[Page 512]

169. Memorandum of Conversation1

PARTICIPANTS

  • President Ford
  • Hushang Ansary, Iranian Minister of Finance and Economy
  • Dr. Henry A. Kissinger, Secretary of State
  • Brent Scowcroft, Assistant to the President for National Security Affairs
  • Ardeshir Zahedi, Ambassador of Iran

Ansary: His Imperial Majesty asked me to convey his very best wishes to you.

President: Will you please reciprocate for me? I really enjoyed our meeting together2 and I appreciate our association.

I do want you to know I hope we can work out an agreement. I think it would be beneficial to both countries. Henry, would you outline where we are?

Kissinger: We have been talking a five-year agreement which would be above Iran’s current production. We are now looking at FEA authority to buy 500,000 barrels a day for five years for storage. The problem is at the production end, before the storage is ready. We have several ideas for dealing with that. If we can solve that, we can get a deal in outline and complete it when we get the appropriation.

President: I am sending up the appropriation either tomorrow or Wednesday.

Kissinger: Assuming that passes without controversy . . .

President: Yes, it is one area where I and the Congress agreed.

Kissinger: Then we could complete it a couple of weeks after Congressional action.

Ansary: I would like to express His Majesty’s interest in this agreement.

His Imperial Majesty is very concerned about the world scene—the Soviet Union moving in various parts of the world, such as Angola, and the possibility of cutting Africa in half by a linkup with Mozambique.

He feels the declaration of independence by the European Communist Parties is a good sign.

[Page 513]

He thinks the strength and authority of the United States is essential for the Free World. He realizes the US can’t take the initiative on all fronts on its own.

President: You can assure His Majesty that the Secretary and I have agreed on every policy decision since I have been President.

Ansary: Iran can accept responsibility for peace and stability in the Gulf area. Our flourishing economy has permitted us to establish great trade with the US. When I was here we established a Joint Commission at the level of $15 billion of trade.3 That has now grown to $25 billion. As you know, for now we depend heavily on the export of oil. His Imperial Majesty appreciates your support of this progress because it lets us carry out our program and also provides a great quantity to the US and helps you with your recession. We know this is an election year and we all send you best wishes for success, and His Imperial Majesty is looking forward to your victory and working with you in the period ahead.

We have been working at this project for over 18 months without results. We hope with your support it can be brought to an early decision.

President: When we started we thought we had to use DOD and there were some bureaucratic problems with this. With this new authority I think we can move. I can assure you my interest is for something being done.

Ansary: I appreciate that because it is important in enabling us to continue our program. We will be meeting again after this meeting and I only hope the expectations don’t exceed the possibilities and I can report back to His Imperial Majesty that things are moving well.

Kissinger: It may be that Zarb’s first expectations may be a bit excessive and that my friend’s first offer may not be his last.

Ansary: We have our obligations within the OPEC and our friendship with the US. It would be bad if we started off on the wrong premises.

Kissinger: Zarb may have excessive ideas, but I suggest that to avoid endless haggling you make him your best offer.

We have to get enough to justify giving Iran a preferred role in the storage program, but we don’t want to humiliate you.

Ansary: We have been dragging this out for 18 months. His Imperial Majesty thinks that some people here seem to think that if you hold out the oil price will drop. That won’t happen, and His Imperial Maj[Page 514]esty thinks that would not be in your interest, for developing alternative sources.

President: Zarb, in defending his program before the Congress, will have to show his deal is better than dealing in the open market.

Kissinger: That is why we think the appropriation should go through before we close the deal.

Zahedi: One other point: We are now giving 2% of our GNP to aid countries like Pakistan, Turkey, Senegal, etc., so we would be taking some of your burden from you and which we couldn’t do if this program doesn’t go through.

President: I appreciate that. Our problem is one of public opinion here. I am for the program and I will do all I can to complete it.

Ansary: On the question of procedure: Our impression is the various agencies of government buy from the majors. We know at what price the majors buy. If you want more than that, I think that is negotiable.

Kissinger: In other words, we are talking about the profit margin of the majors.

Ansary: Two other small matters. Regarding imports of LNG into the US, there are restrictions of one trillion cubic feet per year. We are concerned at these limitations. We know that you have negotiated for a deal with Algeria and others. Your requirements are growing without the prospect of increasing your domestic production. We are planning a project which would raise the total to 1.4 trillion cubic feet. We would hope there is some flexibility here.

President: I’m not too familiar with this.

[Discussion]

The 1 trillion cubic feet of imports is just a planning figure—it’s not a fixed amount.

Ansary: I will tell His Majesty.

His Imperial Majesty has just returned from Pakistan. Things are going well there. We have discouraged any ideas of revenge against India and we are helping them financially.

President: We are making equipment available. How is it going?

Scowcroft: Slowly, but it is moving.

Kissinger: The problem is financing.

Ansary: We are helping there.

We support you in the Middle East but we think sooner or later something has to be done to get Israel to move.

Kissinger: If you would tell His Imperial Majesty we are determined to press on. We have difficulties this year but we won’t let things stagnate.

[Page 515]

Ansary: His Imperial Majesty hopes you will continue assistance to Egypt. We have promised about a billion. It is essential to help them and we hope you will do so and also encourage others, like the Saudis to do likewise.4

President: We are determined to help. We are helping economically and we have done a little militarily, but we have to move slowly there. But I think we will get the support of the Congress.

Zahedi: His Imperial Majesty was very pleased with the announcement of the sale of the C–130’s.5

Ansary: His Majesty is so concerned with conditions around the world. The United States is the key, and he wishes you success in the elections and for the maintenance of US influence around the world.

President: The nomination is sure; the election will be tougher but I think we will be okay. We will move after that.

Ansary: We really feel strongly about the essentiality of the US role in the world.

  1. Source: Ford Library, National Security Adviser, Memoranda of Conversations, Box 18. Secret; Nodis. The meeting was held in the Oval Office. All brackets are in the original.
  2. See Documents 125 and 127.
  3. See Documents 108 and 109.
  4. According to a memorandum from Robinson to Kissinger, March 31, Ansary rebuffed a request for more Iranian aid to Egypt, largely due to Iran’s financial woes. Robinson concluded that the only way for Egypt to get help from Iran that year was to have Sadat appeal to the Shah directly. (National Archives, RG 59, Central Foreign Policy Files, P840018–1834)
  5. In March, Ford submitted a proposal to Congress to sell Egypt six C–130 transport planes, the first such sale in many years. It was a move that the Shah welcomed, particularly after U.S. officials discouraged him from establishing a pilot training program for Egyptian officers on the C–130s the previous December. (Telegram 294669 to Tehran, December 13, 1975; ibid., P850012–2113) According to telegram 113153 to Tehran, May 9, the Department dropped its objections to the Iranian training plan once the C–130 sale to Egypt was proceeding. (Ibid., Central Foreign Policy Files, D760179–0616)