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40. Telegram From the Department of State to the Embassy in Iran/1/ Washington, June 8, 1964, 8:25 p.m. /1/Source: Department of State, Central Files, DEF 19-3 US-IRAN. Confidential. Drafted by Tiger and General Eckhardt, cleared by Colonel Taylor and Bartlett Harvey (AID/PC), and approved by Talbot. Repeated to CINCSTRIKE/CINCMEAFSA, and CINCSTRIKE/CINCMEAFSA for POLAD. 916. Joint State/AID/Defense message. Military modernization program discussed with Shah by DOD, State and AID reps on 6 June. Shah was told USG intends to be responsive to his military modernization requirements. DOD reps suggested consideration Cooperative Logistics Sales Agreement. Regarding tanks, Shah's attention directed to M-48A3 as better priced substitute for M-60, which now very high priced because of curtailed procurement schedule. Regarding transport aircraft, we offered sale of four C-130's on favorable credit terms for delivery by July 1965. There was less concrete discussion concerning other modernization items. Shah was pleased with general approach, requested further meeting with working level DOD on Monday, June 8, for more detailed discussion modernization plan, particularly possibilities for reduction in price of M-60 as result possible procurement by Iran. At June 8 meeting, main emphasis was on tanks with Shah questioning sharply price and characteristics data. Shah requested another meeting in New York on 12 June at which time he would like to have firm information as to the availability of the M-48A3 tank with the 105[mm] gun and, if possible, to discuss a draft Cooperative Logistics Sales Agreement covering the entire modernization program. Shah at no time asked for details about credit availability or terms but assumed that this would be included in the discussion of a Cooperative Logistics Sales Agreement. Other subjects covered in meetings (CINCSTRIKE Air Defense Study, Iranian economic development) to be covered in memcons. Rusk
41. Telegram From the Department of State to the Embassy in Iran/1/ Washington, June 9, 1964, 5:57 p.m. /1/Source: Department of State, Central Files, POL 7 IRAN. Confidential. Drafted by Tiger; cleared by Billings and Deputy Chief of Protocol William J. Tonesk, and in substance by Sidney T. Telford of the Office of Security, Welk of the Export-Import Bank, and Colonel Taylor; and approved by Bracken. 918. Shah's Visit. Official, social and public aspects Washington portion Shah's visit highly successful. Welcoming delegation headed by Secretary, Duke and Talbot; farewell delegation headed by Duke and Talbot. Shah made excellent impression at Mellon dinner and also at private dinner Washington Institute of Foreign Affairs, where he answered off-the-record questions about world affairs and Iranian domestic problems in frank and informed manner before very distinguished group. Publicity relatively small in volume, prevailingly favorable to Shah, concentrated on cultural-educational aspects of visit with hardly any speculation substantive content official meetings. Students, numbering 25-30, demonstrated quietly at Dulles, White House, American University, Sulgrave Club, and Mass Ave near Embassy. Missed departure National Airport because of last-minute change in locale from Andrews. In each case picketing was kept at considerable distance, and Shah's party was routed in such ways that it doubtful he saw pickets. Students held press conference at National Press Club, June 5, covered in Post inside page, low-key story. There were several late additions to schedule, as follows: meeting with State, AID and DOD reps June 6, followed up by more detailed discussions military modernization with DOD reps June 8 (Deptel 916);/2/ private meeting June 8 with oil executives Page and Parkhurst, at Shah's request (memcon follows);/3/ "tea" June 8 with officials Eximbank, IMF, IBRD, IFC; wreath laying Kennedy grave Arlington, June 8; and brief visit Washington Cathedral as guest Dean Sayre, June 8. We have also heard that Shah spent considerable time June 6 and 7 at Embassy holding levees for various categories of Iranian residents, including some students who sought, and in some cases received, passport renewals. /2/Document 40. /3/See Document 38. Aside from military modernization discussions (Deptel 916), most significant addition to schedule was Monday meeting with bankers, which arranged hastily on Sunday, presumably at initiative of Shah. Attended by: Linder, Sauer, and Welk of EXIM; Knapp, Reed, and Khosropour of IBRD; Rosen of IFC; Southard and Gunter of IMF; Foroughi and Amuzegar. Shah addressed this group on Iranian economic problems, reform program, political outlook. EXIM group was well impressed with his informed, balanced approach, particularly his grasp of economic affairs, and believes international org reps were similarly impressed. Shah acknowledged Iran's greatly improved economic prospects but stressed need for continued foreign lending in interim in order to support adequate pace economic development. He referred in appreciative terms to new IBRD road loan and expressed hope for combined AID-EXIM lending for electric power network. Appears this session initiated on basis advice and briefing from Samii and provided most beneficial follow-up recent Samii mission. Shah has accepted invitation from Northrop to visit USAF base Los Angeles area June 10 for operational demonstration F-5B. Rusk
