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

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

Washington, July 26, 1968, 1716Z.

209512. Subject: Shah’s Visit Follow-up Actions.

1. The President has approved and you are hereby instructed to transmit the following message to the Shah:

“Your Imperial Majesty: I must say once again what a great pleasure it was to see you in Washington last month and to have the opportunity to share thoughts with you and to seek your counsel on matters of mutual concern. My admiration for your country’s progress under your leadership continues to grow.”

“During our conversation, you mentioned a number of specific matters on which you indicated a desire for further consultations. We have reviewed these matters in detail, and I am now in a position to give you additional thoughts on all of them. Ambassador Meyer will also be prepared to discuss them further with you.”

“I fully understand your concern and need for long-term military procurement plans. Although our past undertakings to cooperate with Iran in the military field have, like our present one, been conditioned on Congressional action, they have come to fruition. It is my desire that we continue this cooperation in the future and my hope that the Executive Branch, in accord with the Congress, will continue the agreed programs of military cooperation with Iran. I will discuss this subject with my successor and inform him of the importance I attach to continuing close cooperation with Iran in all fields.”

“In connection with your request for additional technical advisers for Iran’s F–4 aircraft, I am pleased to inform you that we will be able to provide, on a reimbursable basis and initially for a one-year period, up to 50 additional United States Air Force personnel if they can be of substantial assistance to advise and assist in providing maintenance management for these aircraft. I suggest that the details of this arrangement be worked out between your military people and the Chief of our Military Assistance Advisory Group in Iran.”

“You mentioned your concern about defense arrangements in the Persian Gulf. Our military people have made a preliminary investigation which reveals a number of problems and indicates that a land-based missile defense of the Strait of Hormuz would probably not be feasible. If you desire I shall be pleased to direct that a detailed study be prepared for you on this subject, including possible alternatives which might assist your future planning.”

“Your concern to have the most efficient radar and communications system, at the lowest cost, for your southern defense, is of course a matter on which our military people have been working together for some months. I have asked the Department of Defense to consider urgently how we can assist Iran’s needs in this connection. Our Ambassador and the Chief of our Military Assistance Advisory Group in Iran will be prepared to pursue this matter with your people, and we will be as helpful as we can to you in exploring possible alternatives.”

“I am currently having an evaluation made of the plans for the new aircraft being developed by the Northrop Corporation that you mentioned to me. I understand that it is now planned that this aircraft will be ready after 1975. The work on it is still in an early stage, but if it develops that a consortium is to be formed and the aircraft lives up to design specifications, Iran might give further consideration to participation in this project. At that time perhaps our military planners could consult with you as to what alternatives would be available for the further modernization of the Iranian Air Force.”

“We have also looked into the possibilities for expanding the purchase of Iranian oil by American companies or the American government, possibly on a barter basis. I regret that there seems to be very little that can be done in this regard outside of normal, existing trade channels. To give special quotas to Iran for the import of petroleum into the United States or to enter into special arrangements for the exchange of Iranian oil for American goods would raise grave problems for our worldwide oil policy. On the other hand, the Department of Defense regularly purchases refined oil products for our forces in East Asia on the basis of competitive bidding, from a number of sources, and if Iranian companies can supply the required quantities at competitive prices we would be pleased to purchase them.”

“Finally, I appreciate your willingness to consider shifting a portion of Iran’s dollar reserves into long-term United States assets which will assist our balance of payments, and I look forward to hearing further from you about this at your convenience.”

“I take deep satisfaction, Your Majesty, in the warm relations between our countries and look forward to doing what I can to strengthen these relations still further in the future. You and the people of Iran can continue to depend on the sympathy and support of the people of the United States as you strive to build the kind of prosperous and secure Iran that you want.”

