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170. Telegram From the Department of State to the Embassy in Iran/1/ Washington, August 5, 1966, 8:14 p.m. /1/Source: Department of State, Central Files, DEF 19-8 US-IRAN. Secret; Priority; Limdis. Drafted by Colonel Haynes in DOD/ISA on August 4; cleared by Hare, Eliot, McNaughton, and Wriggins; and approved by U. Alexis Johnson. Repeated to London, Moscow, Paris, and CINCSTRIKE. 23183. Joint State/Defense message. 1. Basic U.S.-Iran relationship and impact thereon of Shah's flirtation with Soviet arms purchase have been subject of highest level USG discussions during past several days. We now ready state our position in more definitive framework with aim of achieving forward movement. The President had directed DASD Townsend Hoopes proceed immediately to Tehran to participate with you in putting our position before Shah. Hoopes presence with you during audience will underline importance USG attaches to relations with Iran. He will be prepared help you set our position in context of present realities in Washington--specifically to restate the financial terms of the new $200 million credit as approved by the USG, to explain budgetary limitations on military sales as they relate to size of loan and interest rate, nature and rationale of our administrative procedures in military sales, character of our price offers to Iran in present package, and other elements which underlie our position as set forth in President's letter to Shah of July 20. Accordingly you should seek early audience for yourself and Hoopes with Shah. FYI. Hoopes arrives Tehran Monday August 8 at 2030 hours via Pan Am 114. End FYI. 2. Following are basic elements of USG position which you and Hoopes should convey to Shah: (a) After study at highest government level, USG prepared open detailed technical discussions of further Iranian military purchases from US. As indicated by President's letter, we place great value on US-Iran cooperation in military matters and sincerely hope circumstances will permit this cordial relationship to continue in full effectiveness. We therefore trust Shah will recognize that our proposals are based on genuine desire continue in that military relationship without impairment. (b) We prepared discuss with him and his military advisers, within purchasing power of new credit, full range of equipment items reflected in Peterson Report, except destroyer (DD). We now in position offer two squadrons (up to 32 aircraft) of F-4's for delivery in CY '68 or earlier. These will be new production aircraft whose cost, while not firm, will be in neighborhood of $50 million per squadron. FYI. This probably minimum figure but there is some prospect for reduction. End FYI. Final price must be determined after thorough technical exploration with Iranians as to detailed configuration of aircraft and support elements. You should stress that our willingness increase total aircraft from 12 to 32 and to promise early delivery are important concessions. Furthermore, we are prepared make concessions on R&D charges with respect to the two Hawk battalions; these would put price of first Hawk unit at about $27 million and of second unit at slightly above $30 million, an aggregate reduction of approximately $3 million. Moreover, Secretary McNamara has indicated his willingness to deliver military equipment to Iran on an accelerated basis where possible. We are prepared proceed with sale of PGM's, even though we are not able offer a destroyer (DD). FYI. To summarize, USG offering three concessions: 1) Increase from 12 to 32 F-4 aircraft; 2) Accelerate deliveries of these aircraft and where possible other items; 3) Waive R&D charges on Hawks approximating $3 million. End FYI. (c) Our offer sell major sensitive, sophisticated items (FYI--F-4 aircraft and Shillelagh missile system at minimum--end FYI) must remain conditional until Iran has clarified its position with respect to possible military procurement from the U.S.S.R. As the President's letter stated, we cannot believe that either U.S. or Iran will profit by an increase of Soviet influence in Persian Gulf area; we believe an Iranian arms deal with the Soviet Union would confuse our Congress and people concerning Iran's intentions; and on the technical side, we are determined to protect sensitive US equipment from compromise by Soviet military technicians. FYI. Concerning the relationship between an Iran-U.S.S.R. arms deal and US willingness to offer certain items, we wish to keep above caveats in general terms. You should accordingly refuse be drawn into specific arguments in this regard, particularly on technical and security issues. End FYI. (d) USG hopes that the Shah will look only to Free World sources of arms in meeting his security requirements; but in any event, we continue attach great importance to the annual economic review; and during each review we will wish to take account of impact on Iran's foreign exchange and debt servicing position of any major third country military purchases, and we will determine US military credit availabilities in light of that impact. (e) Assuming there is clear understanding that new U.S. credit limit is $200 million at 5-6 percent plus $60 million of old credit at 4 percent, we are prepared send DOD team immediately to open negotiations on item content and Iranian repayment schedule for the $60 million remaining under the old credit arrangement and on first $50 million of new $200 million. US negotiators would reserve position on sensitive items as indicated Para (c). Prior to negotiating detailed financial arrangements, we would require appropriate amendments to 1964 Memorandum of Understanding. FYI. USG position on amendments will be cabled shortly. End FYI. Rusk
