Office of the Historian

209. Memorandum of Conversation1

Washington, August 23, 1967, 11:30 a.m.

SUBJECT

  • Oil and Gas (Part V of V)

PARTICIPANTS

  • H.I.M. Mohammad Reza Shah Pahlavi, ShahanShah of Iran
  • H.E. Hushang Ansary, Iranian Ambassador
  • The Secretary
  • The Honorable Lucius D. Battle, Assistant Secretary, NEA
  • The Honorable Armin H. Meyer, Ambassador to Iran
  • Theodore L. Eliot, Jr., Country Director for Iran, NEA

The Shah said that he had met with oil company officials in New York and had indicated to them that they should support countries which are stable and reliable and that they merely caused trouble by giving so much to small desert countries such as Kuwait. He hoped the companies would agree.2

Commenting on Arab oil policies, he said it was ridiculous for any Arab to believe that the West could really be hurt by an Arab oil embargo. Iranian, Venezuelan and American oil are available. The West could stand an oil embargo for a couple of years, but the Arab countries could not. Agreeing, the Secretary commented that he has found it useful to suggest to our moderate Arab friends that they make this point. The Shah said he has been doing the same thing. The Secretary [Page 383] said the Arab countries would not only hurt themselves in the short run by imposing an oil embargo, but they might cause the West to turn away from Middle East oil and substitute nuclear power on a crash basis.

The Shah mentioned plans for an oil pipeline across Turkey to the Mediterranean, for a gas pipeline from Iran to Trieste and for an oil import terminal in Yugoslavia to supply Eastern Europe. On the latter point, he said that the Eastern European market for oil is of course a limited one. As for gas, he said that he would much prefer to use Iranian gas to make petrochemical products, especially fertilizers, for Iran and for export. He had urged the oil companies to interest themselves and others in this possibility. In the meantime, however, Iran was making plans to export gas, and it seemed desirable to have customers in addition to the Soviet Union.

  1. Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967–69,POL 7 IRAN. Confidential. Drafted by Eliot and approved in S on August 30. The meeting was held at Blair House.↩
  2. The gist of the position taken by the oil executives is in a company briefing paper transmitted in airgram A–690 from London, August 19. (Ibid., PET 2 IRAN) The oil company executives later reported that “Shah made predictable plea that Iran’s stability and reliability be taken into consideration in companies’ planning and investment. Stressed that Arab-Israeli crisis not ended and may revive.” They also characterized the Shah’s speeches as “milder than often in past. In sum, they feel results of conversation ‘not too bad,’ although they remain concerned that Iranian expectations will continue to exceed realities.” (Telegram 25746 to Tehran, August 23; ibid., PET 6 IRAN)↩