42. Memorandum of Conversation/1/ New York, June 12, 1964. /1/Source: Department of State, NEA/IRN Files: Lot 69 D 178, Iran, 19-4-a, Five-Year Agreement, 1965-69. Secret. Drafted by Walsh. SUBJECT PARTICIPANTS The Shah of Iran Defense Major General George, Eckhardt, Chief MAAG/Tehran State At the request of the Shah, Defense/State representatives met with him in New York on June 12. The meeting was held in his suite in the Waldorf Astoria. It began at 6:45 p.m. and lasted about an hour and twenty minutes. Since the DOD group arrived at about 6:40, we only had a few minutes to discuss our position and no opportunity to see the specific position papers which General Eckhardt utilized throughout the session. The atmosphere was friendly. The Shah had just arrived some minutes before from Los Angeles. He appeared tired and somewhat melancholy. One had the impression that the demonstrations in Los Angeles had depressed him. There was a huge crowd in front of the Waldorf. According to the police, it was entirely friendly with no demonstrators present. Nevertheless, the fact that he had once again been confronted with a large crowd may have recalled to his mind some of his irritation about what happened in Los Angeles. At one stage in the discussion, the Shah said that he was subject to what one might call an international conspiracy led by the communists with the active assistance of Nasser and the Arabs. In one demonstration in Los Angeles, according to the Shah, there were only six Iranians and the other demonstrators seemed to have been American communists and Arab students. He spoke with manifest irritation about an incident in Los Angeles; apparently a plane flew over the ceremony at UCLA carrying a banner that said "If you want a fix, see the Shah." He said he asked people "What is a fix?" and they told him it was heroin. He said with bitterness that this smearing attack was made against him despite his efforts to kill off this dirty drug. If I am involved in heroin, he added, one should say that I am a terribly poor salesman and that I am working against my "sales interest." He went on to say that he was going to stop off and see King Hassan who had invited him to talk about Nasser. He said Hassan was having trouble with Nasser, which is a common experience. He said Nasser was giving arms to the Algerians to kill Moslem Moroccans; he was giving arms to Greek-Cypriots to kill Turkish Moslems; he was threatening the life of the Shah, a Moslem. In accordance with the position agreed upon in Washington, the Shah was informed that the United States is prepared to conclude a sales agreement in FY 1965 for 176 M-60 tanks and four C-130 transport planes with deliveries to occur on a phased basis. He was also informed that we are prepared to begin negotiations at an early date in Tehran of a broader program covering the FY 1965-69 period, which would include both credit and grant equipment elements. Subject to Congressional authorizations, grant MAP would be continued in the three years after the end of the current Five-Year Plan, namely in FY 1967, 1968, and 1969. It was emphasized that the United States participation in the proposed negotiations would be under the direction of Ambassador Holmes who would be assisted by technicians from Washington to the degree deemed necessary. The Shah was clearly pleased by United States responsiveness in respect to the modernization requirements of the Iranian military structure and by the decision to continue MAP grants. He indicated that he would begin preparations for negotiations as soon as he returns to Tehran this week. General Eckhardt was under direct instructions from Secretary McNamara to inform the Shah that we would be prepared to begin the negotiations within a week's time. I told General Eckhardt before the meeting started that he should carry out his instructions, but that we would have to inform the Shah that other elements of the American Government doubted our ability to hold the discussions that quickly. Both these points were conveyed to the Shah and it was evident that there was not a problem involved insofar as he was concerned because he himself will not be ready as quickly as the Secretary had hoped. It seems probable that a target date of about July 8 would be logical. If a Team arrives much before that date, it is likely to cool its heels waiting for the Iranians. It will be recalled that the Department of Defense had strongly desired the preparation and submission to the Shah of a detailed memorandum of understanding which ostensibly would have been initialed by him. We had opposed this proposition and of course it did not take place. For what it is worth, it is my opinion, and I believe the opinion of General Eckhardt, that the Shah would not have been pleased had we followed that plan and that he would not in fact have initialed that paper or any other paper. He was not prepared, in my opinion, to negotiate while in the United States. Tanks In opening the subject of tanks, General Eckhardt informed the Shah that Secretary McNamara had looked very closely at the question of the desirability of furnishing the M-60 and/or the M-48A3. It was the viewpoint of the Secretary that, taking a variety of factors into account, it would be desirable to furnish M-60's. The indicated price per unit with one year's spares would be $220,000. This would be about $70,000 more than the indicated price for an M-48A3. On the other hand, the M-60 is a better piece of equipment. It could be maintained for a longer period of time and it would be better from a supply, maintenance, and operating viewpoint to concentrate on one tank instead of having a combination of M-60's, M-48's and M-47's. In response, the Shah said he was pleased by this decision. He felt it was wise. He said he wanted a tank that was good for eight or ten years, and that the M-60 was best for this purpose. He, too, had been worried about the proliferation of models. On the subject of the proposed M-41 light tank, General Eckhardt said that the United States Army had looked at this question very carefully and recommended that the Shah not take M-41's. The General said that there would be a maintenance problem with the tank within several years and that its adoption would again create proliferation problems. He said that the Army felt the Shah would be better advised to