11. Telegram From the Department of State to the Embassy in Iran1

678. Following is outline of principal points which may be used by CINCMEAFSA and by Embassy Tehran as basic guidance in any discussions with Shah which may develop concerning present and future shape of MAP, along with other aspects basic Iranian military policy.

These points neither all-inclusive nor detailed. They may be filled out and supplemented by drawing on previous communications and general information available to U.S.G. representatives. Shah, not U.S.G., should take initiative in opening subject, and US side should, under ordinary circumstances, counter initiatives the Shah can be expected to undertake.

U.S. is satisfied with the Five-Year Military Plan and with way it is being implemented on both sides.
Far from doubting validity of assumptions and principles of the plan, US is confirmed in its belief that they continue essentially valid. Iranian military capacity is being improved steadily. Iran’s military capacity as compared with that of Iraq and Afghanistan is also continuing to increase.
As Shah knows, our military assistance appropriations have been drastically reduced and future of such appropriations is uncertain. Despite shortages of funds and pressing needs from areas such as Vietnam, U.S. has managed to continue essential elements of the Five-Year Program as concerns MAP. We hope continue do so though we are aware we have had to ask Iran to take over certain support functions (viz. follow-on spares) which had earlier been a U.S. contribution under MAP.
We do not know whether there will be a military assistance program beyond FY 1967, when the Five-Year Plan terminates. If there is one, and if adequate funds are appropriated, U.S. would hope to continue its relationship of military cooperation with Iran. In view of Iran’s rapidly improving financial condition, it will probably be necessary for the U.S.G.-financed grant MAP portion of such a future program to be for only a portion of the total, and for Iran to cover the remainder with its own foreign exchange resources. The proportion of MAP grant to the total would probably have to be reduced year by year. US materiel would be available for sale to Iran under this program. Depending on Iran’s overall financial condition and on other demands on Iran’s foreign exchange, credit terms for such sales might be available. FYI. In your presentation of post-FY 67 MAP possibilities, you should take great care not to use language that may be construed as constituting any commitment on our part for any grants or credits in that period. End FYI.
We cannot discuss the specifics of such a program, but we are beginning to study the problem and will be able to talk about it in greater detail later.
If Shah is unaffected by U.S.G. arguments and continues to express a determination to buy additional equipment immediately, U.S.G. representatives should, after repeating all the arguments previously used as to equal importance of economic development and social reform in preserving national security, and after defending adequacy and effectiveness of the current plan, inform Shah that:
Certain types of purchases by Iran which would in our opinion result in a net reduction of Iranian military capacity through grossly irrational employment of material and human resources cannot be agreed by the U.S. under any circumstances, and would be regarded by the U.S. as a cause for releasing the US from its obligations under the Five-Year Plan.
Other types of purchases which we feel would have a net positive effect on Iranian military capacity and which would not in themselves cripple Iran’s economic development program could be accepted as additional to the present Five-Year Plan, and the U.S. could sell such equipment for cash.
Iran should prepare a study with accompanying rationale which we could discuss together in light of the principles set forth above.
  1. Source: Department of State, Central Files, DEF 19 US–IRAN. Confidential. Drafted by Bowling; cleared in draft by Wheeler, Hirschberg (AID/PC/MAD), Colonel Preble, George L. Warren (G/PM), and Padelford; and approved by Jernegan. Also sent to CINCSTRIKE/CINCMEAFSA and repeated to CINCEUR, Paris TOPOL (by pouch), Moscow, Ankara, and CINCSTRIKE/CINCMEAFSA for POLAD Tampa.