110. Telegram From the Embassy in Iran to the Department of State1

789. Country Team message. Shah and U.S.

Fathoming the Shah. To understand Iran one must understand Shah. This is not one-shot undertaking. Shah’s personality undergoes steady metamorphosis. To understand current developments, such as authorization to borrow up to $200,000,000 for military purposes it is therefore necessary to fathom present state of Shah’s mind.
Becoming more like father. Shah today is no longer ward of foreigners as in 1941–45, nor vacillating youth of late forties. Mosadeq era effected major conversion. While for decade leaning heavily on Uncle Sam’s shoulders, Shah has increasingly become self-sufficient authority. Iran has been making remarkable strides. Shah believes it is because he knows better than anyone else how to handle his people. Former Ambassador George Allen2 aptly observed, “he is becoming more like his father.” Old Reza Shah was tough, independent-minded, impulsive and autocratic. But he modernized Iran of his day. Shah is determined to do same.
1965 Model Shah. While it difficult dissect complex personality such as Shah’s, following traits noteworthy at this stage his development:
Hard worker. Shah is indefatigable worker. There is no tint of play-boy. Virtually every waking moment is invested in progress and security his country. This is dulling and can tend to foster sense of infallibility. Shah should have more diversions.
Pretensions. Convinced that he has mastered job of pulling his listless and backward people forward, Shah knows that he is more firmly in saddle in Iran than ever before. This is fact which we must also recognize. It is not surprising that Shah feels his talents can have wider usefulness. Hence recent moves to build up his image in Afro-Asian world. At this point, however, his political ambitions in area do not include territorial aggrandizement, even Bahrain. On the whole his ambitions are constructive and responsible.
Independent-mindedness (see Embtel 611).3 Even as he himself has learned to stand on own feet, Shah wants independent stance for his [Page 196] country. (As George Allen observes this is precise goal of U.S.G. policy since Azerbaijan days.) Soaring oil income makes independent policy possible economically. Politically, he is having inner tension between his basic beliefs which coincide with those of West and expediency of enhancing his image in unprincipled Afro-Asian political milieu. Shah cherishes his ties with U.S., but Viet-nam and Pakistan have shaken him badly. In Viet-nam, Diem was murdered and despite American military power, Shah fears end result may be negotiated settlement which in Iran’s case could mean loss of wealthy Khuzistan. For Shah lesson of Pakistan is that Iran must have reasonably adequate military resources in event military supplies are shut off during regional conflict. Beyond these selfish considerations, Shah sincerely believes it is in US, as well as Iran’s interest, that Iran itself be able cope with regional threats. Hence, his desire to have adequate military capability.
Surprise tactic. Over years Shah has learned that hesitation permits intrusion of opposing forces. When Soviets proposed non-aggression pact in 1959, delay in following it up permitted Western Ambassadors to block agreement. FonMin Aram tells me same thing happens in cabinet changes, i.e., Shah stages fait accompli. Steel mill transaction was initially [apparent omission] even before terms decided. Thus $200,000,000 borrowing authorization was rushed through before inevitable resistance could buildup either from within or from outside Iran.
Congenital weaknesses. Shah’s two greatest weaknesses stem from his father. He has obsession for things military. He is intolerant of criticism. These weaknesses require almost daily treatment.
Guilty conscience. Shah is self-confident and even a little cocky because of recent successes. He tells me his White Revolution has “taken wind out of sails” of Communist and National Front movements. Steel mill transaction, like eating of forbidden fruit, has given populace big lift. Yet Shah knows he is treading on dangerous territory. He, therefore, engages in rationalization and self-justification.
Feigned grievances. As Dept knows, Shah has been dredging up whole set of grievances which are based on distortion (Embtel s 244 and 776).4 Obviously he wishes to rationalize to us, and particularly to himself, his recent moves.
Sensitivity re small things. Shah has become increasingly sensitive to Iranian student criticism abroad, anti-regime articles in foreign press, Cuyler Young, etc. This past month PriMin Hoveyda, trying to be more royalist than Shah, threatened Turk Ambassador to recall Iran Ambassador from Ankara unless Turkish student who had criticized Shah were brought to trial. Fortunately FonMin Aram has throttled this stupidity. [Page 197] Similar case was Syrian PriMin’s statement re Khuzistan re which Hoveyda made mountain of molehill.
