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260. Telegram From the Department of State to the Embassy in Iran/1/ Washington, March 2, 1968, 0807Z. /1/Source: Department of State, Central Files, PET 6 IRAN. Confidential. Drafted by Walter M. McClelland (NEA/IRN), cleared by Akins, and approved by Eliot. Repeated to London and Paris. 123602. Subject: Iran Oil. 1. Fulmer, Texaco, McDonald, Mobil, Hedlund, Esso New York, and Clark, Esso London Office, called on Eliot at their request March 1, to review oil situation Iran. 2. Point of meeting was to ensure that Department informed why companies had to reply negatively to requests for larger offtake or cost oil. Re offtake companies cited extraordinary recent increases from Iran, especially in 1967, limit to size of overall market for ME crude, and competition from other areas that cannot be ignored. Re cost oil, companies said that since GOI not investing any capital or paying royalties, supply such oil would be tantamount to partial expropriation. Furthermore, oil to bloc countries, oil surplus area, would push out oil into consortium sales area and bloc may in any case be within consortium sales area in future. Giving in to Iran would also result in similar demands from other countries. Companies pointed out their strenuous efforts to find solution to Shah's demands and had made progress; this should be appreciated. 3. Important other points emerging were a) companies not asking USG/HMG intervention at this time, just keeping us informed, and b) there is some confusion as to whether GOI demands for $5.9 billion oil revenue over next five years includes revenue from other companies as well as consortium. Eqbal, both in October and in his recent letter, has said that the 5.9 figure applied to consortium only; however Shah told Bridgeman in early January, and consortium reps on January 31, that figure includes all oil revenues, and Fallah recently said same thing to reps in US. 4. As to future steps, Clark said companies hopeful Shah will want to talk further. Consortium had not yet decided whether or not to send written reply to Eqbal letter, but sentiment in favor of keeping disagreement oral growing among members. 5. CFP reported to be "as responsible as anyone" for consortium rules, solidly behind decision not to sell cost oil, and relented only at last minute to allow additional refinery throughput. Nevertheless, CFP "oil hungry" and wants all the oil it can get. Rusk
261. Telegram From the Department of State to the Embassy in Iran/1/ Washington, March 5, 1968, 0125Z. /1/Source: Department of State, Central Files, POL IRAN-U.S.. Secret; Priority; Nodis. Drafted by Grey on March 4, cleared by Eliot, and approved by Under Secretary Rostow. 124570. Eyes Only for the Ambassador. Ansary called for a private meeting with Rostow as soon as he arrived back from his meeting with the Shah in St. Moritz. Ansary appeared very concerned and made following points with great emphasis. 1. He said that according to Iranian sources it appeared that some of our people had contacted former Prime Minister Amini. More importantly, he passed on story to effect that Ambassador Meyer had said to General Amini's widow that he would like to meet with former Prime Minister Amini and suggested meeting at dinner at her house. 2. Ansary noted that there had been some student unrest in Tehran recently and passed on the report that some of our people had been in contact with the students involved. 3. Ambassador stated that Rostow's position on closeness of US-Iranian relations had been accepted by Shah but that Shah noted that some people appeared to take a slightly different view of this relationship and had been less than neutral in median line dispute, Gulf problems and consortium discussions. Shah had pointed out that his government was after all a nationalistic one and it would be disastrous both for himself personally and for US Government's interests in area if he were to give up Iranian claims to $2 billion worth of oil in dispute in median line area. Ultra Nationalists, people out of sympathy with his regime, and Communists would exploit such concessions on his part to detriment of both his and our interests. 4. As example of types of stories circulating in Tehran which tended to erode basic US-Iranian understanding was report Ansary had heard from two sources which indicated that US Ambassador had said that he thought cancellation of Shah's visit to Saudi Arabia was a mistake. Ansary added that stories to this effect would provoke an emotional reaction both from Shah and from his immediate entourage. 5. Ansary stressed that we should not underestimate the seriousness of the Bahrein problem, and that he was most concerned by reports that Bahrein and Qatar were contemplating becoming members of Gulf federation. 6. Ansary reported that Shah was extremely disturbed by status of consortium negotiations and he felt that some movement on part of companies was badly needed. Shah had pointed out to him that Iraqis had taken away large part of consortium concession in Iraq but consortium was still producing oil in Iraq at relatively satisfactory rate. 7. On arms sales negotiations, Ansary said Shah was extremely disturbed because after several months of negotiations no draft agreement had been produced. He pointed out to Ansary that Iraq and Saudi Arabia were buying arms elsewhere and that his reasonable requests for purchases from the US had not yet been honored. He wished to do business with us and he hoped that he would be able to continue to do so, but there would come a time when his patience would be exhausted. 8. In conclusion, Ansary stressed fact that in a period of increased nervousness in Tehran when there were even unfounded rumors of a change in government, it would be wise for US diplomatic establishment to proceed cautiously as suspicions and fears were heightened. 9. Rostow made appropriate responses to all points covered. 10. Rostow expects see Ansary again March 6 and would appreciate comment on above beforehand. Rusk
