9. Editorial Note

On February 22, 1973, The New York Times published an article entitled “Iran Will Buy $2-Billion in U.S. Arms Over the Next Several Years,” which set off an international reaction. Responding to the concerns of the Indian Government, for example, Assistant Secretary of State for Near Eastern and South Asian Affairs Joseph J. Sisco wrote in telegram 37015 to New Delhi, February 28, that “Iranian arms sales are part of continuing USG program and not, as suggested in press reports, new package.” He noted that over the past 3 years Iranian orders totaled over $2.5 billion, many placed after President Nixon’s discussions with the Shah in May 1972. The Shah’s primary motive, he concluded, was to improve Iran’s defensive capability against the potential threats that he perceived to his country’s integrity from the Soviets and others and to protect Iranian interests in the Indian Ocean. (National Archives, Nixon Presidential Materials, NSC Files, Box 1295, Harold H. Saunders Files, Iran Military)

In telegram 1384 from Tehran, March 5, the Embassy concurred in this explanation of the Shah’s rationale and noted that it had received queries from the Soviet, British, and French Embassies regarding the [Page 33]news reports. The queries reflected puzzlement “and speculation over what recent events may have prompted Shah to make this purchase, assumption being that $2 billion purchase was new, sudden decision by Shah. In reply we have used same points set forth reftel [telegram 37015] and stressed that Iran’s military acquisition decisions are made by Shah and we are not rpt not party to them, but as appropriate we have urged restraint on Iranians.” The Embassy also noted that the Shah was paying for all that he acquired. (Ibid., Box 602, Country Files—Middle East, Iran, Vol. IV, September 1971–April 1973)

To pay for the arms build-up, the Iranian Government had turned to deficit spending. In a March 10 letter to John Rouse of the Office of Iranian Affairs, First Secretary of the Embassy Alexander Rattray wrote about the Iranian calendar year 1352 budget (March 21, 1972–March 20, 1973): “The GOI’s budget approach understates actual spending by some 7 per cent and effectively obfuscates the size of the deficit.” He added: “Please note the staggering size of scheduled debt repayments and the substantial military expenditures which have been buried in the development side of the new National Budget.” Hiding military expenditures in other categories “in my view, accounts for the substantial 1352 increase in ‘General’ expenditures and is probably in part responsible for the 38 per cent rise in social expenditures.” He concluded that the full impact of military spending on Iranian fiscal plans had yet to be fully calculated, and estimated that defense spending for the next plan period was likely to reach the $16–18 billion range, requiring a third or more of all Iranian borrowings and revenues. (Ibid., RG 84, Tehran Embassy Files, Box 8, Iran, 1973, National Budget)

In a March 13 letter to Director of the Office of Iranian Affairs Jack C. Miklos, Deputy Chief of Mission of the Embassy L. Douglas Heck explained that while the leak of the Iranian arms build-up story did not bother the Shah, it encouraged “those in the society who are troubled about the Shah’s attitudes and the military hardware he is acquiring.” Due to considerable student unrest and anti-regime incidents, almost all of the universities were closed down, and he noted that “the students are mad because the Shah has billions for defense but not enough for education, as they see it.” (Ibid., RG 59, Central Files 1970–73, DEF 12–5 IRAN)