported in telegram 2364 from Rome. A handwritten notation indicates that the President had seen the cable. (Johnson Library, National Security File, Wriggins Memos, 1966) 2364. For the President and Secretary of State from Harriman. 1. With Amb. Meyer I had a two-hour soul-searching talk with the Shah in Tehran Tuesday afternoon (Nov. 1). He exposed his hopes and fears on Viet-Nam and he now agrees with your policy to seek a negotiated settlement. The favorable developments in Indonesia have changed his more hawk-like previous views. 2. He takes satisfaction in his new contacts in Eastern Europe but is under no illusion that Moscow would not take an opening of weakness to cut his throat. He no longer fears open aggression from the north but knows that the Tudeh Party is alerted to sieze any opportunity to cause him trouble. He believes Moscow is working through Nasser and now Syria in a flanking maneuver. The foothold in Yemen will be expanded when the British leave Aden through southern Arabia to the Persian Gulf. Iran must be strong enough to face this threat alone without our intervention. However, his military expenditures should not interfere with Iran's economic and social progress to attain a southern European living standard. Iran and Japan are the only two eastern countries that can aspire to this goal. 3. He pleads for our help to make oil companies realize it is more important to increase Iranian oil production than that of the small princely states in Arabia. I urged caution in military expenditures and patience in dealing with oil companies and not to kill the goose. The Shah takes justifiable pride in Iran's economic growth of over 10 per cent per annum for the last two years without rise in cost of living. He was obviously pleased that you sent me to consult him and looks forward to talking with you personally in Washington, hopefully in June. All in all it was a friendly conversation combined with a glass of excellent scotch and ample of Iran's best caviar. Reinhardt
182. Telegram From the Embassy in Iran to the Embassy in Thailand/1/ Tehran, December 8, 1966, 1315Z. /1/Source: Department of State, Central Files, POL 7 IRAN. Secret; Priority; Limdis. Repeated to the Department of State, which is the source text. 2453. For Secretary Rusk. Following subjects may come up in your talk with Shah: 1. Iran's Orientation. Although still publicly proclaiming "independent policy," Shah has no illusions re Commie aims. His visits to East Europe, steel mill project and stepped up trade with Sov Bloc were hailed as new look in Iran policy. Some of glamour seems be wearing off, however, particularly pursuant to Moscow efforts to roil waters during recent Iranian discussions with consortium. Surveillance of Sov Bloc activities here is intensive and some inevitable frictions developing as Iranians and Sov Bloc reps try to do business. You may wish commend Shah for cautiousness in dealing with Sov Bloc and note that reduction in tensions with his northern neighbor is also of benefit to U.S. assuming, of course, that relaxation not accompanied by diminution in long-standing U.S.-Iran friendship. 2. Iran's Stability. Due to economic boom, internal stability is at new high in Iran. Shah deserves good marks for economic and social progress notably Literacy Corps, Health Corps and land reform program. Shah determined modernize Iran a la Europe before he lays down reins. Hopefully he will not bite off more than Iran can chew. Hopefully also future will include political progress. 3. Viet-Nam. Shah will welcome opportunity exchange views on world's number one problem. Privately he supports USG policy but except for little publicized medical team in Viet-Nam he refrains from public support. Because of improved Indonesian situation, Shah has "shifted" his view from firm military riposte in Viet-Nam to negotiated settlement. He probably favors extended bombing pause. He would be particularly gratified if there were useful role he might play in achieving settlement. 4. Oil Issue. See Tehran 2435/2/ re State of play. In general Shah can be commended for his staying within bounds of reason. /2/Dated December 7. (Ibid., PET 6 IRAN) 5. Military. As you know Shah believes Iran must be capable of deterring or coping with regional threats and he thinks this is in USG interest. He been heavily influenced by Viet-Nam and by Pak plight last fall. He has been publicly critical of CENTO (for unfair reasons) but intends continue membership until acceptable replacement available, i.e. greater regional cooperation including hopefully Afghanistan. Without sales talk re CENTO's future, it might be useful to remind Shah that Iran's CENTO affiliation has had value, e.g. $800 million in US military aid to Iran, while permitting Iran's peaceful development, and cause of shift in Soviet tactics. If subject of our military credit sales comes up, you might point out that despite our preoccupations with Viet-Nam USG did quite well by Iran last summer, e.g. first country except Brits get F-4 aircraft, relatively reasonable credit terms despite stringency of MAP supporting funds, etc. 6. Arab Threat. Shah sincerely concerned that Nasserism will emerge on southern coast of Persian Gulf, e.g., overthrow of Kuwaiti regime or some vague UAR extension from Yemen-Aden base after British withdrawal from Aden. As counter, Shah is less interested in retention British power than in building up his own capability. Without arguing potentiality of threat, it may be useful to point out that while adequate self-defense necessary (and we have recognized that) Iran's best bet is healthy economic and social development which will thwart more sinister forms in which threat likely to occur. 7. Cooperation with Paks. Shah has stayed close to Ayub to prevent too close Pak association with ChiComs. Shah may press you for approval of M-47 tank transaction which is part of quiet and small scale effort of Shah to permit Ayub source of supplies other than from Commies. You may wish indicate we realize value in Shah's keeping window open for Ayub but note that our whole policy re Pakistan's military needs is under discussion. 8. Iran-Iraq. Aram will be in Baghdad when you are here. Shah does not expect substantive progress in relations with Iraqis but wants give public indication Iran's friendly disposition if Iraq determined stay out of Nasser's clutches. 9. U.S.-Iran. Relations very good. Main problem is instant transition from large-scale aid to more normal relationships. 10. AID Phase-out. Conceivably the phase-out of AID might be mentioned. Our line is that we are proceeding with a planned AID phase-out in FY 1968 and expect that by November 1967 we will have our mission staff pretty well on its way, although of course we will continue with an orderly conclusion of ongoing programs using Embassy facilities hereafter. 11. PL-480. A proposal for an agreement for 37.5 thousand tons of wheat is pending and is expected to be concluded this month, with another 37.5 thousand tons in January. This is for dollars under present Title IV. It is hoped that rial proceeds will be used for grain storage and processing facilities. 12. As you fly in, big military parade will be concluding in vicinity of airport. Dec. 12 is anniversary of ouster of Russians from Azerbaijan. Meyer
183. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, December 13, 1966, 0800Z. /1/Source: Department of State, Central Files, ORG 7 S. Secret; Priority; Exdis. Repeated to Paris for the Secretary. 2499. Secretary's Talk With Shah. Following are highlights of more than three hours' discussion between Secretary and Shah evening 12th: 1. Presidential Greetings. Secretary said he brought personal greetings from President who is always interested in Shah's views on subjects of international import. Shah asked that greetings be reciprocated and expressed hope that President's health is fully restored. 2. China. Secretary explained that with respect to Viet-Nam Soviets are hesitant to play peace-making role because of their relations with China. At Hanoi there is enigmatic situation but chief obstacle is China. Destruction of culture, except for nuclear science activities, is indicative of bellicose and ultra-nationalistic character of present ChiCom regime. Secretary opined that two ChiCom trends are to be feared: a) increasing militancy; or b) accommodation with the Russians which would again unite these two great powers in drive for world revolution. USG hopes, Secretary said, that both extremes can be avoided and this explains our desire for early stabilization of Southeast Asia. Shah said of two alternatives mentioned by Secretary he would prefer former for U.S.S.R.-CPR rapprochement could only occur if Soviets moved closer to ChiCom policy of belligerence. ChiComs, Shah said, are fanatical ideologists whereas Soviets are adjusting primitive Marxist philosophy to more acceptable system since pure Marxist system has proved failure. 3. Viet-Nam. Secretary reported current situation in Viet-Nam and commended fine work being done by Iran medical team. Re military aspects Secretary emphasized our forces cannot be defeated. He stated USG will persist until a successful outcome is attained for if we fail to do so our commitments elsewhere in the world would in eyes of Communists be worthless. Shah agreed and said US should not be deterred by students and other critics. Secretary pointed out there is growing unhappiness in American public opinion at lack of support by our friends and allies. War in Viet-Nam has changed from organized military conflict to primarily guerilla warfare. Particularly needed is assistance in constabulary endeavors. Shah parried this cue by asking why is there Viet Cong. Secretary said Viet Cong in part result of totalitarian tactics of Diem regime, particularly oppressive propensities of Diem's brother. Shah noted Hanoi is equally totalitarian. Secretary pointed out Diem regime was ruthless enough to alienate people but not as ruthless as Hanoi regime in enslaving the populace. Secretary expressed hope that recent elections, constituent assembly and other developments might lead to more wholesome South Viet-Nam political situation. Shah thought key need is strong leadership. (Secretary has asked Ambassador to follow up with Shah matter of constabulary assistance.) 4. East-West Trade. Shah expressed wholehearted approval of current USG policies for building trade bridges with Eastern Europe. From his visits, he could testify that those countries want increased independence. He cited his efforts to sell oil in East European markets which, he is convinced, are noncompetitive with consortium markets. Secretary wondered whether Soviets and Romanians are truly in need of oil. Shah said Romanians wish to use their high quality crude for sophisticated purposes and in any case the amounts of crude Iran will sell are relatively small. While differing in character, all of the satellites in the Shah's view are loosening their ties with the Soviets despite latter's efforts to perpetuate their dependence. 5. Soviet Arms. Recalling what he described as strong Soviet efforts last summer to sell Iran MIG's and SAM's, Shah reaffirmed his decision not to buy any sophisticated Soviet military equipment. To do so he noted would be incompatible with procurement sophisticated American equipment and would require undesirable influx of Soviet advisors. Shah indicated, however, that active negotiations are in progress with Soviets for purchase of anti-aircraft machine guns, noting Soviet equipment this type less expensive than similar American equipment. 6. Relations With Pakistan. While not agreeing with Pakistan's flirtations with ChiComs, Shah declared firm friendship for Ayub. Shah appeared a bit miffed that Paks recently wined and dined UAR's General Amer. Paks have explained that they need Arab votes on Kashmir question but Shah noted no public pronouncements by Amer siding with Pakistan as over against India. 7. RCD. Without expatiating his complaints re CENTO, Shah expressed wish that RCD could be beefed up as alternative. He would like to see Afghanistan included, perhaps even Iraq. However, Turkey's membership in NATO is stumbling block. Secretary said there no reason why there cannot be interlocking arrangements. Shah's strong view is that Turks in any case are too Europe-centric. 8. Iraq. Shah said Iran has every desire to be on good terms with Iraq and current policy is to be as patient as possible with Iraqis. He claimed 60 percent of Iraqis are Shia and thus specially linked with Iran. There is no reason, Shah said, why Iraq should be submissive to Nasser. 9. UAR. Secretary asked Shah's view whether it better for USG provide small quantities of food to UAR and thereby have some influence on Egyptian behavior or to refrain from providing food supplies and be without any influence. While our achievements had not been great, he said, our PL-480 program had helped US influence Nasser on number of matters, e.g. moderating Nasser re Congo, re Libya and re Arab boycott. Shah said Nasser wittingly or unwittingly serving as Soviet tool and in any case is dissipating his resources on adventures when he should concentrate on doing more for his people. Shah implied that USG food supplies should be resumed only if Nasser gets out of Yemen and stops agitating against King Hussein. 10. Iran Development. Secretary commended Shah for Iran's remarkable economic progress, also for satisfactory resolution of recent oil crisis. At dinner, Shah, PriMin, FornMin and Court Minister Alam spent much time describing successes of what Shah considers his "revolution." PriMin Hoveyda reported GNP increase this year will again exceed 10 percent. To Secretary's request about next steps, PriMin said govt is heavily engaged in formulating fourth five year plan and main emphasis will be on development of agriculture. Shah said he knows that increased world food production is subject of great interest to President Johnson and he (Shah) is already formulating some thoughts on this subject and what Iran is doing about it in anticipation of visit with the President next June. 11. Comment: While nothing sensational emerged from the conversations, clearly Shah was delighted to have opportunity to exchange views with Secretary. Shah's constructive purpose and detailed knowledge of what is going on in world and in his own country were impressive. Also heartwarming was his obvious sympathy for what USG is trying to do. In absence of aid programs, which formerly featured US-Iran relationships, intimate talks of this kind with top-level US officials, including sharing of confidences, are highly useful instruments in retention of friendly ties between our two countries. 12. Incidentally, Secretary's visit here was not marred in any way by activities critical of US policy in Viet-Nam. On contrary, while motoring through city Secretary's cavalcade was on several occasions greeted with impromptu applause. Meyer
