183. Telegram From the Embassy in Iran to the Department of State1

7977. For Secretary’s Eyes Only. Department please pass immediately. Subj: Secretary’s Audience with Shah.2

Set forth below, to be sent to the President,3 is a proposed draft of the highlights of your audience with the Shah as per your request: Begin text

(1) My audience with the Shah after lunch August 6 at his guest house in Nowshahr on the Caspian Sea lasted the better part of three hours. It was followed by a press conference which I asked the Shah to conduct for the American newspapermen traveling with me.4 The audience took place in an atmosphere of warmth, cordiality and privacy. (Ambassador Helms was the only other individual present.) There were no interruptions so that our discussion was frank and intensive. The Shah particularly asked me to convey to you his warmest regards, [Page 548]and he spoke with obvious conviction about his personal feeling toward you and the importance he attaches to this relationship.

(2) I took the occasion of the audience to cover with the Shah certain of the points I intended to make that evening in my toast at the formal dinner given at the Foreign Ministry by Minister of Economic Affairs and Finance Hushang Ansary.5 I wanted to be sure that nothing I would say would be an embarrassment to Iran. The Shah’s reaction was positive. He encouraged me to speak out. I felt that the thrust given in the press to the Senate Foreign Relations Subcommittee Report on arms sales to Iran6 required a prompt statement which set the United States/Iranian relationship in proper historical and current perspective, believing strongly that we cannot afford to permit an atmosphere of ambivalence to develop about an ally who has been as consistently supportive of US foreign policy over the years as has Iran. (You have the text of my toast as finally delivered.)

(3) During the audience the Shah agreed to a formulation on the issue of nuclear reprocessing which the next day we hammered out with American and Iranian experts into an approach which I think will be adaptable not only to Iran but to other countries who wish to buy nuclear reactors.7 Rather than attempting to set down here the details of this formulation I would prefer to cover the whole matter with you when I return to Washington, because I believe that you will be interested in the possibilities it holds for dealing with key Congressional figures like Senators Ribicoff, Javits, Glenn, Percy, etc. Sievering of ERDA and Kratzer of State participated in the discussions and will be working in the remaining days of this trip to try to refine what we have in mind and what we hope to achieve. I was encouraged by this aspect of my Tehran consultations.

(4) The Shah and I discussed at some length the best tactics for handling notification to Congress of Iran’s intention to purchase the F–16 aircraft. The Shah is obviously anxious to acquire some of his 300 F–16s (160 plus others over time) as soon as possible since his F–14s will lack F–16 support until deliveries are made. The Shah underlined, as he has so frequently in the past, that he wants to keep his Air Force supplied entirely with American equipment. He made it clear that he does not want to introduce into his Air Force airplanes of any other nation but he subtly pointed out that the reluctance of the United States to make deliveries would oblige him to go elsewhere. He noted that Israel has of[Page 549]fered for sale to Iran almost any Israeli military equipment Iran wants. (We know that Iranian Vice Minister of War, General Toufanian, recently visited Israel and looked over its arsenal.) The Shah added that President Giscard would be making a State visit to Tehran in early October and that he hoped the F–16 question will have been decided by that time since he is under constant pressure from the French to purchase Mirages. I assured the Shah that I would discuss this matter with you and that we would make the decision as to when to place the F–16 purchase before Congress.

(5) The Shah raised with me the same questions about electronic countermeasures that Ambassador Zahedi had earlier taken up with Brent Scowcroft.8 I went over carefully the problems we have in Washington with the general request that Iran be put on the same basis as NATO. I recommended to the Shah that rather than approaching the problem in this fashion, he ask us for specific items of ECM gear arguing his needs and requirements for each one. I assured him that we would give serious consideration to a few high-priority items at a time and that these requests should be handled securely either through Ambassador Helms or to Scowcroft and to Eagleburger at the Department. The following day I informed General Toufanian of our willingness to make available one particular item that the Iranians desired. Scowcroft’s message on this subject was most timely and enabled me to show the Iranians that we were attempting to move cooperatively on their requests in this sensitive area.

(6) The Shah and I discussed the oil barter negotiations between Iran and various American weapons manufacturers. I pointed out the concern felt in some quarters of Washington that Iranian purchases of voting stock in American oil companies might be regarded as undesirable. The Shah hastened to assure me that he did not rpt not want any stock in Ashland or the New England Power Company (NEPCO), both of which are involved with General Dynamics and Litton in that particular negotiation. He said that Ashland and NEPCO had offered stock but that Iran would not under any circumstances accept the offer. On the Occidental Oil Company agreement which has been so much publicized, the Shah indicated that thus far the deal is not working. It appears that Occidental is making certain conditions which the Iranians are not prepared to accept. These matters are still in the early stages of negotiation and the deal is in no sense finalized. The Shah made the additional point, however, that the United States should make up its [Page 550]mind to what extent it is going to permit foreign purchases of voting stock in oil companies. Under existing circumstances, he commented, there are no guidelines. He emphasized that in such matters he would scrupulously abide by the stated wishes of the United States Government.

