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190. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, April 19, 1967, 1020Z. /1/Source: Department of State, Central Files, POL 7 IRAN. Confidential; Limdis. 4121. Ref: State 176341./2/ Subj: Shah's Washington Talks--Water and Food. /2/Dated April 17. (Ibid.) 1. At this point we doubt Shah has specific proposals to make re water and food. His interest in these subjects as major world problems has been greatly stimulated by Secretary Udall's visit and by various public pronouncements made by Secretary Freeman, copies of which we have supplied Shah. He knows these subjects are high priority in Washington and is developing his own thesis, still in embryonic form, that world should get its mind off international quarrels and address its united attention to great problems of tomorrow on this planet. Shah is determined limit population growth in Iran. 2. Shah is convinced that water is limiting factor in food production, notably in Iran. In his talk with Rome Daily American editor Galling (Tehran A-559),/3/ Shah noted that in addition to desalination Iran would have to pump water up to 4,000 foot plateau which doubles cost. He is nationalizing "every drop of water" as tenth point of his "White Revolution," a move which Secretary Udall suggested was as perspicacious as Teddy Roosevelt's nationalizing forests (which already been done in Iran). Beyond these general points, we know of no specific projects which Shah might propose by way of desalination, etc. Our hope, however, would be that some small consultative project might emerge from Shah's discussions with President and our impression is that Secretary Udall and his able aide Frank Diluzio have already given thought to something along this line. /3/Dated April 18. (Ibid., SOC 13 IRAN) 3. Re food production, Shah's basic thesis is that there is no reason why Iran should not be self-sustaining which it already almost is. However, due to limiting factor of water, Iran will not be able to develop into significant food exporter. Shah's belief is that Iran can make salutary contribution to food production in this entire region by supplying fertilizers from large petrochemical industry presently under construction. 4. In talk reported in Tehran 4006,/4/ Shah specifically told Ambassador that he is deeply interested in project which is being proposed by William Warne, former USAID Director to Iran, more recently California Water Commissioner, and presently Vice President for Water Resources in David Lilienthal's development and resources corporation. Warne is seeking to organize California consortium to develop commercially 100,000 acres of wheat production in Khuzistan. This fits in with Shah's conviction that while his land reform program has been great success, Iran must proceed with larger-scale farming than 4-hectare plots which been awarded peasants. Shah is immensely impressed with large-scale agriculture in U.S. and wishes have Iran follow U.S. pattern. We recommend Department discreetly stay in touch with Lilienthal and Warne. /4/Document 189. 5. Shah has already decided not to avail himself of political-military briefing (para 3 reftel). If truly worthwhile briefing re food and water problems could be provided and if time available, Shah might be interested. Thacher
191. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, April 29, 1967, 1135Z. /1/Source: Department of State, Central Files, DEF 12-5 IRAN. Secret. Repeated to CINCSTRIKE/USCINCMEAFSA. Passed to DOD at 10:30 a.m. 4261. Subj: Annual Review. Ref: Tehran 4253;/2/ A-578; A-580./3/ Dept pass DOD for ISA. /2/Dated April 27. (Ibid., E 2-2 IRAN) /3/Both dated April 27. (Ibid., DEF 12-5 IRAN) 1. Following is summary principal conclusions and recommendations contained in Embassy's A-580 on broad political-military-economic aspects of FY 68 increment US military sales program for Iran: A. As result last year's extensive review Iran's military requirements for next four years, discussions FY 68 tranche can be conducted within much narrower framework. Although Iranians fully understand each annual $50m tranche of USG military credit requires specific Presidential approval after joint US-Iranian review Iran's economic prospects, Shah and his military advisors planning on assumption U.S. will meet commitment given fall of 1966 to supply Iran with two squadrons (32) F-4 aircraft. B. Iran's friendship is of tangible worth to U.S. Iran is oasis of success in ME and provides evidence that close collaboration with US can produce stability, progress, and reform, as well as commendable desire to command one's own destiny. Shah has given quiet support to CENTO, has warned Pakistan against too close association with ChiComs, and has sought to act as moderating influence against Pak extremism. Iran's aid to Vietnam is unique in ME and its friendship and cooperation permit refueling stops and overflights for endless stream US military aircraft. Most important of all, Iran provides base for variety U.S. special facilities vital to U.S. security. C. These valuable assets require continued U.S. support. With U.S.