Office of the Historian

107. Memorandum From Robert W. Komer of the National Security Council Staff to the President’s Special Assistant for National Security Affairs (Bundy)1

Washington, November 22, 1965.

Mac:

Iran interest rate on arms sales. I’ve held this up for over 8 weeks now, in order to keep it tied to Peshawar package. But we’re going nowhere fast, and heat is mounting (see Tehran 743 attached).2

Case for holding up has been that giving away a goodie too long before we ask for something in turn vitiates the leverage. But State and DOD think the Shah would still remember, and also argue the case for going ahead now anyway on general grounds of keeping Iranians happy. Also Iran is talking about purchasing arms elsewhere at cost to our balance of payments. Past rate has been 5%. State/DOD want to cut it [Page 189] to 3–1/2–4% (ultimately about $350 million in sales over next several years may be involved).

Other problem is that McNamara wants to lay off this paper with Ex-Im, thus freeing MAP credit fund for other sales. It will take a WH whip, of course, to get Linder to do this.

I favor going ahead now at 4%, so long as I have your backing in beating up Harold when necessary.3

RWK
  1. Source: Johnson Library, National Security File, Country File, Iran, Vol. I, Cables, 1/64–12/65. Secret.↩
  2. Document 106.↩
  3. Next to this paragraph Bundy wrote “OK” with his initials.↩