90. Telegram From the Embassy in Iran to the Department of State1
1450. Annual Econ-Military Review. Re Deptel 1124, June 12.2
General Eckhardt and I had two and three-quarter hr session with Shah 17th formally reviewing econ-military picture pursuant to US-Iran Memorandum of Understanding of July 4. Shah was in good mood, no major problems developed. He went along with our various positions (Deptel 1124) except that he wishes one squadron F–5’s equipped with Bullpups. Gen Eckhardt who ably handled discussion military procurement is writing up memo for record3 of understandings reached which will be supplied to Shah for his approval prior to his departure for USSR. Details of military aspects will be reported by separate message.
Nearly hr was spent re econ framework. I led off by reiterating econ development is as important as military. Noted Iran has excellent income but also large deficits projected for future. Added Shah’s reform programs apt to add to GOI financial burden and cautioned unless rising expectations met frustration of Iran masses could cause real problem. Concluded that while redoubled effort is going to be required in econ filed over long run, prospects for immediate future satisfactory and, therefore, we prepared proceed with second tranche of military program.
Shah then expatiated at length. First he expressed his personal cynicism re economists, noting Iran has had sad experiences with experts [Page 162] who claim to know all answers and who disagree among themselves. Happily Iran econ situation has now recovered from handiwork these economists. He particularly pleased by what he considers overwhelmingly favorable impact of his recent attack high cost living thru setting prices for certain basic commodities. He confident his reform programs will greatly improve welfare Iran masses, e.g. by increased production from farms which they now own and by sharing profits from expanding industrial sector. Meanwhile, great strides being made Khuzistan and elsewhere. Thus in general picture good one.
From this point, Shah launched into his usual contention that this future prosperity meaningless if Iran not secure. He simply has been able cope with regional threats. Viet Nam is graphic example, according Shah, of what could happen Iran. U.S. despite its might now compelled seek “unconditional discussions,” which Shah means negotiating with and making concession to aggressor. He went on to express concern re future of Kuwait, Aden and Bahrain. He believes Nasser frustrated in Yemen and elsewhere bound to launch adventure some where, probably against Libya, much less probably against Israel. Nasserist threat in Gulf area cannot be ignored.
Thus his principal foreign policy consideration is safety and security Gulf area where Iran’s wealth concentrated. He said no responsible leader facing threat this kind can afford be too cautious. After seeking downplay Nasserist threat, I pointed out threat very likely be more subversive (as in Viet Nam) than open military attack. Thus more attn to counter-insurgency was desirable. Shah recognized this and said that his interest in counter-subversion explains his emphasis on total “positive program.” He cited new dams being built in Khuzistan and other efforts toward econ and social improvement.
After he had delivered himself of remarks obviously previously planned, Shah agreed my summation that he and his govt are determined accelerate econ progress and that GOI will dedicate its resources to extent necessary to achieve that objective.
- Source: Department of State, Central Files, DEF 19–3 U.S.-IRAN. Confidential. Repeated to DOD and CINCSTRIKE.↩
- Document 88.↩
- Not found.↩