-GOI relationship in "transitional" phase as result growing Iranian prosperity and steady elimination U.S. economic and military assistance, much depends on US response in major dynamic area our relationship--military sales--on which Shah focuses as barometer U.S. intentions. D. GOI purchases military equipment from other than U.S. sources (e.g., U.S.S.R., U.K.) have been generally consistent with US understanding Shah's intentions at time four-year sales program evolved. Shah still deeply concerned over his exposure to destructive surprise attack on his vital industrial and oil installations in south and elsewhere in border areas where his two most important air bases are located. Iranian fears keyed largely to what they regard as U.K. intention to withdraw from Persian Gulf area and immutable UAR objective to obtain by whatever means control over all ME oil wealth. Reinforcing these apprehensions is concern over unfavorable balance in Iran's military power compared with that of its Arab neighbors. Iran remains concerned with Soviet threat and considers Nasser as prime Soviet instrument in ME. E. Shah still welcomes advice on technical matters but vigorously rejects efforts to challenge his estimate fundamental dangers he faces. To be effective U.S. advice must take into account Iranian sensibilities and Shah's own security estimates. Shah continues to rely on U.S. for sophisticated and sensitive weaponry. However, if US not prepared to provide defensive arms as "insurance" for his rich border region, Shah will surely acquire them elsewhere, a move which would have enormous impact on U.S. military presence in Iran. F. Iran, now in its third year of rapid economic growth under circumstances of impressive price stability, has demonstrated its capacity to maintain momentum of rapid economic development while meeting its economic problems. Economic outlook for Iran presents no reasons for refusing further credit to Iran. Rather it demonstrates constructive role such credit, at long terms and low rates, can play in Iran's future. G. In up-coming credit negotiations GOI will emphasize GOI's needs for maximum stretch-out repayment dates and minimum interest costs. Iranians will also be mindful of their accommodating response to U.S. requests for forbearance re purchases of gold for dollars as well as 2-1/2 percent interest rate and over 10-year repayment period offered by U.S.S.R. U.S. will not be expected to meet Soviet credit terms but to present tangible proof it values Iranian friendship. H. It is recommended that: (1) U.S. extend $50m credit for purchase of arms; (2) U.S. agree to sell Iran second F-4 squadron at most reasonable prices possible; (3) we attempt to conclude negotiations on note of general cordiality and satisfaction; (4) we provide concessional interest rate of not higher than 4-1/2 percent; rate higher than 5 percent unquestionably would deprive U.S. of psychological and perhaps political advantage we can otherwise reasonably expect; and (5) we give careful consideration to possibility extending payment period to full 10 years; in no case, however, should payment period be less than eight years. Meyer
192. Record of Meeting of Interdepartmental Regional Group for Near East and South Asia/1/ IRG/NEA 67-16 Washington, May 8, 1967. /1/Source: Johnson Library, National Security File, NSC Files of Harold Saunders, Iran Military, 4/1/66-12/31/67. Secret. Drafted by Ernst on May 9. Record of Meeting--May 8, 1967 The meeting was held to consider the United States position regarding the negotiation of a new annual increment of credit-financed sales of military equipment to Iran. The Group: Agreed that a review of the favorable Iranian economic and financial situation does not make undesirable on economic grounds the extension to Iran of the second $50 million increment of the $200 million military sales credit approved by the President in May, 1966. At the same time, noted the rapid projected increase in Iranian military expenditures and agreed that when informing the Shah of the availability of the $50 million, our Ambassador should stress our concern lest these expenditures divert resources from Iran's economic development. Agreed that Iran's economic and financial situation does not call for concessionary terms for this increment of the military sales credit. After noting, however, the importance to vital U.S. security interests of our special installations in Iran and the key importance of Iran in the light of unfavorable developments affecting the U.S. position in the Middle East, agreed that for overriding political reasons the credit should be on concessionary terms. Noted that DOD currently obtains funds for military sales credits from the Export-Import Bank at an interest rate of 5-1/2% with a repayment term of 7 years and that the President last year stipulated that the terms for such credits