(7) On the question of CIEC deliberations, I went carefully over the problems which we feel that Iranian attitudes are causing in these meetings.9 The Shah listened carefully and indicated that he was not aware that the Iranian position on the issue of rescheduling debts was causing difficulties. He then launched into a justification of oil prices, a detailed presentation of price increases on military and industrial equipment in the United States, and his abiding desire to work out some kind of an arrangement with the United States which would permit the special relationship between the two countries to flourish in an atmosphere of inflation and continually rising prices. He spoke of the various suggestions he has made such as indexation, barter arrangements, bilateral oil agreements, and so forth. He repeated again that the present price of oil has still not forced the United States to get serious about developing alternative sources of energy.

(8) I covered with the Shah the proposal that I intend to make to Prime Minister Bhutto on the Pakistan reprocessing plant issue, i.e., that we will provide A7 aircraft in exchange for his willingness to drop the idea of acquiring the plant from France.10 The Shah felt that this was a good proposal and that Bhutto would be wise to accept it. He pointed out again how weak militarily Pakistan is and how much it needs help from the United States.

(9) I had ample opportunity to cover with the Shah our detailed views of the situation in the Middle East and on developments in the area including the shifting alignments of Arab countries. As you will have recognized in recent months, the Shah’s perceptions are almost [Page 551]identical with our own. He particularly agrees that Syria must not fail in Lebanon, that the Palestinians must be cut down to size, and that Egyptian policy must not be permitted to so weaken Syria that it brings about a “radical crescent” of Syria and Iraq backed by the PLO and the Libyans. The Shah confirmed that he had had an unpublicized visit from Prime Minister Rabin in mid-July and that Rabin had made it clear Israel was not unhappy about current developments in Lebanon. The Shah and I discussed the viability of a Geneva Conference and agreed that we had similar difficulties in visualizing how one would conduct such a conference and what parties should participate at least in the initial stages.

(10) Africa came in for detailed discussion. We agreed on the general approach and on the fact that it is one area where we should be able to fend off Soviet influence since there is no Israeli problem to frustrate our relationship with friendly countries and tribal elements holding Western allegiances. The Shah has agreed to receive Rhodesian nationalist leader Joshua Nkomo when he comes to Iran in a week or so. He will see what he can do to help him since he agrees with us that Nkomo represents a political element which we should support. End of text.

Helms
  1. Source: National Archives, RG 59, Central Foreign Policy Files, P840114–1442. Secret; Immediate; Nodis; Cherokee.
  2. Atherton provided Kissinger with briefing material for this meeting on July 31. (Library of Congress, Manuscript Division, Kissinger Papers, Box CL–154, Iran Trips, 5–8 August 1976, Briefing Book F1)
  3. Scowcroft passed Kissinger’s report of the meeting to the President on August 9. (Ford Library, National Security Adviser, Trip Briefing Books and Cables of Henry Kissinger, Box 40, Kissinger Trip File, August 4–11, 1976—London, Tehran, Kabul, Islamabad, Deauville, The Hague, HAK Messages for the President)
  4. The transcript of Kissinger’s joint press conference with the Shah on August 6 at Nowshahr is in telegram Secto 20064 from Tehran, August 7. (National Archives, RG 59, Central Foreign Policy Files, D760305–0422)
  5. See footnote 3, Document 181.
  6. See footnote 4, Document 179.
  7. The report of the Atomic Energy Committee of the Joint Economic Commission is in telegram Secto 20055 from Tehran, August 7. (National Archives, RG 59, Central Foreign Policy Files, D760305–0207)
  8. In backchannel message WH61035 to Tehran, August 1, Scowcroft notified Helms that Zahedi had approached him regarding the possibility of Iran receiving access to electronic warfare equipment on a par with NATO. (Library of Congress, Manuscript Division, Kissinger Papers, Box CL–153, Iran, Chronological Files, 1 August–1 November 1976)
  9. According to a checklist that Atherton and Oakley provided for Kissinger’s talks with the Shah, August 5, Iran was pressing for indexation of oil prices and across-the-board debt relief for the poorer LDC’s, in part to divert their dissatisfaction from the financial assistance they were getting from Iran and other oil producers. (Ford Library, National Security Adviser, NSC Middle East and South Asian Affairs Staff: Convenience Files, Box 5, Iran (11))
  10. See footnote 3, Document 173. In telegram Secto 20089, August 8, Kissinger sent Robinson the three options for Iran’s nuclear reprocessing needs that he had presented to the Shah: a binational plant with the United States as partner, an acceptable third country partner, or an exchange with the United States of irradiated fuel for fresh fuel. Kissinger made clear, however, that reprocessing on a purely national basis was not acceptable. (National Archives, RG 59, Central Foreign Policy Files, P840169–0666) Robinson followed up with the Secretary on this topic on August 18. (Ibid., P850126–2020) U.S.-Iranian nuclear cooperation remained under negotiation until the end of the Ford administration.