use the in-country M-47's for the purpose he had in mind with respect to the M-41 and, if this recommendation were adopted, there would be a net indicated savings for Iran of about $12 million. The Shah again said that this seemed wise to him and he believed that it was the proper course for Iran to pursue. The Shah then raised the subject of armored cars. In reply he was informed that the United States Army recommended he not enter this field. We do not use armored cars in our own Army. There are none produced for United States Government account although both Cadillac and Chrysler produce this equipment for export purposes. It was pointed out that their products are competitive with the products produced by other countries but again to the extent that this type of equipment was needed the requirement could be covered by a judicious use of M-47's. The Shah said he was inclined to accept the recommendation in this respect, but he would wish to review this subject in the course of the Tehran discussions. Other Equipment The Shah raised the question of certain other equipment that he had inquired about at the meeting on June 8, such as machine guns, APC's, and howitzers. He was informed these would be available and details would be provided in Tehran. Furthermore, it is quite possible that these would be supplied under MAP grant. He said he was grateful for this information, and nothing more was said about it. Air Defense The Shah asked what information was available in respect to the various elements of the air defense problem that had been discussed at the two earlier meetings in Washington. In reply, the Shah was asked what his reaction had been to his experience in flying the F-5A on the West Coast. The weary Shah brightened up at this point and for a few minutes we maneuvered an F-5A very high in the sky. He said it was a beautiful plane, highly maneuverable, very easy to fly, and with substantially better characteristics than he had understood. He said he was much impressed with the way the Northrop people had dealt with him when he was in their capable hands. He said as a Persian he had certain knowledge of the tactics of salesmanship. In this instance, he honestly felt that they had not overstressed or oversold their case and he greatly appreciated their approach to him. He then asked General Eckhardt if he had statistics available on the relative characteristics of the various Russian bombers. The General supplied this information with indications that the F-5A was quite capable of handling these bombers in a combat situation. The General went on to point out frankly that a MIG-21, which has quite high air defense characteristics, was in some respects clearly superior to an F-5A. On the other hand, its very short range would indicate that it could not effectively operate against an F-5A very deeply within the territory of Iran. The Shah appeared impressed by these points. He said that he now felt that he should not plan on utilizing the F-4C. He said the F-4C is a superior airplane; on the other hand, it would be terribly expensive in money terms and again would involve a proliferation of aircraft models and would be hard for his people to handle. He therefore was coming to the conclusion that he ought to plan in the years ahead on replacing his F-86 squadrons with F-5A's. He said that he was hopeful that the armament people would be successful in their efforts to produce a better missile for the F-5A, but this of course would remain to be seen. General Eckhardt said that we noted with satisfaction the Shah's feelings about the F-5A and agreed there would be a very substantial savings in terms of money and men, if he would continue with this fine plane. The Shah said this was his point of view at this moment. He went on to say that the modernization program for all his forces would have to go on. He very much doubted, however, that they would be able to make very much in the way of gains relative to the great strength of their potential enemies from the north. They would of course do their best. On the other hand, he was convinced they had a growing threat from the west. He was confident that Iran, within its resources, could make a positive improvement in its posture in this respect. He was determined to do this. He said that Iran and the United States had made very substantial investments in the Dezful and Hamadan airfields. These are very fine facilities which are of very great importance in a military sense both to Iran and to the United States. At this moment, however, they literally have no defense. It would be a very great pity if nothing were done about this problem and at some future time these facilities were knocked out. He said it was important to establish Hawk facilities at these airfields, and he wished now to obtain American views on the availability of such equipment. In reply he was told that we did have a Hawk battalion which could be made available and that we would be prepared to discuss this in greater detail in the course of the negotiations in Tehran. It was indicated that this particular battalion could be made available at about $21 million. The price of a battalion at a later date would probably be significantly higher. He said he would be interested in obtaining this battalion and that he would contemplate possibly splitting it with two batteries at each airfield. He then asked about the characteristics and potential availability of Nike Hercules. In reply he was told this of course was very good equipment. However, we had not made it available under MAP and it was very doubtful that we would. It is extremely expensive and very difficult to man in an effective sense. He seemed to accept this as a logical and negative reply. He asked if there might be some equipment that could be made available to provide at least a low-level air defense capability for his airfields in the interim