to Iran should carry an interest rate averaging between 5 and 6% with repayment by FY 1976. Agreed that an interest rate of 5% and repayment term of 8 years for the second $50 million increment should suffice to achieve our political objectives by making it possible for us to indicate to the Iranians our special interest in their country. Noted, however, that these terms would not fully please the Iranians. Further agreed that the credit negotiators be authorized initially to offer a 5-1/2% rate, with the offer of a 5% rate to be made as required in the course of the negotiation. Noted in this connection the critical importance of not handling this aspect of the negotiation in such a way as to lose the overall political gain we seek from the transaction. Agreed that the recommendations to the President should be ready for forwarding to him by May 12 in order that it will be possible for our Ambassador to meet with the Shah on this matter prior to the Shah's departure from Tehran for Europe on May 23 and in order that the credit negotiations can be completed prior to the Shah's arrival in Washington on June 12. Noted that the "cost" to the U.S. of the concessionary terms would consist of $3.7 million of appropriated DOD funds, which would be recovered when Iran repaid the credit, and the foregone 1/2% interest which, assuming an even repayment schedule over the 8-year repayment period, would approximate $1 to 1-1/2 million. Agreed that a statement of the cost to the U.S. should be included in the memorandum of recommendation to the President. Members Present: DHE
193. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, May 10, 1967, 1248Z. /1/Source: Department of State, Central Files, POL 7 IRAN. Secret; Immediate; Limdis. Passed to White House and USIA. 4458. Shah's Visit in Suspense. 1. Upon my arrival at large luncheon given 10th in honor of Ambassador-designate Hushang Ansary, PriMin Hoveyda, obviously in great state of distress, handed me copy of UPI story dated May 9 reporting statements by Chairman Fulbright and Assistant Secretary McNaughton during recent closed-door hearings of Disarmament Subcommittee. 2. Story quotes Fulbright as saying Iran's recent arms purchases from Russia and U.S. "are largely to maintain Shah on his throne." Story says McNaughton agreed arms not scheduled for use "against Russia." Story said remainder McNaughton's explanation was deleted. Fulbright said he had been impressed by recent conversation with "very intelligent young man from Iran" who warned that further repression of freedom in Iran is bound to result in revolution. Fulbright quoted as saying, "We are following a wrong course and very unwise one to encourage Shah to maintain complete political control." McNaughton reportedly agreed Shah has "displayed a good deal of independence." 3. During middle of luncheon PriMin was called to telephone by Shah who had just read story and was highly indignant. He told PriMin to ask us for text of McNaughton's statements which had been deleted. According to PriMin, Fulbright's allegations were offensive enough but Shah wishes to know what was response of official USG spokesman. Shah told PriMin that until USG attitude is clear his trip to Washington must be considered in suspense. 4. Both before and after Shah's phone call, I tried my best to calm Hoveyda down and to enlist his cooperation in bringing Shah down from chandelier. I pointed out that criticism leveled at Shah was relatively minor compared to that to which USG officials themselves, including President Johnson, are subjected. Expressed personal opinion that deleted testimony dealt with Shah's reasoning for acquiring adequate defense capability. Went on to say that best way to meet criticism reported in UPI story was for Shah himself to tell his story in his usual impressive manner. I asked Ambassador-designate Ansary to assist also. 5. Naturally cancellation of Shah's Washington visit can have untold adverse repercussions in our relations with this country. Hope Dept can provide us soonest with gist, if not text, of McNaughton testimony and that it will be of nature to put issues Fulbright raised in better perspective. In addition it would be helpful to have other testimony favorable to Iran given by official USG spokesmen. Finally, it might be worth sending us for relay to Shah some personal words of friendliness from Secretary or even President. Meyer
