17. Telegram From the Department of State to the Embassy in Iran 1

785. Re Deptel 774;2 Embtel 922.3 Joint State-AID-Defense message. While future plans for Iran not sufficiently finalized to allow making any commitment re credit at this time, there are available several sources of credit for military sales without new Congressional appropriation being required. These sources include the MAP reimbursement account (Section 508 of the Foreign Assistance Act) and utilization of Defense stocks (Section 507(a) of the FAA). Also, the dependable undertaking method of payment (Section 507(b) of the FAA), while not credit, may be utilized for procurement of materials. In line with USG policy of gradually shifting MAP recipient countries to a reimbursement basis, GOI would be legitimate claimant for credit during period current five-year plan for spare parts, reimbursement items, etc. For deliveries after FY 67, assuming continued rate of balanced economic growth for Iran, we see no reason at present why Iran should not be a legitimate claimant for larger amounts of credit for military purchases. We should keep credit possibilities in mind in reaching our conclusions about a financially feasible modernization program.

  1. Source: Department of State, Central Files, DEF 19–3 U.S.-IRAN. Confidential. Drafted by Padelford and Cain in International Logistics Negotiations in DOD/ISA; cleared in substance by Tiger, Skiles, and Towsley and in draft by Preble; and approved by Bracken. Repeated to CINCSTRIKE/CINCMEAFSA, and CINCSTRIKE/CINCMEAFSA for POLAD Tampa.
  2. Document 16.
  3. Document 15.