RECENT TRENDS IN IRANIAN ARMS PROCUREMENT
Summary and Conclusions
1. The rapid military buildup of the radical Arab States after the 1967 Arab-Israeli War and the British withdrawal of military forces from the Persian Gulf prompted the Shah to undertake a rapid expansion and modernization of Iran’s armed forces. He has been particularly anxious to keep pace with the rapidly modernized forces of neighboring Iraq. During the past five years, Tehran has ordered more than $1.4 billion worth of arms from abroad.
2. Since the mid-1960s, Iran has diversified its sources of arms, and the United States no longer is the sole provider. Iran now meets most of its requirements for naval craft, air defense equipment, and tanks from the United Kingdom, while other Western suppliers provide an assortment of equipment ranging from small arms and antiaircraft guns to helicopters and transport aircraft. The USSR has become an important source of ground forces equipment. The United States, however, still accounts for one-half of Iran’s arms purchases. Moreover, Tehran continues to increase its purchases from the United States and to depend on this country for all of its fighter aircraft and most other sophisticated weapons systems.
3. Since January 1967, when the first arms accord with the Soviet Union was concluded, the USSR has emerged as Iran’s third largest arms supplier. The Soviet contribution has been confined to artillery, armored personnel carriers, and support equipment. Tehran generally has been satisfied with this equipment and views its payment in natural gas as a way of saving hard currency. The Shah prefers not to purchase sophisticated arms from Moscow because of the dependence it creates for technical assistance, parts, and replacement. He probably will continue to restrict purchases from the USSR to standard ground forces equipment as long as he can continue to procure sophisticated weaponry from the West.[Page 2]
4. The Shah’s efforts to expand Iran’s military capabilities, combined with cutbacks in US military grant aid, have brought Iran’s military budget to almost four times its 1966 level. If defense spending continued to expand at the present rate, it could absorb as much as one-fourth of Iran’s gross national product by 1975. It is more likely, however, that procurement—while remaining high—will level off before that time, and Tehran should be able to finance the foreign exchange costs of military imports without difficulty from increased oil revenues.
Magnitude and Motivations
5. Iran has imported nearly $1.8 billion of military equipment since the mid-1950s, making it the sixth largest arms recipient in the Third World. The United States has provided 79% and the USSR 13% (see Table 1). Iranian arms purchases during the past five years total some $1.4 billion, most of which remains to be delivered. Tehran’s efforts to obtain arms in the early 1950s were motivated by fears of Soviet aggression and internal security needs. Iran joined the US-sponsored Baghdad Pact (subsequently renamed the Central Treaty Organization—CENTO) through which it received almost all of its arms and training. These arms came from the United States and were provided as grants.
6. Concerned with the cutbacks in US military aid and with the embargo placed on arms deliveries to Pakistan (another CENTO member) after the Indo-Pakistani War of 1965, Iran began in the mid-1960s to diversify its sources of arms, concluding sizable agreements with West European countries and the USSR. The latter reflected the Shah’s declining fear of Soviet aggression and the strengthening of diplomatic and economic ties between the two countries. The Shah’s primary concern shifted to the arms buildup in Egypt, Iraq, and Syria and Nasser’s efforts to expand his influence into the Persian Gulf area.
7. The recent spurt of Iranian arms purchases has been generated by Tehran’s effort to upgrade its military forces and fill the vacuum left by the withdrawal of British forces from the Persian Gulf. Although the Egyptian threat has receded, the Shah is concerned with the possible emergence of new radical influences in the area, particularly those supported by Iraq. The Shah regards a modern, well-equipped military establishment as essential to deter hostile Iraqi moves, to further Iranian interests, and to assure Iranian control of the Gulf.[Page 3]
Foreign Deliveries of Military Equipment to Iran a/ (Million US $)
|United States b/||1395.4||706.9||82.0||101.7||160.1||215.1||148.0|
- Deliveries are differentiated from arms sales and aid agreements.
- Data are by fiscal year.
