149. Memorandum by the Executive Assistant to the Deputy Secretary of State (Oxman)1



1. Lloyd Cutler and I met today at the Metropolitan Club with Robert Armao, advisor to the former Shah of Iran, and William Jackson, the former Shah’s attorney. Armao and Jackson had requested the meeting for the purpose of discussing certain aspects of the Shah’s stay in Panama. The meeting lasted from 1:15 p.m. until 2:40 p.m.

2. Armao returned from Panama on Sunday, Jan 13, 1980. He had been there with the Shah continuously since the Shah’s arrival in Panama on December 15, 1979, except for an 8-day period over Christmas. Two of Armao’s assistants—Mr. Mark Morse and Mr. John McMurray—have also been in Panama for most or all of the period since December 15.

[Page 392]

3. Armao began by complaining that Ambler Moss’ cable reporting Armao’s recent meeting with Moss,2 had been leaked, and had led to unfortunate press stories about the Shah’s dissatisfaction with conditions in Panama. Armao claimed that an ABC representative, who was in Panama in connection with the David Frost interview of the Shah,3 told him that the cable had leaked to ABC’s bureau in Washington. Armao said the Shah was very upset by the news stories that resulted from this alleged leak. Armao requested that our meeting today be kept completely confidential.

4. Lloyd responded that he doubted very much that the cable had been leaked and that of course our meeting today would be kept confidential.

5. Armao asserted that the conditions under which the Shah and his party were living in are generally unsatisfactory. He said all of their phone calls are listened to by Panamanian security personnel. (The phone system the U.S. Government had helped install is still in place, Armao said, but it is a VHF radio phone and therefore is not secure). Further, Armao complained that the bills that have been presented to him by the Panamanian security personnel are excessively high and that when he complained about them, the security personnel have, in general, rudely rejected his questions and requests. He asserted the security personnel, from the lowest to the highest levels, have been “nasty” to him and the other Americans in the Shah’s party. He conceded that the Shah and his wife have been treated extremely cordially in all respects by all of the involved Panamanians.

6. Armao seemed particularly upset that the Panamanians had recently prevailed upon the Shah to travel to Panama City at 10:00 pm at night for the purpose of staying overnight at the Panama Hilton before looking at houses around Panama City the next day. Armao claimed he had insisted on accompanying the Shah but that his request had been rejected. He conceded that the Shah ultimately decided that he would go alone.

7. Armao claimed that Col. Noriega, the head of the Intelligence Service in Panama, had complained to the Shah about Armao and his two assistants. They were agents of the State Department, were disloyal, were security risks, and ought to be asked to leave. Armao asserted that Noriega has been trying to drive a wedge probably because he [Page 393] thinks that with Armao out of the way no one at the Shah’s party will complain about the bills and other financial issues. Armao said the Shah told Noriega that he could not do without Armao. Noriega then dropped the issue, according to Armao.

8. Armao’s other complaints included the following:

—the hotel bills for the security personnel are inflated and these personnel are charging various luxuries to the Shah’s account;

—a large number of expensive items (such as silver flatware) have been ordered for the house, without consultation with Armao or the Shah, and the bills have been presented to Armao;

—the hotel bill has included a charge of $10,000 for two small “shacks” on the property where the Shah is staying (Gabriel Lewis property), even though these structures have no apparent connection with the hotel;

Armao’s access to the Shah has been impeded.

9. Bill Jackson said that in addition to these annoying “local problems” on Contadora, there was the more troubling issue of whether Torrijos intended to extradite the Shah.

10. Lloyd said that as to the “local problems” it would make sense for the Shah to raise them with Torrijos or President Royo, since his relations with them, according to Armao, are excellent.

11. Armao interjected that the local problems seem to have gotten very much better in recent days after he had brought some of his complaints to the attention of General Torrijos’ doctor (whom Torrijos had made available to the Shah for medical consultation). Moreover, Armao went on, now that he has left Panama and intends to stay in New York for some weeks, he thinks the friction with Noriega and his personnel will diminish considerably.

12. On the issue of extradition, Lloyd stated that we do not see any risk of Torrijos allowing extradition to occur. Not only is it not legally possible, in view of the absence of an Extradition Treaty between Panama and Iran, but it would be contrary to the assurances we received before the Shah left for Panama. Lloyd noted that President Carter had recently said publicly that he would not permit the extradition of the Shah. Armao conceded that Royo had told the Shah that Panama would deal with the Iranian extradition request in accordance with Panamanian legal procedures, and would then deny the request.

13. The larger problem, Armao said, is that “we simply cannot trust Torrijos”. Jackson said he agreed, that the situation was “insecure” and that “somehow there has got to be another place” Armao complained that of the 80 security personnel assigned to the Shah, the overwhelming majority are blacks who are not literate. Lloyd noted that our original understanding was that the Panamanians would pro [Page 394] vide all three rings of security at the outset, but that the Shah was free to bring in his own private security personnel as the inner ring whenever he wished. Armao said Col. Giambini (the Iranian Colonel who is the Shah’s principal security advisor) has advised against doing this, since the private personnel would be Americans and there would be friction between them and the Panamanians.

