229. Telegram From the Embassy in Iran to the Department of State0
931. CENTO. Following are highlights of two-hour conversation which Secretary had with Shah evening April 28. Foreign Minister and Holmes present.
Reform Program
The Shah reviewed reform program and plans for modernization of Iran and expressed confidence and determination to carry them out. He laid special emphasis on land reform and pointed out heavy financial requirements to compensate landholders for property taken over. He said that he now understood that U.S. lending criteria would not permit loans for this purpose but hoped that we could make development loans on good terms in order that Iran could devote its own resources to finance land reform. He spoke particularly of two areas in which he thought U.S. assistance would be especially useful: (1) in the fields of irrigation particularly in a program of sinking deep wells, and (2) for the establishment of a national grid to supply electric power.
On the first point Shah said that he had instructed the Plan Organization to complete projects which would constitute loan applications to finance purchase in the U.S. of drilling rigs, pumps, casing, etc. He said that there would be three such projects, one for the Qazvin Plain which would be completed soon, to be followed by projects for Azerbaijan and Fars. With regard to an electrical grid, the Shah pointed out that three major dams for hydroelectric power would soon be completed and pointed out the abundance of oil and gas for thermal plants. Here again the Shah said that he would like to have loans for the purchase of equipment in U.S. Holmes reminded him and Secretary that we had already agreed to a loan for an electrical survey which was shortly to begin.
Development Loans
In connection with development loans, the Shah recalled that during his visit to Washington a year ago, this matter had been discussed. He had long ago accepted our position and he thoroughly understood we could not give further budgetary support to Iran but hoped that his land reform program, to which we had given approval and praise, could be assisted by development loans on easy terms.
[Page 501]The Secretary replied that when projects for irrigation and electrification were completed, we should be very glad to consider loan applications sympathetically.
Afghanistan/Pakistan Border Dispute
The Secretary complimented Shah and Foreign Minister for their initiative and good work in furthering a settlement. All agreed that the prospects for getting Afghans and Paks together were better now than they had been at any other time and efforts to further a settlement should be continued. The Secretary assured Aram that we stood ready to be of any possible assistance to him, especially while they would be together in Karachi. The Secretary pointed out that there were other advantages in Iran’s continuing efforts to improve relations with Afghanistan and sketched prospect of closer relations between the three kindred countries of Iran, Afghanistan and Pakistan.
The Shah agreed with this concept and said that it was his purpose to do everything possible to bring it about. He felt that if close relations could be developed among the three countries that Pakistan and Iran could do much to save the Afghans from themselves in counteracting Soviet influence.
Kashmir Dispute
The Secretary explained our attitude toward this matter and expressed our great concern about the defense of the subcontinent. The Shah expressed complete agreement with this assessment in which Iran had a very definite security interest and indicated willingness to help in any way he could. He said that the President of India would pay a visit to Iran next month and asked the Secretary’s opinion as to whether it would be useful to discuss this matter with the Indian President. The Secretary explained the position which the President of India had taken at the time of the Chinese attack; that he had been extremely firm, had stiffened Nehru, and played an important part in the dismissal of Krishna Menon. The Shah expressed great surprise and pleasure at hearing this and said that he now felt that he could open this matter during the Indian President’s visit.
Arab Unity
The Secretary was about to take leave when the Shah asked him to remain if he were not too tired because the most important subject had not yet been discussed. The Secretary, of course, readily agreed to remain and the Shah launched into a recitation of his preoccupations and concerns at the prospect of Nasser controlling Iraq with its eight hundred miles of land border, but more importantly, the control of the Shatt-al-Arab and access to the Persian Gulf (these concerns of the Shah have been reported in great detail and it is not considered necessary to recite them [Page 502] again in this message). The Secretary responded with our assessment of the probable outcome of Arab attempt at unity. He expressed our genuine interest in preservation of the independence and integrity of Jordan, Israel, Saudi Arabia and, of course, Iran, which seemed to give the Shah considerable assurance and may help to relieve somewhat his anxieties. The Secretary said that it is vitally important for the two of us to keep in close touch on developments in the Arab world. The Shah said that it was of course possible that he exaggerated the dangers but that in the light of his responsibility for the security of Iran, he must do every prudent thing to anticipate dangers which might arise. He then turned to the specifics of steps which he thought should be taken.
Additional Defense of Oil Complex in Persian Gulf
In view of vulnerability to air attack of this important and sensitive area, the Shah expressed his opinion that additional protection should be provided. Specifically he thought two additional radar stations should be added and two additional fighter squadrons provided. He reviewed the five-year Military Assistance Program and mentioned the provision which allowed the program to be reviewed in the event of a change in the international situation which presented no danger to the security of Iran. He did not invoke this part of the agreement, saying that he understood perfectly well our limitation in the light of other commitments which we have and availability of sources indicating his awareness of Congressional attitude toward appropriation for military aid. He said that the two radar stations and two additional fighter squadrons would not represent enormous cost and suggested that they might be provided by purchase from Iran’s own resources which were growing, or hoping that such purchase might be arranged on good terms. Apparently anticipating a statement as to Iran’s capacity to absorb additional equipment, the Shah said that although pilots and other operational personnel could handle additional aircraft, he realized that maintenance technicians, especially in electronics, were very short; that although a training program is underway, it would take some time before Iranian technicians could be produced in sufficient numbers. He said that he would be glad to have additional American technicians here and pointed out that at one time ARMISH/MAAG had nine hundred personnel in Iran.
The Secretary responded by saying that he would be glad to take up this question on his return to Washington. He made no commitment to do more than that but his willingness to raise the matter on his return was well received by Shah.
Comments
The conversation was relaxed and friendly. The Shah was serious and thoughtful but unemotional. He gave the impression of being quietly determined to go forward with his reform and, although he has [Page 503] obvious genuine concern about the prospect of Arab unity and its potential danger to the security of Iran, he was in no sense panicky. There was no hint of discouragement or despair which he has been known to exhibit in times past. His attitude toward us was clearly one of the good ally working with his friends on a basis of mutuality of purpose and confidence.
- Source: Department of State, Central Files, CENTO 3 PAK (KA). Confidential; Limit Distribution. Repeated to Karachi for Secretary Rusk.↩