Arms Procurement from the United States
8. The United States has provided Iran with about $1.4 billion of arms between 1955 and 1971.(1) More than $700 million was exported to Iran during 1967–71. More than one-half of total US arms exports has been furnished as grant aid under the Military Assistance Program (MAP) (see Table 2).
9. US military interest in Iran began during World War II, when it served largely as a distribution center for supplies to the Soviet Union. A US military mission was established in mid-1942 to train the Iranian Army and Gendarmerie, and Iran subsequently received some Lend-Lease aid. Additional aid was provided immediately after the war to help Tehran counter the Soviet-supported separatist movements in the provinces adjacent to the USSR.[Page 4]
US Arms Export to Iran, by Program a/ (Million US $)
|Year||Total||Military AssistanceProgram b/||Excess Stock Sales c/||Foreign Military Sales d/||Commercial Sales|
(a) Data are by fiscal year.
(b) Grant aid program and includes some military training.
(c) Covers equipment in excess of US mobilization reserve requirements and is sold for its rehabilitation cost or for its “utility” value—about one-third of the original procurement price.
(d) Consists of US-financed arms sales and US-guaranteed private arms credits.
10. Iran did not begin to receive large-scale US arms aid until it joined the Baghdad Pact in 1955.(2) When Iraq withdrew from the alliance in 1959, Iran signed a bilateral defense agreement with the United States and joined with Turkey, Pakistan, and the United Kingdom to form CENTO. As a member of US-backed military alliances, Iran was eligible for MAP[Page 5]
11. Because of Iran’s high rate of economic growth and sizable oil revenues, the US economic aid program was terminated in November 1967, and the MAP program began phasing out. Virtually all military hardware programmed under MAP had been delivered by the end of 1969. The only MAP assistance authorized thereafter was to support the US Military Assistance Advisory Group stationed in Iran and to train Iranian military personnel.
12. Iran began to purchase US arms with Foreign Military Sales (FMS) credits on a regular basis in 1964, when a Memorandum of Understanding was signed with the United States allowing the procurement of $200 million of equipment. The Memorandum was amended in 1966 to permit purchases of as much as $470 million ($400 million on credit and $70 million for cash) through 1970. In 1971 the Export-Import Bank extended an additional $420 million in credits for arms purchases.(3) Repayment is being made over seven years at 7.25% interest. In addition, Iran purchased $27 million of equipment directly from US manufacturers for cash.
13. Iran has received a wide range of US military equipment, but recent contracts have consisted largely of sophisticated military hardware, including 73 F–4 supersonic jet fighters and 30 C–130 transports (see Table 3). Most equipment purchased in 1971 is scheduled to arrive in Iran during 1972–74. Iranian purchases in 1972 are expected to exceed $200 million and may include more than 140 F–5 jet fighters, self-propelled howitzers, and the TOW anti-tank missile system. Thus, despite the decline in the US share of the Iranian arms market from nearly 100% prior to 1966 to 56% of total deliveries in 1971, Tehran continues to increase its purchases from the United States and to depend on them for most of its sophisticated weapons systems.
British Arms Sales
14. Iran’s arms purchases from the United Kingdom, which began early in 1966, have totaled $570 million (see Table 4). Deliveries have been small thus far—about $70 million by the end of 1971—but Iran will begin receiving deliveries of sizable quantities of equipment in 1972. These purchases were facilitated by London’s willingness to sell sophisticated weaponry and to provide favorable financing—credits averaging about seven years with interest rates ranging between 5% and 6.5%.[Page 6]
Major Items of US Military Equipment Procured by Iran
|Military Assistance Programs||Foreign Military Sales Programs||Orders by Fiscal Year|
|Type of Equipment||Deliveries||Deliveries||Orders||1965||1966||1967||1968||1969||1970||1971 b/|
|F–86 jet fighters||121||—||—||—||—||—||—||—||—||—|
|F–5 jet fighters||92||48||48||—||—||4||25||4||15||—|
|F–4 jet fighters||—||64||137||—||—||32||—||32||—||73|
|Armored personnel carriers||112||N.A.||231||—||181||50||—||—||—||—|
(a) All items ordered under MAP have been delivered.