262. Telegram From the Department of State to the Embassy in Iran/1/ Washington, March 5, 1968, 0123Z. /1/Source: Department of State, Central Files, POL IRAN-U.S. Secret; Priority; Nodis. Drafted and approved by Rostow on March 4. 124569. Eyes Only for Ambassador. For Ambassador from Under Secretary Rostow. We are concerned about the atmosphere and the implications of these charges and rumors. On their face, they are absurd. But what do they mean? We want not simply the factual ammunition required by the situation but your full evaluation of what these demarches represent, and your advice on how they should be handled. Needless to add, we do not take these transparent attempts to drive wedges seriously. But how serious are the suspicions and fears they represent? Rusk
263. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, March 5, 1968, 1350Z. /1/Source: Department of State, Central Files, POL IRAN-U.S. Secret; Priority; Nodis. 3619. Eyes Only for Under Secretary Rostow. Ref: State 124570./2/ /2/Document 261. 1. Shah's grievances, as reported by Ansary, strike me as ill-founded and over-dramatized. Gratifying, however, they are now on table. Hopefully frank discussion such as you with Ansary and between Shah and me when he returns can clear the air and restore mutual confidence. Point by point comment substance reftel follows: A. In casual dinner conversation with General Amini's widow some time ago possibility of seeing Amini some time was mentioned. If necessary to take up specifics of these allegations, perhaps you could say plain fact is we have had no contact with Amini. Given present sensibilities this is probably not the time to dwell on broader issues. Shortly after my arrival I tried to persuade Shah, apparently without success, that it is in his interest for true friends like ourselves to maintain contact with people out of power. I noted how helpful it had been in Lebanon in bringing the govt and outsiders together and in preventing explosions. I made clear to Shah all of this was done with full knowledge and confidence of President Chehab. Unfortunately traditional Persian disposition is to suspect and then eliminate, or at least quarantine, any diversity of thought. Incidentally, one reason for not pursuing this broader question more recently was our assumption, until present flurry, that political opposition was insignificant. B. Any contact we have had with students had been most casual and normal. If there are any specific allegations of questionable contact, we should like to have them. C. Having assisted Shah in satisfactory solution re four major points in crisis with consortium just over year ago, plus consortium's subsequent concessions re OPEC discount, devaluation problem, refinery throughout, etc., it difficult to understand charges of being less than neutral re oil problems. Re median line, we have not even suggested position that GOI must ratify initialled 1965 line. We have, however, expressed impartially to both sides our hope that further confrontations can be avoided and reasonable mutually satisfactory solution found at early date. D. Re cancellation of Saudi visit, Shah's primary impression obviously derives from fact we worked so hard to try to have visit materialize. "Two sources," to which Ansary refers, could be FornMin Zahedi and Alam, to both of whom, in discussions after visit cancelled, I voiced view that on this issue we had obviously had honest difference of views but assumed our friendship strong enough to withstand some diversity of opinion. Around town, including Diplomatic Corps, we have sought carefully to avoid any implication we lobbied for visit, for we fully aware that key factor in Iranian policy-making is posture of "national independence." E. Re Bahrein and Gulf federation, this first inkling we have had re Shah's embryonic reaction. (This may be Ansary's own initiative.) Obviously we here have no comment. F. Re present consortium problem, our effort been directed to obtaining clearer understanding and good will both sides. FYI. It not unnatural consortium becoming increasingly impatient Shah's incessant demands, and our fear is that there only limited further give possible by member companies. My talk with Alam (Tehran 3587)/3/ was designed to be helpful, including implicit suggestion that gap-narrowing concessions, e.g. elimination OPEC discount, increased refinery output, best foot forward, etc. might serve as face saving device for getting GOI out of box if it so wishes. /3/Dated March 31. (Department of State, Central Files, PET 6 IRAN) G. Re arms, I have informed Samii that we are proceeding along lines recommended by PriMin in our talk February 25 (Tehran 3471)./4/ I have added that everything seems be on rails, i.e., Jablonsky having extensive review of shopping list in Washington light [list?] is coming out in couple of weeks, and "pacing factor" is progress on annual economic review. Samii assures us he hopes have data available by March 9 so we can try to meet Department's March 15 deadline (State 123603)./5/ Undoubtedly one of key factors behind Shah's present questioning of our integrity here is report from Iran Embassy Washington (perhaps delivered to Shah by Ansary), which has been cited to us by Samii, that Pentagon has confirmed draft agreement re new five-year military program was sent to Embassy "some time ago." Under Department's guidance, we been telling Iranians we had no such draft. Ted Eliot can fill you in on details. It is quite likely Shah suspects I personally have blocked this action so dear to his heart, perhaps because of chagrin over cancellation of Saudi visit. At least Embassy been cast in role of prevaricators. /4/Dated February 25. (Ibid., DEF 12-5 IRAN) /5/Dated March 2. (Ibid.) H. Re rumors of possible change of govt, we heard nothing about them until reading stories in press and PriMin Hoveyda's public remarks. 2. Assessment of what is behind this obvious attempt to dredge up insubstantial grievances will follow tomorrow as will recommendations for counteraction. Meanwhile, Embassy's airgrams (A-417/6/ and A-465/7/) may be useful to you as background. /6/Dated February 10. (Ibid., POL 33 PERSIAN GULF) /7/Dated March 3. (Ibid., POL 12 IRAN) Meyer
264. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, March 6, 1968, 0730Z. /1/Source: Department of State, Central Files, POL IRAN-U.S. Secret; Immediate; Nodis. 3626. Eyes Only for Under Secretary Rostow. Deliver at 8:00 a.m. Wednesday morning. 1. Recalling your congenial and constructive audience less than a month ago, Shah's present state of mind, as reflected by Ansary, is indeed puzzling. Since Shah arrived on ski slopes, some spark must have ignited his cogitation, e.g., inflammatory reporting from Tehran or irritation over London Economist article re "The Intemperate Shah." In any case Shah is brooding. 2. We not only one baffled. As you know, Alam continues not to consider situation serious. SAVAK called in CAS to ask what is behind all this and categorically assured CAS that SAVAK has no reports of our misbehavior. Hoveyda's public remarks signalled Shah's unhappiness, but even Hoveyda seems puzzled. He has invited me to en famille dinner, which is scheduled for Friday evening. 3. In analyzing cancellation of Saudi visit (A-417) and attack of Amini (A-465),/2/ Embassy conjectured re motivations behind Shah's current behavior. These included: a) his penchant for moodiness with which my predecessors have also had to cope; b) chronic Persian tendency to impute foreign hand behind any unpleasant development; c) intoxicating effect of such successes as last August's visit to US, coronation panoply, and current economic boom; d) Shah's almost messianic desire to transform Iran into a country as modern as any European during days of power remaining to him; e) sycophantism which tends to inure Shah from reality; f) escalation of inflammation by Foreign Ministry and, in case Amini, perhaps by Prime Minister; g) tendency of Persian monarchs to "show their teeth" and success of that tactic in recent devaluation issue with consortium; h) Shah's desire to be world and Mideast leader; i) eagerness of all Iranians from Shah down to prove their "national independence" which here means from the US; j) cover Russian tactics of putting Iranians increasingly on defensive (particularly as prelude to Kosygin's visit) by shrill broadcasts, overtly and clandestinely, to effect Iranian regime is stooge of Americans, etc. /2/See footnotes 6 and 7, Document 263. 4. All of these are contributing factors to present state of affairs. Undoubtedly the event which has catalyzed them and caused them to peak at this moment is British announcement of withdrawal from Gulf. It is important to make clear that in a sense Shah welcomes British departure as a new era with glorious possibilities for Iran. Thus to tell him we urging British to continue to play influential role in Gulf is of little beneficial effect. 5. Prompted by factors in para 3, Shah's initial responses to challenge of Gulf's future were gun-boat diplomacy in median line and "showing of teeth" by cancelling Saudi visit. While news of these sallies was carefully managed, many Iranians have reservations, including even some Cabinet ministers. Except from official organs and agents, plaudits to which Shah accustomed not been forthcoming. Although unexpressed, thinking Iranians are questioning government by whim, e.g. one day papers printed letters from heads of Parliament and Senate forswearing pilgrimage and three days later PriMin Hoveyda publicly bade farewell to first batch of pilgrims. Inevitably there is some concern about too close an embrace with Soviets. Sharp increase in government budget, especially military, is causing some grumbling as tax collection becomes more strong armed. Meanwhile, presumably for apolitical reasons, strikes are occuring in Iranian universities; they have been disturbingly well-coordinated. This adds to worries of Shah and GOI. 6. Outside Iran, Shah's initial sallies in Gulf been greeted with disapprobation, notably in British press. (NYT may follow suit as energetic Tom Brady was here last week.) Officially, Shah knows USG disappointed re cancellation of Saudi visit and Median Line confrontation. Vis-à-vis US, he has guilt complex. 