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

1109. Dept pass Defense and Eckhardt. Embtel 1065.2 Following conversation Eckhardt and I had with Shah May 24 (reftel) General Hejazi, Chief Supreme Comdr’s Staff (SCS), handed Eckhardt “Study of [Page 64] Modernization Program” on May 28. Study rejected ARMISH/MAAG presentation favoring carefully planned and phased replacement program for tanks and transport aircraft and supported in essentials accelerated program proposed by Shah. Study also backed immediate organization naval security battalion and armored personnel carriers for infantry battalions in Ahwaz division. ARMISH/MAAG promptly prepared additional memorandum reiterating and further supporting memo we left with Shah May 24. This memo was passed to SCS May 30 with comment I was available if Shah wished to discuss it. Morning June 1 top SCS officers conferred with General Ash and Col Gildart (Eckhardt in Washington). SCS said MAAG position not satisfactory and more cooperative attitude required in understanding need for accelerated program which SCS then attempted to defend. MAAG said its comments were made in context local discussions of most desirable military program, and represented its best professional views and MAAG officers reiterated considerations supporting them. MAAG added that when GOI had reached position after having MAAG advice, exchange would move to govt level and MAAG would do its best, as always, in support of any GOI-US decisions. In mid-afternoon MAAG was informed SCS wished to consider morning discussion off record. (Text of memoranda of these conversations forwarded by pouch to GTI.)

Evening June 1 I had two-hour audience with Shah. He discoursed along usual lines on Arab threat and Iran’s need to prepare for own defense, although calmly and without emotion. I then opened part of conversation covering military requirements with friendly but pointed remarks on value of good professional military advice based on factual analyses, emphasizing particularly the value of sound negative advice, and noted we agreed at Dezful (Embtel 1008)3 to have exchange of professional views re replacement program without regard to source of financing. All exchanges recent weeks we considered in this context and it now probably time for Shah examine all advice and decide what he wished to propose.

I noted that too rapid introduction of new weapons systems would be likely to overtax facilities for maintenance and utilization, not only for new weapons and equipment, but also for existing equipment. It was judgment our military people that overall combat capabilities of Iranian armed forces would thereby be significantly reduced during immediate future about which Shah appeared most concerned, Shah seemed to be seriously impressed by this consideration.

I once again called Shah’s attention to need for balanced use of resources in order not to impair development program. I said it appeared [Page 65] oil revenues were rising nicely but best projections we able make suggested 1970 level not be quite so high as Shah previously indicated. Also foreign exchange projections indicated there would be period of squeeze to fulfill planned development in next few years and for two years or so Iran might well be drawing on foreign exchange reserves. Shah appeared bothered by this but seemed to hoist in its implications.

Shah then said he thought ARMISH/MAAG probably right, SCS program too rapid, it would be wiser to get 17 tanks for training by end Iranian year, March 1965, instead of August 1964 and have six months (instead of four months) program for introduction tanks into each battalion.

I suggested Shah’s proposals be set down in writing by SCS and I would send them to Washington with the request that they be considered with regard to availabilities and terms. I said time would not permit answers during Shah’s visit and he expressed understanding but hoped there could be some agreement in principle with questions regarding availabilities and terms to be worked out later.

SCS memorandum, delivered to MAAG this afternoon, set forth following requirements (text forwarded by pouch to GTI):

1)
460 M–60 tanks. 17 to be delivered for training by March 1965, 53 to be delivered in each of next three month periods (for three battalions Ahwaz division), then 36 in each of seven following four month periods (for seven other tank battalions).
2)
156 armored personnel carriers for three mechanized infantry battalions Ahwaz division.
3)
130 light tanks or armored cars for seven armored cavalry squadrons.
4)
110 howitzers 105mm to add third battery to 26 field artillery battalions.
5)
28 howitzers, eight-inch, to augment existing batteries and add battery to Ahwaz division.
6)
One additional airborne battalion.
7)
1610 A–6 machine guns.
8)
4 C–130 aircraft by mid-1965 (one C–47 squadron to be deactivated).
9)
Replacement for F–86 to be discussed later.
10)
Level of ammunition reserve increased to six months’ supply.
11)
High priority to air defense Khuzistan and Bandar Abbas.
12)
One additional naval security battalion “when Bandar Abbas port complex completed”.

Quantities tanks, APC’s, armored cars and machine guns contain attrition factors. Specific time phasing not stated except for tanks and C–130’s.

Comment: Shah has accepted substantial validity our views and modified his proposals appreciably to accommodate them, although his proposed deliveries still call for rather tight schedule. However, I believe they now provide basis on which we can work out details of mutually [Page 66] acceptable program and preserve present valuable military relations with Shah.

Immediate problem is tanks. If we can be forthcoming on tanks during Shah’s visit, our relations with Iran will be greatly strengthened and success of visit assured. I strongly recommend that we by able to tell Shah we are prepared to sell Iran 17 M–60’s for delivery by March, 1965 and to make subsequent deliveries, production rates permitting, at rate approximating his schedule. Would be helpful if we could also indicate we would try to work out some credit arrangements for FY 66 deliveries.

If tanks problem resolved, discussion of program covering other items can proceed here at less rapid pace except for C–130’s on which Shah will want early answer. For this discussion we will need to know soon level of credit available for Iran in FY 66.

Holmes
  1. Source: Department of State, Central Files, DEF 19–3 US–IRAN. Confidential; Priority. Repeated Priority to CINCSTRIKE/CINCMEAFSA for POLAD.
  2. Dated May 25. (Ibid.)
  3. Document 19.