Foreign Relations of the United States, 1964–1968, Volume XXII, Iran

268. Telegram From the Embassy in Iran to the Department of State¹

Tehran, March 14, 1968, 1650Z.

3767. Shah’s Preoccupations.

1. Zahedi Tour. Shah 14th told me major purpose FornMin Zahedi’s visit to Washington is discuss Persian Gulf. Oil consortium problem also.

2. Angry at British. Shah said his Isfahan statement (Tehran 3754)² was directed at British. He refuses accept their non-responsibility for creation of FAA. He has reached conclusion that Bahrein’s inclusion in FAA, plus implication that British will deliver Tunb Islands and Abu Musa to sheikhdoms, is intolerable. Shah said he waiting to hear from British following Zahedi’s talks. He considers Brenchley as chief HMG culprit with George Brown not far behind. If British, who are allegedlly allies, persist in present course, Shah said, Iran will not sit at same table with them, e.g. CENTO.

3. Wants not to be pressed re Bahrein. Shah said he had previously suggested formula for dissolving Iran’s claim to Bahrein, i.e., plebiscite, but that would not be possible now given present excitement on Bahrein question. If issue could be put in ice-box for two years, plebiscite might be possible then. I noted Sheikh of Bahrein himself has problems and referendum might only succeed in stirring up rabid Arab nationalists. Basing remarks on State 128944³ re nebulous nature of FAA until now, I urged Shah to relax a bit. Noted public denunciation of FAA by Iran could have unhappy repercussions, i.e., drive Bahrein more solidly into FAA, open opportunities for exploitation by radical Arabism etc. Concluded it behooves all of us to buckle down to see if some mutually satisfactory resolution can be achieved for knotty Gulf problems precipitated by departure of British.⁴

3 [sic]. Oil Consortium. Shah seemed relatively relaxed re consortium. He has impression consortium will meet his demands for 1968 or gap will be so narrowed that it acceptable. Problem is oil income for remaining four years of fourth plan. Shah concentrated particularly on inter-participants agreement, proudly reporting that through various sources he has received secret info re attitudes of various companies. He repeated what we had heard from consortium reps, that previously internal regulations “absolutely impossible” but now they merely “impossible.” He believes obstructive underlifting companies are concerned that overlifters might steal some of their markets. Shah believes underlifters can be mollified by setting limit, e.g., 15 percent as to how much overlifting oil hungry companies, e.g., Iricon, will be allowed to take if and when restrictions can be loosened further. I pointed out what one rep had told me that obviously oil hungry companies will say revised regulations are still prohibitive so long as they think further liberalization is possible. Also went to considerable lengths to suggest offers by East Bloc and CFP have ulterior motives, i.e. shaking the normal oil industry in Mideast for their own political and economic benefit. Cited phony Hungarian report against Mobil, and fact that as soon as Shah got special price to barter oil to Romania and other East Bloc countries Romanians raced to Saudi Arabia, Libya, Egypt and other oil producing companies offering barter deals for oil—with none of them, including deals with Iran, resulting as yet in moving one drop of oil to East Bloc. Re Mobil, Shah said Iran can not object to consortium companies trying to sell additional oil including in East Bloc but it does object if an NIOC price is undercut. Shah said in Washington Zahedi will make point that Iranian liftings only 130 million tons per year while Arab states moving around 600 million, but West would be well advised to work toward better balance in view of uncertainty of Arab behavior.

4. Soviet Hostility. Referring to recent Soviet communique, [garble] Iran broadcasts, Soviet diplomatic demarche etc., Shah said it is “clear as daylight” Soviets have their own plans for Persian Gulf. He annoyed by overtones of “sphere of influence” in communiqu&e. Not only has Communist expansionism been added to Czarist designs for warm water port, Shah said, but their major strategy is to control valves of Mideast oil. Soviet system has failed in competition with West, Shah said, and world war is out of question for them, so they trying to dominate Mideast and its oil as means for destroying West European industry and thereby systems of government. Shah said he has ordered Zahedi to have Iranian diplomats in Western Europe emphasize this point.

5. Relaxed re Arms Program. Shah seemed content with status of negotiations re continuation our military credit sales. He was particularly pleased when I noted annual economic review which was held with PriMin that morning had taken place May 3 year ago. Shah seeing Jablonsky Sunday.⁵ Incidentally, PriMin had already apprised Shah of our discussion, including pitch we had made (with which both PriMin and Shah agree) for encouragement of copper development and other private enterprise joint ventures.

6. U.S. Collusion. Began conversation by expressing gratification that small irritants which had been mentioned by Ambassador Ansary to Under Secretary Rostow been cleared away and mutual confidence fully restored, including with this Embassy. Shah still thinks we side with Saudi Arabia but only because of his partisan evaluation of events leading up to cancellation of Saudi visit. As I was leaving he mentioned Amini and I reviewed details, also my conviction that our being in touch with outsiders is to his advantage. Cited how well this worked when I was in Lebanon, also how helpful it was (and he agreed) when I took on Iranian students across from Blair House last August. He then professed there no objection to our seeing even Amini “every night” (but of course he does not mean it). Shah (as Hoveyda had done before) said what caused concern was coincidence of events, e.g. student unrest, Amini’s increased activity, etc., which resembled developments in 1961 prior to Amini’s coming to power. His view now is that student unrest was definitely Communist inspired and other disturbing events also had nothing to do with USG. Conversation ended most amicably with Shah jokingly agreeing I not persona non grata.

Meyer

1. Source: Department of State, Central Files, POL IRAN-U.S. Secret; Limdis; Noforn. Repeated to Dhahran, Jidda, Kuwait, London, Moscow, and CINCSTRIKE/USCINCMEAFSA.
2. Dated March 14. (Ibid., POL 15–1 IRAN)
3. Not found.
4. In telegram 3774, March 15, Meyer reported that his audience with the Shah had convinced him that his analysis in telegram 3626 (Document 264) was “right on the button.” He suggested that the Shah might be satisfied by a package deal including: 1) clear cession to Iran of the Tunb and Abu Musa Islands (through British auspices); 2) a joint Saudi-Iranian venture in the mid-Gulf for exploiting oil resources on both sides of the 1965 initialed line; and 3) relinquishment by Iran of its claim to Bahrein. (Department of State, Central Files, POL IRAN-U.S.)
5. March 17.