The following is a summary of the most important of the issues covered. Parenthetical citations are to numbered documents in the text.

The Johnson administration continued the Kennedy administration’s support for Shah Mohammed Reza Pahlavi of Iran and its emphasis on buttressing Iran’s internal security by encouraging a far-reaching program of political, social, and economic reform—the Shah’s so-called “White Revolution.” U.S. policymakers, who agreed on the strategic importance of Iran, which was on the southern periphery of the Soviet Union, remained concerned over potential threats to the long-term stability and viability of the Shah’s regime. Iran was also valued as one of the most dependable U.S. allies in the region. Unlike many other Third World leaders, the Shah supported U.S. policies in Vietnam, the Dominican Republic, and other sensitive Cold War areas. Johnson’s personal relationship with the Shah, which dated from his trip to Tehran as Vice-President in August 1962, was closer than Kennedy’s had been. The two leaders corresponded frequently, and the Shah met with Johnson three times during his presidency.

The only real bone of contention between the two countries was the Shah’s seemingly insatiable appetite for more and newer military equipment. Thus, the continuing U.S. advocacy of Iranian economic development and reform as a check against internal upheaval or revolution was offset by the Shah’s insistence on spending more of Iran’s growing oil revenues on weapons.

On January 7, 1964, the Shah sent the President a letter pointing to an increasing Arab threat to Iran and arguing that the September 1962 U.S. Five-Year Military Plan for Iran had already proved inadequate. (2) In his March 19 response, the President noted that, because of Iran’s exposed position, the U.S. Government had always taken the Shah’s military concerns quite seriously, but that it had concluded that the basic factors that had led U.S. military experts to agree on the current Military Plan had not changed significantly since 1962. (8) During subsequent discussions of a military modernization program for Iran, U.S. officials continued to emphasize the importance of assuring that such a program would not hamper Iran’s economic development program, while the Shah insisted that increased oil revenues over the foreseeable future would make it possible to pay for increased defense expenditures without impairing Iran’s economic progress. (14–17, 19, 22)

When the Shah visited Washington in June 1964, the President complimented him on his reform program and called Iran “the brightest spot in the Middle East.” (36, 39) The Shah discussed his military modernization program in detail with U.S. representatives, who assured him that the United States intended to be responsive to his military needs. (37, 40–42) On July 3 Ambassador Julius Holmes was instructed to negotiate a new Memorandum of Understanding on military modernization with the Shah, but to emphasize U.S. concern that the program be kept within proper bounds in order not to jeopardize Iran’s economic development and to make it clear that the U.S. Government intended periodically to examine jointly with the Government of Iran the overall economic effects of its military expenditures. (45–48)

Although U.S. policymakers remained concerned over potential threats to the Shah’s regime, Embassy reports indicated that that no clearly identifiable threat to Iran’s internal security was likely to develop in the near future, except in the event of the demise or abdication of the Shah. (6, 18) A May 1964 National Intelligence Estimate (NIE) concluded that the Iranian Government’s vigorous suppression of widespread anti-government demonstrations in June 1963 and its continuing strong pressure against religious dissidents had severely weakened this segment of the opposition. (23)

An upsurge of opposition to the government and anti-Americanism came in October 1964, however, when the Iranian Parliament, the Majlis, passed a status of forces bill granting U.S. military personnel stationed in Iran and their dependents full diplomatic immunity, as the United States had been requesting since March 1962. When it voted less than two weeks later to accept a $200 million credit from U.S. commercial banks for purchase of U.S. military equipment, critics claimed that passage of the status bill had been the price exacted by the United States for the credits. (52, 54–55)

On November 3 dissident religious leader Ayatollah Khomeini, whose attacks on the status bill had included calling for the overthrow of the Iranian Government, was arrested and exiled to Turkey. (56, 58) Department of State analysts warned in January 1965 that Khomeini’s views were symptomatic of widespread popular opposition to Government policies, recently extended to open criticism of American policy in Iran, and that this new attitude posed a threat to U.S. interests in Iran and made the U.S. task there far more difficult. (64) Department officials disagreed, however, as to the extent of popular discontent in Iran. (66–67)

