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30. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, June 2, 1964, 6 p.m. /1/Source: Department of State, Central Files, DEF 19-3 US-IRAN. Confidential; Priority. Repeated Priority to CINCSTRIKE/CINCMEAFSA for POLAD. 1109. Dept pass Defense and Eckhardt. Embtel 1065./2/ Following conversation Eckhardt and I had with Shah May 24 (reftel) General Hejazi, Chief Supreme Comdr's Staff (SCS), handed Eckhardt "Study of Modernization Program" on May 28. Study rejected ARMISH/MAAG presentation favoring carefully planned and phased replacement program for tanks and transport aircraft and supported in essentials accelerated program proposed by Shah. Study also backed immediate organization naval security battalion and armored personnel carriers for infantry battalions in Ahwaz division. ARMISH/MAAG promptly prepared additional memorandum reiterating and further supporting memo we left with Shah May 24. This memo was passed to SCS May 30 with comment I was available if Shah wished to discuss it. Morning June 1 top SCS officers conferred with General Ash and Col Gildart (Eckhardt in Washington). SCS said MAAG position not satisfactory and more cooperative attitude required in understanding need for accelerated program which SCS then attempted to defend. MAAG said its comments were made in context local discussions of most desirable military program, and represented its best professional views and MAAG officers reiterated considerations supporting them. MAAG added that when GOI had reached position after having MAAG advice, exchange would move to govt level and MAAG would do its best, as always, in support of any GOI-US decisions. In mid-afternoon MAAG was informed SCS wished to consider morning discussion off record. (Text of memoranda of these conversations forwarded by pouch to GTI.) /2/Dated May 25. (Ibid.) Evening June 1 I had two-hour audience with Shah. He discoursed along usual lines on Arab threat and Iran's need to prepare for own defense, although calmly and without emotion. I then opened part of conversation covering military requirements with friendly but pointed remarks on value of good professional military advice based on factual analyses, emphasizing particularly the value of sound negative advice, and noted we agreed at Dezful (Embtel 1008)/3/ to have exchange of professional views re replacement program without regard to source of financing. All exchanges recent weeks we considered in this context and it now probably time for Shah examine all advice and decide what he wished to propose. /3/Document 19. I noted that too rapid introduction of new weapons systems would be likely to overtax facilities for maintenance and utilization, not only for new weapons and equipment, but also for existing equipment. It was judgment our military people that overall combat capabilities of Iranian armed forces would thereby be significantly reduced during immediate future about which Shah appeared most concerned, Shah seemed to be seriously impressed by this consideration. I once again called Shah's attention to need for balanced use of resources in order not to impair development program. I said it appeared oil revenues were rising nicely but best projections we able make suggested 1970 level not be quite so high as Shah previously indicated. Also foreign exchange projections indicated there would be period of squeeze to fulfill planned development in next few years and for two years or so Iran might well be drawing on foreign exchange reserves. Shah appeared bothered by this but seemed to hoist in its implications. Shah then said he thought ARMISH/MAAG probably right, SCS program too rapid, it would be wiser to get 17 tanks for training by end Iranian year, March 1965, instead of August 1964 and have six months (instead of four months) program for introduction tanks into each battalion. I suggested Shah's proposals be set down in writing by SCS and I would send them to Washington with the request that they be considered with regard to availabilities and terms. I said time would not permit answers during Shah's visit and he expressed understanding but hoped there could be some agreement in principle with questions regarding availabilities and terms to be worked out later. SCS memorandum, delivered to MAAG this afternoon, set forth following requirements (text forwarded by pouch to GTI): 1) 460 M-60 tanks. 17 to be delivered for training by March 1965, 53 to be delivered in each of next three month periods (for three battalions Ahwaz division), then 36 in each of seven following four month periods (for seven other tank battalions). 2) 156 armored personnel carriers for three mechanized infantry battalions Ahwaz division. 3) 130 light tanks or armored cars for seven armored cavalry squadrons. 4) 110 howitzers 105mm to add third battery to 26 field artillery battalions. 5) 28 howitzers, eight-inch, to augment existing batteries and add battery to Ahwaz division. 6) One additional airborne battalion. 7) 1610 A-6 machine guns. 8) 4 C-130 aircraft by mid-1965 (one C-47 squadron to be deactivated). 