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300. Memorandum From the Joint Chiefs of Staff to the Assistant Secretary of Defense for International Security Affairs (Warnke)/1/ DJSM 790-68 Washington, June 25, 1968. /1/Source: Washington National Records Center, RG 330, OSD Files: FRC 73 A 1250, Iran 400, 25 June 68. Secret. SUBJECT 1. (U) Reference is made to a memorandum by the Assistant Secretary of Defense (ISA), dated 19 June 1968, subject as above./2/ /2/Not found. 2. (S) During the recent talks with the President, the Shah of Iran raised the question of the best military way of dominating the entrance to the Persian Gulf. The Shah also expressed his concern about the Russian Fleet and the Persian Gulf and asked whether the United States could fix missiles owned and controlled by Iran on the islands in the Strait of Hormuz to dominate it. 3. (S) By his concern, the Shah identified the major threat to the Persian Gulf as the Soviet Navy. However, this threat is not considered immediate and therefore all elements of the problem should be thoroughly examined before changing the proposed sales program, which was recently developed in response to previous requests by the Shah. 4. (S) Considering the range, nature of the target, usual temperature and environmental factors, it would seem that the Nike Hercules is the only missile in the United States inventory that would approach the Shah's requirements. One or two batteries (nine launchers each) located on the mainland or on Larak or Qeshm Islands, could deliver 500 pounds of high explosive to any point in the strait with an estimated 200 yard circular error probable (CEP). A guided missile system would have the advantage that such a system could probably be established without the undue irritation that would be caused by measures such as mining. Disadvantages of the system would be the high cost (probably at least $4 million per battery), the need for another variety of specialized personnel, and the susceptibility to enemy destruction. Production lines of this missile are presently shut down. In addition, experience in use of the Nike Hercules in the surface-to-surface role is considered inadequate to justify expenditure of funds to employ this missile as possibly envisioned by the Shah. 5. (S) Presently Iran has a well motivated, competent Air Force which could operate with good effect in the Strait of Hormuz. This capability will be greatly improved with the programmed acquisition of F-4 aircraft. 6. (S) The Shah has also sought to procure PGM-84 missile boats with a surface-to-surface capability. These are also considered more practical, when available, than an island based missile system. 7. (S) Iranian control of the Strait of Hormuz will not in itself keep the peace in the Gulf or maintain its Western orientation. Also, if the USSR should decide to move into the Persian Gulf, Iranian missiles would not be a deterrent. It is therefore recommended that an attempt be made to dissuade the Shah from procuring an island based surface-to-surface missile system. B.E. Spivy
301. Letter From Secretary of Defense Clifford to the Shah of Iran/1/ Washington, June 29, 1968. /1/Source: Washington National Records Center, RG 330, OSD Files: FRC 73 A 1250, Iran 452, 29 Jun 68. No classification marking. Your Imperial Majesty: Since your departure from Washington, my staff has looked carefully into the pricing of F-4 aircraft./2/ As a result, I can assure you that Iran has paid no more than the costs our armed services would incur in purchasing the same number of aircraft at the same time. I do not expect this situation to change in the future. /2/A June 20 memorandum from Warnke to Clifford noted that in response to the Shah's questioning of Clifford about aircraft prices paid by the U.S. Air Force versus those paid by Iran, Warnke wrote that Iran had paid no more, and in one case paid less, than the costs that the U.S. armed services would have incurred in purchasing the same number of aircraft of the same configuration at the same time. (Ibid.) I have asked Mr. Henry Kuss of my staff to discuss this matter in some detail with Governor Samii in order to resolve any questions which he may have on either past or future procurement. It was indeed a pleasure to see you again. The occasion gave me an opportunity to re-acquaint myself with the great advances Iran has made in recent years under your wise leadership. Sincerely, Clark M. Clifford
302. Memorandum From Harold H. Saunders of the National Security Council Staff to the President's Special Assistant (Rostow)/1/ Washington, July 1, 1968. /1/Source: Johnson Library, National Security File, Walt Rostow Files, Visitors, 1968. Secret. SUBJECT /2/July 2. Attached is State's briefing paper./3/ Following are the main points you might make to Ansary: /3/Attached but not printed. 1. We are just about finished with the studies the President promised the Shah. It will take us a couple of more weeks and the President will be in touch. Some of these involve difficult problems for us but we have made every effort to be as forthcoming as possible. 2. You could say how much the President enjoyed the Shah's visit and how much the President has enjoyed his association with the Shah. 3. You might say the President appreciates the Shah's agreement to consider shifting dollar holdings to longer term basis. 4. You might ask Ansary to tell Prime Minister Hoveyda how much we are looking forward to his visit in December. (The purpose of that visit will be to broaden our current praise of Iranian leaders. We don't want the Shah to think that he is the whole show. Having Hoveyda here, with the possibility of meeting the President-elect, will serve this purpose.) 