46. Telegram 602 From the Embassy in Iran to the Department of State1 2

For Acting Secretary and Sisco


  • Tehran 564
PriMin Hoveyda called me last night saying he must see me this morning about a most urgent matter. When I called on him he had telegram in his hand which he received last evening from Shah. He said telegram instructed him to remind me:
of great urgency and importance Shah attached to matters, particularly oil, which he had discussed with President last October;
of Shah’s expectation based on his talks with President that US would be forthcoming in responding to Iran’s request re oil and also military matters on which peace and very future of Persian Gulf depended;
that thus far there no rpt no favorable response to these requests; (he said Shah sent President personal message through Iranian channels to which only interim reply received).
telegram concluded by asking what then had been accomplished by Shah’s talks in Washington.
Hoveyda commented very privately to me that Shah is deeplay disturbed because this whole policy is based on close cooperation with US. Hoveyda has seen memcon of [Page 2] Shah’s talk with President from which it clear Shah expected US would help him on major problems on which Shah convinced Iran’s future stability, economic and social progress and security depended. Memcon mentioned that in Shah’s presence the President had instructed Peter Flanagan to tell US oil companies that it was in US national interest for them to take more Iranian oil. In light of gravity of Iran’s finanicial problems, solutions to which depend primarily on more oil revenue, Shah obviously feeling sense of deep frustration. Hoveyda believes this sense of frustration may have been increased by our insistence this year that MSC credit should be 50/50 MSC-private credit instead of 75 percent MSC and 25 percent private credit as last year; increases in interest rates; our inability to meet request re aerial tankers (Tehran 536); no specific reply from US re “blue suiters,” etc.
I said it was not rpt not surprising that President had been unable to reply re oil since he had only received Schultz Committee report few days ago and matter of our oil policy was one of tremendous complexity insofar as US domestic considerations are concerned. However, I knew that President and administration were very sympathetic to Iran’s oil problem and would have it very much in mind in reaching decision although at this juncture it just not possible to make any commitments. Re aerial tankers, they simply were not available as they were in short supply supporting combat operations in Vietnam where American soldiers are still dying. It is simply a question of non-availability and not question of our good will or desire to help.
Re oil Hoveyda said Shah still earnestly hoping we would be able to do something that would increase Iran’s access to American market through special arrangements or otherwise and that at same time he hopes White House will continue to urge American oil companies, with whom GOI will soon be meeting in annual reunion with consortium, to take more Iranian oil.
Speaking again “very privately,” Hoveyda said dangerous situation developing in Gulf which is “Iran’s [Page 3] jugular vein” has also added greatly to Shah’s concern since he believes Iran is only country in Gulf region that can make contribution to stability of that vital area which is so essential not only to Iran but also to Japan, Europe and US and he needs US cooperation to help assure stability and security there. This deep concern coupled with Shah’s high expectations after Washington visit may have led to his present feeling of “deception” that nothing seemed to be moving although four months had passed since his visit.
Comment: We heard very recently that Shah was getting restless but we did not know that his sense of frustration had reached such a pitch. while we of course realize that all his requests cannot be met, we do urge that we do all we can to respond as favorably as possible wherever we can, particularly since there seems to be general agreement that after 1971 the future stability and security of free world interests in Gulf (an area of vital importance to Japan and NATO from which US nets one and half billion dollars annually from US oil company sales) will almost inevitably depend to very considerable extent on Iran—the only plus in the area.
  1. Source: National Archives, RG 59, Central Files 1970–73, DEF 12–5 IRAN. Secret; Exdis. On February 19, in Telegram 25377, Sisco responded sympathetically to MacArthur’s plea for the government to be forthcoming towards the Shah’s requests, but added that the Shah’s appetite was difficult to satiate. (Ibid., POL IRAN-US)
  2. Ambassador MacArthur relayed the Shah’s urgent demand for a response to the matters he had raised with President Nixon in October, particularly oil.