171. Telegram From the Department of State to the Embassy in Iran/1/ Washington, August 5, 1966, 8:15 p.m. /1/Source: Department of State, Central Files, DEF 19-8 US-IRAN. Secret; Priority. Drafted by Newberry on August 4; cleared by Saunders, Colonel Haynes, Wehmeyer, Eliot, and Warren and in draft by Funari; and approved by Hare. Repeated to USCINCMEAFSA. 23184. Ref: State's 23183./2/ Subject: Additional MAP Agreement. /2/Document 170. 1. Embassy is authorized negotiate amendment to 1964 Memorandum of Understanding on basis text para 2 and to sign if no changes made. Any changes must be approved by Dept. 2. Negotiating text: "Excellency: I have the honor to refer to the Memoranda of Understanding between the Govt of the United States of America and the Imperial Government of Iran of September 19, 1962, and of July 4, 1964, and to the exchange of notes in amendment thereof signed Aug. 18, 1965./3/ The said agreements provide for the Military Assistance Program during Fiscal Years 1962-66, and for an additional Program of Mutual Defense Cooperation during 1965-1969." /3/See Document 47 and footnote 6 thereto. The August 18 notes were not found. I have the honor to propose that the Memorandum of Understanding of July 4, 1964 be amended as set forth in the Annex hereto so as (1) to extend the period for the additional program of Mutual Defense Cooperation through Fiscal Year 1970, (2) to provide for additional cash purchases of an estimated $20 million principally for maintenance materiel and services, (3) subject to availability of funds, to provide additional credit for purchases up to $200 million in annual increments up to $50 million at interest averaging between five and six per cent, and (4) to provide that the additional amount of credits will be repayable over the ten-year period FY 1967-76. I further have the honor to propose that this note and Your Excellency's reply thereto concurring therein shall constitute an amendment of the Memorandum of Understanding of July 4, 1964 between our two Govts and shall enter into force on the date of Your Excellency's reply. Accept, Excellency, etc. Annex of Amendments: The Memorandum of Understanding of July 4, 1964 between the Imperial Govt of Iran and the Govt of the U.S. is hereby amended as follows: 1. In the first sentence of para III, substitute "FY 1965-1970" for "FY 1965-1969." In Para III.A 3(B): A. In first sentence, substitute "$250 million" for "$200 million"; delete "and are consistent with" and substitute therefor the following: "and subject to satisfactory mutual conclusions being reached in the reviews provided for in para V, additional amounts not to exceed $50 million each for U.S. FY 1968, 1969 and 1970, all of such credit being subject to"./4/ /4/In telegram 570 from Tehran, August 6, Meyer argued that rewording the 1964 memorandum with reference to Iran's sovereign right to determine what it would devote to its defense was unnecessarily provocative and strongly urged that he and Hoopes be authorized to provide the interpretation intended by this new wording orally. (Department of State, Central Files, DEF 19-8 U.S.-IRAN) Telegram 23991 to Tehran, August 8, authorized Meyer to change the proposed annex to the amendment as follows: "In Para, III A 3 (B) in first sentence following the phrase "including the credits referred to in Paragraph III A, 3 A," substitute for remainder of sentence "do not exceed $250 million and additional credits not to exceed $50 million each for US FY 1968, 1969, and 1970, consistent with the foreign exchange and other limitations contained in Paras III C and V." (Ibid.) B. Delete the last two sentences and substitute therefor the following: "these credits will be repayable on terms which allow payments for the first $200 million over the ten-year period FY 1965-74, with additional terms to be negotiated and contained in each detailed credit sales arrangement under this agreement, taking into account Iran's repayment capabilities. The interest rate on the unpaid balance to be negotiated will not exceed an average of 4 to 5 per cent per annum for the first $200 million and an average of 5 to 6 per cent per annum for such additional amounts." 3. In Para III.B. substitute: A."FY 1965-70" for "FY1965-69", B. "FY up to $470 million" for "$250 million", C. "$70 million" for "$50 million", and D. "Up to $400 million" for "$200 million"./5/ Rusk /5/In telegram 639 from Tehran, August 11, Meyer reported that he had handed the official note with the proposed amendment to the 1964 Memorandum of Understanding regarding military sales to the Foreign Minister that morning. He noted that he had emphasized again, as he and Hoopes had the previous day, the abiding U.S. concern that Iran's outlays for military equipment not overburden its economic development effort. Aram had agreed to reemphasize this to the Shah when he secured his approval to a favorable Iranian response to the U.S. note. (Ibid.)
172. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, August 10, 1966. /1/Source: Johnson Library, National Security File, Country File, Iran, Memos & Miscellaneous, Vol. II, 1/66-1/69. Secret. A handwritten "L" on the source text indicates that it was seen by the President. SUBJECT They had a good talk with the Shah/2/which may have gone a long way toward moderating his somewhat irrational feeling that we have been neglecting him. The Shah expressed his deep regard and affection for you and asked Hoopes to convey his sincere appreciation for your interest and for all the U. S. has done for Iran since World War II. He reiterated his desire to maintain a close relationship with us. /2/Telegram 634 from Tehran, August 10, reported on Ambassador Meyer's and Assistant Secretary Hoopes' discussion the same day with the Shah regarding U.S. military sales to Iran. (Department of State, Central Files, DEF 19-8 U.S.-IRAN) Hoopes led off with a detailed exposition of our interest in Iran, our problems and what we could do to help. After a lengthy discussion, they succeeded in persuading the Shah willingly to make some hard choices, cutting out some of the less important items of equipment which would not fit under his financial ceiling. This in itself is a gain, since the Shah has talked recently as if he were going off the deep end buying everything in sight. They believe that they dissuaded the Shah from buying Soviet SAMs but expect that he probably will buy a few anti-aircraft guns and trucks which he can get there at much lower prices. They explained to him quite frankly that our offer of F-4 aircraft was conditional on how far he went in getting equipment from the U.S.S.R. The Shah vowed that he would not allow Soviet technicians in Iran, and Hoopes and Meyer believe he will not permit serious penetration of his country. The Shah summarized the discussion as "constructive, comprehensive and expensive." The upshot of it is that we will send a technician to Tehran to negotiate some of the military details while the Governor of Iran's Central Bank, who will be here next week on another project, will negotiate financial details in the Pentagon. I think we have come out of this pretty well. I would not be personally worried if the Shah were to buy a few minor Soviet items, although every breach in the wall makes it more difficult for other leaders like King Hussein to resist Soviet blandishments. Nevertheless, I think both your letter and your sending Hoopes out there have gone a long way toward keeping the Shah from going overboard. We will undoubtedly have to adjust to his increasingly independent tendencies, but for the moment we have managed to keep the worst we had feared from happening. Walt
173. Letter From the Shah of Iran to President Johnson/1/ Tehran, August 15, 1966. /1/Source: Department of State, Central Files, POL IRAN-US. Secret; Exdis. Attached to the source text is an August 22 memorandum from Read to Rostow stating that the enclosed letter had been delivered to the Department on August 22 under cover of a note from the Iranian Ambassador. Dear Mr. President, The opportunity you have so kindly afforded me with your warm and cordial letter of July 20, 1966,/2/ to discuss some questions of mutual interest is greatly appreciated, particularly as there has been a lapse of some time between our correspondence. I entirely agree with you on the necessity of candor between friends. /2/Document 158. I am in full agreement with you, Mr. President, that our co-operation in military matters has been cordial and to the interest of both countries. Indeed, it is my strong feeling that this co-operation has been of much greater service in that it has contributed effectively to the maintenance of the peace of this region--a region fraught with danger and which, in my opinion, merits closer, deeper and more sympathetic attention, if we are to preserve, at least, the semblance of peace it now enjoys. It gives me much satisfaction to note your interest in the continued stability of the Persian Gulf area. This area and my deep concern over its security have occupied my attention for some years. I have often discussed the problem with high American officials who must have reported my views to you. I feel that a strong and stable Iran can serve as a deterrent to any country around, which would, with scant respect for human or material loss, keep the region in a condition of constant turmoil only to further its own expansionist policy. The unfolding situation in the area and its potential danger, as you have well put it, Mr. President, requires close scrutiny in order to provide against it before it is too late. It is essential for Iran to enjoy peace and tranquility in order to be able to carry through her social and economic reforms now well under way. A strong Iran can, not only ensure such a condition, but also avert the spreading of conflicts in the region, guarantee the smooth and orderly flow of oil to the west and, what is of vital importance and worthy of serious consideration, forestall the repetition of current tragic and costly involvements. I therefore make no apology for repeating that the advantages of a strong and friendly Iran to the west should not be denied or minimized. It is my ardent hope that with our community of feeling and interest this co-operation and the happy and cordial association between our nations will continue to grow stronger and be consolidated. I fully realize that your resources are burdened by your heavy commitments in other parts of the world and I feel grateful to you, Mr. President, for your concern for Iran's security and for your