9) Replacement for F-86 to be discussed later. 10) Level of ammunition reserve increased to six months' supply. 11) High priority to air defense Khuzistan and Bandar Abbas. 12) One additional naval security battalion "when Bandar Abbas port complex completed". Quantities tanks, APC's, armored cars and machine guns contain attrition factors. Specific time phasing not stated except for tanks and C-130's. Comment: Shah has accepted substantial validity our views and modified his proposals appreciably to accommodate them, although his proposed deliveries still call for rather tight schedule. However, I believe they now provide basis on which we can work out details of mutually acceptable program and preserve present valuable military relations with Shah. Immediate problem is tanks. If we can be forthcoming on tanks during Shah's visit, our relations with Iran will be greatly strengthened and success of visit assured. I strongly recommend that we by able to tell Shah we are prepared to sell Iran 17 M-60's for delivery by March, 1965 and to make subsequent deliveries, production rates permitting, at rate approximating his schedule. Would be helpful if we could also indicate we would try to work out some credit arrangements for FY 66 deliveries. If tanks problem resolved, discussion of program covering other items can proceed here at less rapid pace except for C-130's on which Shah will want early answer. For this discussion we will need to know soon level of credit available for Iran in FY 66. Holmes
31. Memorandum From Secretary of State Rusk to President Johnson/1/ Washington, June 3, 1964. /1/Source: Johnson Library, National Security File, Country File, Iran, Shah's Visit, 6/5/64. Secret. The date is from the Department of State copy. (Department of State, Central Files, POL 7 IRAN) SUBJECT A. Purpose of the Shah's Visit to the United States. The Shah's visit is informal. He will inaugurate the exhibit "7000 Years of Iranian Art" in Washington and receive honorary degrees from UCLA, American University, and NYU. The Shah is fluent in English. You are scheduled to meet with him for one hour at Noon on Friday June 5. The Shah was last in the United States, on an official visit, in April 1962. You last saw him on your visit to Iran in August 1962. That was shortly before he personally assumed leadership of a basic reform program in Iran. He is exhilarated, perhaps overly so, about the apparent initial successes of that program. Although basically a moody man, subject to periods of discouragement, depression, and doubts as to our intentions, he is at present enjoying a high degree of self-confidence because of the consolidation of his political position at home, as well as Iran's growing financial strength. He feels these developments allow him scope for more independence in foreign policy (exemplified by Iran's improved relations with the Soviet Union), but he recognizes Iran's dependence on the U.S. for security and continues to seek our advice on all important matters. His principal concerns at the moment are two related ones: his fears of aggression from the Arab world; and Iran's requirements for further military modernization. A secure, long-range, close military relationship with the U.S. is necessary if these concerns are to be satisfied and our influence in Iran is to be maintained in the future. The Shah will leave the U.S. on June 14 for a visit with the Sultan of Morocco. B. Items for You to Raise. 1. Military Assistance. Comment on satisfactory progress of current Five-Year MAP Plan and discussions now under way in Tehran for further modernization of Iranian armed forces. Offer sale of /2/ tanks on cash or credit terms during next two or three years to fill Iran's most urgent military replacement need. /2/The words "up to 150 M-60" are crossed out at this point on the source text, and a handwritten note in the margin reads "Suggest you leave details to DOD." At the end of this paragraph the words "(See Special Talking Papers on Military Assistance.)" are also crossed out. This Special Paper is printed as Document 32. 2. "Arab Threat." Indicate understanding of Shah's basic long-range concern with potential Arab threat to his border provinces. Note, on contrary, basic Arab military weakness in spite of supply Sovbloc arms, and continuing forces for disunity in Arab world in spite of repeated unity statements and "agreements." Suggest threat to Iran's border provinces more political and psychological than military and counsel internal development measures and avoidance of provocation to neighbors. 3. East-West Relations. Reassure Shah on following points: we are not contemplating conclusion of an East-West non-aggression pact; we intend to consult with the Shah and our other allies regarding any important development in East-West relations; we will stand firm at all trouble spots (Berlin, Cuba, Southeast Asia); we appreciate Iran's deep understanding of the reality of the Communist threat; we will not sacrifice Iran's interests as part of any East-West settlement. 