194. Telegram From the Department of State to the Embassy in Iran/1/ Washington, May 11, 1967, 12:29 p.m. /1/Source: Department of State, Central Files, POL 7 IRAN. Secret; Immediate; Limdis. Drafted by Eliot on May 10, cleared in draft by Rockwell and by Battle, and approved by Rusk. 192135. For Ambassador from the Secretary. Ref: Tehran 4458./2/ /2/Document 193. 1. Please assure Shah on my behalf that no Executive Branch witness before any Congressional forum has made any statement which would in any way detract from our view of the Shah as an ally whose friendship and counsel we highly value and a statesman under whose leadership Iran has made tremendous strides. We greatly admire the progress Iran has made in recent years in economic development and social reform and the leadership Iran has displayed in helping to mitigate international disputes. Executive Branch spokesmen have stated these views frequently on Capitol Hill and elsewhere. 2. The reason the President invited the Shah to Washington was stated in the President's letter to him of July 20, 1966./3/ That letter spoke of the "continuing comradeship between our two nations," of "our desire to help Iran," of our pride in having "contributed to the gathering political and economic strength of Iran under (the Shah's) wise and skillful leadership." The President stated that he wanted to meet with the Shah to discuss problems of "common concern" and "to hear directly from (the Shah) more about the heartening economic and social progress Iran has made." It is in this spirit that we look forward to the Shah's visit. We sincerely and deeply hope that the Shah will go forward with his plans. /3/Document 158. 3. Septel deals with specifics of testimony which has upset Shah./4/ /4/Telegram 192205 to Tehran, May 11. (Department of State, Central Files, POL 7 IRAN) Rusk
195. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, May 12, 1967, 0700Z. /1/Source: Department of State, Central Files, POL 7 IRAN. Secret; Immediate; Limdis. Passed to the White House and USIA. 4488. Reference: Tehran 4486./2/ Shah and Fulbright. /2/In telegram 4486 from Tehran, May 12, Meyer expressed confidence that Rusk's "wonderful message" in telegram 192135 to Tehran (Document 194) would "do the trick." He noted that the message had arrived during their farewell dinner for Ambassador-designate Ansary, and that Prime Minister Hoveyda had rushed to phone the Shah. (Department of State, Central Files, POL 7 IRAN) 1. Obviously eager to discuss his unhappiness over Fulbright hearings, Shah received me only four hours after request for audience. We had 2-1/2 hour session late Friday afternoon 12th. It was rough going. 2. Apparently what irked Shah most was injection into public media of unchallenged suggestion by Fulbright that Iran becoming ripe for revolution. Shah was appalled that chairman of such an influential body as US Senate Foreign Relations Committee could believe and make public as his own views those of an itinerant student who walked into his office. He had assumed Fulbright would be fully briefed by USG but if Chairman's judgement to be gauged by this episode, "Heaven help the United States". 3. Obviously deeply wounded because he considers himself in forefront of world's progressive leaders and is profoundly proud of Iran's successes under his leadership, Shah contrasted Iran's progress and freedom with that of other Afro-Asian countries, particularly so-called "progressive" states which he presumed liberals like Fulbright favor. He said he ready make referendum in Iran tomorrow and all but smallest fraction (mostly few American or British trained maladjusted Iranians) would register enthusiastic approval of Iran's reforms and economic and social development. It is absurd to think that Western-style democracy could be automatically transplanted to countries like Iran, he said, adding that nevertheless Iran is making progress in democratic procedures in accordance with its cultural traditions and state of its economic development. 4. We went round and round. I recalled Secretary Rusk during his visit here had told Shah there bound to be reaction on Capitol Hill to Iran's closer relations with Soviets. I emphasized freedom to dissent in US and noted that present administration does not have much leverage on Senator Fulbright. Assured him, as Secretary Rusk's message made clear, prevailing U.S. opinion, certainly that of USG, appreciates good work which being done in Iran. It would be shame, I said, if Iranian student who spoke to Senator Fulbright would be allowed to "defeat" Shah. Best counteracting course, obviously, I said, is for Iran's story to be told more widely and there no better opportunity than Shah's forthcoming Washington visit. 5. I pointed out Secretary's reassuring message represented official USG view. Shah asked I convey his deep appreciation for Secretary's timely and welcome words. He described both President Johnson and Secretary Rusk as great and good friends. Problem, he said, is that Secretary's message is confidential. Meanwhile, Fulbright's charges will pre-sumably get world-wide publicity. I told him I not aware that UPI story has gotten much play. Shah expressed hope some means could be found to counteract via public media implications Fulbright allegations. If these allegations get publicity here, he said, there would be no alternative but counter publicity. 