continued intent to respond to Iran's needs despite these commitments. While I was writing this letter to you, Mr. Hoopes, the U.S. Assistant Secretary of Defense arrived in Tehran and called on me with Mr. Armin Meyer your Ambassador and Major General Jablonsky. We had a long and useful discussion on various aspects of Iran's military requirements. He gave me an account of your difficulties and limitations which I fully realize. I do not intend to go over what we discussed since Mr. Hoopes will certainly make a full report to you. What I would like to stress here is the great responsibility I feel towards my people in this troubled area of the world. My most sacred duty is the safeguarding of my country's independence and territorial integrity. Unfortunately, I can see little relief in the troubled Middle East situation, and future generations will not forgive me if I fail to pay every attention to my country's defense requirements. I have given instructions to my government to sign the necessary documents for the 200 million dollars credit, though this figure, I must say, still falls short of meeting Iran's needs. We have always maintained that from all standpoints, political, economic, strategic and also from the standpoint of helping Iran preserve her position as a factor of stability in this region, the production of Iran's oil should be set at a level higher than what it is now. We see people around us who do not even know what to do with their oil revenues. I fully appreciate your interest in Iran's economic welfare and the progress we have achieved. I am resolved to see that while we make provisions for our defense requirements we do not jeopardize the rate of this progress. It is in pursuance of this policy that I need to husband our exchange resources in order to be able to cover the military requirements without hampering the rate of our economic development. I welcome the possibility of a meeting between ourselves some time early next year. I have always found these personal contacts highly satisfactory and I look forward with much pleasure to this meeting with you. In the meantime may I express, Mr. President, my high esteem for you and the great importance I attach to the warm and deep friendship which binds our two countries. Sincerely M.R. Pahlavi
174. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, August 21, 1966, 1035Z. /1/Source: Department of State, Central Files, DEF 19-8 US-IRAN. Secret; Priority; Limdis. Repeated to CINCSTRIKE/USCINCMEAFSA and Moscow. 791. Military Sales to Iran. 1. Expressing gratification over constructive progress re military sales made during talk which Hoopes and I had with him at Caspian (Embassy 634),/2/ I told Shah morning 21st that Washington proceeding with follow-up actions. It is our hope, I said, to have preliminary studies completed so that USG team can come out in second or third week of September to help negotiate details of FY67 tranche. /2/See footnote 2, Document 172. 2. Calling attention to GOI's concurrence in amendment of 1964 Memorandum of Understanding (Embassy 777),/3/ Shah also expressed satisfaction that our military relationship moving in more normal course. He noted, as he had via Aram (Embassy 763),/4/ that Soviets have suddenly become "enthusiastic" to sell arms to Iran. He wanted to assure us, however, that what he had indicated at Nowshahr remains valid. Specifically, Shah said he has made decision not to buy any SAMs from Soviets. He noted that he had earlier suggested isolating SAM contingents from American sophisticated equipment. Now, however, he could assure us he would not buy any Soviet SAMs at all. /3/Dated August 20. (Department of State, Central Files, DEF 19-8 U.S.-IRAN) /4/Dated August 19. (Ibid.) 3. Asked re Soviet military reps' prospective visit to Tehran, Shah said it is not clear at this point whether Soviet team would arrive before his departure for European visits September 1 or after his return circa Sept. 20 or 21. As he had to [line(s) missing from the source text] Hoopes and me, Shah indicated possibility purchasing minor non-sensitive items like Ack Ack, trucks or personnel carriers. He reiterated what he had told us at Caspian that he would "never" have Soviet military advisors. 4. Shah said there seems to be some doubt in USG's mind re necessity of any kind of SAM weaponry, whether Soviet or American (Hawks). We reviewed what Hoopes had explained re cost effectiveness and that instead of investing large sums in anti-aircraft missilery it might be better to base air defense plan primarily on warning system and aircraft. 5. Shah said he been giving this matter much thought, particularly as it would affect vital and highly vulnerable Kharg Island oil installations. Choice, he indicated, boils down whether to invest $25,000,000 in one Hawk battalion (he aware that it could be funded with holding payment of $9,000,000, for black boxes, in FY67 tranche) or purchase additional F-5 squadron at $15,000,000 which would be based at Bushire and would be equipped with Sparrow missiles. He asked that DOD experts provide soundest advice possible re this choice. 6. After discussion number of other subjects, discussion returned to arms procurement and Shah again gave categoric assurances that he would buy no Soviet SAMs. I said this welcome news for as he knew purchase of any major sophisticated sensitive weaponry from Soviets would be incompatible with U.S. sale of F-4. Shah expressed gratification that circumstances have developed so as to permit him to rely on traditional US supply of sophisticated equipment. He recalled how from start he anxious maintain maximum U.S. procurement and that in any case air force should remain completely American oriented. Although again mentioning that F-4's "very expensive," Shah gratified to be able purchase such high quality aircraft. 7. Comment: Undoubtedly due to Aram's spadework (Embassy 763) Shah knew precisely two key issues of moment. Although Shah asked that we consider his commitment to us as confidential, his assurances re non-purchase of Soviet sophisticated equipment and specifically SAMs were categoric and explicit. Re Hawks, his request for advice re defense of Kharg strikes us as intelligent and worthy of prompt and honest Washington response. 8. DCM Thacher accompanied me. Shah was told that if during my absence any significant problems arise Thacher and General Jablonsky well equipped to handle them. Shah agreed avail himself their assistance if necessary. Meyer
175. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, August 31, 1966. /1/Source: Johnson Library, National Security File, Special Head of State Correspondence File, Iran, Shah Correspondence, Vol. II. Secret. SUBJECT The Iranian Ambassador had just delivered the Shah's answer to your 20 July letter/2/ and to your sending Tim Hoopes to talk about his arms purchases. We do not recommend a reply now because his letter completes the circuit for the moment. However, if you approve, we will ask Ambassador Meyer to tell him at an appropriate moment that you appreciated his letter and will be in touch with him later. Unless something unexpected comes up, your next letter would probably be later in the fall, confirming arrangements for a talk early next year. /2/Documents 173 and 158. The Shah has taken heart, I think, from our explicit recognition of the importance of stability in the areas surrounding Iran. He uses that recognition as an excuse for underscoring the importance of his security needs. He is appreciative of our help, which he realizes is a strain in view of our Vietnam commitment, but he states frankly that our $200 million credit still falls short of meeting Iran's total requirements. He welcomes the prospect of a meeting with you early next year but does not sound as if he will press for more aid then. We have come out of this exercise pretty well. Hoopes spelled out our problems in detail but couched them in sympathy for the Shah's aims. The Shah has since assured Ambassador Meyer that he will buy no Soviet missiles and allow no Soviet military technicians into Iran. A Soviet military mission is in Tehran for talks this week, but he says he will buy only vehicles and maybe some simple ack-ack guns, if anything. He is buying some naval equipment from Britain, but our only objection to that is the possible impact on his development program. On that, we'll just have to wait and keep an eye open to how the economy shoulders the burden of these arms purchases. So while the Shah will increasingly move toward a position more independent of us, we have managed to keep him from jumping too quickly this time. Some independence is to be expected and is healthy. We just want to be sure he doesn't go too far too fast and get us all in hot water. For the moment, we've succeeded. Walt Approve verbal acknowledgment/3/ /3/This option is checked. In telegram 1277 from Tehran, September 21, Meyer reported that he had expressed to the Shah that morning the President's appreciation for his August 15 letter. He also reminded the Shah that a DOD team was currently in Tehran negotiating with his officials and pointed out that the proposed military package should certainly meet with his satisfaction. (Department of State, Central Files, DEF 19-8 U.S.-IRAN)
176. Memorandum From the Deputy Assistant Secretary of Defense for International Security Affairs (Hoopes) to Secretary of Defense McNamara/1/ I-26118/66 Washington, September 13, 1966. /1/Source: Washington National Records Center, RG 330, OSD Files: FRC 70 A 4443, Iran 091.3 MAP 13 Sep 66. Secret. SUBJECT This memorandum is for information. You will recall that in early August, as a result of a decision reached at the Tuesday lunch with the President,/2/ I traveled to Iran to reinforce and amplify the President's letter of 20 July,/3/ to make clear to the Shah the dangers to US-Iran relations if Iran should purchase "major, sophisticated and sensitive" military equipment from the Soviet bloc, and to make further proposals regarding F-4s and Hawks. Tab A/4/ is the cable of instruction governing my mission. Tab B is a copy of my remarks to the Shah. Tab C is the reporting cable on the conversation with the Shah. Tab D is the President's letter of 20 July. /2/See Document 167. /3/See Document 158. /4/All of the tabs were attached to the source text; Tab A is Document 170. At the conclusion of the conversation, the Shah said that a purchase of sophisticated equipment from the Soviet bloc was "improbable." A week later we were able to obtain categorical assurances that Iran would make no purchases of Soviet SAMs or other sophisticated equipment. Also, in the course of the conversation, the Shah decided that Iran required only one Hawk battalion instead of two; subsequently, he told Ambassador Meyer that he intends to purchase no Hawks, but to base his air defense on an early warning radar system, fast-reaction interceptor aircraft (F-4 and F-5), and simpler, less expensive antiaircraft guns. As a face-saving gesture in view of his overtures to the Soviets, the Shah restated that he would probably buy a few "lorries, APC's and ack-ack guns" from U.S.S.R. Agreement was also reached during the conversation on the major components of a sales program for FY 67. This would total $110 million (comprising $60 million from the original 1964 credit and the first $50 million of the new $200 million credit). The agreed elements of this tranche are: Blue Shark radar system, one F-4 squadron, four C-130s, additional air force war reserve, and about 100 M-60 tanks. Draft Letters of Offer have been prepared on these items and will be carried to Iran by an ILN team for negotiations beginning on 19 September. We now have evidence that Iran has just about concluded the purchase of a naval package from the U.K., including 4 Corvettes, 6 hovercraft (fast patrol boats), and a refitted (but not modernized) WW II destroyer. In addition to the naval items, the package includes 18 additional Tiger Cat antiaircraft missile launchers and appropriate missiles. The total cost is estimated at $60 million. This purchase has been anticipated. It will confront the US Government over the coming months with the need to determine the extent to which this third country purchase by Iran will affect the total of the new US credit. The FY 67 tranche will not however be affected. On balance, we believe the situation is now well in hand. Townsend Hoopes
177. Telegram From the Department of State to the Embassy in Iran/1/ Washington, October 15, 1966, 10:49 a.m. /1/Source: Department of State, Central Files, POL IRAN-US. Secret; Limdis. Drafted by Eliot on October 14, cleared by Walsh, and approved by Hare. Repeated to CINCSTRIKE. 66833. 1. Following summary October 12 conversation between Secretary and Aram is FYI and Noforn. It is uncleared and subject to amendment upon review of memcons. 2. Conversation was long and most cordial. Much time devoted to review current status Viet Nam, Iran-Arab, Iran-Pak relations. Memcons being pouched. 3. Following bilateral matters discussed: a. Aram said Shah pleased with recently concluded military negotiations. Only remaining problem is need for early delivery of aircraft as British may depart Persian Gulf before aircraft scheduled arrive in 1968-69. Secretary replied that we have procurement and budgetary problems resulting from war in Viet Nam but that within framework our past discussions we will do our best on deliveries to Iran. Secretary suggested in meantime necessary training of Iranian air force personnel begin in case emergency should develop requiring assistance earlier than planned. b. Aram inquired about status Iran's request for PL-480 wheat. While pointing out US no longer has surplus Secretary assured Aram within limits our short supply there is every disposition in USG to do best we can for Iran. Rusk
178. Letter From the Ambassador to Iran (Meyer) to the Assistant Secretary of State for Near Eastern and South Asian Affairs (Hare)/1/ Tehran, October 22, 1966. /1/Source: Department of State, NEA/IRN Files: Lot 70 D 330, Iran 1966. Secret; Official-Informal. A handwritten note on the source text indicates that it was received on October 27. Dear Ray: Set out in the paragraphs below is the Embassy's assessment of the internal security situation in Iran prepared in accordance with instructions from IRG/NEA (Department Airgram A-11 of July 21)./2/ You will note that since last October when we submitted our last formal report on the counter-insurgency situation here (A-281 of October 20, 1965),/2/ no major changes have taken place in the situation as we viewed it at that time. However, the moves toward settlement of the Kurdish revolt in Iraq this year and some evidence that the growing number of Soviet technicians is outrunning the capacity of the security services for effective surveillance, point to possible longer-term problems. There has also been a negative development in the reorganization of the Army's Counter-Intelligence Corps (CIC), hitherto regarded as the most effective counter-intelligence force in the government, which will bear continuous close scrutiny. /2/Not printed. (Ibid., Central Files, POL 23-1 IRAN) As noted in the Embassy's recently-prepared semi-annual assessment of the political situation in Iran (Embassy's A-104 of August 23, 1966),/3/ the period since our last assessment has been characterized once more by the relative placidity of the internal scene. It has been years since the political atmosphere has been as sluggish, as self-satisfied, or as resigned to the status quo. This is related only partly to the effectiveness of political controls. It is in large measure attributable to economic prosperity and to the Shah's success in giving the impression that a reorientation has taken place in Iran's international position. There is more popular confidence in the regime and less carping criticism. A rising new middle class is on the march economically and, in the short run at least, appears to be developing an interest in political stability. This situation could change, of course, if the Shah should be assassinated, or if a serious slowdown in present economic momentum should take place. /3/Not printed. (Ibid., POL 2-3 IRAN) The favorable economic situation and the reduced level of popular dissatisfaction have had the effect of dampening political activities of all kinds. The Communists are in disarray, their fortunes probably at the lowest ebb in years. They certainly can take little heart in the increasingly obvious efforts of the Soviets and the Communist orbit of Eastern Europe to deal directly with the Shah himself on a government-to-government level. The religious opposition remains unreconciled to Iran's increasing modernity and, while there have been rumors of an unholy alliance between the right-wing religious oppositionists and left-wing elements, so far nothing actually has materialized. With the surrender of the