4. Miscellaneous "Talking Points." a. Express appreciation for growing U.S.-Iranian cooperation in all spheres. Make special mention of Iranian provision facilities for our atomic detection programs and recent Iranian decision in principle to participate in Free-World aid effort to South Viet-Nam. b. Note our satisfaction with Shah's reform efforts. Stress also continuing need for courageous decisions and hard work to consolidate initial successes of land reform, achieve necessary fiscal and administrative reforms, ensure a healthy economic recovery in private sector. c. Express satisfaction with growing Iranian financial strength and with current promising negotiations for continued U.S. lending, on appropriate terms, to assist Iran's development program. d. In connection with Shah's trip to Morocco: ask him to convey our friendship and sympathy to King Hassan and Morocco; tell him we commend Hassan's efforts to establish a viable constitutional system in face of serious obstacles; land reform, to which Shah has devoted so much attention, is a subject worth bringing to Hassan's attention. C. Items Which Shah May Raise and Suggested Response. 1. Pahlavi University. The Shah is keenly interested in the development of the recently-established Pahlavi University (at Shiraz) into an American-type institution and might ask that we expand our current assistance. If he raises this, respond that: we also are keenly interested in this project; we intend to broaden scope of our technical assistance from medical faculty to the University as a whole; we expect that principal financial inputs and organizational effort will be made by Iranians from their growing fund of finances and administrative skills. 2. Iranian Student Problem. The Shah may, if he finds time, voice dissatisfaction with our control of anti-regime Iranian students in this country who demonstrate against him and other visiting Iranian dignitaries. If he does raise this, tell him: we do not support these anti-regime elements but our laws do not allow us to suppress them forcibly in the absence of illegal acts; some of the students with expired passports are under warning to cease their extreme activities or face deportation; press and public reaction here are now so favorable to Iran and the Shah that antics of these dissident elements arouse scarcely any sympathy. D. Background papers have been prepared on all of the foregoing subjects. Dean Rusk
32. Special Talking Paper Prepared in the Department of State/1/ SVW-TP/1 Washington, June 3, 1964. /1/Source: Johnson Library, National Security File, Country File, Iran, Shah's Visit, 6/5/64. Confidential. Drafted by Bowling and cleared by Wheeler, John T. Hermansen (AID/PC), Kitchen, Colonel Taylor, and Jernegan. SHAH OF IRAN VISIT TO WASHINGTON
MILITARY ASSISTANCE The Five-Year Plan for the reorganization and modernization of the Iranian armed forces, drawn up jointly and now being implemented, seems to be working out quite well. Granted adequate Congressional appropriations, we intend to continue to do our part in this program, and we are sure Iran will continue to do its part. We are pleased that United States and Iranian officers are now discussing the shape of additional measures of replacement, modernization and training which will permit further improvement in Iran's defensive strength through the sixties and into the seventies. These plans should be analyzed carefully by both governments, with the view toward achieving a rational increase in military potential without limiting unduly the resources available for economic development and social welfare, which are also essential components of a broad security concept. Our various Joint CENTO exercises (especially the recent successful Operation DELAWAR) and the recent exercises involving the Concord Squadron demonstrate to us all the fact that United States and Iranian military capacities are mutually complementary. We understand that the Shah's greatest area of concern at present is in the replacement of tanks. In view of the shortage of United States military assistance funds, and Iran's growing economic strength, we will not be able to provide replacements of Iran's needs on a grant basis. We can, however, sell Iran up to 150 of our new M-60 tanks, to come off production lines during the next two or three years, along with the necessary spares and ancillary equipment. These tanks would be delivered to Iran at the same time that they are being put in service with our own forces, and at the same price we must pay, plus handling and transportation. Iran could pay for the tanks on the same basis that we ourselves make payments to the manufacturers. If this is not possible for Iran, we would be willing to discuss limited credit arrangements. If these tanks are too expensive, the Shah could be offered a rebuilt tank of the M-48 series, retrofitted with the 105-mm gun, the M-48A3, at a cheaper price. A radically new tank, the Sheridan, may be produced later in this decade. No decision has yet been made to put it in production, and any discussions of procuring this vehicle are just not possible at present.