184. Letter From the Ambassador to Iran (Meyer) to the Country Director for Iran (Eliot)/1/ Tehran, December 17, 1966. /1/Source: Department of State, NEA/IRN Files: Lot 70 D 330, Iran 1966, POL 7, Secretary Rusk's Visit to Tehran, December 12, 1966. Confidential. Dear Ted: The Secretary's blitz visit to Tehran was a complete success. It was successful probably more from the standpoint of form than substance. No thorny issues were raised by HIM. He did not play his usual record of grievances against the USG. Nor did he even broach the question of the dates of his forthcoming visit. However, for three hours the two were on almost exactly the same wave length on world affairs. Not once was the phrase "independent policy" mentioned. On the contrary, the thrust of the whole evening's conversation was thwarting communist efforts everywhere in the world, not excluding Iran. It was particularly helpful to have this pro-free world dialogue so manifest at the dinner table. While Aram and Alam needed no shoring up, it was good to remind Hoveyda that Iranian and American policies are still fundamentally in step. Sometimes our good friend Amir Abbas tends to be carried away by street plaudits vis-a-vis palsywalsyness with the Eastern bloc. Even in the public domain one can feel the good effects of the Secretary's visit. The mere fact that HIM welcomed his visitor and spent three hours in intimate conversation belied suspicions that relations between the United States and Iran have cooled. One gets the feeling around here that Iranians generally now realize that the detente with the North has not greatly changed the relationship with our country. A dividend for you and me was that both the Secretary and Bill Bundy came away more impressed than ever with respect to the Shah's dedication and profundity of knowledge. Like many others who have had audiences, they know of few if any other Chiefs of State who have such a detailed knowledge (tons of rice per hectare, for example) re matters in and outside the country as does HIM. This firsthand recent impression, coupled with the obvious progress which Iran is making, should hopefully stand us in good stead whenever Iran's name comes before the Secretary in future months. All this does not mean that all of our problems are solved. Naturally HIM would prefer not to harangue the Secretary as he does the Secretary's Ambassador. Nevertheless, for the time being, particularly after the oil settlement, there is somewhat of a turmoil gap. We hope to prolong it as much as possible. Fond regards of the Season. Sincerely, Armin
185. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, January 24, 1967, 1330Z. /1/Source: Department of State, Central Files, DEF 19-6 USSR-IRAN. Secret; Limdis. Repeated to Moscow, CINCSTRIKE/USCINCMEAFSA, and Ankara. 2985. Iranian Purchase of Soviet Arms. 1. Hoveyda and I had one hour discussion morning 24th re Iran military program, arms deal with Soviets/2/ and impact military expenditures on Iranian economy. I opened discussion by expressing uneasiness, referring specifically to effects of these subjects on USG military credit sales program here. /2/Telegram 2820 from Tehran, January 10, reported that Iran had agreed to purchase military equipment including armored personnel carriers, anti-aircraft guns, jeeps, and trucks from the Soviet Union. (Ibid.) 2. Hoveyda described at some length present favorable economic situation. Country is stable and calm, he noted, two factors without which present economic strides would be impossible. SAVAK Chief only two days ago complained that his work has few challenges. Remnants of old National Front group, Hoveyda said, are dickering with him personally with view to cooperating with "movement" which country is experiencing and which they attribute to relief that present GOI policies are what they been recommending in past. 3. Hoveyda said although Shah tends toward wishing progress more rapid than is realistic, he (Hoveyda) is determined to maintain a realistic "cruising speed." Third plan he said has not attained all its goals because it was too ambitious; unrealized objectives will be incorporated in first year of new fourth plan. Re latter, private sector industrial development is flourishing so well that major portion of fourth plan will be concentrated on agriculture. Hoveyda noted Iran's growth rate has been excellent. Cost of living been held in line and PriMin has recently appointed standing committee to keep an eye on it. As index of strength of Iranian economy, Hoveyda said black market rate for U.S. dollars is now below official bank rate. He said new tax law will be passed in Majlis within week and it will mean more revenues. In addition, GOI planning measures for mobilizing "savings," including a national loan to cover increased defense costs. Behind all this, Hoveyda said, is his determination to govern by persuasion rather than coercion and to rely heavily on private enterprise. 4. Referring to apparent increasing military budget, I reminded Hoveyda this continues be matter of great concern to USG. Hoveyda said Iran with help of U.S. advisors determined to have effective modernized armed forces. Increased budgetary costs primarily due to building of "infra-structure." One of the difficulties of having thriving economy with burgeoning middle class, he said, is that military personnel, particularly lower ranks, require more amenities in face of soaring salaries of workers in private sector. To train and keep adequate maintenance and operating staff for modern equipment, therefore, requires such things as relatively decent housing, etc. 5. Discussion turned to Iranian arms deal with Soviets and I expressed concern at magnitude of reported transaction and my impression that prices higher than necessary. Hoveyda said it important keep in mind that except for small component of Iranian-produced refrigerators, etc. repayment will be made entirely in natural gas. Soviets wanted at least 30 percent foreign exchange, but Iranians flatly rejected. While noting that delivery schedule for proposed vehicles remains to be worked out, Hoveyda sketched out repayment schedule extending to 1978. He said Soviets are charging 2-1/2 percent interest. First payments minimal and not significant before natural gas pipeline completed in 1970. Problem, Hoveyda said, is what can Iran safely obtain from Russians in return for natural gas. He solidly against Soviet prestige projects. Steel mill is more than enough. Soviets been pressing hard to build Tehran subway but he steadfastly opposed. Not all of natural gas credit, even in first years after 1970, will go for repaying steel mill. Thus repayment for trucks, APC's and anti-aircraft equipment can be made via natural gas with no strain. He noted that no Soviet advisors will come with equipment. 6. Hoveyda indicated that magnitude of deal with Russians was heavily conditioned not only by ease of repayment but also by Shah's determination not to be at Soviets' mercy if crisis develops. Iran wants to have adequate quantity of spare vehicles and spare parts should Soviet policy toward Iran change. He noted in this connection that there are no illusions anywhere in GOI that Soviet ultimate motivations have changed from what they have always been. 7. Hoveyda expressed view that USG should recognize that this deal with Soviets undercuts Soviet propaganda branding USG villain for supplying arms to Iran. Hoveyda also has hope that deal will throw some sticks in wheels of Soviet cooperation with UAR and Syria. 