14. I said that the problems troubling Armao seemed to arise for the most part from an excess of security caution by the Panamanian security personnel. I said it is understandable that they do not want to run any risks with respect to the Shah’s safety. Armao conceded that “the security is excellent”.

15. Armao said there is another major problem on the horizon. He explained that in three weeks the Shah must go into a hospital for tests. General Torrijos’ doctor had said it would not be politically acceptable in Panama if the Shah were to go to the American Military Hospital (Gorgas) rather than the leading Panamanian hospital in Panama City (Piatilla). Armao said Gorgas is clearly preferable, with superior facilities and staff. I asked whether there are objective reasons why the Shah’s doctors from New York would be able to function more efficiently and effectively at Gorgas. Armao said there were such reasons, and I urged that these reasons be used in discussion with the Panamanians so as not to injure their pride. Lloyd suggested the possibility of dividing the tests between the two hospitals or some similar approach.

16. With respect to the Shah’s medical condition, Armao says the size of the Shah’s spleen has diminished somewhat and that his “blood count” is holding reasonably stable. He said that the prognosis for the Shah is that his cancer could at anytime metastasize and lead quickly to death. The doctors’ best guess, Armao said, is that the Shah has perhaps another two to three years, but they readily concede that the period could be much less.

17. Armao said that the Shah’s wife is extremely unhappy in Panama. He noted that the visit of the Shah’s children over the Christmas vacation went extremely well and thanked us for assisting on the travel arrangements.

18. Armao asked whether the Afghanistan crisis may have led to a change in Chancellor Kreisky’s unwillingness to accept the Shah. Lloyd said he would guess not. Jackson asked whether there is another country to which the Shah could go. Lloyd said we knew of none and that we had certainly checked throughout the world. Jackson said, “we want to get the Shah out of Panama as soon as possible”, but acknowledged that no other possibilities appear ripe at this time.

19. Armao reiterated that he did not trust Torrijos. He said that deep down, he worries that “they’re trying to get their hands on the [Page 395] Shah’s ‘billions’”. He said that while no one has specially asked the Shah to invest in Panama, Gabriel Lewis has offered the Shah financial advice, and he suspects that the Panamanians will become more specific over time.

20. Lloyd said he would review the points that had been made with Hamilton Jordan.4 He reiterated that his instinct was that the Shah should raise the “local” problems with Torrijos and/or Royo, or even Lewis.

21. Jackson asked what the USG’s position is on the “Waldheim proposal” concerning a tribunal to hear charges against the Shah and the United States. Lloyd said we are prepared to go along with some such formula provided the hostages are released before any tribunal begins its proceedings. Jackson inquired as to the legal foundation for any such tribunal. Lloyd responded that the Secretary General has authority to appoint committees or commissions to look into various matters or interests, and that the only nation in a position to object to any inquiry into its internal affairs (Iran) was unlikely to do so.

22. Armao raised two housekeeping problems. He said the private security personnel protecting the Shah’s children in the U.S. need a special radio frequency. Lloyd asked that Armao put this request in a letter and said we would pass it along to Henry Geller at Commerce. Second, Armao asked for the status of the visa applications by family members or individuals in the Shah’s entourage. Jackson cut in to say that Rocky Suddarth on David Newsom’s staff and John Dean in Jackson’s office were handling these matters and that everything seemed to be in order.

23. Lloyd concluded by saying that we would stand by the commitments we had made in Texas5 and that Armao and Jackson should let us know what they would like us to do. Armao responded that the Shah does not want us to raise any of the foregoing problems with the Panamanians. Armao said he wanted to emphasize this point to us. Lloyd said we would not do so unless Armao requested it. Armao said that it might be helpful if Hamilton Jordan could ask General Torrijos on the phone “how things are going” with the Shah. Armao said there was nothing else that he or the Shah want us to do at this time. Jackson also said that “we” (i.e. the Shah’s representatives) are going to look quietly into alternative countries, but did not ask our help.

24. Armao and Jackson said they were very grateful for the opportunity to meet with us and would be back in touch as the situation develops.

  1. Source: Department of State, Records of David D. Newsom, Under Secretary of State for Political Affairs, Subject Files, 1978–1981, Lot 81D154, Briefing Book: Vol. 5, the Shah, Panama Jan–March 1980. Secret; Sensitive. In the upper right margin, an unknown hand wrote: “DDN—FYI.”
  2. See footnote 7, Document 139.
  3. Portions of Frost’s interview with the Shah in Panama aired January 17. The Shah attributed his ouster from power to two U.S. oil companies, to an international conspiracy to increase oil prices, and to personal betrayal and intrigue by close friends and Huyser. He also rejected allegations his regime engaged in torture. (Dusko Doder, “Shah Calls Ouster Part of a Scheme To Lift Oil Prices,”Washington Post, January 18, 1980, p. A1)
  4. See Document 144.
  5. See Document 98.