33. Memorandum From Robert W. Komer of the National Security Council Staff to President Johnson/1/ Washington, June 4, 1964. /1/Source: Johnson Library, National Security File, Country File, Iran, Shah's Visit, 6/5/64. Secret. The source text is attached to a memorandum to the President from Bundy which reads: "Here is another excellent memorandum from Bob Komer, this time on the Shah of Iran, which you may wish to read tonight. He will follow it up tomorrow with a last-minute one-pager on talking points." The Shah's visit is mostly an exercise in political massage. Like all our clients, he will be reassured simply to touch base with you (we didn't invite him, but laid on a brief meeting once he decided to come collect a few honorary degrees). A good personal relationship between you and the Shah is more and more essential to our influence in Iran. We've helped Iran generously ($1.5 billion since 1947) but our aid is dropping sharply as Iranian oil revenues mount ($450 million this year, probably $800 million by 1970--the Shah estimates even higher). For example, we're now in the middle of a 5-year $300 million 1962-66 MAP program, but expect to shift later to a sales basis, because Iran can now afford it. So our chief problem becomes one of periodically reassuring this moody monarch, especially since he actually runs Iran. Though we've kept telling the Shah that his real problems are internal not external, and that reform is first on the agenda, he keeps reverting to the military toys he loves. We've convinced him there isn't much chance of Soviet attack, so now he's talking up an Arab threat as his excuse. His main interest just now is replacing his aging M-47 tanks. M-48A3s like the Israelis want would be cheaper and more than ample, but he wants our new M-60s. To avoid a discussion about hardware, you might tell him right off that we can't provide tanks as grant aid but will sell him some when available; you've directed Defense to work out the details. He'll settle for this, because in his January letter to you he candidly offered to buy such equipment if Congress cut MAP funds too short. Nor do we want to commit ourselves to any MAP grant program for the period after our present arrangement runs out in 1967, but we can assure him we'll continue to work with him. It's worth telling the Shah that we are beefing up our own strength in the Indian Ocean area by frequent carrier deployments (he recently attended a weapons demonstration on one). This gives us far greater combat power in the area, and is aimed largely at backing up Iran against the U.S.S.R. or the Arabs. We want to reassure the Shah about the "Arab" threat. He runs scared of Nasser. For example, we don't think the vague new "unity agreement" between the UAR and Iraq adds up to much. Since you've been so heavily immersed this week in Arab-Israeli affairs via the Eshkol visit, you might use that as a handle for expounding our view that the Arabs aren't much of a military threat. The Shah also keeps beefing about our making Nasser our "chosen instrument" in the Middle East. It would help if you made clear that: (a) we're not naive about Nasser--we're simply trying to keep him from leaning too far toward Moscow--this is in Iran's interest as much as ours; (b) we aren't really giving Nasser much aid except food which he can't convert into arms; and (c) we are still in effect containing Nasser by our aid to Israel, Jordan, Saudis, Sudan, and Libya as well as Iran. After rebutting the Shah's security preoccupations, we hope you can shift the conversation to his reform program. We still see this as his best defense against subversion--the real threat from both Moscow and Cairo. We've waged a successful campaign since the economic crisis of mid-1961 to shift his attention from defense to domestic economic progress. His land reform program is going fairly well, and two good harvests have eased initial dislocations. But the economy in the urban areas still hasn't fully recovered (though it's beginning to snap back now that public spending is picking up) and the Shah still needs to get the city people behind him along with the peasants. So we've got to convince the Shah that he's only begun the modernization process, and has to keep at it. We also want to nip in the bud any notion that he can relax as oil revenues climb. No matter how much money there is, demands are always so great that careful priorities have to be set. The Shah's new government under Ali Mansur has recently taken steps to improve its machinery. But to keep his nose to the grindstone, you might mention how important you consider his new Budget Agency, his new Civil Service Code, and his plans for tax reform. You could also explain the rationale of your anti-poverty campaign. We want him to catch some of your enthusiasm for domestic reform. Since the Shah will stop off in Morocco on his way home, I suggest you ask him to convey your regards to King Hassan. You might also enlist his aid to get Hassan too focussed on the need for sound administration and reform. As background you should read the attached cable/2/ from Ambassador Holmes. Also attached are State briefs./3/ I'll give you a last minute reminder on talking points tomorrow. /2/Document 27. /3/Not printed. The Special Talking Paper on Military Assistance is printed as Document 32. Bob Komer
