37. Memorandum of Conversation1
SUBJECT
- Working Tea with Shah 6 June 1964 (Representatives of State, Defense, AID & White House Staff in attendance)
- 1.
- Background Briefing—The Shah gave a detailed description of his reform program, covering past accomplishments and his hopes for the future. He concluded by stressing the importance of his security forces to the success of his program and his concern with the military assistance being rendered the Arabs by the U.S.S.R. and the aggressive nature of Nasser’s policies and propaganda toward Iran.
- 2.
-
U.S. Intentions re Military Modernization—Mr.
Harriman (State) expressed
the importance that the U.S. attached to its relationship with Iran and
asked Mr. Sloan (Defense) to
discuss the matter of continued support in the military field. Mr.
Sloan referred to the Shah’s
conversation with the President and stated it was the intention of the
U.S. to respond favorably to the military needs of Iran as recently
received in the Pentagon.
- a.
- C–130 Transport Aircraft—Mr. Sloan announced that the U.S. was prepared to consummate arrangements for the sale of 4 of these planes to Iran as replacements for a squadron of C–47s. Favorable credit terms were available. In order to meet the desired delivery date of July 65 and to provide the same model plane that the IAF already has in its first squadron of C–130Bs, it was proposed to have the USAF rehabilitate 4 C–130Bs for delivery to Iran. These would later be replaced in the USAF inventory by 4 C–130Es from production. Iran would pay the price of the C–130E which is less than the C–130B price. The Shah expressed his appreciation for the rapid consideration of his needs but gave no view concerning the relative desirability of the C–130B and E.
- b.
-
Tank Replacement—Mr. Sloan reiterated the statement of the President that we wanted to provide him the tanks that he desires but it was felt that, in all fairness, the various alternative possibilities should be described together with their implications. As a result of a cutback in production schedules the cost of the M–60 had escalated to about $270,000 including spares and handling charges. They could be made available starting in March 65 as requested. The U.S. Army had developed two A–3 modifications of the M–48 which were felt to be about equal to the [Page 77] M–60 in performance and about $100,000 cheaper per tank. The first modification was being applied to 1000 tanks for use by the U.S. Army and Marines. It has the same engine and operating range as the M–60. The 90mm gun is retained in order to permit the use of large stocks of 90mm ammunition for training. Also a HEAT round has been developed that gives the gun about the same range as the 105mm gun of the M–60. The second modification has the same engine and gun as the M–60. The principal advantage of the M–60 is in a slightly smoother silhouette. Since this latter modification is not presently contemplated by the U.S. Army, it could not be accomplished as rapidly as the first, which is now underway.
The Shah expressed concern that spare parts would become a problem with the M–48 as they have for the M–47. Mr. Sloan stated that the M–48 would be in the inventory of the U.S. Army as long as the M–60 and until a main battle tank was developed and available, estimated to be in the early 1970s. The Shah expressed concern that this conversion to a new tank would not be completed until 1969 which would not leave much useful life if spare parts became short in the early 70s. Mr. Sloan assured him that it was U.S. present policy that spare parts would be maintained for all military equipment provided to allies as long as the equipment was in use. Mr. Komer (White House) spoke up in strong support of the M–48 A–3 as being comparable to and more economical than the M–60. The Shah asked that he be given a detailed comparison of the three possibilities with a revised cost figure for the M–60 that would reflect the increased production schedule to accommodate Iran’s requirement.
- c.
- Other requirements for Iran—Brief discussion was held concerning the remaining items in the modernization plan: machine guns, artillery, M–113, and scout cars. No one brought up any problem areas and it was concluded by the Shah that these items could be made available, in the context of an overall plan.
- d.
- Air Defense for Southern Area—The Shah spoke of the absolute necessity of defending the strategically-important oil fields and the Bandar Abbas Port complex. He inquired as to the status of the air defense study being prepared by General Adams (CINCSTRIKE); General Griffith (STRIKE Command) stated that he had turned over to General Eckhardt (ARMISH/MAAG, Iran) this study for further discussion with the Shah.
- e.
- Cooperative Sales Agreement—Mr. Sloan stated that when the requirements are completely definitized, it would be possible to draw up an overall agreement that would indicate what Iran desired to buy from the U.S. and the lesser amount that the U.S. would try to provide under MAP during the period in question. MAP, of course, was always subject to Congressional approval. The Shah expressed the opinion that this was [Page 78] the only way to carry forward our mutual efforts in an orderly and businesslike manner.
- 3.
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Economic Modernization—Mr. Rostow (State) introduced the problem that he had observed in other developing countries and which he thought was probably applicable to Iran. This was the difficulty in getting industry to develop in such a way as to support and complement the agricultural development. This was directly related to the stimulation of proper marketing practices that are necessary if much agricultural produce is not to be lost in the marketing process. Specifically he mentioned the requirement for industry to take the emphasis from production for Teheran and other cities and to concentrate in producing things the farmers need and want: textiles, farm implements and machinery, cheap radios, electricity, etc. Otherwise the farmer will find that his increased productivity and income have brought him no realization of his aspirations.
The Shah admitted this was a basic problem in Iran with which he needed help from the U.S. Dr. Macy (AID Iran) stated that some work was being done on improving the marketing. The Shah asked that additional technical assistance be provided in solving the larger problem described by Mr. Rostow. In the economic field he also expressed the desire that a combination of AID and Ex.Im. Bank loans be considered for Iran.
- 4.
- Conclusion—Mr. Harriman assured the Shah of continued U.S. assistance in strengthening Iran. As the meeting was breaking up, the Shah asked General Eckhardt to meet with him at 1000 hours Monday to discuss the Air Defense Study prepared by CINCSTRIKE and go over in more detail the other items in the modernization plan, particularly the price of the M–60 to reflect the procurement by Iran of the first 176 tanks.2 He inquired concerning the light tank he had discussed with General Adams. General Eckhardt advised him that there was no available information on the availability and price of the Sheridan tank.
Major General, USA
Chief, MAAG, Iran