151. Telegram From the Embassy in Iran to the Department of State1
Tehran, July 7, 1966,
1350Z.
80. Military Sales to Iran.
- 1.
- In hour-long talk morning 7th, I told Shah that time had come for frank conversation on arms procurement problem. Shah said he welcomed opportunity and wanted make clear that steps he taking in no way intended as “threats.” I said what I had to say should also be considered in framework not of threats but facts.
- 2.
- I opened by expressing full USG support for Iran’s “independent” policy, emphasizing we delighted Iran able stand on its own feet. Similarly, we can understand Iranian desire in military field to get best buys and to diversify sources of supply. We had been aware of Toufanian’s shopping tours to Western Europe and this gave us no serious concern. What was cause for concern, however, would be turning to Soviets for arms. At least three times during conversation I stated categorically that move to Soviets will inevitably have serious “impact” as far as U.S. concerned, but added that precise nature that impact uncertain.
- 3.
- Shah professed failure to comprehend why there should be any US reaction. Contact has been made with Soviets, he affirmed, but acquisitions [Page 271] would be limited in quantity and quality. I pointed out Americans are human and there not slightest doubt they would be deeply hurt that valued and admired friend like Shah has decided to trade in arms with our adversaries. This particularly true, I added, at this time when whole American nation is gripped by anxiety over Vietnam.
- 4.
- Shah said problem is one of basic economics. As he had publicly stated in convocation of Deputies March 1, if oil income not stepped up to meet Iran’s requirements Iran would have no choice but to look to sources of supply other than traditional suppliers. Problem was purely and simply one of foreign exchange.
- 5.
- On same occasion, Shah said, he had publicly stated his desire maintain traditional sources of arms supplies if those sources would offer acceptable terms. He had made same point in his personal appeals to President Johnson. Meanwhile, he had “waited seven months” for US to understand and respond sympathetically. R and D costs were being assessed and in case of Hawk Missiles this alone represented $2,000,000. I tried to explain that “accessorial charges” included number of elements. Crowning blow, Shah said, was limiting Iran to one squadron of 12 F–4 aircraft. Clearly, Shah said, USG not interested in according Iran favorable treatment compatible with investment US has put into this country or with traditional friendship between our two countries.
- 6.
- [garble—USG?] deeply devoted to Iran’s higher interest, I said, USG, unlike certain other countries, not sending arms peddlers around even though we have serious balance of payments problem. We abhor arms races and overriding desire of President and others has been keep military expenditures to minimum adequate level so that economic progress can go forward. I went on to describe his assessment of our hardware response as grossly unfair. Stressing framework of our 1962 and 1964 agreements, I pointed out generous USG cooperation over years which continues to this very moment. Despite surprise nature of additional $200,000,000 authorization which Shah requested and received from parliament, USG had come forward with offer of additional $200,000,000 credit. Military costs are high these days, I said, and US equipment is best available. Prices had been shaved as best we could. Noted in this connection Hawk Missile battalion was offered at $28.8 million when earlier it had been $30, yet Shah in our conversation week ago scarcely noticed Hawk item. Shah said originally we had talked of $22 million price. I noted that was “naked” Hawk battalion.
- 7.
-
Shah said total cost of items Iran required was over $400 million according prices USG offered. I said on contrary I continue to have conviction we could work out acceptable procurement program of USG purchased items, providing efficient and adequate military security.
I went on to say that indicative of USG’s general forthcomingness, there is today over $200,000,000 worth grant assistance either undelivered [Page 272] or contemplated over next three year period. It difficult to understand, I said, how our Iranian friends overlook something of such importance and appear ready to jeopardize it. Noted in this connection difficulties in obtaining grant funds to support such assistance from Congress.
- 8.
- Referring to inevitability of impact as far as USG is concerned, Shah said if USG held up on planned military supplies it would naturally produce a chain reaction. Among other repercussions, Iran would procure equipment elsewhere. Because of sensitivity of aircraft, he would not consider MIGs. Shah said if F–4 aircraft unavailable he would buy Mirages, adding that French are ready at any time to conclude transaction including credit. When I recalled his aversion to single engine aircraft Shah noted again that Israeli Air Force Chief of Staff had been here and had recommended Mirages enthusiastically.
- 9.
- Agreeing with Shah that chain reaction unfortunate, I asked why in order to save a few dollars by purchases from East Bloc he so ready to risk so much. Noted in this connection how Russians are duping so many Mideast countries by handing out MIG–21s “like lollipops” and mesmerizing Iranians and others with 2–1/2 percent interest rate. Shah said problem was not so much savings as it was Iran’s shortage of foreign exchange, caused by lack of responsiveness of oil consortium. It was because of this that Iran must turn to barter arrangements with Soviets.
