Office of the Historian

60. Letter From the Assistant Administrator of the Agency for International Development for Near East and South Asia (Macomber) to the Deputy Assistant Secretary of Defense for International Security Affairs (Solbert)1

Washington, December 11, 1964.

Dear Peter:

The Country Team in Iran has requested us to clarify for the Department of Defense the possibility of using P.L. 480, Title I, 104(c) funds to finance the local currency costs of MAP projects in Iran. The recent Title I agreements with Iran provide that the proceeds be used for loans to support [Page 116] Iran’s economic development. No provision has been made to extend grants for defense purposes. Moreover, because of Iran’s long term favorable balance of payments position, it is unlikely that further Title I agreements will be concluded. In the future, sales of surplus commodities to Iran will be for dollars under Title IV and not for local currency. In summary, there are no funds available for military purposes under present agreements and future availability is highly improbable.

The Department of Defense will also recall that in the Spring of 1962, the Shah was informed of the United States decision to terminate budgetary support for the Iranian defense establishment. An allocation of P.L. 480 local currency proceeds for defense purposes would represent another form of budgetary support and a reversal of policy which, in our judgment, would not be warranted in view of Iran’s improved economic position.2

Sincerely yours,

Bill
  1. Source: Washington National Records Center, RG 330, OASD/ISA Files: FRC 68 A 306, 121 Iran—11 Dec 64. Confidential. A stamped notation on the source text indicates that Solbert saw it.↩
  2. A handwritten notation on the source text reads: “General Strickland—No action called for by us, I take it. PS.”↩