7. Shah knows Iran becoming somewhat isolated. Ostensibly honeymoon with Russians continues but frictions developing and Shah realizes Moscow is mortal enemy his regime. Nasser is his bete noir. Other Arabs, including Faisal, are in Shah's view Nasser's hostages and vulnerable to overthrow by radical Arabism. Shah is at odds with Ayub. Turkish friendship is not warm. Israel is convenient friend but not in same league with US. 8. Urgent questions are burdening Shah on Swiss ski slopes: Whether to authorize IPACI proceed with drilling on Saudi side of 1965 initialled line; whether to score fait accompli by occupying Tunb and other mid-Gulf islands; whether to oppose confederation of Gulf sheikhdoms; whether to take more active measures to demonstrate patriotism re Bahrein, etc. If he takes such steps, he jeopardizes relationship with US, the one country from which he can least afford to be isolated. 9. Key to US-Iran relationship is, of course, arms supplies. Shah vividly recalls American embargo on arms to Pakistan during latter country's 1965 hostilities with India. He must be painfully weighing whether reorientation his arms procurement is practical possibility and if not how he can fashion Gulf policy without alienating Americans. Neither option is easy. Beyond military field, Shah realizes cooperation with US commercially and otherwise is sine qua non if Iran is not to become another Finland. 10. Meanwhile, Shah is in jam with consortium, which provides more than 50 percent of GOI's income, this year around $800 million. Public bravado re intolerability of consortium irresponsiveness necessitates either new consortium concessions, which unlikely, or face-saving exit for Shah. Either way Shah will wish USG assistance. 11. How foregoing analysis reduces to Shah's suspicions of American collusion with Amini only Byzantine, or perhaps Persian, mind can fathom. Certainly, one explanation is that best defense is good offense. Shah's remonstrances through Ansary are in other words tactical, i.e. rationalization to US and to himself for actions he has recently taken, and for actions he may take in near future; also a pressure tactic on US vis-à-vis his problems such as arms, consortium and Gulf policy. 12. Perhaps silver lining is that Shah is coming to grips with reality. He is generating his own turbulence, which is preferable to our doing it. Situation is, of course, very delicate and our job is to deter Shah from irrational actions. At stake is future of Gulf, role Shah will play and our relationship with Shah as he plays it. Our recommendations are set forth in separate telegram./3/ /3/Document 265. Postscript: There no objection your eliminating nodis label from this telegram if you so wish. Might also be worth repeating to London and other interested posts. Meyer
265. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, March 6, 1968, 0750Z. /1/Source: Department of State, Central Files, POL IRAN-US. Secret; Immediate; Nodis. 3627. Eyes Only for Under Secretary Rostow. For delivery at 8:00 a.m. Wednesday. 1. Based on evaluation in Tehran 3626,/2/ and recognizing our problem as psychological and tactical, as well as political, I offer following recommendations in treating suspicions and fears reflected in Shah's démarches via Ansary: /2/Document 264. 2. Play it cool. If Shah thinks he has US on defensive, he is apt to become even more temperamental. 3. Apply appropriate massaging. Early indication through me via Alam that President will have Shah to lunch when he comes for Harvard degree would be very helpful. Periodic correspondence with President, as well as high-level USG visits, also indicated. 4. Do what we can to placate grievances. Make clear Embassy has not been in contact with Amini, nor encouraged striking students. Neither have we sided with Aramco; on contrary our record in Shah's behalf quite extraordinary. Might note Saudis are alleging Iran is our favorite. 5. Both here and in Washington (and probably in consultation with British) we should address ourselves intensively to critical problems in Gulf area in wake of British departure, i.e. Median Line, Tunb and other mid-Gulf islands, and, of course, Bahrein. Purpose to facilitate solutions with which Shah can live. While these problems may seem minor on world scene they are of type which breed major confrontations if not resolved. 6. Remind Shah consortium has made remarkable number of concessions to Iran in past two years and that in short span of less than 15 years Iran has catapulted from Mosadeq's abyss to front rank in Mideast oil production. Should also point out that while Iraq is now increasing production their demagogic tactics, e.g. unilateral legislation and taking away proven fields, have dropped them way behind in Mideast oil derby. Their performance not worthy of emulation. (Meanwhile, we should seek from Mobil some useful explanation, if there is one, to counter Iranian annoyance at Hungarian reports that Mobil has tried to under-cut NIOC.) 7. Request Henry Kuss to correct report given to Iranian Embassy, Washington, that draft military agreement was sent to Embassy "some time ago." Fact is that what we received was an uncleared piece of paper. Meanwhile, assure Iranians along lines reported in para 1.g of Tehran 3619./3/ /3/Document 263. 8. Seek diversions. Shah is presently all tied up in knots re his own problem. To extent we can, we should draw his attention to world problems, e.g. Mideast and Viet Nam, and invite his thoughts. Incidentally, special Viet Nam briefing team will be coming here in few days and our hope is Shah will agree to receive them. 9. To extent possible enlist cooperation of Israelis (possibly also Turks) to disabuse Shah of suspicion that USG has turned against Iran. Separate airgram reports Israeli attitudes here. 10. Assure Shah of complete USG confidence. This means all agencies, including CAS and Embassy. Make clear there is absolutely no possibility of separate clandestine policies. 