34. Memorandum From Robert W. Komer of the National Security Council Staff to President Johnson/1/ Washington, June 5, 1964. /1/Source: Johnson Library, National Security File, Country File, Iran, Shah's Visit, 6/5/64. Secret. Here are the things the Shah will like to hear, interwoven with a few we'd like to get across to him. I'd strongly urge that (as with Eshkol) you get in the first word; it disarms the guest. 1. It's a special pleasure to see Shah, because at time when lots of troubles elsewhere Iran is brightest spot in ME. 2. As to US, we have more troubles but fewer real dangers. Soviets are behaving, even if Chicoms are not. 3. In fact, one of our biggest headaches today is that our allies are constantly trying to get us to solve their disputes with other friendly countries (for example, Iran's neighbors Pakistan and Turkey are doing so right now). We're glad we don't have this kind of problem with Iran. 4. We recognize Shah's concern over potential Arab threat, but urge he not run too scared. Despite many tries since 1952 revolution, UAR hasn't successfully expanded yet. Nor do we see much likelihood of Iraqi-UAR unity. 5. One of our big problems is to convince allies like Pakistan and Turkey that real way to insure their future security and stability is through nation-building. 6. This is why we're so impressed with Shah's start on reform. We consider especially important his new budget agency, civil service code, and plans for tax reform. 7. But modernization is a never-ending process, even in the US. Look at our urban renewal and poverty problems. Shah must stimulate his economy more too, to provide cushion for shock of reforms. 8. Shah will raise tanks, probably after complaining about Arab threat. If so, suggest you tell him we can't provide tanks on top of present 5-year $300 million program. Because of MAP stringency, we'd have to sell him some. He should talk with McNaughton (who sees him this afternoon). 9. Remind Shah that our periodic carrier deployment into Indian Ocean designed largely with Iran in mind. Did Shah like recent carrier demonstration? 10. Finally, when Shah sees King of Morocco give him your regards and stimulate his interest in being reformer too./2/ /2/A handwritten notation in Komer's handwriting at this point on the source text reads: "Only Shah and his Ambassador, plus Talbot, Komer, and maybe Rusk will be present." An unsigned, undated memorandum for the files in the Department of State files reads: "No Memorandum of Conversation was prepared on the conversation which took place between the President and the Shah of Iran on June 5, 1964." (Department of State, S/S Conference Files: Lot 66 D 110, Vol. II, Visit of the Shah of Iran--Memcons, Sub. & Admin. Misc., CF 2409) Bob Komer
35. Memorandum From the Deputy Assistant Secretary of Defense for International Security Affairs (Solbert) to Secretary of Defense McNamara/1/ I-0109/64 Washington, June 5, 1964. /1/Source: Washington National Records Center, RG 330, OASD/ISA Files: FRC 68 A 306, 452.1 Iran, 5 Jun 64. Confidential. SUBJECT The Shah of Iran has included in his most recent statement of military replacement needs a requirement for four C-130 aircraft for delivery by 1 July 1965. It is proposed that we approve a sale for this requirement totaling $10 million ($2.2 million each, plus spares) and advise the Shah of this approval during his current visit to Washington. The Air Force has indicated that four C-130B's are available and could be rehabilitated and delivered by that date assuming the sale is consummated by 1 July 1964. The Air Force, in turn, would procure four C-130E's for replacement to its inventory within the 22 months lead-time. The question of credit may arise if the Iranians cannot meet the sale under dependable undertaking, our recommended starting position. In this event, the following credit terms under Section 508 of the Foreign Assistance Act of 1961, as amended, are recommended for your approval (State/AID concur): Minimum Position 10% down, 3 years repayment in 12 equal quarterly payments, and 3-1/2% interest on the unpaid balance. Fall-Back Position 10% down, 5 years repayment in 20 equal quarterly payments, and 3-1/2% interest on the unpaid balance. This amount would be considered to be within the $20-$40 million range for military sales to Iran discussed in background material submitted to the President for the Shah's visit./2/ /2/Approved by McNamara on June 6. Peter Solbert
