27. Memorandum From Robert B. Oakley and Robert Plowden of the National Security Council Staff to the President’s Assistant for National Security Affairs (Scowcroft)1

SUBJECT

  • SRG Meeting on the Persian Gulf: January 5 at 3 p.m.

PURPOSE

—To review the study response to NSSM 238 and to approve the revised Executive Summary as a framework for consideration of political and security issues in the Persian Gulf which will require high-level policy consideration in 1977 (Tab A).

—To approve a set of specific procedures for the management of US Security Assistance programs in the Persian Gulf (Tab B).

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—To consider the implications for US economic and energy policy of our political and security policy in the Persian Gulf.

BACKGROUND

More than a year ago, the Department of Defense recommended a review of our arms sales policy toward Iran. Further discussions with State and Defense pointed up the need for our Iranian security assistance policy to be considered in the broader context of US security interests and policy in the Persian Gulf as a whole. A broad study of US Persian Gulf policy had been conducted in 1970–72, resulting in NSDMs 92 and 186 (Tab C), which have formed the basis of our policy ever since. However, a number of subsequent developments have made a new policy review essential:

—The effect of the Arab-Israel war of 1973;

—The oil embargo, increased oil prices, and greater importance of oil production by the Gulf states;

—The increased political and economic influence of the Gulf states on the regional and international scene;

—The rapid economic expansion and modernization of the Gulf states;

—The acquisition of large quantities of modern military equipment by Iran and Saudi Arabia and the extensive involvement of the United States with their military programs;

—The increasing pressures of the smaller Gulf states on the US for military purchases; and

—Congressional and public concern over US actions in the security field involving Gulf states.

With your approval, NSSM 238 was issued in February 1976, calling for an examination of US political and strategic goals in the Persian Gulf, with policy alternatives for the near and medium term. Economic issues were to be considered but primarily as background, since NSSM 237 on energy was to deal with this element of our relations with the Gulf states. The Interdepartmental Political-Military Group chaired by the Department of State prepared a study response which was submitted to the NSC Staff in May 1976. The spread sheet summarizing Conclusions and Policy Options is at Tab D. The study response was long on identifying and discussing issues (it is a veritable encyclopedia of recent Persian Gulf political and economic history and problems) but short on succinct presentation and useful recommendations. The all-inclusive approach of the study response identified more than 100 possible options and sub-options, but there were no agreed recommendations, nor was there an Executive Summary.

In order to obtain a policy document suitable for top-level review, the NSC Staff worked with the most knowledgeable officials in State, DOD and the CIA to develop a draft Executive Summary (updated to include major developments since completion of the original study [Page 133]response) and several broad policy options. In addition, a set of procedures was proposed for improving interagency consideration of requests for military equipment and for improving the management of ongoing security assistance programs. These proposed procedures were derived from a careful case-by-case study of the management of our security assistance programs and the handling of arms requests for the Gulf states over the past several years, and from criticisms and suggested improvements made by knowledgeable officials within the Executive Branch and in Congress.

After receiving official Agency comments, we have now revised the Executive Summary to incorporate these comments and to drop all policy options or recommendations (the State preference). We have separated the proposed arms transfer procedures for consideration as a separate issue by the SRG.

AGENCY VIEWS

All of the Agencies (State, Treasury, DOD/JCS, CIA, ACDA) are expected to accept the revised Executive Summary substantially unchanged, since it now includes no specific recommendations and is intended primarily as a high-level interagency issues paper for the next Administration. (Treasury believes that any policy decisions must be preceded by a parallel review of both NSSM 237 and NSSM 238, a position which is fully consonant with the Executive Summary in its present form.)

The proposed procedures for management of Security Assistance programs will be more controversial. Defense, ACDA and other Agencies have indicated approval of the proposed procedures without substantial change and favor their adoption right away—particularly in view of the threatened moratorium by Congress on FMS cases for the Gulf until the policy review has been completed. State may argue that the adoption of even technical procedures should be deferred until the next Administration. [State’s position is derived from its proposal for the establishment of an Arms Export Control Board at the Undersecretary level to monitor global arms transfer policy, leading State to object to the adoption of procedures before a State-chaired AECB is available to establish policy and administer procedures. As you know, other interested Agencies favor establishment right away of a senior arms transfer board chaired by State, but believe that it should be established at the Assistant Secretary level rather than the Undersecretary level.]

YOUR APPROACH AT THE MEETING

We suggest that you open the meeting by reviewing briefly some of the major issues which gave rise to NSSM 238, noting that these issues will remain and will probably need to be addressed by the new Administration during its first few months in office. In introducing the three principal items on the agenda, you should note that the objective [Page 134]of the meeting is to provide a basic framework for policy decisions which will probably have to be made sometime in 1977 and to ensure that the new Administration inherits an effective system for the orderly review of security assistance issues which are likely to arise during the early months of 1977.

