118. Memorandum From the Assistant Administrator for Near East and South Asia of the Agency for International Development (Macomber) to the Deputy Assistant Secretary of State for Politico-Military Affairs (Kitchen)1
SUBJECT
- Iran’s Proposed $200 million Purchase of Military Equipment
I have discussed with Dave Bell Iran’s intention to purchase $200 million of military equipment. It is our view that this action by Iran is [Page 211] contrary to the spirit of the 1962 and 1964 agreements. We believe such a purchase will have an adverse impact on Iran’s economic development.
We realize that the U.S. probably cannot prevent Iran from making such a purchase. Moreover, any attempt to do so would likely damage the national and security interests of the U.S. in the Middle East.
Nonetheless, we believe the following steps should be taken:
- 1.
- An analysis of the impact on Iran’s economic and social development be highlighted in the annual review under the terms of the 1964 agreement, and a) this review in Tehran be attended by a senior representative from AID/W, b) the time for the review be moved up to occur before final agreement on the sale.
- 2.
- The Country Team should argue to the GOI that the threat the Shah envisages is not great, but the impact on Iran’s economic development would be severe. Iran would be better off to shift its expenditures to capital investment and social progress.
- 3.
- In arriving at final agreement, the U.S. should seek to reduce the actual amount purchased and stretch out the delivery time over the long-est possible period of years.
- 4.
- AID should concur in and help prepare the instructions given to the military team to be sent out in mid-February.
Meanwhile, while discussions are continuing among State, DOD, AID, and the White House Staff, I would propose that no commitment be made to the Government of Iran.
- Source: Department of State, Central Files, DEF 12–5 IRAN. Secret.↩