5. You might chat about the Persian Gulf in the light of its experiment in sub-regional relationships. The main point we want to make is the importance of the Shah working out these arrangements with other leaders in the Gulf, especially Faisal. 6. You might chat about the Arab-Israeli problem (keeping your comments general since everybody reads Ansary's reports and he isn't always too accurate). State recommends that you not foreshadow our response on any of the specific requests the Shah made so we can save the full impact for the President. For your information, however, here are the conclusions on the points the President asked to have studied as they stand in draft: 1. Assuring the Shah of our support for his five-year program. The best we have been able to come up with so far is a promise by the President to speak to his successor about the importance of our continuing cooperation with Iran. We would also reiterate the assurance we have already given--that the Executive Branch will continue to try to persuade Congress of the importance of our ability to participate in Iran's military development program. 2. USAF technicians to support F-4 aircraft. The USAF has surprisingly come up with a proposal to send 40-50 supervisory personnel for maintenance management. However, this still is not final because we haven't resolved the major question of who would pay. 3. Dominating the entrance to the Persian Gulf. The proposal so far is that we offer the Shah a study of this problem. I don't think this is quite enough by itself, and I will urge that this be beefed up. 4. Radar and military communications systems. Our next step will be to outline the alternatives to the Shah to make clear what he still needs to decide. Once there is a definite plan, we will see how we can help, but the issue is just not precisely enough defined yet. 5. Northrop 530 Aircraft. We would give the Shah the facts, telling him that we think it is premature for Iran to invest because the plane has not even been design-tested yet. 6. US to buy more oil from Iran. This is the toughest. The proposal is to invite Iran to work through companies that have US oil import permits, since the USG can't engage directly in barter without upsetting the whole quota system. Iran could also bid on the sale of refined products to Defense (though it's not clear yet what this would add up to). As I say, these are still tentative, and we will be sharpening them in the next few days. Hal
303. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, July 7, 1968, 0825Z. /1/Source: Department of State, Central Files, POL 13-2 IRAN. Confidential. 5600. Subject: Student Unrest. Ref: State 186094./2/ Summary. Iran would have to be unearthly if student problems did not exist. However, for the moment at least, potential student demagogy is having trouble tilting against Iran's economic boom and Shah's "independent nationalism" policies. So student problems will probably remain low key, although in long run student unrest could erupt, particularly if Shah's present highly successful policies should begin to falter. /2/Dated June 19. (Ibid.) 1. Compared with recent events at Columbia University, Berkeley, Paris and Rome, student situation in Iran is at least for moment tranquil and well-controlled. Several minor student upsurges occurred this spring (A-476, A-520, A-539, and A-647),/3/ which surprised GOI and prompted charges of foreign inspiration but as reported by Embassy (A-576)/4/ these upsurges gained little momentum and were effectively brought under control by GOI. /3/Dated March 9 (ibid.), April 6 (ibid., EDU 9-3 IRAN), April 17 (ibid.), and June 6 (ibid., POL 13-2), respectively. /4/Dated May 6. (Ibid., EDX 12 IRAN) 2. In Iran, student unrest is largely function of political status quo. Politically, Shah and his regime have never been more firmly in saddle. As result of "white revolution" and "independent nationalism" policies, wind has been taken out of sails of opposition, i.e., remnants of Tudeh and National Front parties can no longer effectively accuse regime of being feudalist or U.S. puppet, meanwhile, economic boom, premised on $800 million oil revenues, leaves oppositionists, past or potential, with few flags to wave. 3. This is not to say that younger generation in Iran is less restive than youth elsewhere. Rebellious adolescent instincts exist. They are encouraged by epidemic of student unrest elsewhere in world, including even in Communist Bloc. They should never be judged as less than incipient. It must be remembered that massive student uprisings against Shah's regime did occur here in early 1950's, cleverly manipulated by demagogic leader, Mosadeq. As recently as 1963, major uprising occurred at Tehran University, which was quelled by rather ruthless police action. 4. Present day Iran affords some special opportunities for student unhappiness. Despite economic boom, there is almost legendary lack of identification. Decisions are made by Shah or not much lower than cabinet-technocrat level. There is thus little feeling of participation in decision-making, least of all among student groups. This frustration is, however, for the moment considerably offset by prospects of personal economic gain and by vague awareness (and pride) that compared with other countries in Mideast Iran is somewhat a model of economic development and social progress. Dissatisfaction which exists tends to be less focussed on Shah and has become more of an amorphous discontent with political structure. Specific issues for stirring up dissidence are, however, quite unpromising. In short, instead of passionate student hostility there is student apathy, which is less but still worrisome. 