102. Telegram From the Embassy in Iran to the Department of State1
469. Pass Komer White House. DOD for Kuss. U.S.-Iran Military Cooperation. As Embassy has previously reported, Shah has become increasingly unhappy with his virtually complete dependence on U.S. for military supplies. He considers there have been intolerable delays, too much back-seat driving “from 10,000 miles away“, undesirable gaps such as in air defense, and discrimination in sense that Iran, one of few Afro-Asian countries to support us in foreign policy matters (like Viet Nam), is forced to pay for its supplies on virtually commercial basis while other less friendly nations receive both military and economic aid at more generous terms. Just prior to Central Bank Governor Samii’s departure for U.S. to negotiate financing of “second tranche.” Shah was startled to learn that while our agreement envisaged interest terms between four and five percent we at outset immediately jumped to five per cent figure.
With this background, a crowning irritation for Shah has been discovery that when he wanted to send token military help to Pakistan to assist Iran maintain dialogue with Ayub during recent Indo-Pak crisis, U.S.G. bluntly and categorically put its foot down, not just re MAP supplied hardware but also supplies purchased via U.S.G. guaranteed credit and even straight sales which require USG licensing. In bitter tone, he spoke exasperatedly to PriMin Hoveyda in front of me, “We are not free.” When signing various military agreements with U.S., Shah was, of course, aware restrictions incorporated. They were, however, at time somewhat academic. Now full meaning has come sharply to his realization. This comes at time when in general foreign policy is tending toward move designed to alter what he considers his “American stooge” image in Afro-Asian world.
There is no doubt in my mind Shah will make definite effort to decrease his military dependence on US. In fact, there is already evidence coming to Embassy that he intends to do it promptly. He will be seeking procurement from non-American sources. Even Iranian procurement from Soviets cannot be ruled out (Shah has told me Soviets offered him MIGs during his recent Moscow sojourn).
While we may not be able completely to forestall Shah’s move to loosen his military cooperation ties with U.S. (including CENTO), there is much to be said for our maintaining that cooperation to the maximum [Page 182] extent possible. Certainly we should seek to avoid having pendulum swing too far in other direction. With this end in view Embassy once again appeals to Dept and DOD to conjure up some means (perhaps through appropriate component of USG financing) for reducing interest rate for “second tranche” purchases as close as possible to four percent figure.
In addition to Samii, Iran FinMin Amuzegue also now in Washington. Advising them that more favorable terms have been arranged would do great deal to shore up our position in Iran, specifically as far as military cooperation is concerned.
- Source: Department of State, Central Files, DEF 19–8 US–IRAN. Confidential; Priority. Repeated to CINCSTRIKE. Passed to DOD and the White House at 8:45 a.m.↩