before the Hawks were in place, recognizing that this might be three years. He was told there were some twin M-40 "Dusters" available and that they might run about $50,000 a unit. He asked what the status was of the in-country 20 and 40 mms. which have been phased out of the Iranian force structure. The General replied that they were in very bad shape, but that it might be possible to find enough of them in usable condition to provide at least a modicum of defense and training equipment for these two airfields. If this were done, the General felt they probably should be turned over to the Iranian Air Force. The Shah thought this was a good idea and requested the General to look into it when he returned to Tehran and to discuss it with him at a later date. This was agreed. The Shah said that at some time in the future he felt that Iran would need a second Hawk battalion and he wondered if it might not be possible and feasible to train simultaneously the manpower that would be necessary to handle two battalions instead of just one. He said he was thinking in part about the future need for some air defense about Bandar Abbas. He estimated that the Bandar Abbas port and navy "base" would be completed in about 1968. He also said that he very much hoped that the airfield at Bandar Abbas would be operational before that date. He said he had instructed the Plan Organization, which has the necessary funds, to proceed with this as fast it feasible. In this respect he recalled that he had mentioned the possibilities of pre-positioning American equipment in this area. General Eckhardt told him that there would of course be considerable strain in the training process in regard to the Hawks and this was something that would have to be discussed at a later date in greater detail. The Shah said he understood this and would look forward to further discussion in Tehran. As a final comment in respect to aviation, the Shah said that he was pleased about the decision in respect to the four C-130's and that he hoped that in the course of negotiations in Tehran decisions could be arrived at in respect to the additional four that would be required to complete their air transport force. He would ultimately wish to replace all his C-47's with twelve C-130's. Navy The Shah inquired if we had been able to accumulate information he had requested in respect to the possible purchase of a DD or a DE. He was told that we felt we could ultimately make available either a DD or a DE in a completely rehabilitated condition. The destroyer probably would be in excess of $3 million and the destroyer escort would be in the vicinity of $2 million. In each case Congressional authorization would be required for the transfer and it would be unlikely that either could be made available short of two or three years. The Shah said that this was all right because it would take some time for his people to be ready to utilize units like this effectively. He was also told it might be possible to make available a new frigate. This would not require Congressional authorization but the price would be in excess of $4 million. While the Shah did not appear to be much interested in the frigate, he did indicate a desire to discuss this matter further in the coming discussions in Tehran. In sum, the Shah was informed that (1) we were prepared to sell him 176 M-60's and four C-130's; (2) MAP grant assistance would be continued in FY 67-69; (3) that we were prepared to begin negotiations in Tehran in one week, although we had doubts about the feasibility of such an early date; (4) these negotiations would cover the modernization requirements of the Iranian forces in the FY 65-69 period; (5) that a Hawk battalion would be available at about $21 million; (6) that his other requirements, such as machine guns, howitzers, and APC's, would be provided. He was manifestly pleased.
43. Memorandum From the Acting Assistant Secretary of Defense for International Security Affairs (McNaughton) to Secretary of Defense McNamara/1/ I-25, 193/64 Washington, June 13, 1964. /1/Source: Washington National Records Center, RG 330, OASD/ISA Files: FRC 68 A 306, 381 Iran--13 June 1964. Secret. Attached to a control sheet with a typed notation by Lieutenant Colonel W.A. Forbes indicating that at a meeting on Five-Year MAP for Iran on June 11, Secretary McNamara requested a memorandum stating that all MAP commitments to Iran expressed in the September 1962 Memorandum of Understanding would be delivered by June 30, 1967, the terminal date of the agreement. SUBJECT The Five Year Military Assistance agreement between the Government of the United States and the Government of Iran, consummated by the Memorandum of Understanding of September 1962, provided for furnishing certain defense items of materiel and services. Some items were to be furnished in specified quantities, other items were described in general terms, without specifying quantities, such as: Ammunition for training and a 30-day stock level, communications equipment, combat support equipment and civic action support. The total value of the 5-year package was not to exceed $298.6 million, but the Iranians were not informed of this dollar limitation. Deliveries were to be accomplished by 30 June 1967. Programming actions provided $53.1 million in FY 62, $70.0 million in FY 63 and $53.2 million in FY 64 which have been applied against the commitment. Future programs have been prepared which will provide $41.1 million in FY 65 and $46.1 million in FY 66 for a total cost of $263.5 million for the 5-year program. All items pertaining to the Memorandum of Understanding commitment have been included in these yearly programs. Deliveries already accomplished and those projected against future programs will permit delivery of all commitment items by 30 June 1967. John T. McNaughton/2/ /2/Printed from a copy that indicates that McNaughton signed the original.