(b) Some of this procurement occurred early in FY 1972.
(c) Including recoilless rifles and mortars of more than 100 mm.[Page 7]
Estimated British Arms Sales to Iran
|Year of Agreement||Mission US $||Equipment Covered|
|1966||12.5||Seacat/Tigercat missile system|
|62.8||4 Mark V destroyer escorts and 12 hovercraft|
|94.0||Rapier missile system|
|1971||126.8||300 Chieftain tanks and support equipment|
|240.0||470 Chieftain tanks and support equipment|
15. Tehran’s first purchase of sophisticated weapons from the United Kingdom was of the Seacat/Tigercat surface-to-air missile (SAM) system in July 1966. Iran subsequently purchased the Rapier low-level SAM system and a radar net to cover southern Iran.
16. The British also have become a major source of naval and ground forces equipment. In 1966, Tehran purchased four Mark V destroyer escorts, with delivery scheduled to begin in mid-1972. Iran also has bought 16 hovercraft from the United Kingdom, some of which may be armed with missiles, thereby becoming the first country in the world to establish a military hovercraft fleet. During 1971 the Shah, concerned with Iraq’s possession of Soviet T–55 tanks, purchased 770 Chieftain tanks. Iran is the first less developed country to receive this sophisticated main battle tank.
Other Western Sources of Arms
17. Iran has purchased almost $160 million of arms in recent years from other Western suppliers (see Table 5), and some $70 million of this has been received. Purchases from Italian arms dealers have reached almost $60 million. The acquisitions from Italy initially were limited to ammunition and support equipment, but in 1968–69 the Augusta Bell Company sold Iran 100 AB–206 and 44 AB–205 helicopters with deliveries scheduled through 1972. The helicopters are being assigned to the Gendarmerie’s aviation battalion, the Air Force, and the Navy’s air arm. The AB–206s ordered for the Navy are to be armed with wire-guided air-to-surface missiles and are used to support the coastal patrol activities of the hovercraft fleet. In 1970, six SH–3D helicopters were purchased for the Navy and 16 CH–47C helicopters as troop transporters for the Army.[Page 8]
Iranian Arms Purchases from Other Western Countries
|Source and year||Million US $||Equipment Covered|
|1968||28.0||40 AB–205 helicopters|
|1969||11.8||100 AB–206 and four AB–205 helicopters|
|1970||10.8||Six SH–3D and 16 CH–47C helicopters|
|1969||45.0||150 antiaircraft guns, fire control radars, and ammunition|
|1971||3.1||Support equipment and ammunition|
|1971||28.0||14 F–27 transport aircraft|
|1967||12.0||Artillery, small arms, and ammunition|
|1968||3.2||Communications equipment, mortars, recoilless rifles, and ammunition|
|1971||0.6||Communications and support equipment|
18. Iran has purchased nearly $50 million of arms from Switzerland, including 150 radar-controlled, twin-barrel 35-mm Oerlikon antiaircraft guns. Small quantities of military equipment, largely support equipment and ammunition, have also been obtained from Israel, Belgium, Canada, the Netherlands, Norway, and West Germany. In one agreement, Israel sold Iran Soviet artillery, small arms, ammunition, and related spare parts captured during the June 1967 War. The Dutch have provided 14 F–27 transport aircraft to be delivered in 1972. The only equipment purchased from France was some $2 million worth of anti-tank missiles and communications equipment. Paris, however, continues to pressure Iran to purchase Mirage III aircraft, reportedly offering as an inducement to construct a Mirage spare parts plant in Iran that would be licensed to sell throughout the Middle East.
The Soviet Aid Program
19. The USSR, Iran’s third largest arms supplier, has extended at least $370 million in military aid since January 1967 under seven separate agreements (see Table 6). Some $235 million had been delivered by the end of 1971 on credits that will be repaid largely in natural gas over eight years, probably at 2.5% interest.