11. To extent you feel possible declare your full confidence in US Ambassador in Tehran and your disappointment that in spirit of frankness, suspicions and allegations have not been taken up directly with him. If feasible, you could point out that Ambassador in Tehran has presented Iranian case in fashion more formidable than Shah apparently appreciates and that he deserves Shah's full trust. Note: Alam once delightfully described me as Iran's best Ambassador to Washington and he implied Shah felt that way too./4/ /4/In telegram 125954 to Tehran, March 7, Under Secretary Rostow thanked Meyer for his suggestions and said that he had consistently expressed his confidence in the Ambassador, which was shared by all of them there, and would continue to do so in talks with Iranian officials. (Department of State, Central Files, POL IRAN-U.S.) 12. Here in Tehran, I intend to have heart-to-heart talks with Hoveyda and Zahedi, as well as with Shah when he returns. I confident we can lay to rest suspicions against Embassy even though Shah's deeper concerns may be more difficult. Big challenge is to inspire Iranians to follow up their successes to date by playing leading constructive role in future of Persian Gulf area. Meyer
266. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, March 6, 1968. /1/Source: Johnson Library, National Security File, Country File, Iran, Memos & Miscellaneous, Vol. II, 1/66-1/69. Confidential. SUBJECT The Shah is coming to receive an honorary degree at Harvard on June 13. He would naturally like to drop in for a short chat with you./2/ With the British withdrawal from the Persian Gulf now a certainty, he will want to stay in close touch with you, and we have an interest in his cooperation with his Arab neighbors to prevent an undue increase in Soviet or Arab radical presence. /2/In telegram 3437 from Tehran, February 21, Meyer had reported that the Shah had decided to accept the invitation to receive an honorary degree at the Harvard commencement, and that Court Minister Alam had expressed the belief that the Shah would also want to meet with the President. (Department of State, Central Files, POL 7 IRAN) Secretary Rusk recommends that you invite the Shah to an office meeting and a small working lunch either June 12 (Wednesday) or 14 (Friday) so he can stop in on his way to or from Cambridge. We realize you just had him for a more formal visit last August and would not have recommended another meeting so soon. But since he's coming on a private invitation for a laudable purpose, it's hard not to pay him some attention. An additional reason for the meeting is that, as you know, we maintain our relationship with the Shah via periodic contact of this sort--more frequent than is normal in other cases. Right now he is having another periodic case of annoyance and nervousness over some serious problems and decisions he faces. In short, he's at another point of needing reassurance that he can count on us. He isn't getting what he wants from the oil companies; the British are vacating the Gulf leaving him face to face in a dispute with Saudi Arabia over tremendous oil reserves under the Persian Gulf; his military sales agreement with us is pending; Kosygin is coming in April, and the Communist clandestine radio is raking him over and appealing to his opposition; he's not doing too well with the Arabs, and he may be feeling generally isolated at the moment. Your schedule would permit an office chat and small lunch on either June 12 or 14./3/ /3/Approved for June 12. Walt
267. Telegram From the Department of State to the Embassy in Iran/1/ Washington, March 8, 1968, 0030Z. /1/Source: Department of State, Central Files, POL IRAN-US. Secret; Nodis. Drafted by Under Secretary Rostow on March 7, cleared by Eliot, and approved by Grey. 126616. 1. Rostow called in Ansary March 7 and made following points: 2. In the nature of the relationship of confidence and trust between our two countries and the respect and admiration we feel for the Shah, it is gratifying and right that we clear away any doubts, misunderstandings or suspicions that may arise between us. It is natural, given the complexity of some of the problems we face together, that such misunderstandings can arise from time to time. We appreciate the spirit that led Shah to ask the Ambassador to raise with us the problems we discussed at our last meeting. 3. We have rechecked the points raised. We are glad to assure the Shah that so far as we can find out from all sources there is no substance to any of the rumors that have been given us. No one at the Embassy has been in contact with Amini, nor has any American connected with other official groups. It is true that the possibility of a social meeting with Amini was mentioned at a dinner party some time ago, but it was not followed up. From the point of view of our normal diplomatic policy, as the Ambassador knows, we would see such meetings as normal. The problem of contacts has been fully and amicably discussed by Ambassador Meyer with the Shah. If you have more concrete evidence, we should be glad to consider it. But it is hard to check on vague and general rumors. 4. Any contacts Embassy officers or other officials have had with students, through Student Center at university or otherwise, have been most casual and normal. The idea of Americans being involved in any way in student movements or demonstrations is fantastic, and has no foundation. 