314. Memorandum From the Executive Secretary of the Department of State (Read) to the President’s Special Assistant (Rostow)1
SUBJECT
- Military Credit Sales to Iran
In your memorandum of May 2, 1968,2 you outlined the President’s understanding, in approving the FY 1968 military credit sales program for Iran, that State, Defense, and AID would go ahead with further in-house economic and military studies in order to provide the best possible estimates of military credit requirements for the FY 1970 budget and the basis for our joint review with the Iranians next year. As you suggested, we have been in touch with the Bureau of the Budget on this matter.
The requested reviews have now been completed and are enclosed for your information.3 Our review revealed many political and military reasons for continuing to plan on the basis of $100 million in annual U.S. military credits to Iran. However, the economic study points out several problem areas for the future and recommends that these be kept under review. Our recommendation is, therefore, that the FY 1970 budget estimate for military credit sales to Iran should be set at $100 million, up to half of which might be from commercial credit funds as indicated in the attached report of the financial study group. The final figure would be subject to the results of the annual military, economic and political review to take place during FY 1970.