5. In Iran, Shah monarchy has 2500-year tradition. It may one day give way to liberal democracy, but it is institution which still is effective, particularly as so cagily manipulated by present Shah. Mosadeq sought to tilt with this institution and Shah as its personification with 20th century weapons, but, as so often happens in emerging societies, Mosadeq employed totalitarian tools as much or more than regime against which he tilting. Still today there is some lingering pro-Mosadeq sentiment. For example, there seems to be goodly number of secondary school teachers who mostly due to limited qualifications have never risen to prominence and who still tend to carry Mosadeq torch. Their teaching has some influence on university enrollment (which knew not Mosadeq), with sort of greener pastures overtones. But this sentiment, as all other oppositionism, bucks national self-congratulation induced by Iran's present manifest prosperity and progress. 6. Some controversy inevitably develops over manner in which GOI copes with student manifestations. Thanks largely to university leadership, peaceful student marches have been condoned, but any activism is quickly suppressed by police (and SAVAK) action. This, of course, reaps student resentment. In case of Pahlavi University unrest several students were locked up and accused under highly questionable pretexts of being ChiCom agents. In future, ruthless police methods could contribute to student explosion. However, GOI leadership is convinced that strong police action is in keeping with exercise of authority as historically practiced in Iran. Its belief in efficacy such measures has only been strengthened by dramatic reports of recent student riots in US/other countries where in GOI eyes administration has been too lax. 7. Fact that Shah has always been good America friend, and in particular prevailed over Mosadeq with American blessing, tends to associate Shah's regime, despite its flirtations with Soviets, with US. Since he is riding high, US is for present in relatively good position, although among student groups there is inevitably unhappiness over Shah's military expenditures, as well as U.S. role in Viet Nam. Nonetheless, there have been no demonstrations in Iran re Viet Nam, even by students. Therefore, under present circumstances chances of student revolt being centered on anti-Americanism are not bright. 8. Student problem was reported in greater detail in A-576, along with GOI and USG activities connected therewith. Of course, student situation could explode at moment's notice. However, our best guess is that student troubles in Iran will at least for present remain at relatively low key. Student grievances are apt for the present to center on university policies. In long run, however, political frustrations could mount up, particularly if Shah's dream of transforming Iran into political entity with Western European standards of living does not materialize. Meyer
304. Telegram From the Embassy in Iran to the Department of State/1/ /1/Source: Department of State, Central Files, DEF 1-5 IRAN. Secret; Priority; Limdis. Repeated to CINCSTRIKE/CINCMEAFSA. Tehran, July 12, 1968, 0905Z. 5666. Shah's Defense Concepts. Summary. In tour d'horizon re Iran's defense program, Shah emphasized vital importance of security of Gulf and Iran's key role in attaining that objective. Kuss succeeded in securing Shah's consideration of cost effectiveness and of need for gearing shopping list to other factors such as supply of technicians. 1. Shah 11th opened two-hour conversation with Defense Deputy Assistant Secretary Kuss and me by contrasting Iran's military posture with that of its neighbors. Question he emphasized is not merely preparing against threats but maintaining military "balance" so as to deter adventurous aggression. 2. Doubting Soviets would risk world war by direct attack on Iran, Shah said Iran would nevertheless resist as long as it could should Soviet aggression take place. More likely, however, would be "wars by proxy" 3. Shah noted Afghanistan has MIG's, SAM's (which Iran does not have), and Soviet technicians. Iraq, he said, is "big question mark," capable of going either anti-Communist or to chaos. He noted Iraq has more fighters than Iran plus sixteen Sukhoy bombers with sixteen more to come. Radical Arab states have vast quantities of Soviet arms, supported by Soviet technical personnel (3,000 in UAR alone). More recently Saudi Arabia has bought Hawks and Lightnings, Kuwait and even Qatar are seeking arms deals with British. When Kuss pointed out none of these countries serious military threat because of personnel incompetence, Shah noted they hiring mercenaries. Discussion re British, FAA and Bahrein being reported separately./2/ /2/Not found. 4. Shah stressed vital importance of Persian Gulf to Iran. It simply not possible to permit vacuum which will occur by British withdrawal to be filled by irresponsible forces. To assure Iran's interest and, therefore, Gulf security Iran must play role consonant with its size and capability. Most effective means for doing so would be potential control of Strait of Hormuz. Knowledge that Iran has such capability would in Shah's view serve as most effective deterrent. We emphasized Iran must be prepared by end of 1971, date of British withdrawal. 5. Shah placed highest priority on air defense, radar and navy. Army requirements could if necessary be to some extent deferred. 