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

4744. For the Secretary and Sisco from Ambassador. Department please pass Cairo. Subj: Iran’s Purchase of F–14 Airplanes.

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1. With Shah’s decision June 10 to purchase additional 50 F–14’s and, for the present at least, no rpt no F–15’s, we seem to have reached a major milestone in consideration of the aircraft issue.2 However, if recent indications from the F–15 manufacturer, McDonnell Douglas, are any guide, we are still some distance from a lasting peace on the Congressional front.

2. To review the background: Following Shah’s approaches to the President and you last year,3 we presented GOI with a letter of offer for 30 F–14’s in January. At that point Shah was also thinking of a buy of 53 F–15’s. During succeeding months it became clear that F–15 had not reached equivalent stage of development and that its cost would be higher than anticipated. (In fact, when F–15 letter of offer arrived here from SecDef’s office it contained some one-time charges that were not present in F–14 contract. These were removed this month with submission of a revised L/O, but by that time DOD had pointed up to Iranian military that F–15 alleged to have certain shortcomings, merits of which we in no position to judge.)

3. Problem was further complicated by DOD’s need to provide for Grumman’s cash flow problem in light of Congressional dissatisfaction with past arrangements. U.S. Navy originally planned to place this burden on Iran, but we demurred and final solution was for USN and Iran to share Grumman financial support on same basis.4 Shah accepted this arrangement June 10 without questions.

4. These developments naturally fired up McDonnell Douglas which sent its Marketing Vice President, Robert Little, here last month. Little told ranking Iranians DOD was out to save Grumman at expense of F–15 and his company and that F–14 was inferior aircraft. It seems his technique may have had reverse effect on GOI which resents second guessing by U.S. salesmen.

5. On the Washington front we note in press here that Senator Symington entered the fray on McDonnell’s behalf and we understand that Senator Proxmire is considering public hearings on the F–14/Grumman financing issue. We have told the Iranians that they can expect a large clamor from Washington and asked that they be patient [Page 195]with the workings of our institutions. I believe they will, if Iran does not become a focus point in this controversy.

6. Wanted to bring this to your attention as at some stage you may be injected into this controversy. Incidentally, Iran’s purchase of a total of 80 F–14’s (30 plus the new 50) will bring the U.S. almost 1.8 billion dollars, missiles not included.

Helms
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 603, Country Files—Middle East, Iran, Vol. VI, January 1974–. Secret; Priority; Nodis.
  2. In a June 11 letter to Schlesinger, Lieutenant General Toufanian wrote that the Shah would procure a total of 80 F–14 aircraft instead of the previously-planned combination of F–14s and F–15s. (Washington National Records Center, OASD Files: FRC 330–78–0011, Box 64, Iran 452, 1974)
  3. See Documents 26, 29, and 36.
  4. Schlesinger explained to the Shah in a June 6 letter that Iran, like the U.S. Navy, would be required by the Grumman Aerospace Corporation to advance funds for F–14 contracts above the normal “80%-of-work-accomplished progress payments.” (Washington National Records Center, OASD Files: FRC 330–78–0011, Box 64, Iran 452, 1974)