Attachment
TEXT OF CABLE FROM TEHRAN (1572)2
For the President from Ambassador Meyer.
Iran and U.S.
The problem of U.S. military sales to Iran which I was privileged to
discuss with you on May 13 has reached a critical juncture. A package
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proposal has been
formulated by our associates in Washington. It is to be presented to the
Shah as soon as your approval has been obtained.3
While considerably more restricted than is compatible with protection of
our interests, the package proposal reflects careful attention and an
effort to be as forthcoming as Washington circumstances and the U.S.’s
view as to Iran’s capabilities permit. As your Ambassador to this
country, I am nonetheless concerned that we are about to alienate the
Shah and his country with whom we have had a long and mutually
beneficial friendship. My concern is of sufficient depth to warrant
taking a few minutes of your valuable time to request relatively small
modifications which may be able to reduce adverse repercussions to
manageable proportion.
My week in Washington made clear the antipathy which exists both in our
legislative and executive branches to military programs, particularly
following the Indo-Pak debacle last
fall. This is fully understandable. But it makes very difficult the
maintenance of healthy relationships with true friends like Iran with
whom we have a long-standing military relationship. Due to massive
Soviet arms shipments to this region, the vulnerability of Iran (like
Israel) has sharply increased. The Shah six months ago became so
concerned he obtained authorization from his Parliament for an
additional $200,000,000 borrowing authority to build up his air and
naval defenses. His purpose is to deter aggressive action against Iran’s
vulnerable oil producing areas or to cope with such aggression if it
takes place. Deeply impressed by the Vietnam situation, the Shah
believes such self-reliance is in U.S. as well as Iran’s interest. A
seven-man team of U.S. military experts under Brig. Gen.
Peterson assessed the situation in March. In a
report (which the Shah has in his possession)
Peterson confirmed that a threat truly exists
and recommended a rational program for augmentation within the
$200,000,000 added ceiling. Thus, the judgment that early measures
should be taken is not only the Shah’s but our own.
A main concern in Washington is the effect of military expenditures on
Iran’s economic development. At present, Iran is thriving. With his
profound sense of mission, the Shah is making Iran a show-case of
modernization in this part of the world (8–10 percent growth rate,
utilization of 75 percent of the $500,000,000 annual oil income for
development purposes, land reform, literacy corps, etc.). The problem is
he may bite off more than he can chew. It is the Embassy’s view,
however, that as in the past, major projects (and their financing) will
stretch out over a considerably longer period than planned. While we, of
course, regret any diversion of Iran’s resources to military
expenditures, we are convinced
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favorable economic factors are such that Iran can meet the financial
burdens of a military program along lines envisaged in the
Peterson Report without courting disaster. In
any case, economic difficulties are more apt to be forestalled if we at
this Embassy are enabled (by adequate responsiveness to the
Peterson recommendations) to maintain a healthy
dialogue with the Shah and his Government.
This brings me to my greatest concern with the proposed package. The
underlying assumption appears to be that the U.S. Government can compel
the Shah to obtain only such equipment as we decide he can have. This is
altogether unrealistic in 1966. Time and again over the past few months
the Shah has said, privately and publicly, that Iran is its own master.
He has made this clear (again in a lengthy talk with us yesterday)
specifically as far as arms purchasing is concerned. I do not foresee
the possibility of attaining his agreement to a documentary amendment,
as presently proposed, requiring him to consult with us “on the
magnitude and terms of major purchases outside this arrangement.” It is
true he will only with greatest reluctance give up the benefits of a
package proposal but he will in my view balk at being put in a strait
jacket. Even if it proved possible to obtain his concurrence, rancor
would be deep and he would inevitably violate this injunction. Then we
would be faced with a showdown in our total relationship here.
Instead of a “Papa knows best” attitude, excessive manipulation of which
is in my view to a considerable extent responsible for anti-Americanism
in this part of the world, I believe we would get much further by
treating the Shah like an adult. In our 1964 Memorandum of Understanding
we already have provisions similar to the one proposed. We can refer to
them if necessary. In any case, I feel strongly that in the realm of
human affairs one gets farther by reasoning together than by
coercion.
I will, of course, try my best to sell whatever final package you
authorize. It would have been helpful to have a concessional interest
rate, particularly to induce a favorable climate for installation of
augmented special U.S. intelligence facilities. That apparently is not
possible. What should be possible, however, in addition to “favorable
prices,” which you mentioned to the Shah in your letter of April
11,4 are the following two
proposals:
- A.
- On-schedule deliveries. According to the proposed package, the
$200,000,000 credit will be phased in $50,000,000 tranches over
four years. The problem is that there is usually a two or
three-year delay in delivery after credit funds are arranged. It
would be important to be able to assure the Shah:
- 1.
- While funding is being held at $50,000,000 per annum
level because we want to assist Iran in keeping its debt
burden manageable,
- 2.
-
Delivery of equipment will nevertheless hold to the
phased five-year schedule set forth in the
Peterson military survey
report (in effect this means in most cases funding
would be delayed until just prior to delivery
dates).
If such telescoping of leadtimes is not possible, it
is recommended as an alternative that the FY 67 new credit tranche
be increased to $200,000,000 by advancing the final
$50,000,000 tranche (FY 70) to FY 67.
- B.
- Elimination of the strait jacket. If we hope to retain our
military cooperation with Iran, including discouraging the
Shah’s purchasing elsewhere, we are more likely to do so
(although complete control is unlikely) by informal
consultations as we go along, based on provisions which already
exist in the 1964 Memorandum, than if we try to coerce him by
further documentation in effect requiring him to seek our
permission before he can purchase elsewhere.
Certainly treating the Shah like an adult is the best long-range policy
if we are to continue to play a role in Iran’s moving ahead and if we
wish to maintain our rather extensive assets here of significant
importance to our national security.