8. Throughout discussion I made clear that there bound to be repercussions on US opinion. While we might understand Iran's rationale there will be some on Capitol Hill who will wonder about Iran's intentions and this could have adverse effect on our military programs which involve MAP funds. More important, however, is the impact on Iran's economy. I reiterated our stipulation of last summer that each tranche of our future annual military sales credit will be reviewed in light of economic picture here and that President himself must give approval. I recalled specifically our having made clear that purchases from other countries would be taken into account. GOI would be well-advised, I said, to keep these factors in mind. In any case, both of us will be going into the total situation thoroughly during our annual economic review. 9. Hoveyda was greatly interested in observations which I brought along re cost comparisons and re what USG has done over past years in supplying trucks and other military items on large-scale grant basis. Noting how GOI has kept us informed re negotiations with Soviets, Hoveyda agreed that Jablonsky and Toufanian continue their dialogue particularly with a view to assuring that military spending in all fields be kept at minimum compatible with efficient military program. He also agreed it will be useful for me to discuss this whole subject with Shah upon his return. Meyer
186. National Policy Paper Prepared in the Department of State/1/ Washington, February 2, 1967. /1/Source: Department of State, S/P Files: Lot 72 D 139, Iran. Secret/Noforn. The introduction to the paper states: "All agencies with major responsibilities affecting our relations with Iran participated in the development of this Paper and concur in the objectives, strategy and courses of action which it sets forth." "Execution of the policy set forth in this Paper is the responsibility of the various executive agencies under the leadership of the Secretary of State and overseas under the leadership of the Ambassador." Secretary Rusk approved the paper on February 2. IRAN
PART ONE--U.S. POLICY
I. U.S. Interests and Objectives A. The Broad Setting With United States participation in the Allied occupation (U.S.S.R.-U.K.-U.S.) of Iran during World War II, our role drastically changed from an earlier cultural-missionary presence to a growing position of influence in the country's affairs. Our assumption of leadership in post-war affairs was initially a vacuum-filling operation. We replaced the former rivals, Russia and Britain, whose days of shared hegemony ended rather abruptly with the repulse of Soviet efforts to communize northwestern Iran and the demise of Britain's South Asian empire. Britain's weakened role was later confirmed by the conflict and break over nationalization of the Anglo-Iranian Oil Company. Active United States diplomacy in the UN's handling of the Azerbaijan crisis coincided roughly with our assuming a greater portion of the British responsibility in Greece, and in the strengthening of Turkey against Soviet claims to Kars and Ardahan, which led to the Truman Doctrine of March 12, 1947. Economic efforts under Point Four begun in 1950 established United States influence in both the internal and external affairs of Iran. Since that time, the importance of these northern tier countries, not the least being Iran, has increased rather than diminished. B. US Interests in Iran In the short term Iran is important to the United States because of its strategic location and the defense facilities and privileges extended to the United States bilaterally and through cooperation in the CENTO framework. Over the longer term it is of continuing importance to United States security interests that Iran be seriously committed to modernize its political as well as economic and social institutions and thus build the internal strength to foil insurgent attempts, either by discontented urban and rural elements, the Communist (Tudeh) Party or dissatisfied, unassimilated tribal elements (Kurds in the west or Arabs in the south), or obscurantist rightist groups such as Fedayan Islam opposing any basic reform. The United States and the West have a stake in continuing modernization of the political and economic structure. This is interrelated to our narrow interest deriving from the $225 million in commercial investments (including the American share in the consortium). C. U.S. Objectives United States objectives in Iran are pursued within the framework of our particular relationship with the monarchy of that country. The Iranian monarchy provides the stability not yet available through popular institutions or long popular experience in organized political affairs. It is, at present, the sole element in the country that can provide continuity for public policy. While there are areas of divergence between us and the Shah, they have remained thus far more matters of emphasis than of essence, not particularly significant within the broad consensus we share with him on most of the really fundamental issues of foreign and domestic policy. While the United States is not necessarily committed to the support of any particular form of Government in Iran, the Shah at present affords the best means for the safeguarding of our basic security interests in Iran and is the only personality on the scene who can lead the anarchically-bent Persians. Thus, until another potentially viable power source appears, which we do not expect during the next two to five years, support for the Shah and his reformist programs will form the basic condition of our pursuit of the following objectives: 1. An independent and increasingly self-reliant Iran, free from any foreign domination or aggression, and motivated to cooperate with the West in: a. Taking such measures as lie within Iranian power to frustrate Soviet clandestine activities within Iran and Soviet expansion toward Suez and the Persian Gulf; b. Providing access to Iranian soil for Western forces in the event of conflict, including retention of over-flight privileges; c. Stimulating developing relations with neighboring countries so that there evolves in the course of time a more friendly relationship between Iran and its non-communist neighbors to promote greater stability and cooperation in the Middle East, particularly Persian Gulf, area. 2. Evolution of a new but still mutually rewarding relationship between the United States and Iran, in a climate of increasing Iranian public understanding that the United States role is that of assisting Iran in its national development rather than of directing its course. 3. An effective Iranian Government which, through the increase of strength and the improvement of administrative efficiency, will command the respect and support of broader segments of the population, especially among intellectuals--teachers, university students, professional men, etc.--and provincial leaders. 4. A sound, well managed economy which properly balances military and development expenditures so that the already large and rapidly growing wealth of the country can be used for orderly, self-sustaining economic growth and steady improvement of the standard of living. 