5. With regard to the cancellation of the Shah's visit to King Feisal, our views were thoroughly and frankly discussed with the Shah. While we were somewhat disappointed, we understood his decision, and there was no criticism of it. We did not discuss our views in public, or outside a very tight circle in the government. 6. On broader issues, Rostow said he had been unable to detect any rebels against the President's policy. In every agency, and at every level, there was a unanimity remarkable in the American government, and not very typical of the American mind--a unanimity of enthusiasm for what Iran is accomplishing, and of confidence in the Shah's leadership, at home and abroad--in the Persian Gulf, in the Middle East, and in world affairs. 7. On oil questions, we have indeed been neutral. The Saudis think we favor Iran. Our efforts with the Consortium have been addressed to facilitating clearer understanding and good will on both sides. The Consortium has made major concessions to Iran in past two years, and their performance over the last 15 years has been spectacular, and has helped make possible the Shah's program of economic and social development. So far as Iraq is concerned, their behavior over the years has reduced both investment and their share in production. 8. With regard to the arms supply problem, Rostow said he had checked on the status of plans. Draft military agreement had not been sent to Embassy some time ago. Nothing more than an uncleared sketch had been received. But a directive has now been issued to have the entire matter prepared for action very quickly. Ways and means of financing the transaction are being studied. We have every reason to expect an answer within a short period. We must of course bear in mind the history of Congressional interest in arms sales generally. 9. About the Gulf, we stand ready to examine problems of cooperation and stabilization in that vital area with GOI, here and in Tehran. We realize the sensitivity and importance of the issues involved, and will do our best to facilitate their solution. The problems of the Gulf are of critical importance. The latest Soviet statement on the subject is serious. It asserts that our interest in the safety of the region is directed against the security of the southern borders of the Soviet Union. It endorses national liberation movements in the area, and attacks "imperialist and neocolonialist regimes." And it offers Soviet protection to the governments of the area in order to safeguard them against imperialist encroachments. Rostow said there was no need to stress the implications of this bold public statement, as published in Pravda on March 4. 10. Our government is unanimous in its admiration of and respect for our Ambassador. He has been doing an extraordinary job. Ansary warmly and enthusiastically agreed and said he knew Shah had great confidence in Ambassador Meyer. Rostow said we were glad to be assured by the Ambassador that Ambassador Meyer enjoys the confidence of the Shah. We believe that confidence is fully merited. Ambassador Meyer presents the Iranian viewpoint to us with great force and understanding. We are glad there is no misunderstanding between us on this point. Rumors of this kind would normally be cleared up in frank talks with the Ambassador in Tehran, and we are sure this practice will continue to be the rule when the Shah returns to his capital. Ansary agreed with Rostow that undoubtedly reason why these issues were raised in Washington rather than Tehran at this time was their sensitivity. In view of probable sources of reports, it would have been difficult for Shah to handle problem by cable to Tehran. Rusk
268. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, March 14, 1968, 1650Z. /1/Source: Department of State, Central Files, POL IRAN-U.S. Secret; Limdis; Noforn. Repeated to Dhahran, Jidda, Kuwait, London, Moscow, and CINCSTRIKE/ USCINCMEAFSA. 3767. Shah's Preoccupations. 1. Zahedi Tour. Shah 14th told me major purpose FornMin Zahedi's visit to Washington is discuss Persian Gulf. Oil consortium problem also. 2. Angry at British. Shah said his Isfahan statement (Tehran 3754)/2/ was directed at British. He refuses accept their non-responsibility for creation of FAA. He has reached conclusion that Bahrein's inclusion in FAA, plus implication that British will deliver Tunb Islands and Abu Musa to sheikhdoms, is intolerable. Shah said he waiting to hear from British following Zahedi's talks. He considers Brenchley as chief HMG culprit with George Brown not far behind. If British, who are allegedlly allies, persist in present course, Shah said, Iran will not sit at same table with them, e.g. CENTO. /2/Dated March 14. (Ibid., POL 15-1 IRAN) 3. Wants not to be pressed re Bahrein. Shah said he had previously suggested formula for dissolving Iran's claim to Bahrein, i.e., plebiscite, but that would not be possible now given present excitement on Bahrein question. If issue could be put in ice-box for two years, plebiscite might be possible then. I noted Sheikh of Bahrein himself has problems and referendum might only succeed in stirring up rabid Arab nationalists. Basing remarks on State 128944/3/ re nebulous nature of FAA until now, I urged Shah to relax a bit. Noted public denunciation of FAA by Iran could have unhappy repercussions, i.e., drive Bahrein more solidly into FAA, open opportunities for exploitation by radical Arabism etc. Concluded it behooves all of us to buckle down to see if some mutually satisfactory resolution can be