Alleged US infidelity. Shah is fully aware how US saved his regime in Azerbaijan crisis and in Mosadeq days. He also knows extent of our financial assistance. Yet in present state of mind he conjures up all sorts of spectres, e.g., USG could put Gudarzian in jail but really does not want to; McCloy letter to Ebtehaj5 shows USG is abetting Shah’s enemies; no one in Washington appreciates really how in Kremlin Shah (alone among Afro-Asians) supported US policy in Viet-nam; delay in second tranche paper-work is retaliation for steel-mill transaction with Soviets: US supports Iraqis on Shatt-al-Arab; while economic aid to Iran is being terminated and military aid rapidly diminishing, USG continues subsidize generously those who undermine Western cause, e.g. Nasser and India; US is discriminating Iran on interest rates, etc.
Shah feels misunderstood. Not all of Shah’s complaints are due to self-rationalization. He is basically on our side. He is affording U.S. facilities of tremendous strategic importance. He has spoken up for us on Viet-nam when others have spit on us. He is piloting his country on an economic take-off. His efforts in this connection are gaining wider support and participation from skilled Western-trained civil servants. Shah’s security problems cannot be dismissed lightly. Soviet-backed neighbors are receiving some military equipment superior in quality and quantity. Despite all that we have done in past, Shah feels U.S. today does not appreciate him nor understand his needs.
$200,000,000 Motivation. Shah is military expert. There is little doubt his present military posture is weak in air defense. While we may not agree, he understandably believes that Kharg Island and virtual forest of off-shore oil installations in Persian Gulf require security protection, including destroyers. In Shah’s view, other countries in this area, whether US allies like Turkey or Soviet-supported outfits like Egypt, Iraq and Afghanistan, have equipment better both in quantity and quality, notably SAM’s and MIGs. A pilot himself, he is envious of Mach 2.3 MIG speeds. Since he now has financial resources of his own, Shah is determined to maintain parity, hopefully via supplies from his closest friends, the Americans; but if not from whatever sources available. He has mentioned to me several times that while he was in Moscow Soviets offered him MIGs. As Shah sees it, greatest need is in anti-aircraft and naval equipment. (We have impression that General Khatemi, who is realist as well as admirer of US Air Force equipment, has toned Shah down for moment re more highly supersonic aircraft.) In any case, Shah himself has [Page 198] indicated that about $80,000,000 of new $200,000,000 authorization will have to go for increased costs of already agreed U.S.-Iran military program.
Our monopoly is cracking. I am convinced we no longer have ability dictate Shah’s policies, including details his military establishment. Our agreement of 1962 was intended to do that. It lasted only until 1964, when revision was unavoidable. But even 1964 agreement was signed under Iranian protest. We hoped our grant aid “sweetener” would retain our dominance. It has not. He has told me he would hate to change American pattern in which his military establishment is molded but unless U.S. recognizes his security requirements he has no choice. Thus his move to obtain $200,000,000 additional authorization from Majlis is not ploy to obtain favor from U.S. (Deptel 591).6 He is deadly serious. If U.S. were to denounce our 1962–64 agreements, in his present mood, Shah could just as easily obtain additional authorizations from Majlis to replace American military program. In fact, it could be portrayed as another triumph for Iran’s independence. Such a move might be foolhardy on Shah’s part, but as Ambassador Grady7 observed years ago, “One cannot assume that Iranians will not cut off their nose to spite their face.”
Soviet potentiality. While I know my Washington colleagues are weary of Ambassadors raising Soviet bogey, I must place on record these possibilities:
Soviet readiness to supply Iran with military equipment even MIGs
Shah’s interest, revived from 1959 days when he turned Soviets down because West insisted, in non-aggression pact as replacement for onerous Soviet-Iran 1921 treaty. At present Commie clandestine radios are concentrating heavy attack on U.S.-Iran military relationship, urging ouster of ARMISH/MAAG. This is all part of perennial Czarist-Soviet aim of penetration to warm water port. Worth reading is authentic Tudeh document (CAS NIT–6894) where Soviets themselves describe present phase as “cultivating the land” before overthrow of Shah and “imposition of socialism”.