5. The development and strengthening of political, social and economic institutions which will provide the means for orderly and peaceful transfer of power, as necessary, and in the longer term facilitate increased participation of ever-widening sectors of society in their own government. 6. Continued access for the West to Iranian resources, principally petroleum, on acceptable terms. 7. Continued United States access to expanding Iranian markets. [Here follows Section II, "Problems and Alternatives."] III. United States Strategy in Iran A. General Our strategy for Iran must take account of the increasingly independent position of the Shah. This limits our area of maneuver. It also defines a major problem to which our strategy must address itself. The key developments in recent years that underlie this picture of independence are: (1) the Shah's successful concentration of power in his own hands and the internal stability this has achieved at least for the present; (2) the increase in oil revenues that has given the Shah relative financial independence from the United States and, at the same time, has provided a major instrument for his internal control of the country. In addition to these developments, the Shah's independent position must be understood as part of a longer run trend to which Mossadeq over a decade ago had given new impetus--namely, the emergence of Iran from a quasi-colonial status to one in which Iran would exercise the power over its own affairs that is associated with full sovereignty. Major elements of a strategy designed to move Iran forward in the next five years--politically, economically and socially--toward a more stable base for the longer run must be devised within this framework. B. The Independent Posture Our strategy should be to respond as fully and as positively as we can, consistent with maintaining our special bilateral security arrangements with Iran, to the Shah's thrust toward a fully independent national posture in the country's foreign relations. On the economic front, this would mean adherence to our current policy of phasing out AID assist-ance. Again, with respect to our military assistance program, we should adhere generally to the present policy of shifting the appropriate pace from grant to credit sales on fairly hard terms and attempt to restrain the Shah's desires for equipment and forces that we consider unjustified by the threat. Although the days are over when we could dictate to the Shah what his military establishment should be, we can continue to play an important role in influencing Iran's military program, and in preserving a balanced application of resources as between the military and economic fields, provided this is done with tact, diplomacy, and a modest application of US resources. While recognizing that the Shah now has the financial means and market options to shift some of his procurement to non-US suppliers, we also recognize that our mutually beneficial relationship with Iran is, to a significant degree, based on our military training and supply activities. C. The Means of Leverage Our influence on both internal and external policy will have to be exercised in somewhat different ways than in the past because our material assistance is declining and because Iran is determined, after many years of almost embarrassing reliance on American advice, to make at least a show of independence. Recently this has been accompanied by an increase in foreign (non-United States) technical experts serving in Iran including some 500 from the USSR and other communist countries, and by more varied offers of financial assistance from non-United States sources. Our leverage in the past has resulted in large measure from our economic, technical and military assistance, which has totaled $1,453.5 [sic] million ($706 million economic, $757.5 military, through FY'66) in the past 16 years. While not uniformly successful in achieving the stated goals, these modes of assistance have secured entree into the key administrative, economic, and military circles and have contributed notably to the forward movement experienced on most fronts during the past decade. At present our concrete assistance is dwindling because of our resource limitations, Iran's growing financial strength, and Iranian pride--sometimes not fully justified--in the recent advances in domestic administrative capabilities. We ended direct budgetary support in 1961 and completed the shift in our support for development projects from concessional AID lending to Export-Import Bank loans in FY'66. We have gradually reduced our permanent technical advisory staff over the past three years and have put the Iranians on notice that the Development Grant program will end soon. In this transition period, which will come to an end in FY'68, we will concentrate our efforts in such strategic sectors as power and agriculture (rural development). We have shifted our Food for Peace assistance from a local-currency to a dollar-credit sales basis. In the military sphere, we are reducing MAP grants and shifting to credit sales, meanwhile retaining our close advisory relationship. Fortunately our multifarious operations in Iran since the early 1950's, combined with Iran's reliance on us for fundamental security from Soviet aggression, have established our reputation sufficiently within influential government and private establishments that we need not look forward to encountering blank walls as our material sources of leverage melt away. Especially among the educated circles there is considerable acceptance of the value of ties with the West and increasing agreement with the stress we have been placing on modernization in all spheres of Iranian life. Neutralistic and xenophobic sentiments remain to be exploited by demagogic politicians, but it would take a major mishap to catapult such a one into power. Nevertheless, as time goes on, we will unquestionably be more on our mettle to keep our advice sound and convincing in Iranian terms. Except perhaps in security matters, where we may look forward to many more years of close dependence on United States advice and support, we will be drawn less closely into the decision-making process in the inner councils of government, i.e., we will move more into the role of a trusted ally (hopefully still the most trusted) and away from the earlier role of responsible senior partner. When we are consulted on non-military domestic and foreign policy issues, we must take increasing care to avoid repeatedly offering advice which, however beneficial in an objective sense it might seem to be, would be disregarded because the Iranians would be unable or unwilling to act on it. It is hard to foresee how much disregarded advice would add up to a general reduction of confidence in United States leadership, but we must keep in mind that this consideration will be more of a problem in Iran in the future than it has been in the past. It has been a significant irritant in our relations in recent years that as Iran sees it, we appear to take its dependence on us so much for granted that we show greater concern for troublesome and uncooperative allies and even neutrals than for Iran. As Iran's strength and its bent toward independence grow, this type of irritant could well affect our leverage, and it therefore behooves us to keep in mind the deference due, in both tone and substance, to a staunch and increasingly proud ally. D. Contingencies The principal contingency requiring a change of strategy would be the