Qashqai bandit Bahman Khan earlier this year the last vestige of rebellion among the southern tribes disappeared from the scene, at least for the time being. However, there is some evidence of increasing activity on the part of the Iranian Kurds. The apparent negotiated settlement of the Kurdish revolt in Iraq reached late last June was generally well-received by the Kurds in Iran. The end of hostilities, however, also set in motion a latent nationalist fervor among this minority group due primarily to the expectation that the Iraqi Kurds would gain certain advantages and privileges from their acceptance of the cease-fire. This tendency probably is best reflected in what has been described by Embassy sources as a general increase in political activity, particularly among Kurdish groups in the Mahabad area. The Iranian Government appears to be watching this unsettled situation warily and has developed a renewed interest in the National Resistance Movement (NRM). So far, however, we have no evidence of any major shift in GOI policy vis-a-vis the Kurds. Although some Iraqi leaders continue to believe to the contrary, the GOI appears to have discontinued purely military assistance to the Iraqi Kurds, and has closed the Iraqi-Iranian border in the Kurdish area. So far, although there are the usual cases of smuggling and banditry, Iranian Kurdistan appears peaceful. We do not believe that political activity on the part of Kurds in Iran which might affect drastically Iranian Kurdistan will develop in the near future. Iran's central security organizations appear quite capable of handling any situation likely to develop. While Iranian security forces appear capable of handling any political activity likely to develop in Kurdistan, they are having their difficulties elsewhere. At the present time, the greatest security problem is of a long-term character. The Iranian security forces clearly are unable to keep the steadily rising number of Soviet technicians in Iran under effective surveillance. The number of Soviet personnel in Iran in connection with the steel mill, pipeline, and other projects is approaching 600 and likely to surge beyond that figure. The Iranians, however, have taken a number of administrative steps to aid in controlling more effectively the movements of Soviet officials more or less permanently stationed in this country. The Embassy also hears that a number of dossiers concerning suspicious activities on the part of the Soviets are piled up on the desk of the Shah. We believe that Iranian security forces are keeping especially careful tabs on possible contacts between Soviet technicians and Iranian Communists. Speaking once more of the Communists, Savak is showing interest in long-term threat posed by the Chinese Communists. The latter have not been able to form any organization within Iran, but have been successful in their propaganda activities among Iranian students in Europe. An increasing number of these students have begun to show Communist Chinese sympathies and some of them apparently have even visited China. The Chinese have flooded Europe with publications which are having an effect on Iranian students some of whom can be expected to return to Iran and to attempt to conduct subversive activities. Savak believes that students returning from abroad will have to be checked very carefully lest the Chinese Communists get a foothold in Iran. Although Savak believes that the pro-Soviet group now dominates the Tudeh party, it feels that the Chinese Communists, considering that they have been laboring under the double disadvantage of being newer in the field than the Soviets and of having no official representation in Iran, have done very well to date. For this reason, Savak will continue to observe closely the activities of Chinese Communist elements. The decentralization of the Counter Intelligence Corps (CIC) of the Iranian Armed Forces has reduced its effectiveness markedly. CIC units in the field have been transferred from the administrative and operational control of CIC Headquarters in Tehran to the units to which previously they had been attached only. Thus, all reporting on security matters now must pass through channels via the unit commander who, if he sees fit to do so, may suppress the reports rather than forward them to the Supreme Commander's Staff (SCS). Given the well-known Iranian penchant for not reporting matters which superiors do not wish to hear, security reports are more often suppressed than forwarded to headquarters. In addition, decentralization takes away the capability of CIC units in the field to respond quickly to an urgent request from CIC Headquarters for operational support on an espionage or subversion case. Under the new arrangement such requests must be dispatched through command channels to the lower CIC unit. In the past CIC Headquarters sent a message directly to the unit concerned. A study is now underway, however, to determine how to retain such support from the field without taking away the prerogative of the major commander concerned. The decentralization has had a deleterious impact on the morale of the CIC as has also the fact that it is still smarting from the incompetence of its previous commander. Although a new commander, a professional intelligence officer, has been recently appointed, it is problematical whether he will be able to restore the CIC to the level of its previous effectiveness when it was regarded as the top security organization in Iran. We continue to find valid the judgment made at the time of our last report (March 19, 1966 letter to Governor Harriman)/4/ that there are no disturbing