36. Memorandum From the Assistant Secretary of State for Near Eastern and South Asian Affairs (Talbot) to the Under Secretary of State for Political Affairs (Harriman)/1/ Washington, June 6, 1964. /1/Source: Department of State, NEA/IRN Files: Lot 69 D 30, Staff Studies. Confidential. Drafted by Tiger and cleared by Jernegan. SUBJECT The Shah's meeting with the President yesterday was warm and cordial. As expected, the Shah devoted considerable attention to the following subjects: Arab designs on Khuzistan, which he said were now backed by Khrushchev, who is anxious to deny Middle East oil to the West; the consequent need for enhanced Iranian defensive capabilities; the suitability of Bendar Abbas for use by the United States for a base; and the Shah's fears that the oil companies would give preferential treatment to Arab producing countries now that OPEC had become what the Shah called an "instrument of Arab imperialism". In connection with the latter point, the President told the Shah that we would speak to the oil companies about the Shah's misgivings. At the White House luncheon, following the private meeting, both the President and Secretary Rusk spoke to Mr. Howard W. Page of Standard Oil of New Jersey and Mr. George Parkhurst of Standard Oil of California, emphasizing United States Government interest in seeing that the companies treat Iran fairly. Later in the afternoon Messrs. Page and Parkhurst called on Mr. Talbot and reiterated their appreciation of Iran's situation and the agreement of the companies to ensure fair treatment for Iran in the OPEC negotiations. Details of this discussion are included in the attached memorandum of conversation. It would be very helpful if you would reassure the Shah further on this point and convey to him the assurances expressed by Messrs. Page and Parkhurst. It is expected that the discussions with the Shah at the 5 p.m. "tea" will be concerned mainly with military affairs, specifically the Shah's program for military modernization and the possibilities of United States sales of modern tanks and transport aircraft to Iran to cover the most urgent replacement needs. Mr. Talbot will be present at the "tea", and the other guests will be: DOD-- JCS-- White House State-- AID--
37. Memorandum of Conversation/1/ I-8729/64 Washington, June 6, 1964. /1/Source: Johnson Library, National Security File, Files of Robert W. Komer, Visit of Shah of Iran, June 1964. Confidential. Drafted on June 9. SUBJECT 1. Background Briefing--The Shah gave a detailed description of his reform program, covering past accomplishments and his hopes for the future. He concluded by stressing the importance of his security forces to the success of his program and his concern with the military assistance being rendered the Arabs by the U.S.S.R. and the aggressive nature of Nasser's policies and propaganda toward Iran. 2. U.S. Intentions re Military Modernization--Mr. Harriman (State) expressed the importance that the U.S. attached to its relationship with Iran and asked Mr. Sloan (Defense) to discuss the matter of continued support in the military field. Mr. Sloan referred to the Shah's conversation with the President and stated it was the intention of the U.S. to respond favorably to the military needs of Iran as recently received in the Pentagon. a. C-130 Transport Aircraft--Mr. Sloan announced that the U.S. was prepared to consummate arrangements for the sale of 4 of these planes to Iran as replacements for a squadron of C-47s. Favorable credit terms were available. In order to meet the desired delivery date of July 65 and to provide the same model plane that the IAF already has in its first squadron of C-130Bs, it was proposed to have the USAF rehabilitate 4 C-130Bs for delivery to Iran. These would later be replaced in the USAF inventory by 4 C-130Es from production. Iran would pay the price of the C-130E which is less than the C-130B price. The Shah expressed his appreciation for the rapid consideration of his needs but gave no view concerning the relative desirability of the C-130B and E. b. Tank Replacement--Mr. Sloan reiterated the statement of the President that we wanted to provide him the tanks that he desires but it was felt that, in all fairness, the various alternative possibilities should be described together with their implications. As a result of a cutback in production schedules the cost of the M-60 had escalated to