achieved for knotty Gulf problems precipitated by departure of British./4/ /3/Not found. /4/In telegram 3774, March 15, Meyer reported that his audience with the Shah had convinced him that his analysis in telegram 3626 (Document 264) was "right on the button." He suggested that the Shah might be satisfied by a package deal including: 1) clear cession to Iran of the Tunb and Abu Musa Islands (through British auspices); 2) a joint Saudi-Iranian venture in the mid-Gulf for exploiting oil resources on both sides of the 1965 initialed line; and 3) relinquishment by Iran of its claim to Bahrein. (Department of State, Central Files, POL IRAN-U.S.) 3 [sic]. Oil Consortium. Shah seemed relatively relaxed re consortium. He has impression consortium will meet his demands for 1968 or gap will be so narrowed that it acceptable. Problem is oil income for remaining four years of fourth plan. Shah concentrated particularly on inter-participants agreement, proudly reporting that through various sources he has received secret info re attitudes of various companies. He repeated what we had heard from consortium reps, that previously internal regulations "absolutely impossible" but now they merely "impossible." He believes obstructive underlifting companies are concerned that overlifters might steal some of their markets. Shah believes underlifters can be mollified by setting limit, e.g., 15 percent as to how much overlifting oil hungry companies, e.g., Iricon, will be allowed to take if and when restrictions can be loosened further. I pointed out what one rep had told me that obviously oil hungry companies will say revised regulations are still prohibitive so long as they think further liberalization is possible. Also went to considerable lengths to suggest offers by East Bloc and CFP have ulterior motives, i.e. shaking the normal oil industry in Mideast for their own political and economic benefit. Cited phony Hungarian report against Mobil, and fact that as soon as Shah got special price to barter oil to Romania and other East Bloc countries Romanians raced to Saudi Arabia, Libya, Egypt and other oil producing companies offering barter deals for oil--with none of them, including deals with Iran, resulting as yet in moving one drop of oil to East Bloc. Re Mobil, Shah said Iran can not object to consortium companies trying to sell additional oil including in East Bloc but it does object if an NIOC price is undercut. Shah said in Washington Zahedi will make point that Iranian liftings only 130 million tons per year while Arab states moving around 600 million, but West would be well advised to work toward better balance in view of uncertainty of Arab behavior. 4. Soviet Hostility. Referring to recent Soviet communique, [garble] Iran broadcasts, Soviet diplomatic demarche etc., Shah said it is "clear as daylight" Soviets have their own plans for Persian Gulf. He annoyed by overtones of "sphere of influence" in communiqu&e. Not only has Communist expansionism been added to Czarist designs for warm water port, Shah said, but their major strategy is to control valves of Mideast oil. Soviet system has failed in competition with West, Shah said, and world war is out of question for them, so they trying to dominate Mideast and its oil as means for destroying West European industry and thereby systems of government. Shah said he has ordered Zahedi to have Iranian diplomats in Western Europe emphasize this point. 5. Relaxed re Arms Program. Shah seemed content with status of negotiations re continuation our military credit sales. He was particularly pleased when I noted annual economic review which was held with PriMin that morning had taken place May 3 year ago. Shah seeing Jablonsky Sunday./5/ Incidentally, PriMin had already apprised Shah of our discussion, including pitch we had made (with which both PriMin and Shah agree) for encouragement of copper development and other private enterprise joint ventures. /5/March 17. 6. U.S. Collusion. Began conversation by expressing gratification that small irritants which had been mentioned by Ambassador Ansary to Under Secretary Rostow been cleared away and mutual confidence fully restored, including with this Embassy. Shah still thinks we side with Saudi Arabia but only because of his partisan evaluation of events leading up to cancellation of Saudi visit. As I was leaving he mentioned Amini and I reviewed details, also my conviction that our being in touch with outsiders is to his advantage. Cited how well this worked when I was in Lebanon, also how helpful it was (and he agreed) when I took on Iranian students across from Blair House last August. He then professed there no objection to our seeing even Amini "every night" (but of course he does not mean it). Shah (as Hoveyda had done before) said what caused concern was coincidence of events, e.g. student unrest, Amini's increased activity, etc., which resembled developments in 1961 prior to Amini's coming to power. His view now is that student unrest was definitely Communist inspired and other disturbing events also had nothing to do with USG. Conversation ended most amicably with Shah jokingly agreeing I not persona non grata. Meyer
