Iran is today the strategic center of the world ma 1 I 7561511 or 11 SECRET I SUMMARY g MEMORANDUM FOR Dominating the Persian Gulf' and with a 150-0-m11e border with the Soviet Union its continued stab ility and poss1ble co1-j lapse_ co u1d endanger the world oil supply and tilt the balance of power - 2 The -Shah has been-- -irreparably damaged by recent events - He cannot regain his absolute power position except throug h _violent repression that co u1d _turn Iran into anothenkLebanon 3 By ac-ting and v1sibly the Shah has a last chance to perserve the dynasty either by assuming the role 'of Constitutional monarch or through a regency 4 But the time for action can be measured in days delay will mean a resumption of turbulence There is danger that the Shah may toy with half meaSure-s that will not succeed mistrust of the- Shah is so widespread as to rule out any gradual relinquishment of power The Shah must announce- unequivocally that he is transferring all civil power to a civilian government coalition He might remain command er of the armed forces as called for by the 1906 Constitution but only with the clear commitment that he will use the_ armed forces for internal matters only with the approval _of the government and p arliament 5 Unless the- Shah acts dramatically to transform the situation events will ra-pidly deteriorate Oil production gf LU is -1ess than one fifth what it was the banking s-ystem is badly impaired unemployment is mounting_ and inflation is heading toward 30% The army c annct cope with these 'economic problems Meanwhile it h-as started a count er ' campaign of beating and sho oting Bloody reprisal and i33f5 j acounter-reprisal are sure to follow 1-u u n 2 6 The telegrams indicate that some representatives-cf - the- National- Fro nt have been talking with Amhass ador zahedi acting for the Shah Given the personal interests of those conducting the talks I fear the talks could lead to half meaSures that do not involve a definitiv e transfer of power In that event time will have been lost without producing anything adequate to secure public confidence and stop the strikes and violence - E11 0 lg r3 ISSUES OF THE IRANIAN CRISIS George W Ball SECRET - - far Declassification Qn'December 12 1984 SECRET The collapse of the Shah's regime is far more signifi- cant than a localized foreign policy crisis with exceptionally I high stakes it challenges the basic validity of the Nixon Doctrine We made the Shah what he has become we nurtured his love for grandiose geopolitical schemes and supplied him the hardware to indulge his fantasies Once we had annointed him as prote ctor of our interests in the Persian Gulf we became dependent on him Now that his regime is coming apartj under the pressures of imported modernization we have so Committed ourselves as to have no ready alternative 1 This paper will deal primarily with the immediate poli- tical Crisis in Iran and what our p olicy may look like over the near and longer term But the events in Iran als o call vfor a searching reappraisal of the assumptions underlying the Nixon Dictrine and the degree to which we can afford to dele gate to others the protection of our own vital interests THE IMMEDIATE WEEKS HEAD Now that the Shah has so far Weathe-red the storm of Ashura he will be tempted to conclude that he can retain his power intact Yet the passage of the immediate crisis does not mean a return to tranquility On the contrary Iran faces a period of protracted turbulence and perhaps another intense cenfrontation on the day of mourning that will occur about January 20th 40 days after Ashura Continuing turmqilI will disrup t eon-nomic activity inflation will rise to- 30 p eroent or more and the cancellation of construction pro- jects the impairment of the -hanking system and the sleek down of the eo onomy will increase unemployment and public discontent Yet dangerous as they will be the next few weeks may - offer the last clear chance for Iran to avoid a dark night of repressio n aInd the vanishing hope for anything resembling constitutional government To exploit this brief interlude of opportunity we should in my vi ew change our approach in dealing with the Shah In the se l atter days of cris is we have tended to treat the Shah as though he were an invalid requiring constant encouragement and incessant avowals of unqualified support To continue such solicitons treatment could encourage the Shah to illusory hopes and deter him from squarely facing his predicament Ever since President Nixon 3 visit to Tehran in 197'2 we have behaved as though Iran were a power equaLto America and as I shall point out later have contributed to the Shah' megal- omania Though we need the Shah in the short run he needs SECRET government SECRET -2- us far more both now and in the longer future If he thinks he can take for granted our full support he will feel less need to make the hard decisions