Art of possible. Given foregoing, it strikes us that most sensible course is for U.S.G. to adjust its relationship with Shah to “be responsive to his basic security needs” (Deptel 561).8 To be rigid and insist on compliance to letter with unaltered 1964 agreement (and his withdrawal of $200,000,000 bill) would defeat very objectives we sought in those agreements. We would lose our influence on Shah in military field and other fields as well. It is much better in our view to hold Shah to aims of those agreements by recognizing that modifications are possible. This will permit [Page 199] us to retain considerable leverage in his military planning. It will also permit us to use solid citizens like General Khatemi to curb some of Shah’s extreme desires (Khatemi has told us of his annoyance that other supreme commanders and sycophants fail to air with Shah Iran’s limitations such as trained manpower). Incidentally, it may be that some diversification in sources of Shah’s military procurement would be of value to U.S. by removing onus that U.S. is Shah’s exclusive support in vital military field. In any case, by maintaining dialogue with Shah re things military we can retain influence in whole spectrum of our relations. Furthermore, by picking up large portion of $200,000,000 business we could help our dollar balance, which we gather is still problem of major concern in Washington.
Top priority: second tranche. At moment, our military relationship with Shah, and much of our political relationship, is stymied by lack of response from Washington re second tranche documentation. As indicated in Embtel 611, favorable response with 4 percent interest rate can help us retain fruitful relationship with Shah. In our conversation 25th (Embtel 776), Shah made clear this one problem is fateful road-block in pathway of continued friendly U.S.-Iran relations. In his present mood Shah considers delay as proof positive that Washington has lost interest in him. It is my sincere hope Washington will give us speedy indication that paper-work is cleared, hopefully with 4 percent interest rate. On our end, we can make clear that such rate would not necessarily apply to purchases under new $200,000,000 authorization.
Have money, will buy. IBRD has indicated Iran highly credit-worthy with capability assume additional $200,000,000 worth of debt annually through 1967 (Embtel 724).9 Shah is going to buy additional equipment (in effect $120,000,000 more than what we have agreed). To extent possible he wants to “buy American.” We think favorable attitude on our part is in our interest: a) to maintain our military cooperation (including strategic facilities); b) to help our gold outflow problem; and c) to maintain friendly political relationship which has until this year been thriving between our two countries. First step is breaking second tranche log jam.
Protection of investment. Foregoing is not to suggest that we cater to Shah’s every whim. Until now we believe our differences re scope of military program here have been honest differences of judgment. Iran’s shift on ChiRep issue, I am convinced, was not premeditated move by Shah. In fact we have every hope of repairing Iran’s position to large extent. To influence his behavior re this and other issues we need maintain friendly dialogue which has characterized our relations over years. [Page 200] Vast sums we have invested in Iran have succeeded in saving this country from chaos and Communism and Shah knows this. Our help has assisted Iran to stand on its own feet. USAID economic assistance is being terminated. Our technical assistance program is being phased out. Our military aid program is also tapering off. In recommending that we unfreeze second tranche and maintain military cooperation on adjusted basis, our conviction is that this will help insure that after take-off Iran will still remain member of our flying club.
  1. Source: Department of State, Central Files, POL IRAN-U.S. Secret. Repeated to CINCSTRIKE for POLAD, Ankara, Baghdad, Kabul, Karachi, London, Moscow, and USUN New York.
  2. George V. Allen was Ambassador to Iran May 11, 1946–February 17, 1948.
  3. Dated October 19. (Department of State, Central Files, AID 6 IRAN)
  4. Documents 96 and 108.
  5. Telegram 568 to Tehran, November 8, transmitted a letter from John McCloy to Ebtehaj stating that it would not be possible to take the latter’s testimony by deposition. (Department of State, Central Files, POL 15–1 IRAN)
  6. See footnote 2, Document 105.
  7. Henry F. Grady was Ambassador to Iran July 2, 1950–September 19, 1951.
  8. Dated November 3. (Department of State, Central Files, AID 6 IRAN)
  9. Dated November 16. (Ibid., DEF 19–8 U.S.-IRAN)