20. The Shah’s acceptance of Soviet arms reflected his declining fear of Soviet intentions toward Iran and the general rapproachement between the two countries that began early in the 1960s. Iran had accepted some Soviet economic aid in 1963, and by 1966 agreed to a major Soviet program that included the construction of a steel mill and a natural gas pipeline to the USSR. This arrangement was followed in January 1967 by Tehran’s first arms agreement with Moscow. The accord totaled $110 million and marked the first acquisition of Soviet arms by a country in a Western military alliance. A second arms accord signed later that year totaled some $40 million. Both agreements covered only ground forces equipment, including some 700 armored personnel carriers, 8,500 other vehicles, 600 23-mm and 80 57-mm antiaircraft guns, and spare parts and ammunition.(4)[Page 10]
Soviet Military Aid Agreements with Iran
|Date of Agreement||Million US $|
21. About half the equipment ordered had been delivered by the beginning of 1969. A third accord—also for $40 million—was signed early in 1969 and contained about the same types of equipment as the earlier agreements. Tehran was interested in obtaining the Soviet 23-mm self-propelled, radar-controlled antiaircraft gun (ZSU–23–4), but Moscow claimed that it was not available at that time, because the entire production of the weapon was being used to meet higher priority needs. Iran declined a Soviet offer of MIG–21 jet fighters, Komar-class guided missile patrol boats, and 1–55 medium tanks.
22. Two arms accords were signed in 1970 totaling some $135 million. Among the new types of equipment ordered were 136 130-mm (M–46) field guns and 1,500 RPG–7 recoilless anti-tank rocket launchers. The decision to purchase the field gun reportedly was prompted by Iraq’s possession of the same weapon. The RPG–7 was acquired to provide troops with an anti-tank defense and was chosen in place of the more costly and sophisticated Sagger anti-tank missile system. Iran also obtained a license to produce 23-mm ammunition. The Shah finally obtained 30 ZSU–23–4 antiaircraft guns under a $25 million agreement concluded in August 1971.
23. Iran depends mostly on Western countries for technical assistance. The overwhelming share of military technicians in Iran are US personnel, while training of Iranians abroad is done principally in the United Kingdom (see Table 7). Training at military schools in other countries ranges from equipment maintenance and flight training to staff planning. The numberof Iranians attending courses in non-US facilities has increased greatly since the mid-1960s, as Iran has diversified its arms procurement. The training provided by Pakistan and Turkey generally is US-sponsored programs under CENTO.[Page 11]
Involved in Technical Assistance Programs
|Trainees in Donor Country||Technicians in Iran|
(a) US-sponsored CENTO training.
24. Iran has made little use of Soviet technical assistance, preferring to limit Moscow’s contacts with Iranian military personnel. Only a small number of Soviet technicians are in Iran, largely assembling and testing newly delivered Soviet equipment. Tehran has sent only about 135 Iranians to the USSR, mainly to learn equipment operation and maintenance.
Domestic Defense Production
25. Indigenous production represents only a small share of Iran’s total defense procurement. Two facilities in the Tehran area supply most of the domestically produced military hardware. The Mosalsalsazi plant has an annual capacity of 30,000 G–3 rifles and 5,000 MG–1 machineguns of West German design. The Saltanatabad facility produces small arms ammunition, 81-mm and 120-mm mortar shells, 105-mm artillery shells, 20-mm cannon ammunition, grenades, signal flares, and anti-tank and anti-personnel mines.[Page 12]
26. Iran has been anxious to expand domestic arms production as part of its diversification efforts. The West German firms Fritz Werner AG and Rhein Stahl AG have been assisting in a modernization program, and much of the pre-World War II machinery in the two Iranian munitions plants has been replaced. In addition, the USSR agreed in 1970 to permit Iran to manufacture 23-mm antiaircraft ammunition under license. The USSR suggested, however, that the necessary production machinery be obtained from Czechoslovakia. The planned facility will produce half a million rounds per year and would be in operation within two years after delivery of equipment. A tank retrofit plant that would modernize the more than 400 M–47 tanks in Iran’s inventory was scheduled to be completed in March 1972. The facility eventually will be able to assemble tanks from US and UK components.