44. Telegram From the Department of State to the Embassy in Iran/1/ Washington, June 16, 1964, 6:44 p.m. /1/Source: Department of State, Central Files, POL 7 IRAN. Confidential. Drafted by Tiger; cleared in draft by Chief of the Division of Protective Security Keith O. Lynch, Deputy Chief of Protocol Chester C. Carter, Joseph W. Reap (P), Donald A. Wehmeyer (L/NEA), and Deputy Administrator of the Bureau of Security and Consular Affairs Charles H. Mace; and approved by Bracken. 931. Shah's Visit. Following is summary security, publicity aspects New York, Los Angeles portions Shah's visit: At New York stop 9 June, 30 to 50 anti-Shah pickets, shouting loud and abusive protests, were allowed within 15 feet of entrance to East 78th Street premises where NYU honorary degree awarded. Proximity pickets was result admitted error New York police and situation was corrected before party's return visit to New York 12 to 14 June, when there were no serious disturbances at Waldorf Astoria or World's Fair. About 15 pickets were near the hotel. Shah and Empress upset by 9 June episode and Foroughi cites it as only really disturbing episode entire U.S. visit. N.Y. press treatment not overly sensational and prevailing tone favorable to Shah. During Los Angeles visit, pro-Shah demonstrators, evidently organized by official Iranians (Naficy and Kowsar) outnumbered anti-Shah demonstrators at airport and Ambassador Hotel, were overly boisterous in their welcome, and engaged in some fisticuffs with anti-Shah demonstrators; at least one anti-Shah demonstrator arrested but released on bail. UCLA commencement ceremonies 11 June proceeded with dignity in spite of major attempts to cause disturbances. There were about 75 anti-Shah demonstrators, of which only 12 Iranians, remainder being "other nationalities" (no further information yet available). These were kept on sidelines, some 150 yards away from ceremony, and their shouts did not disturb proceedings. When Shah started to speak, 5 students walked out but were not able to create disturbance. When some anti-Shah students attempted to unfurl banner, two were removed bodily by pro-Shah student group, which numbered about 50. During ceremony, hired airplane made two runs toward area carrying streamer reading: "Need a fix? See the Shah" (reference was to heroin addiction). Los Angeles police helicopter, which standing by in case serious riot, ascended and drove plane from area. Shah outraged by reference narcotics addiction but deeply impressed effective police action; at 12 June departure ceremony, he asked to see helicopter pilot and presented him with gift. No info yet available re renters of plane except they said to be "students" and paid $250 for rental. Los Angeles press publicity, while predictably sensational (referring to "dogfight" in air over UCLA, stressing Empress's extravagant shopping sprees) probably not, in sum, detrimental. On balance, it appears from info presently available that Shah, though upset with New York picketing and L.A. plane episode, does not hold USG responsible or suspect these incidents result of any official policy protection anti-Shah elements. This does not however preclude strong representations by GOI officials both here and in Tehran, and foregoing details are provided to help you deal with such approaches following Shah's return to Tehran 17 June. We shall attempt to run down further specific details of anti-regime activity and investigate possibilities of legal or administrative action. Rusk 45. Memorandum From Robert W. Komer of the National Security Council Staff to the President's Special Assistant for National Security Affairs (Bundy)/1/ Washington, June 27, 1964. /1/Source: Johnson Library, National Security File, Country File, Iran, Vol. I, Memos & Miscellaneous, 1/64-12/65. Secret. Copies were sent to Talbot and Macomber. Mac-- Iran Problem. Though 5-year $300 million Iran MAP plan (a real break-through) still has three years to run (FY63-67), Shah recently got all fired up about buying some fancy new hardware. He alleges growing Arab threat to oil-rich Khuzistan, but more likely his rapidly growing oil revenues have gone to his head (he told LBJ he expected $1.2 billion annually by 1970--he gets $400 plus million now). We're happy to sell for hard currency, since otherwise Shah will simply buy elsewhere. However: (a) chief threat to Iran's stability is still internal, not external--so nation-building remains the basic need; (b) since Iran is oil-rich, we want to phase out AID money and let it finance its development through oil revenues; (c) ergo, we want to limit Shah's overall military outlays to reasonable figure, using MAP credit sales plus some continued MAP as the lever. So we've cooked up a so-called Cooperative Logistics Agreement under which we: (a) promise Shah good credit terms for some $250 million in sales of M-60's, C-130s, F-5s, etc. during FY65-69; (b) as a sweetner promise to continue a MAP grant program through FY 69 ($53 million beyond present agreement); (c) want in return a promise that Iran will restrict its own military outlays to what we think reasonable so that development program is not short-changed. McNamara is pushing hard for closing this deal immediately, saying he's discussed it with LBJ. One story is that LBJ told him either to sell $1.5 billion a year in hard goods to balance our payments or to cut troops in Germany. Bob pressed Bell and Alex Johnson last week. Whatever the cause, Bob has