Executive Summary and Study Response

For the reasons listed above in the background section, a full-scale review of United States security assistance (including military supply) policy and programs has become essential. The results of this review will certainly be of special interest to the new Administration and to Congress, which is aware that a NSSM has been underway for some time. Congress has adopted a resolution (and key individual Members have indicated they intend to adhere to it) opposing consideration of any new FMS cases for Persian Gulf states until the policy review has been completed.

With respect to the NSSM 238 study response and Executive Summary, you should point out the complementary nature of the two papers. You may wish to add that, in view of the extensive prior consideration of these two documents, the meeting should try to avoid getting bogged down in minor and editorial issues.

While it might be unwise for this Administration to adopt formally a comprehensive policy for the Persian Gulf less than a month before the Inauguration, it would be very useful to provide the next Administration with an agreed top-level, interagency summary of the historical and strategic framework of US policy toward the Persian Gulf plus an indication of the key issues which are expected to require high-level policy consideration at an early date. The study response to NSSM 238 and the revised Executive Summary prepared by the NSC Staff can serve that purpose and should formally be transmitted to Mr. Brzezinski after approval by the SRG. It might also be useful to inform key Members of Congress before January 20 that this has been done, and possibly provide them with a brief summary of the review.

Security Assistance Procedures

As pointed out in our memo of December 16, there are a number of reasons why a decision on these procedures should be taken now and not be postponed:

—It is important to have established procedures in operation to deal with important FMS cases which are anticipated during the early days of the next Administration.

—The proposed guidelines are the result of several years’ experience and incorporate suggestions from our Embassies and MAAGs, as well as State, DOD and ACDA. They also take into account Congressional and other criticisms and recommendations. They are neutral [Page 135]from a policy point of view and will facilitate rather than interfere with any future policy review.

—Establishment of these procedures will also provide a tangible and useful outcome of the NSSM process which should help reassure the Hill that major arms transfer cases will receive careful study and appropriate high-level policy consideration.

—If a decision on the procedure is not taken now, it is difficult to predict when an orderly interagency system might be adopted to replace the present approach which has on past occasions failed to provide adequate interagency review and coordination, particularly vis-à-vis Congress.

If State should recommend postponing action on these procedures until the next Administration, you should note that these guidelines are technical rather than political. They are merely designed to improve management of on-going security assistance programs. As such, their adoption is particularly appropriate now in order to provide effective machinery for use by the new Administration during the period when new individuals are assuming unfamiliar responsibilities and when fundamental policies are being reviewed—yet when they will be faced with the continuing need to review FMS requests and manage effectively existing programs (which will probably be the object of continuing criticism).

If State objects to the use of the Middle East Arms Transfer Panel, you can point out that it is the only existing body presently available within the NSC system to implement the procedures effectively. It does not limit in any way the establishment or the authority of a senior State-chaired group for global arms policy such as the Arms Export Control Board proposed by State. As indicated in the footnote on page 1 of the recommended procedures, it is understood by all Agencies that the MEAT Panel would be subordinate to such a State-chaired body when it is established.

Energy-Security Assistance Interrelationship

The need is evident for close coordination between our security assistance (including military supply) policies and our energy policies with respect to Persian Gulf countries, particularly Iran and Saudi Arabia. However, there is no agreement—although there are many different ideas—on how this can be done in a manner which would enhance overall United States interests. This is a useful opportunity to explore Agency views on the nature of the interrelationship (including the sharply debated question of US security assistance leverage over oil price and production decisions) and to get them on the record for the eventual consideration of the new Administration. It would probably be better to agree from the outset that the SRG will not seek to reach specific conclusions on this subject but rather confine itself to an examination of possible approaches.

  1. Summary: The NSC staff summarized for Scowcroft previous action on NSSM 238 and provided briefing materials prior to a January 5 SRG meeting on the study.

    Source: Ford Library, National Security Adviser, NSC Institutional Files, Box 49, Senior Review Group Meeting on the Persian Gulf (NSSM 238). Secret. Sent for action. Brackets are in the original. Tabs A, B, and C are attached but not published. At Tab A is the undated (presumably December 16) revised Executive Summary of the NSSM 238 study. At Tab B is a paper titled “Recommended Procedures for Management of Security Assistance Programs in the Persian Gulf Area.” At Tab C is NSDMs 92 and 186, which are in Foreign Relations, 1969–1976, vol. XXIV, Middle East Region and Arabian Peninsula, 1969–1972; Jordan, September 1970, Documents 91 and 120. Tab D was not found. NSSM 238 is Document 25. The study is not published. (Ford Library, NSC Institutional Files (H-Files), Box 42, NSSM 238–U.S. Policy Towards the Persian Gulf (1 of 3) (4)). According to a December 16, 1976, memorandum from Oakley and Plowden to Scowcroft, the Department of State recommended that in light of the 1976 Presidential election results, all policy recommendations be removed from the Executive Summary, transforming the NSSM into a background paper for the incoming Carter administration. (Ford Library, NSC Institutional Files (H-Files), Box 41, NSSM 238–U.S. Policy Towards the Persian Gulf (1 of 3) (1))