removal of the Shah from a position of power, either suddenly or as a result of a well-coordinated coup. This and other contingencies will be the subject of a separate study. IV. The Preferred Strategy: Courses of Action A. Political Strategy A limited response by the Shah to the pressures for broader political participation, which are bound to increase during the period ahead, could be an important factor in achieving the objective of a longer run stability that we and the regime both seek. The 1967 elections may provide the opportunity for a limited opening up of the system. Considering the time required for planning and organizing broader political participation, we should, as opportunities arise, continue to urge upon the Shah the desirability of such an approach. He has occasionally indicted an interest in building bridges to some of the more moderate nationalist figures in the opposition. If the Shah could reach, in the next year or so, a decision to permit at least a limited amount of popular choice in the next elections--even if that choice were only between "approved" candidates, this could be an important step forward in Iran's political development. United States influence, diplomatically exercised, would support such a strategy. 1. Courses of Action--Political a. Encourage the Shah in his "White Revolution" on a course which is fast enough to broaden the base of support for the regime by whatever means make sense politically and economically in terms of the regime's basic stability. Action: State b. Continue to deal with the Shah on questions of basic national security but do what we can to foster responsibility for Iran's day-to-day foreign and military policies on the part of the government. Action: State, DOD c. Encourage the Iranian Government's efforts to engender a greater degree of popular identification with government affairs, and discourage regime impulses toward unduly harsh and repressive measures against non-communist opposition elements. Action: State, DOD d. Encourage the Shah to enlist both moderate, conservative and liberal opposition elements to support his program of social reform and emancipation. Action: State, AID, USIA e. Encourage the Shah and the Government toward greater efforts to build more permanent and orderly political, legislative, administrative and labor institutions and organizations. Action: State, USIA, AID, Labor f. Persuade the Iranian Government and people that the United States is willing to assist Iran without threatening its sovereignty. Action: State, USIA, DOD g. Persuade the Iranian Government to show maximum understanding of the real problems faced by Iraq and the Persian Gulf Sheikhdoms, to concentrate on real as opposed to merely apparent threats to Iran's vital interests, and to maintain an attitude of dignity and non-provocation even in the face of provocative propaganda from those countries and the UAR. Action: State, DOD h. Encourage the Iranians to maintain an attitude of vigilance in the face of current Bloc blandishments and to take effective measures to thwart the Soviet subversive potential inside Iran. Action: State, DOD i. Seek to maintain and increase the effectiveness of United States-Iranian cooperation on international issues in the United Nations, CENTO, and elsewhere. Action: State, DOD, USIA j. Encourage the increase of responsible mutual interchange between Iran and other nations in the Free World, particularly in the Regional Cooperation for Development (RCD) organization, taking care that our encouragement of RCD not be misinterpreted as interfering or attempting to influence the course of RCD. Action: State, USIA, DOD k. Take whatever administrative and legal steps are warranted to ensure that dissident Iranian political activity in the United States does not damage United States-Iranian relations. Action: State, Justice B. Security--Strategy 1. Future United States Role in External Defense Our military relationship with Iran is now, and will continue for the foreseeable future, to be close and meaningful. Through our support of CENTO and our bilateral security agreement of 1959, we provide a security umbrella for Iran against Soviet aggression. We should continue to support CENTO as an arrangement of positive, if limited, value, whose collapse would have a tangible disruptive effect in the Middle East. Our official public statements have clearly indicated our willingness to oppose by various means aggression in the Middle East, including Iran, from non-Soviet directions, though the Iranians place little reliance on such statements. Our exclusive military advisory relationship dates from 1947, but is based on the groundwork laid by our army mission and Corps of Engineers during World War II. Since 1951 we have supplied military equipment of various degrees of sophistication, as has befitted developing Iranian capabilities. A unique feature of our military supply relationship with Iran has been joint forward planning which we began on a five-year basis in 1962 and which has been useful in securing agreement with the Shah on a reasonable schedule for equipment supply and on the proper strategic mission of the Iranian armed forces. The September 1962 agreement was amended in July of 1964/2/ to extend the period covered through FY 1969. US commitments are stated in Annex A to the 1964 Memorandum of Understanding,/3/ and are listed as specific items of assistance with no dollar costs given. The Presidential determination, NSC 1550, No. 65-1,/4/ for the agreement indicates that grant assistance in Annex A for the period FY 67-69 shall not exceed $83 million. This figure does not include grant military assistance to the Imperial Iranian Gendarmerie during the period. The memorandum contained assurances by the Government of Iran that its program of military purchases would not cause undue strain on the nation's foreign exchange reserves or jeopardize plans for the nation's economic and social development. The agreement provided for a joint annual review procedure to satisfy the Iranian and United States Government that a proper balance was being maintained between development and defense. In addition, Iran was authorized to purchase over the next five years $200 million of American military equipment for delivery before the end of FY 1970. These purchases will be financed by United States credit institutions backed by US Government guarantees. The credits will be repayable on terms that will allow amortization over the ten-year period FY 1965-74 at interest rates ranging between four to five per cent per annum. /2/See Document 47 and footnote 6 thereto. /3/Annex A is in telegram 1196 to Tehran, June 25, 1964. (Department of State, Central Files, DEF 19 U.S.