panicked his people, and seems to be listening only to his salesmen, not to politico-military types. For example, he reversed his OK to Sloan to steer Shah to M-48A3 (our Israeli ploy) and plugged M-60s. This will cause havoc with Turks, Paks and others, who will now want M-60s and can't pay for them. AID and I can't see cause for rushing in so fast (Shah is quite happy with promises of M-60s and C-130s he got here). But above all we think this military carrot (to which we've no objection) should be used to get an agreed ceiling on Iran's overall hard currency military outlays, so Iran's future isn't jeopardized to satisfy Shah's military whims. Embassy Teheran says Shah wouldn't like any attempt to impose ceiling (Teheran 1188)/2/ and promises to achieve same result through provision for annual reviews of Iran military program, upon which each year's MAP and sales increment would be contingent. But I don't trust Embassy or DOD here, and would prefer a real stab at an agreed ceiling, a la the successful Indian exercise we just went through. At least let's make a try for an agreed ceiling, before retreating to annual reviews as a fallback. /2/Dated June 23. (Department of State, Central Files, DEF 19 U.S.-IRAN) We still have control of this, because a 1550 Determination is needed. I'm sure BOB will agree with us, and probably AID too. So I hope we won't let Rapid Robert's passion for promptitude panic us into premature pusillanimity. Saunders will keep you clued. HHS/3/ /3/Saunders initialed for Komer.
46. Memorandum From Harold H. Saunders of the National Security Council Staff to the President's Special Assistant for National Security Affairs (Bundy)/1/ Washington, July 2, 1964. /1/Source: Johnson Library, National Security File, Country File, Iran, Vol. I, Memos & Miscellaneous, 1/64-12/65. Secret. McGeorge Bundy initialed his approval. McGB: We have reached a compromise on our new 5-year MAP agreement with Iran. RWK has dropped his idea of writing a foreign exchange ceiling into the memo of understanding provided we send Holmes tough instructions to tell the Shah our help will continue only so long as his military purchases don't slow Iran's development. Defense and AID couldn't go along with including a ceiling because (1) they don't have a realistic figure and (2) they don't think the Shah would stand still for such hand-tying. They think an annual US-Iranian review of the effect of arms purchases on the economy would give us better control. They say they'd even be willing to shut off credit altogether if the Shah goes too fast. The key point is to be sure Holmes gets this idea and explains it clearly to the Shah because the memo of understanding doesn't sound that tough. Kermit Gordon will be looking at the 1550 Determination this afternoon and may talk to you about it. State will also send over instructions to Holmes for clearance, which I'll check./2/ /2/See Document 48. Hal
47. Telegram From the Department of State to the Embassy in Iran/1/ Washington, July 2, 1964, 8:47 p.m. /1/Source: Department of State, Central Files, DEF 19 U.S.-IRAN. Confidential;Priority. Drafted by Walsh; cleared in draft by Director of the Office of Developement and Planning Alfred D. White, AID Near East/South Asia Coordinator Daniel Arrill, Towsley, Stoddart (DOD), and Tiger; and approved by Deputy Assistant Secretary for Near Eastern and South Asian Affairs James P. Grant. 6. Joint State-AID-DOD message. Embtels 1188, 1189./2/ Following is new Memo Understanding covering military modernization program now in final process approval. Annexes forwarded separately./3/ Negotiation authorization follows separate cable when approved./4/ /2/Both dated June 23. (Ibid.) /3/Annexes A and B were transmitted in telegram 1196 to Tehran, June 25. (Ibid.) /4/See Document 48. I. The Government of Iran and the Government of the United States have reviewed the following defense considerations of their respective countries: A. The Mutual Defense Assistance Agreement between the two Governments of 23 May 1950, as supplemented by the exchange of notes of April 24, 1952, and the exchange of notes of July 12 and October 31, 1957./5/ /5/For texts of the Agreement and supplemental notes, see TIAS 2071. 1 UST 420; TIAS 2967. 5 UST 788; TIAS 3952. 8 UST 2369. B. The Agreement of Cooperation between the Government of the United States of America and the Imperial Government of Iran of March 5, 1959./6/ /6/For text, see American Foreign Policy: Current Documents, 1959, pp. 1020-1022. C. The Memorandum of Understanding between the Government of the United States of America and the Imperial Government of Iran of September 19, 1962./7/ /7/For text, see Foreign Relations, 1961-1963, vol. XVIII, pp. 105-109. D. The exchange of correspondence prior to, and discussions held in June 1964, between His Imperial Majesty, the Shah of Iran, and the President of the United States of America and other officials of the Government of the United States of America. II. In the light of these considerations, the two Governments reaffirm the concept for the defense of Iran and the force structure for the Imperial Iranian Armed Forces set forth in the Memorandum of Understanding of September 19, 1962. The Governments also restate their commitments to carry out their respective obligations undertaken in the Memorandum. In particular, the United States Government will, subject to the availability of funds and continued Congressional authorization, deliver on a grant basis