Foreign Relations of the United States, 1969–1976, Volume E–4, Documents on Iran and Iraq, 1969–1972

92. Telegram 174651 From the Department of State to the Embassy in Iran¹ ²

Washington, October 23, 1970, 0047Z

SUBJECT:

• Iranian Military Credit Purchases

1. You may inform GOI that USG has approved in principle the following items for possible inclusion in the FY 71 military credit for Iran: 32 RPT 32 F–4Es, 4 RF–Es, and 30 C–130s as well as payments on 32 F–4Es ordered in FY 69, the M–47 retrofit program and 4 AN/TPS–43 radars. Up to 7 additional F–4Es have also been approved in principle for sale as attrition aircraft. FYI. You will note that foregoing does not RPT not include 7th and 8th squadrons of F–4s which Shah has indicated he would like to acquire and for which GOI has signed a letter of intent. A separate message dealing with this subject will be forthcoming shortly. END FYI.

2. In conveying foregoing to GOI it is requested that you impress upon it fact that USG has made every effort to be as helpful as possible under the circumstances to assist in financing GOI military purchases. As in past, future requests for credit for military purchases and discussion of items to be acquired should be conducted through Embassy/MAAG channels for onward reference for USG consideration. Once agreement reached on items and on level of annual credit considered appropriate by State/Defense/ExIm Bank, Exim Bank will be prepared to discuss with GOI. By insisting GOI adhere to foregoing sequence, we desire to avoid repetition of recent F–4 and C–130 cases in which letters of intent were signed before USG had agreed to including these items in FY 71 credit program.

3. Estimate disbursement requirements in FY 71 for above items, not RPT not including any attrition F–4s, amount to $131,913,000 RPT $131,913,000. USG is not prepared to provide financing assistance for this entire amount. However, since above items involve FY 71 disbursements substantially exceeding previous FMS credits of $100 million, Exim Bank, desiring to be as forthcoming as possible, will extend, with State-Defense approval, up to $120 million RPT $120 million of direct loan and guarantee assistance to Iran to finance its FY 71 payments for agreed upon military items. It suggested that GOI fund $13.1 million required for TPS–43 radars from its own resources and utilize Exim assistance for other approved purchases (F–4, RF–4, C–130 and M–47 programs require $118,813,000 RPT $118,813,000 in FY 71).

END

Irwin

1. Source: National Archives, RG 59, Central Files 1970–73, DEF 12–5 IRAN. Secret. Joint State/Defense Message. Repeated to CINCSTRIKE. Drafted by Robert L. Dowell, Jr.(NEA/IRN); cleared by Chapman, John M. Bowie (PM/MC), Johnson, Eliot, Philip J. Farley, and in Ex-Im Bank, DOD/ISA, and ACDA for information; approved by Davies. In telegram 4665 from Tehran, October 24, the Embassy responded that the status of the seventh and eighth squadrons had to be clarified, since the Shah had assumed from his October 1969 talks with the President that Iran already had U.S. approval. A U.S. Government refusal to endorse the sale at this stage, the Embassy observed, would run the “serious risk of being interpreted by Shah as unilateral modification of high-level policy decision” with serious consequences. (Ibid.)
2. The Department sent the Embassy a list of items approved in principle under the FY 71 military credit for Iran, which excluded the seventh and eighth squadrons of F–4s the Shah had requested.