about $270,000 including spares and handling charges. They could be made available starting in March 65 as requested. The U.S. Army had developed two A-3 modifications of the M-48 which were felt to be about equal to the M-60 in performance and about $100,000 cheaper per tank. The first modification was being applied to 1000 tanks for use by the U.S. Army and Marines. It has the same engine and operating range as the M-60. The 90mm gun is retained in order to permit the use of large stocks of 90mm ammunition for training. Also a HEAT round has been developed that gives the gun about the same range as the 105mm gun of the M-60. The second modification has the same engine and gun as the M-60. The principal advantage of the M-60 is in a slightly smoother silhouette. Since this latter modification is not presently contemplated by the U.S. Army, it could not be accomplished as rapidly as the first, which is now underway. The Shah expressed concern that spare parts would become a problem with the M-48 as they have for the M-47. Mr. Sloan stated that the M-48 would be in the inventory of the U.S. Army as long as the M-60 and until a main battle tank was developed and available, estimated to be in the early 1970s. The Shah expressed concern that this conversion to a new tank would not be completed until 1969 which would not leave much useful life if spare parts became short in the early 70s. Mr. Sloan assured him that it was U.S. present policy that spare parts would be maintained for all military equipment provided to allies as long as the equipment was in use. Mr. Komer (White House) spoke up in strong support of the M-48 A-3 as being comparable to and more economical than the M-60. The Shah asked that he be given a detailed comparison of the three possibilities with a revised cost figure for the M-60 that would reflect the increased production schedule to accommodate Iran's requirement. c. Other requirements for Iran--Brief discussion was held concerning the remaining items in the modernization plan: machine guns, artillery, M-113, and scout cars. No one brought up any problem areas and it was concluded by the Shah that these items could be made available, in the context of an overall plan. d. Air Defense for Southern Area--The Shah spoke of the absolute necessity of defending the strategically-important oil fields and the Bandar Abbas Port complex. He inquired as to the status of the air defense study being prepared by General Adams (CINCSTRIKE); General Griffith (STRIKE Command) stated that he had turned over to General Eckhardt (ARMISH/MAAG, Iran) this study for further discussion with the Shah. e. Cooperative Sales Agreement--Mr. Sloan stated that when the requirements are completely definitized, it would be possible to draw up an overall agreement that would indicate what Iran desired to buy from the U.S. and the lesser amount that the U.S. would try to provide under MAP during the period in question. MAP, of course, was always subject to Congressional approval. The Shah expressed the opinion that this was the only way to carry forward our mutual efforts in an orderly and businesslike manner. 3. Economic Modernization--Mr. Rostow (State) introduced the problem that he had observed in other developing countries and which he thought was probably applicable to Iran. This was the difficulty in getting industry to develop in such a way as to support and complement the agricultural development. This was directly related to the stimulation of proper marketing practices that are necessary if much agricultural produce is not to be lost in the marketing process. Specifically he mentioned the requirement for industry to take the emphasis from production for Teheran and other cities and to concentrate in producing things the farmers need and want: textiles, farm implements and machinery, cheap radios, electricity, etc. Otherwise the farmer will find that his increased productivity and income have brought him no realization of his aspirations. The Shah admitted this was a basic problem in Iran with which he needed help from the U.S. Dr. Macy (AID Iran) stated that some work was being done on improving the marketing. The Shah asked that additional technical assistance be provided in solving the larger problem described by Mr. Rostow. In the economic field he also expressed the desire that a combination of AID and Ex.Im. Bank loans be considered for Iran. 4. Conclusion--Mr. Harriman assured the Shah of continued U.S. assistance in strengthening Iran. As the meeting was breaking up, the Shah asked General Eckhardt to meet with him at 1000 hours Monday to discuss the Air Defense Study prepared by CINCSTRIKE and go over in more detail the other items in the modernization plan, particularly the price of the M-60 to reflect the procurement by Iran of the first 176 tanks./2/ He inquired concerning the light tank he had discussed with General Adams. General Eckhardt advised him that there was no available information on the availability and price of the Sheridan tank. /2/A memorandum for the record of the meeting on June 8 is ibid. G.S. Eckhardt