Impact of Iran’s Defense Spending on the Budget
27. The expansion of Iran’s military purchases, combined with cutbacks in US military grant aid, caused Iran’s defense expenditures to jump from an average of about $255 million annually during 1963-65 to almost $1.2 billion in 1971 (see Table 8). Defense outlays now account for about 10% of Iran’s gross national product (GNP) and about 30% of the total central government budget. If defense spending continues to grow at its present rate—an average of 30% annually since 1966—it could absorb some 25% of Iran’s GNP by 1975. It is more likely, however, that such outlays, while remaining high, will level off before then.(5)
28. Estimated payments for foreign military hardware rose from an average of $5 million annually during 1963–65 to $18 million in 1966 and rocketed to $191 million in 1971. These expenditures accounted for 16% of defense spending in 1971. Other defense and defense-related imports—such as construction materials and equipment supplies for military installations—could represent another 20%.
The Iran-Iraq Arms Balance
29. Iran’s arms requirements are, to a large extent, based on what Tehran considers necessary to counter Iraq’s activities in the area. Since Iraq’s monarchy was overthrown in 1958, relations between the two countries have ranged from cool to openly hostile. During periods of poor relations, Iran has supplied arms, money, and transit rights to dissident Iraqi Kurds and has looked for other ways to shake the Baghdad government. In turn, Iraq has permitted raids into Iran by dissident Iranian Kurds resident in Iraq and has provided assistance to the Khuzestan Liberation Front and other subversive groups. The diversion of the waters of the Shatt al Arab, the river which separates the two countries in the south, has again become a source of irritation and even armed skirmishes along the border. Although both countries have reinforced their border outposts, they are reluctant to escalate such incidents.[Page 13]
Iranian Defense Spending a/ [Million US$]
|Annual Average 1963–65||1966||1967||1968||1969||1970||1971|
|Million US $|
|Total central government budget||980||1,410||1,740||2,200||2,555||2,960||4,025|
|Estimated payments for military hardware imports||5||18||32||57||83||147||191|
|Defense expenditures as a percent of central government budget||26||22||29||28||30||31||29|
(a) Data are for Iranian fiscal year beginning 21 March of the year stated.
(b) Including internal security.[Page 14]
30. The Shah is concerned about the $1.1 billion of aggregate Communist military aid commitments to Baghdad and the $250 million modernization program Moscow currently is implementing. Iraq has received more than 90 MIG–21 supersonic jet fighters, more than 60 SU–7 jet fighter-bombers, some 800 T54/55 medium tanks, about 1,350 armored personnel carriers, various naval craft, and substantial quantities of artillery. (For the major military inventories of Iran and Iraq, see Table 9). However, the Iranian armed forces are believed to be superior to Iraq’s, both in the quantity of arms and the quality of its personnel.
Support for Pakistan
31. After the 1965 Indo-Pakistani War, Iran acted as an arms purchasing agent for Pakistan, which was having difficulty obtaining military equipment in the West. Iran purchased some 90 F–86 jet fighters, air-to-air missiles, artillery, ammunition, and spare parts from a West German arms dealer. The aircraft were delivered to Iran and then flown into Pakistan. Most of the other equipment was delivered directly to Karachi.