-IRAN) /4/Not found. The Iranian Parliament recently authorized the purchase of an additional $200 million worth of military equipment. The U.S. has offered additional credit up to $200 million for purchases in the period FY 1967-70, with no more than $50 million of this amount to be made available in any one fiscal year. A review of the impact of Iranian military expenditures on the economy of the country shall take place before the U.S. makes commitment with respect to the amount of this credit to be made available to Iran in each fiscal year, and the US Government shall determine military credit availabilities in the light of the impact on Iran's foreign exchange and debt servicing position of any major third country military purchases; after the first $50 million, each subsequent annual credit tranche shall be approved by the President. It has not always been easy in the past for us to secure agreements on military matters. The Shah, reflecting a consensus of high-level Iranian opinion, has tended to regard Iran's 1955 decision to join the Western defensive system as a claim for special consideration of various kinds, especially economic and military assistance. In the early days of this arrangement, the Shah tended to focus mostly on the latter. Obsessed with Iranian weakness and vulnerability, and fancying himself as a military strategist, he pressed us to support, with equipment grants and direct budgetary assistance, a military buildup on a scale that far out-stripped any conceivable progress in Iranian absorptive capacity and that threatened to create a serious imbalance in the allocation of Iranian financial resources. Since those days we have managed to scale down his military establishment and our relationship has matured in many ways. As the Shah has seen his resources increase and as his dependence on us has declined, our negotiations are increasingly conducted on a basis of give and take in which we must take into account the value that we place on our close and cooperative military relationship. More and more he sees himself as a potential purchaser who wishes simply to state his own requirements with the hope that these can be met from US sources--but with alternative sources clearly in mind. During the summer of 1966, for example, Iran negotiated a $60 million credit sale agreement with the UK for naval vessels, Hovercraft, and Tigercat missiles. The Shah momentarily considered buying surface-to-air missiles from the USSR but decided to abandon the idea; he has nevertheless reached agreement for purchase of non-sophisticated equipment from the Soviet Union. Since 1958 our military relationship has matured considerably. We have seen a noticeable improvement in Iranian capacity and willingness to relate their military effort to their overall economic development. Our task over the next few years will be, within the context of our long-term agreements, to meet the Shah's intense desire for military modernization--for which he is now able to pay--sufficiently so that we can maintain the US as the primary foreign military influence in Iran and to continue the United States advisory services which have already begun to bear fruit in the form of a gradually growing professionalism in the Iranian armed forces. A specific objective would be to forestall any significant military relationship between Iran and the Soviet Union. The Shah gave us categoric assurance in Summer 1966 that he would not acquire any sophisticated military equipment from the Soviet Bloc. In the years ahead, we will continue to be faced with the Shah's concern about the radical Arab threat to Iran. The Shah has become increasingly concerned with possibilities of Arab attack on vital oil and military installations in southern Iran, a viewpoint which is the result, partly, of his observation of the negative US reaction to Pakistan's situation in the Indo-Pak war and also his fears of increasing UAR penetration in the wake of what he considers to be an inevitable British withdrawal from the Persian Gulf. He has asserted his unmistakable intention to acquire the military equipment to meet this threat. While responding to the extent possible to legitimate defense needs and while seeking to concentrate the Shah's attention on real as opposed to imagined threats to Iran's vital interests, we will have to be careful not to strain his confidence in us by attempting to dissuade him from meeting what he considers to be Iran's real security needs even if we ourselves cannot supply the equipment he desires. The United States too has an interest in the security of the Persian Gulf area, including its security against inroads and pressures from the United Arab Republic. Although the Shah is inclined to exaggerate the nature of the threat, if a real threat develops, our interests lie closer to those of Iran than to those of the United Arab Republic. 2. Future United States Role in Internal Defense Thanks to effective political and security control, there is no immediate serious threat to Iran's internal security. Iran abounds, however, in classical potentials for insurgency, and the regime realizes the necessity for vigilance against outbreaks, with or without foreign subversion, among the tribes and border nationalities (Kurds and Arabs) and even among the disparate but volatile urban opposition elements. The United States has and will continue to play both a direct and an indirect role in enhancing the capabilities of the regime to cope with potential insurgency situations. Our most direct role is in the supply of technical assistance to the urban police and the rural Gendarmerie (with whom we have had an advisory mission since 1942). For the urban police, USAID civil-type police assistance and advice have effected marked improvements in police telecommunications, vehicular mobility, rec-ords and identification, and in other civil police functions. In the military sphere, some of our equipment grants and a good part of our advisory services have been tailored increasingly to the techniques and theories of counter-insurgency. Iran has formed a Special Forces Group (approximately battalion size) in Tehran. Mobile training teams from the United States Special Forces have instructed regular units of the Iranian army in unconventional warfare and counter-insurgency in field exercises. Our direct role involves also a considerable amount of persuasion toward more enlightened and long-term means of dealing with potential insurgency situations (disaster relief, labor development, economic rehabilitation and development, etc.) in place of the repressive means to which the regime is so often drawn when the chips are down. Our indirect role embraces virtually all of our other programs in Iran, since they are all designed fundamentally to chip away at the roots of disaffection and hence to increase the strength of the government. 3. Courses of Action--Security a. Continue to make clear to Iran, the U.S.S.R., and Iran's Arab neighbors, through our military cooperation and general posture of support for Iran, that Iran cannot be attacked without grave risks of direct United States military counteraction. Action: DOD, State b. To the above end, schedule periodic joint maneuvers on Iranian soil with Iranian forces to demonstrate United States capabilities for quick and effective action. Action: DOD, State c. Equip, train, and encourage Iranian armed forces toward maximal capacity to delay a hostile military advance, and to combat indirect communist aggression with a minimum of direct involvement by Free World military sources. Action: DOD d. Work for a steady improvement in the professionalism of the armed forces and the maintenance of their morale and loyalty to the regime. Action: DOD e. Improve the counter-insurgency and riot-control capacities of the military as well as of the rural and urban police forces. Action: DOD, AID f. Monitor carefully the measures, both military and fiscal, being taken to carry out multi-year MAP and MSA agreements reached with the Shah, including size and programming of force structure. [Here follow C. "Economic Strategy" and Part Two, "Factors Bearing on U.S. Policy."]
187. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, February 15, 1967, 1345Z. /1/Source: Department of State, Central Files, DEF 19-6 U.S.S.R.-IRAN. Secret; Limdis. Repeated to Moscow and CINCSTRIKE/USCINCMEAFSA. 3258. General Conway's Call on Shah. Ref: Tehran 3202./2/ /2/Dated February 12. (Ibid.) 1. General Conway, CINCSTRIKE, and I had nearly one hour audience with Shah 15th. We were accompanied by Ambassador Bell, Admiral Blackburn and General Jablonsky. Shah took occasion to reiterate his well-known views re importance Iran having adequate defense capability. 2. Shah discussed changes taking place in the world and in this region. He made clear that Iran continues to value its friendships and alliances. Russian tactics may have altered but until Moscow renounces its desire to see world dominated by communism Iran and other non-Communist countries must remain "attentive." 3. Shah reiterated his usual theme that if Soviets cross Iranian border there will be world reaction. More imminent threat in his opinion is that in Persian Gulf area. British have reaffirmed their determination to leave Aden in 1968 and, although they are increasing their capability at Sharja and Bahrein, these measures are minimal and probably will last only few years. He implied from reductions in MAP aid that USG also has lessened interest in this area. He considered threat as coming from "rectangle" of Cairo, Yemen, Somalia and Ethiopia, noting that latter two countries are going through rather critical phase. 4. Shah reiterated his intention to have modernized adequate defense capability and disclaimed any thought of territorial aggrandizement. He noted that large quantities of Russian arms continue to flow to countries like Egypt, Syria and Algeria. With such build-ups by aggressive neighbors, countries like Iran cannot confine themselves merely "to prayers and saying mass." He had hoped to maintain exclusive U.S. supply pattern, but with obvious reluctance of USG to supply all his needs Iran has had to resort to other sources. Nevertheless, he still values US-Iran military cooperation, including good work of ARMISH/MAAG. 5. In stressing determination to assure security of Gulf area, Shah mentioned Iran is staying in tough with Saudis. Also in interest of regional security, Iranian cooperation is developing bilaterally with both Turkey and Pakistan. 6. General Conway explained purpose of his visit was to gain first-hand familiarity with countries for which CINCSTRIKE has responsibilities, both from contingency basis and with regard to MAP assistance. He noted that in about one month he will be required to testify on Capitol Hill where opinion is running heavily against military programs, grant or sales. Ambassador Meyer noted that Indo-Pak hostilities had been among the developments which have colored Congressional thinking and there is widespread sentiment in the United States, particularly in Congress, that it is morally wrong for USG to fuel arms races in developing countries when their limited resources were better spent on vital economic development. Shah expressed view that had it not been for USG military cooperation with Pakistan and India hostilities would have broken out earlier and cessation would not have been achieved as quickly as it was. He expressed regret that members of Congress do not see that their attitude endangers countries with peaceful intentions like Iran and Morocco while playing into hands of aggressive ill-intentioned countries. All this led to discussion re possibilities of securing Soviet cooperation re limitation of arms supplies to developing countries. Shah saw no prospect of such Soviet cooperation in foreseeable future. 7. General Conway alluded to Shah's implication that USG interest in this area is lessening and said this not so. He added that contrary to some press speculation re effects of US commitments in Vietnam, USG military capability remains ample to play role in other contingencies should that be necessary. Shah indicated he already aware of this, but he wondered about Washington's political readiness to get involved in future brush fires. 8. There was brief discussion of Soviet interest in natural gas from Iran and more recently a Soviet offer to buy oil. Shah noted that new Soviet pipeline being built to Europe (info supplied via Alam, reftel) but saw some advantage in having power as large as USSR heavily dependent on small country like Iran for commodity like gas. Ambassador pointed out rich foreign exchange rewards Soviets would gain. This obviously on Shah's mind for he spoke vaguely of demanding from Soviets some "triangular" transaction whereby Iran would gain certain additional benefits. He also mused about the costliness of a pipeline direct from Iran to European natural gas market. Shah also noted how Romania in particular and to lesser extent Czechoslovakia are defying Soviet desires for maintaining Soviet economic hegemony over European satellites. In general Shah said efforts at bridge-building with Eastern European countries are desirable provided vigilance is maintained. 9. At conclusion of audience, Ambassador Meyer made brief reference to UPI story revealing Soviet-Iran arms deal. Shah said two things bothered him: a) disclosure should first have been from Tehran; and b) Iran was portrayed as kicking over CENTO traces while Turks are resisting Soviet blandishments. Re latter point, he said answer is simple i.e. Turks still receiving large-scale grant aid from US. He agreed, however, that UPI leak was not totally without benefit, noting points along this line which I had made to Alam earlier (reftel). Meyer
Telegram 169774 to Tehran, April 6, 1967, informed the Embassy that the Justice Department review of the Gudarzian criminal case had concluded that the only realistic course of action involved proceedings based on forgery of the two large checks bearing the names of the Prince and Princess. Chances of conviction, however, were not considered good in the absence of testimony from Ebtehaj. In light of previous Embassy arguments that a Gudarzian acquittal would be worse than no trial at all, the Department had concluded that it should not ask the Department of Justice to pursue the criminal case further. The Immigration and Naturalization Service was prepared to commence deportation proceedings immediately upon being authorized to do so by the Justice Department. Unless the Embassy objected to these conclusions, it was requested to advise the appropriate Iranian officials of this decision and the reasons for it. (Department of State, Central Files, POL 15-1 IRAN) In telegram 3981 from Tehran, April 11, Meyer responded that the Embassy remained convinced that no trial was better than an unsuccessful trial, and that it concurred in deportation proceedings against Gudarzian and Kushan. Meyer expressed appreciation for the Justice Department's all-out attempt to build a case against Gudarzian, and noted that the Embassy would do its best to explain this "failure" to the Shah. (Ibid.)
189. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, April 12, 1967, 0710Z. /1/Source: Department of State, Central Files, POL 7 IRAN. Confidential; Limdis. 4006. Subj: Shah's Talks in Washington. 1. Several times during my audience 11th,/2/ Shah referred to subjects which he hopes have chance to discuss with President Johnson during his forthcoming Washington visit. /2/In telegram 4036 from Tehran, April 13, Meyer reported on his April 11 discussion with the Shah concerning Iran's relations with Nasser and Moscow. (Ibid., POL IRAN-UAR) 2. Shah said at top of list are great problems of water and food. He noted topflight Soviet team currently visiting Iran has admitted that even USSR has potential water problem. Re agriculture, Shah believes outstanding American knowhow should be better applied in other countries, including Iran. He is particularly interested in large-scale farming of type David Lilienthal's development and research organization is proposing for Khuzistan area which follows pattern of Imperial Valley. 3. Shah also wishes to talk about dangers which will beset Mideast when British leave Aden and Nasserism moves in. 4. On military side, Shah agrees that Washington not be scene of haggling over military credit sales program. At same time, he will wish to discuss his general thesis that it is in USG's interest to have Iran self-reliant. 5. Shah seems confident that ground can be covered with President Johnson in the one scheduled meeting evening June 12. However, if not he would appreciate opportunity to complete discussion following day. Meyer [Continue with the next documents] |
