281. Memorandum From the President’s Special Assistant (Rostow) to President Johnson1
SUBJECT
- New Military Credit Sale for Iran
Shortly after his visit last August, the Shah wrote you2 that he intended to embark on a new five-year $800 million program for further [Page 508] modernizing his armed forces. He is now down to $600 million for six years, and this will be uppermost in his mind when he sees you June 12.
There is no question that the Shah will go ahead with some such program. The issues are how to keep it from slowing his economic development and how to keep him from turning to other suppliers.
No one has serious reservations about going ahead with the proposed $75–100 million program for FY 68. Nick Katzenbach recommends you approve this subject to satisfactory Congressional consultations. He would start at $75 million and hold the additional $25 million for you to throw in when the Shah comes.
The real issue is how we assure the Shah that we will participate in this program without actually committing ourselves. He says he has to know what he can count on. We can’t say for sure, and we have good reason for not wanting to jump in all at once even if we could:
- —We don’t know what military sales authority Congress will approve or how much it will appropriate. We don’t want to tie up funds until we see how much we have to divide worldwide.
- —We’re wary about Iran’s committing so much to military expenditures so far ahead. We’d like to go year by year.
- —When the British withdraw from the Persian Gulf, Iran and Saudi Arabia face a number of difficult issues there. We want to be careful about how we build up a new sub-regional super-power.
Offsetting these reservations is our need to maintain a close relationship. Now that AID has phased out, our military program is the major concrete manifestation of that relationship. We look to the Shah to maintain a pro-western Iran and depend on him for even expanding our sensitive intelligence collection activities.
The Shah believes he must be strong enough militarily to deter any attack—overt or subversive—by the Arab radicals. He is worried, as he told John McCloy, about Soviet gains in the area. He knows the British are pulling out. He fears even more that our policy since last June indicates diminished US interest in the Mid-East. Therefore, he wants to modernize his forces but, perhaps even more important, he wants some reassurance of our continuing concrete interest in his security. It’s quite possible that we may not be able to satisfy him.
To tread the narrow line between general assurance and specific commitment for the next five years, State and Defense have devised the finely worded paragraph under recommendation #2 in Nick Katzenbach’s attached memo.3 Essentially, it says we’ll do what we can to help with his five-year program but we just can’t commit ourselves that far ahead. We’d declare Executive Branch intention to push ahead year-by- [Page 509] year toward accomplishment of the Shah’s program. You will want to read the fine print.
The real problem is not the approval of this well-hedged formula. The problem will be whether you feel you can make this stick with the Shah when you see him on June 12. You will have the tough job of trying to persuade him of the continuity of the US-Iranian relationship without knowing either what the Congress will do or who your successor will be. Your line will have to be that (a) anyone who sits in your seat will be impressed with the necessity of a strong continuing US-Iran relationship and (b) we hope he will bear with us through this transitional period.
In the face of this difficulty, I recommend you approve this approach as a start. Regrettably, there seems little chance of devising a more flexible position for you, at least until Congress acts.
You will want to read the attached memos from Charlie Zwick4 and Nick Katzenbach.
Approve the $75–100 million sale for 1968 and the hedged assurance that we will try to help with the rest of the program5
See me
Put on Tuesday lunch agenda
- Source: Johnson Library, National Security File, Country File, Iran. Secret. Attached to a May 1 memorandum from Rostow to the President that reads: “You should know that there is some urgency in connection with a decision about the Iranian arms package. There was considerable delay in the bureaucracy in developing an agreed position. Meanwhile, the Shah is becoming restless, having had reason to expect a response earlier. You will recall that he mentioned the matter to John McCloy, underlining that he was, after all, willing to pay for these arms and that our common strategic interest in the area required him to be strong.”↩
- Document 242.↩
- Reference is to Document 280.↩
- Attached but not printed.↩
- The first and last options are checked.↩