32. In the spring of 1971, Iran loaned Pakistan about a dozen helicopters and other military equipment for use in West Pakistan to replace similar equipment transferred to East Pakistan. Additional supplies, including artillery, ammunition, and spare parts, were sent to Pakistan when Indian troops entered the East Pakistan civil war. Since the 1971 Indo-Pakistani War, there have been reports that Iran may again act as an arms purchasing agent for Islamabad if Pakistan cannot obtain Western military equipment and spare parts.[Page 15]
Weapons Inventories of Iran and Iraq as of April 1972
|Personnel carriers, armored and amphibious||1,200||1,350|
|Artillery, including selfpropelled guns||1,430||1,120|
Recent Iranian Arms Acquisitions[Page 16]
Hovercraft, BH7 Wellington Class[Page 17]
F–4 Jet Fighter
Rapier Surface-to-Air Missile
MK–5 Frigate[Page 18]
F–5 Jet Fighter[Page 19]
Soviet Military Equipment Purchased by Iran
|Date of Agreement|
|Equipment||Total||January 1967||September 1967||February 1969||February 1970||October 1970||August 1971||October 1971|
|Armored personnel carriers|
|Trucks and trailers|
|MMZ–555 (dump truck)||610||—||—||—||10||—||—||610|
|BELAZ–540 (dump truck)||24||—||—||—||—||—||—||24|
|ATZ–3 (gasoline truck)||390||—||—||—||200||190||—||—|
|TZ–22 (gasoline truck)||113||—||—||—||40||25||—||48|
|TZ–500 (gasoline truck)||160||—||—||—||—||160||—||—|
|ATZ–4–121 (gasoline truck)||40||—||—||—||—||—||—||40|
|ATZ–8 (gasoline truck)||45||—||—||—||—||—||—||45|
|TSV–50 (water tank truck)||400||—||—||400||—||—||—||—|
|ATZ–PT–3 (water truck)||50||—||—||—||—||—||—||50|
|TZB–50 (water truck)||10||—||—||—||—||—||—||10|
|PMZ–27 (fire truck)||42||—||—||—||37||5||—||—|
|ATZ–B–1–40 (fire truck)||80||—||—||—||—||—||—||80|
|ALGK–30 (ladder truck)||26||—||—||—||10||—||—||16|
|[Page 20]Construction and engineering equipment|
|A–354 ditching maschine||17||—||—||—||—||—||—||17|
|D–150B asphalt finisher||2||—||—||—||—||—||—||2|
|D–641 asphalt distributor||20||—||—||—||—||—||—||20|
|SB–92 concrete mixer||5||—||—||—||—||—||—||5|
|BBPS 20/11 piledriver||1||—||—||—||—||—||—||1|
|Cranes and forklifts|
|2558 bridge on KRAZ–214||2||—||—||—||2||—||—||—|
|Folding pontoon bridge PMP||7||—||—||—||—||—||—||7|
|Assault boat NDL–20||36||—||—||—||36||—||—||—|
|Mine detector on GAZ–69||63||—||—||—||—||—||63||—|
|Electro car (EK–3)||40||—||—||—||—||—||—||40|
|26-mm signal gun||730||—||—||400||—||330||—||—|
- Source: Central Intelligence Agency, ORR Files (OTI), Job 79T00935A, Box 70, Project 35.6402, CIA/ER IM 72–79. Secret; No Foreign Dissem. The memorandum was prepared by the Office of Economic Research and coordinated within the Directorate of Intelligence.↩
- The CIA’s Directorate of Intelligence examined the recent trends in Iranian arms procurement, particularly Tehran’s sources of supply.↩
- South Vietnam, South Korea, the Republic of China, and Turkey are the only less developed countries that have received more US military aid.↩
- The Baghdad Pact, a defense system along the southern border of the USSR, consisted of Iran, Iraq, Pakistan, Turkey, and the United Kingdom. grant aid. MAP imports increased from $15 million in 1955 to a peak of about $90 million a year during 1959–60, and averaged some $50 million annually during the 1960s.↩
- Previously, the Department of Defense arranged the financing with the Export-Import Bank and commercial banks. The Export-Import Bank now handles all such financing directly.↩
- For a complete listing of equipment ordered under Soviet arms accords, see the Appendix.↩
- For additional information, see ER IM 72-23, Iran’s Balance-of-Payments Prospects Look Up, February 1972.↩