“With my warmest personal regards,”

“Sincerely,”

“Lyndon B. Johnson”

2. When presenting President’s letter to Shah, or at appropriate time thereafter, Ambassador Meyer may state that President authorized him to make following comments concerning letter:

a) General: President’s reply is based on most careful examination of Shah’s various requests by all agencies concerned. It takes into consideration not only President’s desire to maintain close ties with Iran in all fields, but also our own domestic problems and political system. All subjects raised by Shah will of course be subjects of continuing consultations in the future.

b) Five-Year Commitment: President hopes Shah fully understands why US cannot, in view of our legislative system, give any more definite assurances than he has already given. Congressional situation requires us to consider our military credit program on annual basis. This, however, has been true in past, and our past record bears witness to our understanding of importance of our military cooperation with Iran and clearly indicates our desire to continue this cooperation in future.

c) Technical Advisers: Although President wants to be helpful in providing additional MAAG personnel in connection with Iran’s F–4 aircraft, we are uncertain exactly what Shah has in mind. As Chief, ARMISH/MAAG has informed Shah in past, we cannot supply MAAG technicians to perform direct support for foreign forces. If, on other hand, IIAF has requirement for supervisory-level personnel, we could supply up to 50 such people, initially for one-year period, with extension possible for one more year. We would want this program to be on a fully reimbursable basis. We estimate 50 USAF personnel would cost, on this basis, no more than $1,000,000 per year or substantially less than cost of similar personnel hired on commercial basis. Moreover, effectiveness of such personnel, operating as integral part of MAAG, would be far greater than that of personnel operating outside MAAG. Our MAAG Chief can work out details with IIAF.

d) Persian Gulf Defense: President will be pleased to have more detailed study conducted if Shah desires one. Such a study would consider not only question of land-based missiles but also of cost and effectiveness of alternative air and naval defense systems for Gulf. Preliminary investigation referred to by President revealed number of problems concerned with capability and characteristics of land-based missiles for defense of Strait of Hormuz. Furthermore, it indicated that if powerful enemy forces should decide to move into Persian Gulf, Iranian land-based missiles would not be a deterrent since they would be susceptible to enemy destruction. On other hand, Iran has well-motivated, competent air force whose capability will soon be greatly improved with acquisition of F–4 aircraft, and this force could operate with good effect in area.

e) Radar and Communications Systems: President has instructed DOD to ensure full information on various alternatives is made available to Irannian authorities and every assistance given them, through MAAG, to enable GOI to decide on specific courses action for these projects. When decision taken USG will lend every assistance it can to expedite projects. If US contractor is selected to carry them out, USG will do its best to provide necessary military credits to cover future year program costs within present arrangements as communicated to Shah on May 20, 1968.

f) Northrop 530: DOD is considering support for this aircraft for production in US if the aircraft lives up to design specifications. If a consortium is formed Iran would certainly be welcome to join, but it is not expected aircraft would be available until after 1975.

g) Oil Barter: President realizes importance the Shah attaches to his proposal to barter or sell Iranian oil for American goods. Accordingly, USG has made a careful review of all alternatives open but has not found any encouraging avenue.

i. Special Quota for NIOC: Quotas are currently given to importers. There are no restrictions on where they get their oil. They could not be instructed to take oil from any specific country, nor could NIOC be given special quota without fundamental revision of US oil imports program. USG has been asked to grant, but has declined, special quota treatment for other countries in the past.

ii. Barter or Sale of Iranian Oil for American Products: NIOC is free now to barter oil with American companies if there are any companies with import permits willing to make such arrangements. On the other hand, any arrangement with Iran to accommodate barter of Iranian oil outside U.S. oil import program would require modification to program and would cause us very difficult problems with other oil-producing countries and in our domestic oil market. Such arrangement, in effect, would require USG give Iran special country quota with problems explained above.

iii. Increased Military Procurement from Iran: DOD purchases refined oil products, on basis of competitive bidding, from a number of sources. In first half of 1968, it purchased significant quantities from Iran and would be pleased to take additional quantities from companies concerned if suitable products are offered at competitive prices. Ambassador Ansary has been given full information on this procurement. Unfortunately this requirement is only for refined products at relatively low prices, and Iranian companies may prefer to sell elsewhere.

3. Signed original of letter being pouched.

Rusk

1. Source: Department of State, Central Files, POL 7 IRAN. Secret; Limdis. Drafted by McClelland on July 11; cleared by Eliot, Rockwell, Battle, Wolf, and Saunders; and in draft by Warnke, Solomon, and Akins; and approved by Rusk. Repeated to CINCSTRIKE.