elements in the present situation requiring counter-insurgency measures. On the program side we continue to be interested in support for the National Police and in communications for the Imperial Iranian Gendarmerie (IIG). In this latter connection we have obtained from the IIG an idea of the program it desires and have forwarded to DOD via Genmish channels our comments and suggestions. The IIG has obtained from the GOI a pledge of support which we believe approaches 50% of the total cost. The total cost of this communications project is $10.2 million. With the GOI apparently prepared to put up $5 million and with $2.2 million already in the program for IIG communications, this means that $3 million needs to be financed over a five to six year period. We would be grateful for any help you feel you might provide in getting this project on the rails. We think it is of the utmost importance in any counter-insurgency situation likely to develop in Iran that we have an effective command and control system for operations in the countryside. /4/Not found. With all best regards, Sincerely, Armin
179. Briefing Memorandum From the Assistant Secretary of State for Near Eastern and South Asian Affairs (Hare) to Acting Secretary of State Ball/1/ Washington, October 25, 1966. /1/Source: Department of State, Central Files, DEF 6 IRAN. Confidential. Drafted by Eliot and cleared by Solomon and in draft by Director of the Office of Fuels and Energy John G. Oliver. SUBJECT Recommended Position At a meeting yesterday in London, the Iranian Government gave the Oil Consortium one month in which to present proposals in response to the Government's demands. Officials of American companies belonging to the Consortium told us yesterday afternoon in Washington that, while they continue to hope we will help restrain the Iranians from precipitate and unilateral action, they would prefer that we not become involved in the substance of the issues as they are working on their position. In the light of the attitude of the American companies, we do not recommend that you raise this subject this evening with Iranian Foreign Minister Aram. If he, however, raises the subject, you might say that we continue to view the situation with concern and believe that it was a wise decision to allow a month's time for further discussion. We anticipate that Ambassador Meyer will speak to the Shah along these lines today in Tehran. Background At the annual Consortium-Iranian meeting two weeks ago in London, the Iranians asked for a 17 percent increase in Consortium production for each of the next two years. If the Consortium could not achieve this rate of increase, the Iranians requested an advance payment based on the difference between a 17 percent increase and the actual increase. The Consortium has declined to agree to this demand, pointing out that it is unable to predict in advance any rate of increase in the light of changing market conditions. The Consortium has told the Iranians that it hopes to increase its production 10-11 percent this year. The Mideast average increase will be 7-8 percent. After receiving the Consortium's negative reply to their first proposal, the Iranians asked that the Consortium make available to Iran to market on its own account, presumably to Eastern Europe, crude oil at cost. The Iranians suggested that the Consortium guarantee an annual production increase of 12 percent and deliver to them an amount of crude oil annually for the next four or five years equal to the difference between the actual increase and a 17 percent increase. At yesterday's meeting, the Consortium declined to agree to this demand, but requested and obtained a month's time in which to consider possible alternative proposals. The Iranians have informed the Consortium and the British and American governments that they are considering another proposal under which they would ask the Consortium to relinquish all its Iranian reserves of oil except those required to meet a minimum acceptable annual increase in Consortium production. The Shah has indicated that Iran will if necessary take legislative action to achieve this end. Such a move would be contrary to the Consortium-Iranian agreement of 1954. Iranian motives appear to be a combination of two elements. One is a need for increased foreign exchange receipts to meet the needs of a vigorous development program and to cover the costs of rising military imports. The second is a desire to get into the business of marketing oil for their own account. It is not certain what new proposals will be developed by the Consortium. The oil companies will seek a solution within the 1954 agreement. They will not consent to an arrangement under which they would guarantee a specified rate of increase in offtake from Iran because they would then be subjected to similar demands from other producing countries. They will also not consent to an arrangement under which the Iranians obtain oil at cost to market in competition with the Consortium. They believe that the Iranians intend to market any such oil not only in Eastern Europe and that Iranian oil exports to Eastern Europe would permit the Soviets to increase their sales to existing Consortium markets. The Consortium operates in Iran under an agreement reached in 1954 which terminated the crisis set off by Mossadeq's nationalization of the Anglo-Iranian Oil Co. in 1951. The members of the Consortium are British Petroleum (40%), Shell (14%), Standard of New Jersey (7%), Standard of California (7%), Texaco (7%), Mobil (7%), Gulf (7%), French Oil Co. (6%), and eight independent American companies (5%). [Continue with the next documents] |
