Foreign Relations of the United States, 1964–1968, Volume XXII, Iran

136. Memorandum From the President’s Special Assistant (Rostow) to President Johnson¹

Washington, May 12, 1966, 11 a.m.

Ambassador Meyer asked to see you tomorrow² chiefly to get your personal greetings for the Shah. However, he is here to work out our position on a new $200 million arms sales package, which he will be discussing with the Iranians next week at our annual joint economic-military review. You will get a formal recommendation shortly. AID feels the Shah should not spend his money on arms because the purchase could strain his resources to the point of requiring renewed U.S. budget support. State believes the Shah is determined to buy—he has told you so in his last two letters—so our best bet is to try to control his buying by selling ourselves. So you may want to hear Meyer’s views firsthand.

Suggested talking points:

1. Meyer should carry your personal greetings to the Shah. You especially hope the new Prince is doing well.

2. He should express your appreciation for the Iranian medical team in Vietnam.

3. He should also give the Shah a private message from you: You are concerned about reports that the Shah feels we are trying to run Iran for him. You want to assure the Shah of your fullest respect for him as a leader. When you express your views, you are not advising him. But you are deeply interested in the progress of his economic revolution and often want to share your thoughts, as only friends can.

4. You are worried to hear that new arms sales will create a serious debt burden. You are interested in Meyer’s views.

5. You count on Meyer to make serious business of the annual economic military review. (He feels it has already accomplished its purpose by forcing the Iranians to face up to shortage of resources and to set priorities. But we ought to continue to press them on economic issues in next week’s talks rather than just negotiating the arms package.)

6. Meyer should understand that if these arms purchases cause a financial crisis, it will be very difficult for us to justify bailing Iran out. You count on Meyer personally to make sure the Iranians fully understand the economic consequences of these purchases and to raise the red flag at the first danger signal.³

Walt

1. Source: Johnson Library, National Security File, Country File, Iran, Memos & Miscellaneous, Vol. II, 1/66–1/69. Secret. A notation in the President’s handwriting on the source text reads: “Put on my desk—L.”
2. On May 5 Rostow sent the President a memorandum suggesting that he meet with Ambassador Meyer while he was in Washington in order to get his first-hand analysis regarding the new military credit sales package for Iran, which was going to be the biggest issue in U.S.-Iranian relations that year. The President agreed. (Ibid.)
3. Johnson held an off-the-record meeting with Ambassador Meyer and NSC staff member Howard Wriggins on May 13 from 1 to 1:28 p.m. The President’s Daily Diary notes that the discussion centered on the hopeful changes in Iran in the past 2 years as well as the problems associated with the Shah’s desire for large military imports. (Ibid.)