15. Telegram From the Embassy in Iran to the Department of State1
922. Re Deptel 678.2 During Operation DELAWAR I had two hour after dinner conversation alone with Shah.
He went over his discussion with General Adams of April 5 and then referred to statement in President’s letter of March 19 that future military programs could be discussed with me. He then outlined his concept of modernization of Iranian armed forces, giving the same reasons for the need of improvement as he has expounded previously, although there was less note of urgency than he had previously expressed. Although Shah did not say it in so many words, I had the feeling that he has to some degree, at least, come to recognize that possibility of aggression in Persian Gulf area or against Khuzistan is less immediate than he had previously maintained. This does not mean that he has changed his view about Arab ambitions but he seems now to feel that he has more time to prepare himself for defense against it. Criticism of our policy toward Nasser was totally absent.
Shah then gave me a series of papers which set forth existing equipment shortages and additional equipment which he desires, some of it on a relatively short term basis and some having to do with long term replacement of items which will become unsupportable, such as tanks and [Page 30] F–86 aircraft. On question of aircraft replacement, Shah volunteered statement that he realized perfectly well that it would be some time before Iranian air force could absorb and efficiently operate and maintain any additional aircraft beyond F5As. He added, however, that every effort should be made to improve and expand Iranian capabilities in this connection.
Shah said that he realized the difficulties of our position in furnishing equipment on a grant basis over and above that envisaged in five year program. He pointed out the improvement in Iran’s revenues and foreign exchange position and said that what he wanted was to work out a modernization program which would not be extravagant and which would not hamper Iran’s economic development program; this should be done without reference to whether the equipment would be furnished by grant from the US or by purchase from Iranian funds. He hoped that purchases could be arranged on an installment basis. I replied that US could make no commitment for the furnishing of military equipment on a grant basis beyond that envisaged in the five year plan. I then described to him the difficulty of sales of military equipment on credit because under our system there were no public funds available from which such sales could be financed, reminding him that the manufacturer in every case had to be paid in cash. Shah then wondered whether or not credit terms could be arranged with American manufacturers. I replied that this might be looked into at some subsequent time.
The series of papers which Shah handed me were part in Persian and part in English and constitute only a list [of] Iranian views of requirements. There is one document in Persian, not yet translated, which apparently contains some rationale with respect to these requirements. Shah admitted that these papers did not constitute a comprehensive approach to the problem, particularly as no attempt at phasing had been made. He made one or two oral statements with respect to time factors which will be reported when we have had a chance to study the character and magnitude of equipment requirements set forth.
I told the Shah that I would ask the MAAG staff to examine the various lists which he had sent me and that after a clearer picture of magnitude, phasing, etc., emerged, discussions might be held with Iranian staff. The Shah readily agreed to this and said that he was sorry the presentation had not been more orderly, expressing the hope that the work could begin without delay as he wished to make as much progress as possible before his visit to Washington in June.
I am refraining from any substantive comment on the Shah’s proposals until we are able to examine them here, including getting some idea of cost.[Page 31]
In light of Shah’s proposal that a modernization program be discussed without reference to which party should bear costs, I should appreciate confirmation my authority to proceed.