49. Telegram From the Embassy in Iran to the Department of State1
9. Memo of Understanding without change signed today by me and by Minister of Court “by command of His Imperial Majesty the Shah of Iran”. At same time Minister of Court, again by command of the Shah, transmitted a letter which appoints General Hedjazi as the Iranian rep provided for in para IV of the Memo of Understanding. In this same letter it is stated that “In future requirements of the Imperial Iranian Armed Forces will be communicated by General Hedjazi, in accordance with para IV of the memo”. Original signed copy of Memo of Understanding and this letter being forwarded by pouch.
Shah said that he recognized the proposed program involving $200 million credit and $50 million cash was the most that should be spent on military modernization under presently anticipated revenues and foreign exchange availability. However, he wishes to be free to bring up possibility of purchasing additional equipment, which he considers desirable, if increased revenues over and above those now anticipated should accrue to the Iranian Govt in such amount as to make it feasible to acquire additional equipment without jeopardizing national economic and social programs. The Shah made a very strong statement that he would not allow military expenditures adversely to affect Iran’s economic progress. However, he has high hopes that oil revenues, and hence foreign exchange availability, will increase to a greater extent than presently foreseen. The additional equipment which might eventually be acquired would be:
- (1)
- a second Hawk battalion;
- (2)
- an additional radar station in the Bandar Abbas area;
- (3)
- one or possibly two squadrons of F–4Cs, or other high-performance aircraft, in replacement of two squadrons of F–5As.
Gen Eckhardt considers that the problem of training sufficient Iranian military personnel to man new fighter aircraft, first Hawk battalion and AC and W system will act effectively to defer introduction of this additional equipment prior to 1969. He emphasized this personnel problem very strongly to Shah.
In addition to the foregoing, the Shah wanted to go on record as pointing out that modernization might require some slight upward revision of troop ceilings, although he insisted he had no intention of espousing [Page 100] any substantial expansion. He wanted to adhere to the order of magniture of the present force objectives, but, on the other hand, he did not want to be held rigidly to 160,000. A preliminary estimate indicates that any increase required by modernization will not likely exceed the ceiling of 162,000 set in the instructions for the agreement of 1962.
The Shah said that he agreed with Gen Eckhardt that the idea of acquiring destroyers and torpedo boats should be abandoned and said that he would like to add to the program two patrol frigates modified to carry torpedoes. Gen Eckhardt believes that there is enough margin in Annexes A and B to permit this. This addition will be discussed by Eckhardt-Hedjazi.
ARMISH/MAAG will request by cable instructions as to procedure to effect the purchase and credit arrangements within a 30 day period required by para III C.
The Shah expressed himself as being entirely satisfied and pleased with these new arrangements.
- Source: Department of State, Central Files, DEF 19 US–IRAN. Confidential. Repeated to CINCSTRIKE and Department of Defense.↩