38. Memorandum of Conversation/1/ Washington, June 8, 1964, 12:30 p.m. /1/Source: Department of State, Central Files, POL 7 IRAN. Confidential. Drafted by Thomas on June 9. SUBJECT PLACE PARTICIPANTS Mr. Tiger referred briefly to the Alphonse-Gaston type of confusion about whether or not the Shah really wanted a serious talk with Page and Parkhurst during his U.S. visit. After the initial negative finding, Governor Harriman had got the impression Saturday that the Shah did want such a talk, and this was confirmed the next day, the appointment being made for 11:30 a.m. Monday, June 8. Messrs. Page and Parkhurst then described the conversation they had just had with the Shah. He had brought up nothing new, but merely emphasized how important it was that the oil companies not submit to Arab "blackmail." The Shah, of course, would not be opposed to further concessions by the companies, but they should first be offered to Iran. Page and Parkhurst had reassured the Shah, explaining that they had already told Dr. Fala that the companies would make no deals with the Arabs behind Iran's back. Discussions had been going on with Yamani of Saudi Arabia. Aramco's Brougham, who had just been talking with Yamani, was due back in the U.S. tomorrow. The Brougham-Yamani talks were only exploratory, of course, since Brougham was not empowered to negotiate for the oil industry. If these talks indicated there might be some possibility of reaching agreement with Saudi Arabia within the general framework of the oil companies' offer, the companies had promised to inform Fala immediately. There had been some discussion of petroleum economics, which the Shah introduced by remarking that, in Iran at least, oil was no longer a political problem, but solely an economic one. The Shah indicated that he knew something of this subject, being aware, for example, that posted prices were somewhat artificial and that the companies make much of their profit in other operations--transport, refining, etc. Page and Parkhurst had explained that it all depended where one began. If one began on the basis of posted price, then the companies made nothing on the other operations. But in reality they were able to realize overall gains which, while less than those of many other industries, were sufficient to keep them in business. They hoped by improving efficiency to increase their margin of profit. Page and Parkhurst had also explained to the Shah why the competition from other fuels made it impossible to raise oil prices. Returning to Arab affairs, the Shah had said that it was in Iran's interests to remain on good terms with Saudi Arabia and Kuwait. He thought the companies shared this interest with Iran and that the U.S. Government's interest paralleled that of the companies. The Shah thought highly of Faysal. The big danger, in the Shah's mind, was Nasser and Nasserism. And behind Nasser was Khrushchev. The Shah had also encouraged the oil companies to invest in non-petroleum activities in Iran. Page and Parkhurst had said the companies were indeed in the process of studying possibilities for such investments.
39. Telegram From the Department of State to the Embassy in Iran/1/ Washington, June 8, 1964, 6:07 p.m. /1/Source: Department of State, Central Files, POL 7 IRAN. Confidential. Drafted by Tiger on June 5, cleared by Department of State Deputy Executive Secretary John A. McKesson and Komer, and approved by Talbot. 914. Shah's Visit. Presidential meeting and White House luncheon proceeded in atmosphere great warmth and cordiality. In meeting, Shah devoted considerable attention to: Arab designs on Khuzistan, which he said now backed by Khrushchev, who anxious deny oil to West; consequent need enhanced Iranian defensive capabilities; suitability Bandar Abbas for U.S. base use; fears that oil companies would give preferential treatment Arab producers now that OPEC an "instrument of Arab imperialism." President complimented the Shah on his reform measures, calling Iran "brightest spot in the Middle East". He urged on Shah need to keep up pace of modernization which never-ending process even in U.S. He also sought to play down extent of Arab military threat. President told Shah we would speak to oil companies about Shah's misgivings. Shah's luncheon toast consisted of ringing reaffirmation firm commitment to West. Harriman [Continue with the next documents] |