6. Noting Iran not interested in fighting Iraqi KOMAR ships but is more concerned re larger vessels (such as UAR destroyers coming around Arabian peninsula). Shah discussed merits of land-based missiles at mouth of Gulf. He felt they would have maximum optical impact of deterrent nature. If land-based missiles (he has impression Tartar missiles have 40 mile radius) unfeasible, missile-carrying boats would be alternate. He mentioned possibility of Bagrielle missiles and expressed belief their Israeli origin could be successfully camouflaged by saying they were French-made. 7. Noting this is complicated question, Kuss said thorough study being made by DOD experts. Meanwhile, we called Shah's attention to fact that air force is potent weapon indeed in handling threat from enemy navy. Nothing could give greater optical impact than Phantoms screaming across horizon. Shah was concerned that air force could not do job at night or during inclement weather. But readily agreed that air force would be primary instrument inside Gulf. 8. Throughout conversation Kuss stressed trained manpower as limiting factor. Shah reported his discussion with President re possible USAF technicians as soon as some could be spared from Viet Nam scene. Shah hinted he might pick up at least part of tab for USAF technicians. He also mentioned possibility of "mixture" of USAF technicians with some civilians hired under contract. 9. Shah affirmed Iran must avoid duplications in country-wide communications systems. He reiterated, however, that air defense communications must be independent, mentioning again the ease with which potential enemy can knock out microwave pylon. Kuss pointed out no nation has completely separate military communications and noted that if pylon knocked out alternative routings would be possible. Shah eventually concurred that PTT should be backbone of basic military system and even that separate air defense communications be installed in order of priority, utilizing at least temporarily such PTT links as are already available. Kuss stressed saving in money is secondary to economic utilization of Iran's limited supply of technicians. He also noted that TOPO communications centers just as vulnerable as microwave centers. Re Peace Ruby, Kuss agreed USAF would complete "statement of work" within three months. Shah at least tentatively decided to save time by negotiating with sole source rather than resorting to competitive bidding. 10. Recalling how two years ago USG cut back Iranian pilot training slots to five, Shah expressed gratification for 75 slots provided as result his discussions with President year ago. He expressed unhappiness with training of 25 pilots in Pakistan, on grounds program is inferior, trainees being supplied with ChiCom propaganda, and Paks are even asking Iran for training equipment and instructors. Shah stated he prepared to postpone expensive present plans for developing pilot training in Iran if there is assurance that USG will continue to train pilots to meet Iran's needs. Kuss agreed question reasonable and would take up with Chief Air Force and other US authorities. 11. After extensive discussion of tank situation, Shah tended to agree to slippage, if necessary, of Sheridan tank procurement, provided few such tanks could be made available for advance training. Kuss noted how Shileleigh also would be drain on technician supply. Shah stressed Sheridans needed for tank destroyer mission. He agreed to Gen. Twitchell reviewing situation to insure best equipment for this mission. Re M-47, he has decided Swingfires too expensive ($140,000) and tends toward use of 105 mm gun with perhaps some of M-47's retaining 90 mm gun. Re engines for retrofit, Shah tends toward Continental because it is identical with engine in M-60, but will await results of test runs made in Italy. Kuss agreed obtain test data and provide. 12. Shah stressed his need to have firm commitment for five year program. Kuss reiterated standard USG position re our "intention" and noted qualifications which we have mentioned have been present in previous years but they particularly delicate this year because of legislation before Congress. Kuss recognized five year plan worked out with ARMISH/MAAG but urged Shah's support for going beyond "shopping list" type planning to broader joint planning which delineates manpower, training, operations, and financial requirements in keeping with material timing. Meyer
305. Memorandum From Secretary of State Rusk to President Johnson/1/ Washington, July 17, 1968. /1/Source: Department of State, Central Files, POL 7 IRAN. Secret; Limdis. Drafted by Eliot and McClelland on July 11, cleared by Rockwell and Battle, and in draft by Wolf, Soloman, Akins, and Warnke. SUBJECT Recommendations: That you approve the enclosed letter to the Shah of Iran./2/ /2/Attached but not printed. A typed notation on the source text states that the President signed a revised letter to the Shah; see Document 307. That you approve the enclosed instructions to Ambassador Meyer./3/ /3/See Document 307. Discussion: When he visited with you on June 11 and 12, the Shah made six specific requests for various types of American assistance, largely in the military field (see Mr. Rostow's memorandum, enclosed)./4/ In response to your instructions to be as forthcoming as possible to these requests, each one of them has been reviewed in detail and the suggested letter to the Shah incorporates the principal conclusions of these reviews. As you further instructed, memoranda, one on each request, have been prepared and are enclosed:/5/ /4/See Document 299. /5/Attached but not printed. I believe that the suggested response to the Shah is as forthcoming as we can be at this time, will serve to convince the Shah of our desire to maintain our close military relations with Iran, and will therefore contribute to the strengthening of our overall relationship with that important country. Some of the questions raised by the Shah are complex and I also enclose, for your approval, suggested instructions that you may wish sent to Ambassador Meyer in order that he may explain the background and various considerations underlying your letter. The Secretary of Defense concurs in this memorandum and the background memoranda enclosed have been coordinated with the Department of Defense. The paper on the Shah's proposal to barter Iranian oil has also been coordinated with the Treasury Department and the Department of the Interior. The Treasury also concurs in your reminding the Shah of your hope that Iran will shift a portion of its dollar reserves into long-term United States assets. Dean Rusk
306. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, July 24, 1968, 5:15 p.m. /1/Source: Johnson Library, National Security File, Special Head of State Correspond-ence File, Iran, 7/1/68-10/31/68. Secret. SUBJECT You will recall that the Shah put six specific questions to you. Attached are (1) a letter for the Shah answering these questions and (2) instructions for Armin Meyer to use in explaining your answers./2/ We have been relatively responsive, but we have not been able to do everything the Shah has asked us to do. Therefore, the letter is straightforward in saying what we can and cannot do. Following is the reasoning behind each of our answers, arranged in the same order as they are mentioned in your letter: /2/See Document 307. 1. What assurance can we give the Shah so he can plan on obtaining arms on good financial terms from the US for his five-year program? It is still not possible for us to give the Shah any categorical assurance that he can depend on USG credit in the future since we do not know what authority Congress will give us to sell arms on credit. We believe the best offer to make right now is for you to promise the Shah to speak to your successor about your relationship with him and the importance of our continuing cooperation. We have already given him a general assurance that the Executive Branch will urge Congress to fund a continued program, but your personal offer to intervene with your successor might be a sufficiently attractive new element to make him feel that we are doing everything possible. 2. Can the US provide USAF technicians to help Iran learn to maintain the F-4 aircraft it is buying? We are prepared to send fifty supervisory-level personnel for a one-year period to begin with if the Iranian Government will pay for them. We had already planned to send three USAF mobile training teams for a shorter period to help Iran handle its first F-4's this fall, but we could send a mission for longer. However, with limited military aid funds and our balance of payments problem, it would be hard to justify to Congress our paying for these extra people over a period longer than that required for familiarization with the new equipment. 3. What is the best military way of protecting the entrance in the Persian Gulf against the Soviet fleet? JCS does not like the Shah's proposal to station land-based missiles at the entrance to the Gulf because they are too expensive, too uncertain, and too vulnerable to attack. JCS would rather see the Shah rely on a combination of his Air Force and some good missile gun boats. We would give the Shah this preliminary JCS reaction and offer to study the question further with him if he wishes. 4. How can we speed up planning and construction of the Shah's radar and military communications systems? Both of these projects still require decisions by the Shah's Government. We have already turned over several preliminary engineering studies. We do have proposals for helping the Shah decide exactly what he wants and for speeding completion. But your best response to his question, rather than get into these details, is to offer full discussion of these alternatives by our Ambassador and military chief in Iran. 5. What role can the Northrop 530 aircraft play in the development of Iran's Air Force? We would keep the door open for Iran's possible participation in this plane's development. But since it is still in the design stages and is not planned for production before 1975, we would suggest that the Shah move cautiously before committing much money. 6. Can the U.S. buy more oil from Iran? This is the toughest. The best we can tell the Shah is that the Defense Department would buy more refined products at competitive prices if such products are available. This would not amount to too much because we already have a long-term contract with ARAMCO to buy Saudi products through the refinery on Bahrain. What the Shah really wants is for us to increase purchases of crude oil from the National Iranian Oil Company. Theoretically, we could do this by giving Iran a special import quota or by bartering Iranian oil for US exports. The main problem with both methods is that we would have to change our whole import quota system and would thereby open ourselves to requests for similar treatment from our other oil-producing friends, upset Venezuela and stir up a domestic hornet's nest. He will be disappointed, but we suspect he will be prepared for this answer. I believe the Agencies have given these questions a fair look. The answers are not entirely what the Shah might hope for. But they are reasonably responsive and he should recognize this. The attached letter is for your signature if you approve, and beneath it are more detailed instructions for Armin Meyer. Walt Approve/3/ /3/This option is checked on the source text, and a handwritten note indicates the Department of State was informed that the President signed the letter on July 25.