the remaining equipment, material and services specified in the 1962 Memorandum. The Imperial Government of Iran will make satisfactory provision for the effective utilization and operation of all equipment provided to and within its military forces and will limit its purchases of military equipment to the requirements of agreed attainable force objectives. The Imperial Government also undertakes to assure that its program of military purchases will not cause undue strain on the nation's foreign exchange reserves or jeopardize plans for the nation's economic and social development. III. In view of the improved financial situation of Iran and the need for modernizing Iran's military forces on long-range basis, the two Governments agree to an additional program of Mutual Defense Cooperation for the period FY 1965-69 as set forth below. It is understood that, except as specifically modified herein, this new program is subject to those conditions and obligations undertaken by the two Governments in the Memorandum of Understanding of September 19, 1962. A. The Government of the United States will 1. Extend additional grant military assistance during FY 1967-69 to be programmed as set forth in Annex A for delivery by the end of FY 1970. 2. Subject to the request of the Imperial Government of Iran, a) Assist in the formulation of long-range plans for the equipping, training and modernization of the Armed Forces of the Imperial Government of Iran; b) Provide procurement, contracting and inspection services to the Imperial Government of Iran for the material which Iran desires to purchase in the United States; c) Provide technical advice and training services to the Armed Forces of the Imperial Government of Iran to enhance the effective installation, operation and maintenance of the equipment concerned. 3. In order to assist the Imperial Government of Iran in financing the purchases referred to in Paragraph III B, a) Assure credits within 30 days from the date of signing this Memorandum of Understanding for the equipment, spares and services enumerated in Paragraph III C; b) Assure credits during U.S. FY 1965-69 from available private and Government financial institutions or, subject to the availability of funds, from funds made available under the Foreign Assistance Act of 1961 as amended, in amounts which, including the credits referred to in Paragraph III A 3 a), do not exceed a total of $200 million and are consist-ent with the foreign exchange and other limitations contained in III C. Negotiations with available private and Government financial institutions to obtain such credits will be conducted by the Imperial Government of Iran in cooperation with the Government of the United States. These credits will be repayable on terms which will allow payment over the ten-year period FY 1965-74 to be negotiated at the time of the conclusion of each credit sales program or contract under this Agreement and shall take into account Iran's repayment capabilities. The interest rate to be negotiated will not exceed an average of 4-5 percent per annum on the unpaid balance. B. The Imperial Government of Iran will purchase from the United States during FY 1965-69 military equipment, material and services over and above that to be furnished on a grant basis. These purchases have an estimated value of $250 million, including: 1. Cash purchases of an estimated value of $50 million (principally spare parts for equipment provided under military grant aid programs). 2. Purchases, utilizing above credits as necessary, of an estimated value of $200 million (principally new equipment, spares, and related services). Illustrative list is at Annex B. C. To implement this modernization program, the Imperial Government of Iran will place orders and the Government of the United States will provide credits within 30 days from the date of the signing of this Memorandum of Understanding for the following equipment, at approximately the indicated price:
Programming of the other equipment to be offered to Iran under the line of credit cited above will be divided into separate increments and phased over subsequent years. In the course of the negotiation of the credit agreement for each increment, the Iranian balance of payments and budgetary situation and progress of the development program will be reviewed in order to determine the amount of credit to be offered in the increment and a feasible amortization schedule. IV. The Government of the United States designates the Chief of the United States Military Assistance Advisory Group to Iran, and the Imperial Government of Iran designates (a representative to be specified by the GOI) to meet periodically to perform the following functions: A. Serve as the focal point for all matters pertaining to the United States-Iran military modernization equipment procurement program. B. Develop detailed plans and arrangements for the implementation of this general understanding, and to supervise actions relating to the implementation of this agreement. C. Develop Force Objectives and determine valid military equipment and training requirements for the Imperial Government of Iran which are deemed attainable in future time periods. V. A ranking representative designated by the Imperial Iranian Government will meet with the United States Ambassador to Iran periodically, but not less frequently than once a year, to review the progress and execution of this understanding and its relationship to Iran's economic and social development program. This will include a joint assessment of the effect of military purchases on the Iranian balance of payments and budgetary situation. Dated: _________________ For the Government of the United States of America For the Imperial Government of Iran Rusk