When Secretary Rusk met with the Shah in Iran in early April 1965, the Shah told him that his “White Revolution,” which had been achieved without bloodshed, was supported by the nation, with the exception of minor groups such as reactionary mullahs and dispossessed landlords. (72) An assassination attempt on the Shah on April 10, however, highlighted for the Embassy the fact that Iran’s stability was unduly dependent on the life of one man. (76, 78–80)

Faced with the possibility of forced withdrawal from the U.S. facilities in Pakistan, the President ordered in August 1965 that the U.S. Government proceed urgently to develop alternative facilities in the region for the installations in Pakistan. Top U.S. intelligence authorities subsequently concluded, over the objections of Ambassador Armin Meyer, that Iran was technically the most suitable site for relocation of most of this activity. The Ambassador emphasized that if the United States wanted to expand its facilities in Iran, it needed to improve the climate of U.S.-Iranian relations and remove its chief irritants. He noted that the Shah had become increasingly resentful of the U.S. military aid program, which extended grant aid to countries less faithful to the United States than Iran, while requiring him to pay a high percentage rate for his purchases. Meyer thus urged action to ensure that Iran received a truly concessional interest rate for the second tranche of the military sales agreement as soon as possible. (94–95, 98–100)

The Shah continued to argue that successful economic development was useless unless Iran had adequate military security. In September 1965 Meyer cabled Washington that the Shah was unhappy with his dependence on the United States for military supplies and would almost certainly begin to buy arms from non-U.S. sources, possibly even the Soviet Union. (102, 105) In November Meyer reported the Shah’s complaints that the U.S. Government had seriously misunderstood Iran’s true military needs. The Ambassador again urged approval of the long-delayed second installment of the U.S. military credit sales program. Following U.S. approval on November 29, the Shah began to push for a $200 million augmentation of Iran’s military purchases. (108–111, 114)

In March 1966 letters to President Johnson, the Shah argued that Iran needed to purchase more military equipment to maintain its political and economic stability. (122, 126) Johnson’s replies temporized, suggesting that a joint annual military-economic review later that spring would help the Shah determine how best to allocate Iran’s resources and assuring him that the United States also wished to promote Iran’s goals of economic advance and national security. (124, 129)

Subsequent discussions within the U.S. Government, during which Meyer and the CIA warned that the Shah would go elsewhere for arms purchases if the United States would not sell, resulted in Presidential approval on May 23 of $200 million in new arms sales to Iran over a four-year period. When Meyer informed the Shah, he warned him that the President considered the new $200 million to be a planning figure which needed to be reconfirmed each year during the annual review. (136–145) On May 30 the President signed NSAM No. 348, “Alternatives to U.S. Facilities in Pakistan,” approving a State-Defense-CIA recommendation to establish contingency alternatives in Iran for U.S. facilities in Pakistan, in order to be in a position to move them on short notice with little intelligence loss if necessary. (146)

During subsequent negotiations on the arms purchase, the Shah emphasized that Iran was free to purchase the arms it needed from other sources, including the Soviet Union, while U.S. officials warned that there would be an adverse U.S. reaction to any kind of military procurement from the Soviets. (145, 148–149, 151–154) On July 20, 1966, the President wrote the Shah that the U.S. Government was considering providing two squadrons of F–4 aircraft, but that an Iranian-Soviet arms arrangement would create serious problems in carrying forward U.S. military assistance. On July 28 Meyer cabled the President that the only hope of avoiding excessive Iranian military involvement with the Soviets would be to offer Iran better prices and terms. The Joint Chiefs of Staff also urged that every effort be made to prevent the Soviets from gaining a foothold in Iran. (158, 160–161, 165–166)

