Foreign Relations of the United States, 1964–1968, Volume XXII, Iran

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

Washington, January 12, 1968, 8:13 p.m.

98267. Subject: Iranian Financial Problems.

1. In discussion January 12 of certain Iranian financial problems with Under Secretary Rostow, Iranian Ambassador Ansary expressed hope recognition would be given to role Iran must play in area. Rostow said Shah can have no doubt of our appreciation of role Iran playing and we will support Iran in every way we can.

2. Ansary said oil revenues are key. Rostow expressed pleasure concerning settlement devaluation issue and said our impression of general tone of companies’ attitude on offtake issue is positive.

3. Rostow indicated while we still looking into various legislative aspects our arms sales program we are confident we will be able sell arms to Iran on substantial scale and are working on that premise. We hope be able take some action this spring on basis studies of military and economic aspects of situation which are now in progress.

4. Ansary raised matter of controls on private US investment, speaking as he has elsewhere about bad timing of application of these controls to Iran which is only just beginning major effort with US encouragement attract investment in non-oil sectors. He said Iran special case due to recent termination AID program, fact Iran paying for own defense needs, has substantial development program, needs American capital and has unbalanced trade with US favorable to US. Once again saying he not asking for specific action at this time, Ansary asked for special consideration of any problems which may arise.

5. Rostow stressed we can evaluate effects controls on investment only after we learn from companies of their investment plans within program. We must make clear to speculators and financial community that we mean business. We will watch with greatest possible concern effects of program and within program’s limits will attempt facilitate investments companies wish make. He said Iran’s and other countries’ representations have been well received and convey realities which we wish take into account. If program hurts Iran we will give most sympathetic consideration to Iran’s problems at a later point. But this does not necessarily mean we will make changes in program. Rostow added best procedure for taking care of problems which may arise is through arrangements for special licenses if they become possible. He pointed out Iran is in favored category because it can receive AID investment guarantees.

Katzenbach

1. Source: Department of State, Central Files, PET 2 IRAN. Confidential. Drafted by Eliot, cleared by Special Assistant to the Under Secretary for Political Affairs Robert T. Grey, Jr., and approved by Rockwell.