307. Telegram From the Department of State to the Embassy in Iran/1/ Washington, July 26, 1968, 1716Z. /1/Source: Department of State, Central Files, POL 7 IRAN. Secret; Limdis. Drafted by McClelland on July 11; cleared by Eliot, Rockwell, Battle, Wolf, and Saunders; and in draft by Warnke, Solomon, and Akins; and approved by Rusk. Repeated to CINCSTRIKE. 209512. Subject: Shah's Visit Follow-up Actions. 1. The President has approved and you are hereby instructed to transmit the following message to the Shah: "Your Imperial Majesty: I must say once again what a great pleasure it was to see you in Washington last month and to have the opportunity to share thoughts with you and to seek your counsel on matters of mutual concern. My admiration for your country's progress under your leadership continues to grow." "During our conversation, you mentioned a number of specific matters on which you indicated a desire for further consultations. We have reviewed these matters in detail, and I am now in a position to give you additional thoughts on all of them. Ambassador Meyer will also be prepared to discuss them further with you." "I fully understand your concern and need for long-term military procurement plans. Although our past undertakings to cooperate with Iran in the military field have, like our present one, been conditioned on Congressional action, they have come to fruition. It is my desire that we continue this cooperation in the future and my hope that the Executive Branch, in accord with the Congress, will continue the agreed programs of military cooperation with Iran. I will discuss this subject with my successor and inform him of the importance I attach to continuing close cooperation with Iran in all fields." "In connection with your request for additional technical advisers for Iran's F-4 aircraft, I am pleased to inform you that we will be able to provide, on a reimbursable basis and initially for a one-year period, up to 50 additional United States Air Force personnel if they can be of substantial assistance to advise and assist in providing maintenance management for these aircraft. I suggest that the details of this arrangement be worked out between your military people and the Chief of our Military Assistance Advisory Group in Iran." "You mentioned your concern about defense arrangements in the Persian Gulf. Our military people have made a preliminary investigation which reveals a number of problems and indicates that a land-based missile defense of the Strait of Hormuz would probably not be feasible. If you desire I shall be pleased to direct that a detailed study be prepared for you on this subject, including possible alternatives which might assist your future planning." "Your concern to have the most efficient radar and communications system, at the lowest cost, for your southern defense, is of course a matter on which our military people have been working together for some months. I have asked the Department of Defense to consider urgently how we can assist Iran's needs in this connection. Our Ambassador and the Chief of our Military Assistance Advisory Group in Iran will be prepared to pursue this matter with your people, and we will be as helpful as we can to you in exploring possible alternatives." "I am currently having an evaluation made of the plans for the new aircraft being developed by the Northrop Corporation that you mentioned to me. I understand that it is now planned that this aircraft will be ready after 1975. The work on it is still in an early stage, but if it develops that a consortium is to be formed and the aircraft lives up to design specifications, Iran might give further consideration to participation in this project. At that time perhaps our military planners could consult with you as to what alternatives would be available for the further modernization of the Iranian Air Force." "We have also looked into the possibilities for expanding the purchase of Iranian oil by American companies or the American government, possibly on a barter basis. I regret that there seems to be very little that can be done in this regard outside of normal, existing trade channels. To give special quotas to Iran for the import of petroleum into the United States or to enter into special arrangements for the exchange of Iranian oil for American goods would raise grave problems for our worldwide oil policy. On the other hand, the Department of Defense regularly purchases refined oil products for our forces in East Asia on the basis of competitive bidding, from a number of sources, and if Iranian companies can supply the required quantities at competitive prices we would be pleased to purchase them." "Finally, I appreciate your willingness to consider shifting a portion of Iran's dollar reserves into long-term United States assets which will assist our balance of payments, and I look forward to hearing further from you about this at your convenience." "I take deep satisfaction, Your Majesty, in the warm relations between our countries and look forward to doing what I can to strengthen these relations still further in the future. You and the people of Iran can continue to depend on the sympathy and support of the people of the United States as you strive to build the kind of prosperous and secure Iran that you want." "With my warmest personal regards," "Sincerely," "Lyndon B. Johnson" 2. When presenting President's letter to Shah, or at appropriate time thereafter, Ambassador Meyer may state that President authorized him to make following comments concerning letter: a) General: President's reply is based on most careful examination of Shah's various requests by all agencies concerned. It takes into consideration not only President's desire to maintain close ties with Iran in all fields, but also our own domestic problems and political system. All subjects raised by Shah will of course be subjects of continuing consultations in the future. b) Five-Year Commitment: President hopes Shah fully understands why US cannot, in view of our legislative system, give any more definite assurances than he has already given. Congressional situation requires us to consider our military credit program on annual basis. This, however, has been true in past, and our past record bears witness to our understanding of importance of our military cooperation with Iran and clearly indicates our desire to continue this cooperation in future. c) Technical Advisers: Although