73. Telegram From Secretary of State Rusk to the Department of State1
Secto 26. Secretary’s conversation with Shah—Iran’s military policy. During Secretary’s audience with Shah April 7, Shah said that Iran’s military policy was entirely defensive and reflected the determination not to be taken by surprise from any quarter. He said that there was complete agreement between Iran and US as to the menace of Communist aggression from the north. If this occurred, it would provoke international conflict. He added that there might be disagreement between us as to dangers to Iran from other quarters, and he thought the US should welcome a situation wherein it would not be required to become involved militarily in defending Iran in the event of an attack from a country other than the USSR. Iran could not afford to be weak in the face of Arab claims against a part of Iranian territory and in view of the uncertainty as to the [Page 135] future of the Persian Gulf State. Accordingly, Iran had sought and obtained a loan of $200 million for military purchases from the US and it was now time to consider the need for additional such purchases.
The Shah then said that the answers to the economic questionnaire which had been prepared by the Embassy were now ready and would soon be turned over. The study which had been undertaken showed that there would be $680 million available to Iran for borrowing in the next 10 years, even after the establishment and maintenance of an eight percent economic growth rate. One of the future sources of foreign exchange income to which the Shah attached particular importance was the establishment of ammonia plants. He made clear that he was confident that Iran would have no trouble in assuming an additional loan burden for the purchase of military equipment.
The Secretary said that Iran was right in being sensitive about threats to its territorial integrity. If a firm attitude was taken at the very beginning against aggressive tendencies, the danger of aggression was greatly reduced.
- Source: Department of State, Central Files, DEF 1 IRAN. Secret; Priority. Repeated to CINCSTRIKE/CINCMEAFSA.↩