269. Telegram From the Department of State to the Embassy in Iran/1/ Washington, March 16, 1968, 0048Z. /1/Source: Department of State, Central Files, POL 7 IRAN. Secret; Limdis. Drafted by Eliot on March 15 and approved by Davies. Repeated to Dhahran, Jidda, Kuwait, London, and CINCSTRIKE/CINCMEAFSA. 131326. Subject: Zahedi's Washington Visit. 1. Following summary FYI, Noforn, uncleared and subject revision upon review. 2. Summary. Zahedi stressed seriousness to Secretary of Iran's interest in obtaining more oil revenues and in protecting its interests in Gulf. He blamed British for formation FAA and indicated necessity for GOI be able respond to desires Iranian people in settling problems of Bahrein, Tunb and Abu Musa. Secretary urged Iran consider its actions in context total dangerous world situation. 3. Iranian FonMin Zahedi called on and lunched with Secretary March 15 accompanied by Amir-Teimur, Fartash, Ansary and Batmanglidj. Under Secretary Rostow, Davies, Farley, Saunders and Eliot also present. 4. Zahedi made lengthy presentation to Secretary on oil and Persian Gulf. a. On oil Zahedi reviewed Iranian need for revenues to support development program and military requirements which have increased as result British decision withdraw from Gulf. He stressed Iran's helpfulness in keeping its oil available during last June's crisis. He asked whether it wise for oil companies depend so heavily on Arab oil and on Aden refinery. Iran thought that alliance and friendship with US and UK, actions in June crisis, and constructive attitude on many international problems would have resulted in different response. Iran doesn't wish put oil companies in corner and threaten them and is open to suggestions. Consortium has been told what Iran's requirements are and has been asked raise offtake and/or provide cost oil for Iran to market and/or invest in Iran. If Consortium unable respond, it must think of consequences. b. Zahedi reviewed his discussion with Brown in London (State 130381)./2/ Said Iran hurt by UK's recent actions. Iran doesn't desire anyone's land, wants strong and healthy states on other side of Gulf and wants resolve small problems so that true friendship will prevail. Will not take Bahrein by force and will even risk wrath of public opinion by agreeing to plebiscite or some other way to solve problem. Zahedi reviewed Saudi-Bahrein communiqué, Fartash mission, cancellation Shah's visit, Amir-Teimur mission, noting all instances of alleged Saudi misbehavior. He then mentioned formation of FAA,/3/ accusing British of double-cross. Problem with federation not only inclusion of Bahrein but also inclusion of Ras-al Khaimah and Sharjah and with them of Tunb and Abu Musa Islands. He said Iranian public cannot accept this and that if FAA is formally inaugurated on this basis March 31 British will have to accept consequences. He asked how Iran can stay allied to country which behaves in such a way. British tell Iran be patient, but for how long? In response Secretary's question concerning role of British in formation FAA and expression of doubt British planned it, Zahedi and Amir-Teimur reiterated belief they had hand in it, citing Roberts' telling Shah that UK favored federation of some of Sheikhdoms. Secretary also asked if FAA more shadow or substance and whether its formation would affect Iran's relations with individual components. Zahedi indicated formation FAA on present basis would indeed interfere with Iran's relations with Sheikhdoms. /2/Dated March 14. (Ibid., POL 15-1 IRAN) /3/The Federation of Arab Amirates (FAA) was formed in February 1968 by the rulers of the nine Gulf States--Bahrain, Qatar, Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Qaiwain, Ras al-Khaimah, and Fujairah. 5. In response Secretary said he hesitated give off-the-cuff response to such serious and far-reaching problems. He mentioned number of world problems, including Vietnam, Laos, Cambodia, Thailand, Burma, Korea, stirrings in Eastern Europe, economic situation in Free World. He noted that following June war Soviets felt sense of panic and loss of prestige. Stresses in Communist world and judgments they make concerning Free World produce situation pregnant with possibilities of crisis. Secretary said hard for us think about problems Zahedi raised except in framework world situation. We would be disturbed if Iran and UK at odds. Would be serious if Iranian actions would create inflammation in Arab world against Iran causing Arabs to look to Soviets for assistance. He expressed understanding how serious these problems are for Iran but stated they also grave in terms total world situation. It would be easy, he said, for US to counsel patience, but instead we ask Iran examine all consequences and alternatives in current dangerous world situations where clarity and wisdom in high demand. Secretary reviewed our strenuous efforts dissuade British from early withdrawal from Gulf. He mentioned knowledge some Iranians feel we not neutral in Iranian-Saudi problems and assured Zahedi this not so and that in fact we believe good Iranian-Saudi relations prerequisite to peace in Gulf and that they have identity of interest in preventing expansion Soviet influence in area. He said we deeply concerned about any match being applied to gunpowder anywhere. Shah one of best informed men in world and also wise man. Hopefully Iran would look at its problems in widest context. Secretary concluded by saying he could not speak from Mount Olympus and hoped discussions these subjects would continue through Ambassadors. 6. On oil, Secretary said we cannot dictate to companies. We hope both parties will continue to promote their mutually beneficial relations. We will keep in touch with companies. Rostow mentioned our strong interest in mutually satisfactory solution and asked if Iranians had discussed offtake from Abu Dhabi with British. Rusk [Continue with the next documents] |