President wants to be helpful in providing additional MAAG personnel in connection with Iran's F-4 aircraft, we are uncertain exactly what Shah has in mind. As Chief, ARMISH/MAAG has informed Shah in past, we cannot supply MAAG technicians to perform direct support for foreign forces. If, on other hand, IIAF has requirement for supervisory-level personnel, we could supply up to 50 such people, initially for one-year period, with extension possible for one more year. We would want this program to be on a fully reimbursable basis. We estimate 50 USAF personnel would cost, on this basis, no more than $1,000,000 per year or substantially less than cost of similar personnel hired on commercial basis. Moreover, effectiveness of such personnel, operating as integral part of MAAG, would be far greater than that of personnel operating outside MAAG. Our MAAG Chief can work out details with IIAF. d) Persian Gulf Defense: President will be pleased to have more detailed study conducted if Shah desires one. Such a study would consider not only question of land-based missiles but also of cost and effectiveness of alternative air and naval defense systems for Gulf. Preliminary investigation referred to by President revealed number of problems concerned with capability and characteristics of land-based missiles for defense of Strait of Hormuz. Furthermore, it indicated that if powerful enemy forces should decide to move into Persian Gulf, Iranian land-based missiles would not be a deterrent since they would be susceptible to enemy destruction. On other hand, Iran has well-motivated, competent air force whose capability will soon be greatly improved with acquisition of F-4 aircraft, and this force could operate with good effect in area. e) Radar and Communications Systems: President has instructed DOD to ensure full information on various alternatives is made available to Irannian authorities and every assistance given them, through MAAG, to enable GOI to decide on specific courses action for these projects. When decision taken USG will lend every assistance it can to expedite projects. If US contractor is selected to carry them out, USG will do its best to provide necessary military credits to cover future year program costs within present arrangements as communicated to Shah on May 20, 1968. f) Northrop 530: DOD is considering support for this aircraft for production in US if the aircraft lives up to design specifications. If a consortium is formed Iran would certainly be welcome to join, but it is not expected aircraft would be available until after 1975. g) Oil Barter: President realizes importance the Shah attaches to his proposal to barter or sell Iranian oil for American goods. Accordingly, USG has made a careful review of all alternatives open but has not found any encouraging avenue. i. Special Quota for NIOC: Quotas are currently given to importers. There are no restrictions on where they get their oil. They could not be instructed to take oil from any specific country, nor could NIOC be given special quota without fundamental revision of US oil imports program. USG has been asked to grant, but has declined, special quota treatment for other countries in the past. ii. Barter or Sale of Iranian Oil for American Products: NIOC is free now to barter oil with American companies if there are any companies with import permits willing to make such arrangements. On the other hand, any arrangement with Iran to accommodate barter of Iranian oil outside U.S. oil import program would require modification to program and would cause us very difficult problems with other oil-producing countries and in our domestic oil market. Such arrangement, in effect, would require USG give Iran special country quota with problems explained above. iii. Increased Military Procurement from Iran: DOD purchases refined oil products, on basis of competitive bidding, from a number of sources. In first half of 1968, it purchased significant quantities from Iran and would be pleased to take additional quantities from companies concerned if suitable products are offered at competitive prices. Ambassador Ansary has been given full information on this procurement. Unfortunately this requirement is only for refined products at relatively low prices, and Iranian companies may prefer to sell elsewhere. 3. Signed original of letter being pouched. Rusk
308. Telegram From the Embassy in Iran to the Department of State/1/ Tehran, July 29, 1968, 1250Z. /1/Source: Department of State, Central Files, POL 7 IRAN. Secret; Priority; Limdis. Repeated to CINCSTRIKE/USCINCMEAFSA. 5881. Shah's Visit--Follow-up Actions. Ref: State 209512./2/ Summary. Although deeply disappointed over bleak prospects for selling oil to U.S., Shah welcomed aspects of President's letter which indicate continued fruitfulness of US-Iran military collaboration. For the moment, we seem to be over the hump. /2/Document 307. 1. President's message (reftel) conveyed to Shah at Caspian morning 29th. After reading it, Shah was told President's reply reflects most careful study of various subjects raised during Shah's Washington visit. I added that as usual diplomacy is continuing process and Shah, General Twitchell and I would be consulting re these matters on continuing basis. 2. Oil Deal. After expressing appreciation for President's attention to Iran's problems despite heavy preoccupations such as Honolulu Conference, Shah's initial comment was re oil deal. Apparently he already alerted by Reza Falla (probably Ansary) re bleak prospects his barter proposal. I explained why USG cannot tamper with import quota nor dictate to authorized importers countries from which oil must be bought. 3. On commercial side, Shah felt Planet would find it most difficult to break into our import market at profit. He noted contract been initialed with General Electric for $70 million worth GE products if barter oil transaction consummated. I gave Shah background re Planet (State 208708)./3/ He smiled and said he wished he had bought stock. We agreed Allen et al. respectable entrepreneurs. /3/Dated July 25. (Department of State, Central Files, PET 6 IRAN) 4. Shah pointed out how he had hoped to do $800 million worth business in US over next five years, and he mentioned capital goods, arms, and USG securities. In passing he expressed amazement at USG policy which restricts cheap oil from Mideast while consuming US's precious and dwindling reserves. 