48. Telegram From the Department of State to the Embassy in Iran/1/ Washington, July 2, 1964, 8:47 p.m. /1/Source: Department of State, Central Files, DEF 19 US-IRAN. Confidential; Priority. Drafted by Walsh; cleared by Solbert (DOD), Macomber, Arrill (AID), G/PM Director for Operations Howard Meyers, Tiger, and Saunders; and approved by Talbot. 8. For the Ambassador. Joint State/AID/Defense message. Deptel 6/2/ and DEF 976339./3/ You hereby authorized negotiate with Shah and/or other appropriate Iranian officials additional program of Mutual Defense Cooperation for period FY 1965-69 as set forth Memo Understanding and annexes forwarded reftels. In course outlining to Shah our willingness assist in Military Modernization Program you should emphasize our deep interest in Iran's economic development program and its relationship to fundamental security of his country as expressed by the late President Kennedy and President Johnson. Since we would not wish economic effort to be jeopardized, we strongly feel foreign exchange and budgetary effects of military modernization program must be kept in proper bounds. In this respect we will wish periodically examine jointly with GOI overall economic effects military expenditures as indicated Para III 3 C and Para V Memo Understanding. /2/Document 47. /3/Not found. FYI. In regard Para III 3 C we have not as yet reached firm conclusions re programming schedule or magnitudes segments other than first $57 million. While we hope last programming segment will not be later than FY 1968, this para meant to cover possibility of stretching out program over longer period if military purchase program tends conflict unduly with economic development program or Iranian balance payments. [End] FYI Rusk
49. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, July 4, 1964, 6 p.m. /1/Source: Department of State, Central Files, DEF 19 US-IRAN. Confidential. Repeated to CINCSTRIKE and Department of Defense. 9. Memo of Understanding without change signed today by me and by Minister of Court "by command of His Imperial Majesty the Shah of Iran". At same time Minister of Court, again by command of the Shah, transmitted a letter which appoints General Hedjazi as the Iranian rep provided for in para IV of the Memo of Understanding. In this same letter it is stated that "In future requirements of the Imperial Iranian Armed Forces will be communicated by General Hedjazi, in accordance with para IV of the memo". Original signed copy of Memo of Understanding and this letter being forwarded by pouch. Shah said that he recognized the proposed program involving $200 million credit and $50 million cash was the most that should be spent on military modernization under presently anticipated revenues and foreign exchange availability. However, he wishes to be free to bring up possibility of purchasing additional equipment, which he considers desirable, if increased revenues over and above those now anticipated should accrue to the Iranian Govt in such amount as to make it feasible to acquire additional equipment without jeopardizing national economic and social programs. The Shah made a very strong statement that he would not allow military expenditures adversely to affect Iran's economic progress. However, he has high hopes that oil revenues, and hence foreign exchange availability, will increase to a greater extent than presently foreseen. The additional equipment which might eventually be acquired would be: (1) a second Hawk battalion; (2) an additional radar station in the Bandar Abbas area; (3) one or possibly two squadrons of F-4Cs, or other high-performance aircraft, in replacement of two squadrons of F-5As. Gen Eckhardt considers that the problem of training sufficient Iranian military personnel to man new fighter aircraft, first Hawk battalion and AC and W system will act effectively to defer introduction of this additional equipment prior to 1969. He emphasized this personnel problem very strongly to Shah. In addition to the foregoing, the Shah wanted to go on record as pointing out that modernization might require some slight upward revision of troop ceilings, although he insisted he had no intention of espousing any substantial expansion. He wanted to adhere to the order of magniture of the present force objectives, but, on the other hand, he did not want to be held rigidly to 160,000. A preliminary estimate indicates that any increase required by modernization will not likely exceed the ceiling of 162,000 set in the instructions for the agreement of 1962. The Shah said that he agreed with Gen Eckhardt that the idea of acquiring destroyers and torpedo boats should be abandoned and said that he would like to add to the program two patrol frigates modified to carry torpedoes. Gen Eckhardt believes that there is enough margin in Annexes A and B to permit this. This addition will be discussed by Eckhardt-Hedjazi. ARMISH/MAAG will request by cable instructions as to procedure to effect the purchase and credit arrangements within a 30 day period required by para III C. The Shah expressed himself as being entirely satisfied and pleased with these new arrangements. Holmes [Continue with the next documents] |