6. After first-half our of slow going, I found best way to get Shah into normal frame of mind was to discuss other subjects, e.g., Viet Nam, Turk visit, Hussein's visit, etc. Separate telegrams re these subjects will be sent tomorrow. But without fail Shah would return to bitter subject of Fulbright's unwelcome remarks. I urged Sermon on Mount reaction or that of Lincoln that best way to destroy an enemy is to make him a friend. Shah recognized this as good philosophy but it clearly not an ingredient of Persian mentality. 7. While Shah never could get himself to give unqualified affirmative, I came away convinced that he will proceed with plans for Washington visit. Tactically, I felt it better to leave with relatively good feeling we had achieved at conclusion our long talk and leave negotiation of further details re Shah's program for later discussion between Court Minister Alam and myself. I have strong doubts, however, that Shah will be willing to go through with planned tea with Fulbright. Meyer
196. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, May 13, 1967, 1250Z. /1/Source: Department of State, Central Files, POL 13-2 IRAN. Secret; Limdis. 4503. Subj: CIA and Students. 1. Both Shah and PriMin Hoveyda have mentioned several times to me in past few days their suspicions that CIA has been subsidizing anti-Shah Iranian students in U.S. 2. To both I have said USG has no secrets for whole story has appeared in Ramparts. Specifically Ramparts made clear that CIA refused support to Iranian students when their organization took on an anti-Shah complexion. 3. Neither Shah nor Hoveyda were convinced, despite all oaths which I offered. Hoveyda referred to article in some German magazine which stated specifically that CIA was offering secret support to Iranian students. Shah conjectured that I as Ambassador might not be aware of all of CIA's activities. 4. I pointed out there no plausible reason why USG should support movement against regime of country which doing so well. But Shah is so upset by Senator Fulbright's allegation re Iran becoming ripe for revolution that it difficult to stamp out his suspicion that there must be linkage between some USG element and the "Iran student" who fed that view to Fulbright. Meyer
197. Memorandum From Director of Central Intelligence Helms to Secretary of Defense McNamara/1/ Washington, May 16, 1967. /1/Source: Washington National Records Center, RG 330, OSD Files: FRC 72 A 2468, Iran 091.112, 16 May 67. Secret. SUBJECT 1. The June visit of the Shah may well be a critical point in the history of our relations with modern Iran. [3 lines of source text not declassified] In recent years, the Shah has been comparatively cooperative in permitting us to expand exclusively United States facilities in Iran. Also, he has exercised a moderating influence [1 line of source text not declassified]. It is because of my concern that the viability of this entire complex may be affected by the conversations that you and others will have with the Shah that I am taking this means of underlining the significance of his visit. 2. This may be the last occasion that we will have to deal with the Shah as a Middle East leader committed to the United States. I have been impressed that, despite his détente with the USSR in matters of aid and trade, his cooperation with us on matters relating to United States intelligence and security interests and his own posture in dealing with hostile Soviet intelligence activities in Iran have remained, among Middle East leaders, almost uniquely unambiguous. But he has become impatient over the years with our insistence that Iran is militarily threatened only by Soviet forces across the Iranian-USSR border. He is genuinely convinced that Soviet support of radical nationalist forces led by President Nasser constitutes a threat to the more moderate elements. He feels that this threat must be met primarily by a coalition of moderate Middle East countries pursuing a new policy of self reliance. He appears determined to assume the leadership in this new regional alliance but will come seeking United States understanding and a level of support necessary to deter the aggressive actions of those regimes supported and used by the USSR and, to a lesser extent, Communist China. 3. The Shah has repeatedly stated that the ultimate answer to Communism is social and economic progress, and he feels that he has demonstrated this in Iran. He may, during his visit, propose a long-range development program for southern Iran and raise the question of a major development program for all the Gulf as the answer to Soviet and UAR support of the "liberation struggle". 4. The Shah, like most of the leaders in the Middle East, is filled with growing anxieties about both the ability and the will of the United States to remain a Great Power and a reliable ally in his part of the world. Determining our intentions will be the objective uppermost in his mind. His appreciation of our position will, I think, become apparent in the course he pursues when he returns to Iran. Other political leaders in the Middle East, not to mention those in Moscow, will be acutely sensitive to his reactions and consider them in contemplating their separate interests and policies in the area. Dick
198. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, May 17, 1967. /1/Source: Johnson Library, National Security File, Country File, Iran, Visit of Shah of Iran, 8/22-24/67. Secret. A handwritten note on the source text reads, "5/19/67 Saunders notified." SUBJECT You have already agreed to one office meeting with the Shah after his 5 p.m. arrival on 12 June, and you are having dinner with him that evening. However, the Shah is anxious to budget a second meeting with you the next day. Normally, I would stand firm against a second meeting on any but a State visit. However, in this case there is a great deal to talk about. Moreover, the Shah is a person you can talk seriously with. We have invited him over here primarily to convince him that you are deeply aware of the great changes taking place in the Middle East as they concern him, and I think it would be worth going along with him. We could arrange to keep the second meeting off the schedule so it would not create a formal precedent for later visitors, though it would become known. I am sure the Iranians would go along with this. The alternative is to wait and see how things go at the first talk and schedule a second meeting then if you want. To carry this off, we should probably be in a position to suggest to the Iranians now that we wait and let you and the Shah decide. This tack seems attractive, but if you're likely to agree to a second meeting, we'd probably gain by scheduling it informally now. Walt Approve second meeting/2/ /2/This option was checked on the source text. 199. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, May 17, 1967. /1/Source: Johnson Library, National Security File, Country File, Iran, Memos & Miscellaneous, Vol. II, 1/66-1/69. Secret. A handwritten note on the source text indicates that the Department of State cleared the memorandum on May 18 at 10:35 a.m.; another handwritten note indicates it was seen by the President. SUBJECT Secretaries Rusk and McNamara recommend that you approve the second $50 million slice of the $200 million military sales credit for Iran that you approved in May 1966. They would like to get word to the Shah before he leaves on 22 May for a series of State visits that will bring him here 12 June. This credit will finance the second squadron of F-4's that you approved last August. When you approved the $200 million planning figure a year ago, we were concerned that this might be more than Iran's economy could safely take on. We therefore insisted that each slice be subject to your review and instructed Ambassador Meyer that he and the Iranians should thoroughly review Iran's economic situation before recommending release of further installments. One of our motives was simply to force the Iranian economists and politicians themselves to look hard at their allocation of resources between defense and development. We think this device has paid off. The Iranians have improved their management of foreign exchange reserves, and their economic homework for this year's review was much better than last year. Meyer concludes that Iran can handle this additional purchase safely. He does not believe it will cut into the capital investment necessary to keep the growth rate up to at least 7%. The World Bank and Ex-Im have done their own studies and independently reach the same conclusion. We do not want to be over-optimistic. Therefore, Secretary Rusk recommends that, in informing the Shah of your decision, Meyer reiterate our continuing concern that the Shah keep military expenditures within bounds and keep his military purchases from the Soviet Union to a bare minimum. Secretary Rusk for political reasons recommends a slightly concessional 5% rate with 8-year repayment (compared with the normal Ex-Im rate of 5.5% over 8 years). Treasury has gone along. The only cost to us is that Defense must set aside an additional $3.7 million in its sales fund. This will be freed again as Iran repays, so the only "real" cost is about $1-1.5 million in lost interest. In view of our extensive intelligence facilities in Iran and the relationship we are trying to maintain with the Shah, I think this is justified. We are concerned, of course, about increased arms levels in the Middle East. However, we recognize that the Shah has genuine worries about an eventual threat from radical Arab forces in the Persian Gulf area as the British presence diminishes. This will be very much on his mind when he talks with you in June. While we would hate to see him go overboard, we have already argued him down from much higher levels of purchases and believe we have struck the best balance we can. We would rather have him buying from us under some control than buying wildly elsewhere. Treasury, AID and Budget have participated in the coordination of this recommendation. I recommend you approve. Walt Approve/2/ /2/This option is checked on the source text. [Continue with the next documents] |