5. Shah still saw ray of hope via program which Falla had reported whereby foreign oil imports are permitted to petrochemical industries provided products are exported. Without closing door to this possibility, I recalled recent PIW report which indicated Interior Dept running into trouble with this program due to strong resistance from domestic producers. 6. Re DOD purchasing, Shah was surprised to learn that via consortium substantial quantities of Iran oil are moving to Far East. He did not pursue this subject further. 7. USAF Technicians. Shah was pleased that despite Viet Nam, President prepared to make 50 USAF technicians available, initially for one year. Noting our Balpa difficulties, I pointed out technicians would be on fully reimbursable basis to which he agreed. Also stressed they would be supervisory-level, working within ARMISH/MAAG framework. He thought this best utilization of technicians. It was left that General Twitchell would work out timing and other details. 8. Gulf Defense. Shah requested DOD proceed with full study of Hormuz defense weaponry and expressed hope results would be available expeditiously. If land-based missiles are out, he hinted he might purchase certain hardware from Israelis (with whom, he disclosed, he recently signed secret general credit agreement). When I referred to Gabrielle missiles, Shah merely noted that there is some doubt as to their range. 9. Telecommunications. I pointed out various reps, both private, PTT and military, began meeting this morning to determine best integration of communications systems in Iran. Shah said it already decided that Peace Ruby with its communications would go to Philco as sole source. He also disclosed he has decided (whether it is irrevocable, I do not know) to purchase mobile TOPO units from Northrop for $8,000,000. He noted they are almost immediately available and eventually when land-based stations are completed mobile units would be valuable reserve. I urged we see what emerges from current deliberations. 10. Northrop P-530. Shah had already heard that Europeans are banding together to produce their own fighter for mid-seventies and this would probably rule out P-530 project. He was interested that DOD taking interest in P-530 and we agreed to stay in touch re this subject in coming months. If P-530's unavailable, Shah is considering possibility that rehabbed F-4-C's might eventually replace current F-5 squadrons. 11. Long-term Commitment. Although obviously disappointed Shah did not make issue of five-year commitment. If military credit is unavailable via USG sources in coming years, he said, he would seek to purchase directly from American companies even using cash if necessary. I explained USG record vis-a-vis Iran in field of military collaboration is impressive. Also emphasized that given Congressional and other problems in Washington these days USG, with concurrence of all Washington quarters, is again treating Iran very well indeed. I added that this unique treatment reflects confidence which USG has in Shah's constructive, non-demagogic, and peaceful policies. 12. Comment: At Caspian, Shah tends to be calm and relaxed. We shall be hearing more on all these subjects in weeks ahead, but for moment we seem to be over the hump. In reporting to Ansary it is suggested we downplay our optimism for if he reports that we think Shah is satisfied Shah may seek ways to dispel our temporary complacency. Meyer
309. Letter From the Shah of Iran to President Johnson/1/ Tehran, August 2, 1968. /1/Source: Johnson Library, National Security File, Special Head of State Correspond-ence File, Iran, 7/1/68-10/31/68. No classification marking. Dear Mr. President, I thank you most sincerely for your detailed letter of 24th July,/2/ in which you have stated your opinions and enlarged upon various topics that I had the pleasure of discussing with you during my recent visit to Washington. /2/See Document 307. Once again, I would like you to know how glad I was to have had the benefit of a frank and valuable exchange of views with you on matters affecting the interests of our two countries. I too, am highly gratified to observe the amicable relations and the good understanding that exist between Iran and the United States of America, which I trust will continue to be further consolidated to our mutual advantage in the years that lie ahead. As you, Mr. President, are no doubt aware we have already drawn up our military defense plans which, as you will agree, are absolutely vital and of paramount importance to the maintenance and the safeguarding of the interests of an independent sovereign state. You will also concur with me that we cannot rely on one-year military programmes, but must envisage effective long-range plans for our defence. It is my hope that your Government will be able to continue to meet our requirements as before. I look forward to receiving, as soon as is convenient, the results of the detailed technical evaluation which your experts are carrying out on the project for the defence of the Strait of Hormuz. I had also hoped that by selling Iranian oil on the American market on a barter basis, this would have facilitated our purchase of American goods, while at the same time enabling us to invest part of our capital in the United States. But, to my regret, this does not, owing to certain difficulties that you have indicated in your communication, seem feasible at the present time. The matter concerning the shifting of a portion of my country's dollar reserves into long-term United States assets is under careful study and serious consideration at the moment, and I shall be pleased to apprise you of the outcome in due course. I wish to express my gratitude for your thoughtful offer of up to 50 additional United States Air Force personnel as advisors for Iran's F-4 aircraft on a reimbursable basis. This, I am convinced will be of great assistance to us. In conveying my deep appreciation of the kind and friendly sentiments that you, Mr. President, have expressed on your personal behalf and on that of the People of the United States of America in regard to my country and myself, I send you my cordial and heartfelt good wishes for your continued success in the great task that lies on your shoulders of leading your Nation towards an ever brighter and more prosperous future. With kindest regards to you and Mrs. Johnson from the Empress and myself, Sincerely, M.R. Pahlavi [Continue with the next documents] |