- 10.
- Shah said he knew we would lecture him re iniquities of dealing with Soviets. No one knew them better than he, he said. He fully aware their aims, including his own overthrow. I assured him we fully realize Iranians have had more firsthand experience this subject than even we. Shah said we should realize that by getting Soviets to contribute to Iran’s strength, he was in fact improving Iran’s capability of resisting Commie penetration.
- 11.
- This prompted discussion of implications of Commie involvement in Iranian military establishment as far as US security considerations concerned, vis-à-vis Hawk, Sidewinders and F–4’s. Shah tried argue security penetration capability of Soviets would not be significantly increased, but this point seemed at least make slight dent. When he emphasized Soviet involvement would be carefully circumscribed, I told him it is difficult “to be little bit pregnant.”
- 12.
- Shah returned to old argument how Paks had been hurt by cut-off in US supplies last fall. I reiterated previous arguments. Shah agreed Paks had fomented conflict. He also reluctantly agreed that USG policy of stopping hostilities was wiser than fueling them with more arms. Noting that Arabs were his rivals, I questioned his depending on Soviets if Iran-Arab conflict were to arise. Shah said he aware this point and would lay in adequate spare parts, etc. in advance.
- 13.
- Shah obviously actively interested in Soviet SAMs. When I suggested their inferiority to Hawks, noting morning’s news that US planes in Vietnam undertook all missions successfully yesterday despite SAMs, Shah insisted effective altitude of Soviet SAMs to possibility of Soviet tanks if Sheridans not available. He was very critical of what he contended is $500,000 per copy price for Sheridans, noting again he being assessed R and D costs. Shah did not contest strongly when I pointed out M–47’s still useful and question of Sheridans deferrable at least until 1970.
- 14.
- Even more disturbing than “impact” on U.S.-Iran military relationship, I said, is general effect turning to Russians will have on Shah’s image and confidence in Iran. I pointed our Western world considers him enlightened, progressive and responsible leader. Some people would inevitably feel he now becoming another De Gaulle or even Nasser. Noted sad shape of other countries who started down arms procurement path with Soviets, i.e. Egypt (whose move to buy Soviet arms came under circumstances not entirely dissimilar from Shah’s complaints), Ghana, Indonesia, and even Afghanistan. Shah promptly cited India. When asked whether he envied India’s plight, Shah said no, but contended that Iran is much more responsibly and intelligently led than all those countries. I emphasized Iran is doing very well indeed and that is precisely reason we hate see policies which have produced its prosperity put in jeopardy. Shah insisted policy of procuring arms even from Soviets would be fully supported throughout Iran. I said undoubtedly it would be popular with street elements but I would have thought he might have learned from Ayub’s present troubles difficulty of putting lid back on Pandora’s Box. Shah said all Iranians, not just street, would be content.
- 15.
- At one point, Shah warned that when he turns to Soviets USG should not set in motion political movement in Iran. Very thought, I said, is ridiculous. Nevertheless, Shah went on to point out what we would lose if he were to lose his throne. Comment. Obsession of this type is incomprehensible to us, but it is in Shah’s full character.
- 16.
- At one point Shah plaintively expressed wish for opportunity to have two or three days to talk out his problems with President Johnson. He said he very much shares President Johnson’s concern for preserving Iran’s economic progress. He reemphasized problem is primarily one of foreign exchange. It was because of this serious problem that he had hoped USG could find it possible to accord Iran reasonable prices and terms as it had with M–60 tanks. Pointing out President recalled favorably his personal visits with Shah and to Iran and has high regard for Iran’s progress and Shah’s leadership, I noted that during my half hour talk with President this came through as did President’s personal concern that military expenditures be minimal within framework of adequate security.
- 17.
- Each time question Soviet procurement came up, Shah made clear contact been made and transaction with Soviets will fail materialize only if Soviets themselves refuse be responsive. Like Aram (Embtel 61),2 he recalled trouble he got into with Soviets in 1959 when he retreated from negotiations which had already begun.
- 18.
- Shah said he is convoking Senators and Deputies next week to “report” to them on state of affairs as he did on March 1. He said he planned not to go into “details.” Before departure, I referred to this and urged that such public pronouncement refrain from making situation any worse. Public blow-up of this issue, I said, would make useless our continuing diplomatic dialogue on a subject with such vital consequences for Iran. Shah indicated concurrence.
- 19.
- Comment. Give and take was frank and friendly, as Shah had promised Alam it would be. I wish I could say I am encouraged that Shah will not turn to Soviets but I cannot do so. At same time, fact that USG reaction is inevitable is now clearly on record, and room is left for maneuverability as to what our reaction will actually be.
Meyer