In August 1966 the President decided to send Deputy Assistant Secretary of Defense for International Security Affairs Townsend Hoopes to Tehran to explain the budgetary limitations on U.S. military aid, and to offer reduced costs and accelerated delivery wherever possible. Hoopes was also to make it clear, however, that the U.S. offer to sell F–4’s and missiles was conditioned on clarification of Iran’s position on buying from the Soviet Union. (168–171) During his meeting with Hoopes and Meyer on August 10, the Shah promised not to allow Soviet technicians in Iran. (172) During subsequent negotiations on the military package, the Shah assured U.S. representatives that he would not buy SAMs or other sophisticated military equipment from the Soviets. (174–176) Iran’s decision in January 1967 to purchase some less sophisticated military equipment from the Soviet Union led to U.S. protests, but did not derail the U.S.-Iranian arms deal. (185, 191–192) In May 1967, the President approved the second $50 million slice of the $200 million military sales credit. (199, 201)

When the Shah visited Washington in August 1967, the President assured him that the United States would do everything possible to meet his needs, but warned that the mood of Congress made it difficult for him to make firm promises regarding future military aid. The Shah left Washington well pleased with his reception and with the praise he had received for Iran’s economic and social progress under his rule. (232–233, 235– 236)

On November 15 the Shah wrote the President concerning two new projected five-year plans for Iran—one for economic development and one for reorganization of Iran’s armed forces. He noted that a rough estimate of the requirements for military equipment to carry out this reorganization was in the order of $800 million, and that Iran would like to buy this equipment in the United States if the U.S. Government could offer the necessary credit arrangements. (242)

On December 19 the President wrote to the Shah that the U.S. Government was ready to begin discussions on the third $50 million credit installment and intended to seek Congressional approval for the fourth installment at the appropriate time. As he had told the Shah in August, the United States would continue to do its best to be helpful, but he could not say definitively what it could do beyond the existing agreements. The President also expressed concern over the contemplated large size of the projected military program. (254)

In April 1968 Rusk, McNamara, and Rostow supported an interdepartmental recommendation for a 6-year (FY 1968–1973), $600 million military credit sales package for Iran, with a U.S. offer of a military credit sales program for FY 1968 between $75 million and $100 million. Rostow reminded the President that the military sales package would be uppermost on the Shah’s mind when the two men met in June. Johnson gave his approval on May 1. (271–273, 277, 279–281)

When Meyer informed the Shah of U.S. approval of the new military credit sales program, the Shah told him that Iran’s immediate military needs would exceed $100 million and that if U.S. credits for FY 1968 were restricted to $75 million, orders for at least $25 million would have to be placed elsewhere. In early June Rusk and Rostow informed the President that the full $100 million could be made available for FY 1968 and recommended that he so inform the Shah when they met. Before and after his arrival in Washington, the Shah continued to stress that in order to plan militarily, he needed assurances from the United States that it would be able to meet his needs over the next few years. U.S. officials made it plain that the U.S. political situation precluded long-term commitments, but that the administration considered military cooperation with Iran a very high priority and expected its successor to do so. (283–284, 287, 290, 292, 294–296, 299, 302, 304, 306)

During his meetings with the President on June 11 and 12, the Shah made several requests for various types of U.S. assistance, primarily military. On July 26 the President responded that he hoped and expected that Congress would continue the agreed program of military cooperation with Iran, and that he would inform his successor of the importance he attached to such cooperation. He offered further U.S. cooperation in speeding up planning and construction of Iran’s radar and military communications systems. (295, 299–300, 305–307)

Meyer reported that the Shah welcomed the President’s statement and said that if U.S. military credits were unavailable in the future, he would attempt to purchase directly from U.S. companies, using cash if necessary. (308) On October 19, however, Meyer reported that Shah, who had recently returned from a trip to the Soviet Union, had warned that if Congress acted to restrict credit sales to Iran, he intended to purchase elsewhere. (311–312)

As the Johnson administration drew to a close, an inter-agency review concluded that the U.S. Government should continue to plan on the basis of $100 million in annual U.S. military credits to Iran. (314) When Iranian Prime Minister Hoveyda met with the President in Washington on December 5, 1968, Johnson said that although he himself would only be in office a short time longer, he believed that U.S. interests were such that a close relationship between the United States and Iran would continue. (321)

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