and undertake the difficult actions required even for his own survival Ithink it important therefore that we try as soon as possible to condition the Shah to the realities of his own predarious power positiOn We must make Clear that in our view his only chance to s-ave his dynasty if indeed that is still possible and retain Our support is for him to transfer his power to a government responsive to the people Only if he takes that action can Iran hope to avoid continued dis affection followed by cumulative economic paralysis Our in- terest is to assure that the Shah uses the limited period of respite now available to bring about a reSponsible government that not only meets the needs of the Iranian people but the requirements of our own policyn In seeking to facilitate such a transfer of power we must take into account the possible form of the government to which power may be transferred the process by which we make our influence most effectively felt and the timing of our moves Possible Form of Goternment Efferts to Organize a Coalition The most desirable solution -- at least for the short 'term would prcbably be for the Shah to remain as chief of state retaining qualified command of the Army but entrusting the exercise of political poWer and decision- to a civilian Althou gh he is not keeping us fully informed the Shah seems to be trying to negotiate with repreSentatives of the - National Front to reach agreement on the establishment Of a coalition government While encouraging those efforts we must make it clear that nothing less than a full transfer of political power will enable his dynasty to survive At the same time we should not permit our expressed loyalty to the- Shah to inhibit us from a quiet dialogue with representatives of the various moderate interestes If current efforts to organize a coalition government fail primarily because the Shah is unwilling to give up enough of his powers mass demonstrations strikes and violence will continue to enfeebl e the economy In that event the chances era SECRET SECRET -3- either that the Shah will abdicate in favor of his son under presSure of the Army or hunker down while the Army attempts to restore order through Draconian repre-ssion characterized by terror torture widespread imprisonment and _whole sale bloodshed So long as the Shah feels he has the unquestioning support of the United States he is unlikely to accept the limitations imposed on a constitutional monarch or to abdi- cats Thus instead of letting the Shah think we are with him all the way no matter what he does we should firmly and repeatedly lay out the terms essential to a peaceful trans- fer of power Shah as Commander of the hrmy In -his talks with representatives of the National Front the Shah has so far stubbornly insisted not only on retaining his role given him by the 1906 Constitution of Commander- in Chief of the Military Forces but also on controlling the military budget This latter demand cannot possibly be accepted by a coalitiOn government military expenditures mus t be treated like any otheritems in the budget and determined by the civilian authorities If he gives up the budget there are some practical ad vantages in leaving the Shah as Commander-1anhief under a co elition government He has personally picked the officer corps for a quarter century ever since 1953 and they have looked to him for their orders -Many of the older officers would almost certainly be repelled by the idea of taking orders either from a coalition go vernment o-r from a regency council in the event the S-hah were to abdicate in favor of the Crown Prince In addition to the Shah's special relation with the military he is the only symbol of Iranian unity in the far reaches of a country inhab-ited by largely illiterate and Widely disparate ethnic groups The departure of the Shah and the creation of an Iraniani public might run the riSk - of encouraging the creation of ethnic republics Baluchis tans Kurdistans Arabistans etc that could lead to Balkanization and pave the way for increased Soviet influence Shah or Regency At the moment elements of the moderate opposition are proposing that the Shah abdicate in favor of the Crown Prince SECRET SECRET - I 4 who would for the next Itwo years until he reaches the age of 20 be responsible to a regency council They hope to clear this scheme with Khomeini s-ince were he to approve it mi ght relieve much of the current preSsures Still it is not entirely clear whether opposition sentiment is anti dynasty and anti Pahlavi or merely anti-Shah That question may however be academic since in the absence of great pressure from his military commanders there is so far no evidence to suggest that the Shah would abdicate He seems more likely to hang onto his crown re sorting to increased repr sSion so long as the Army gives its full support Iran Without the Shah The older hardline officers in the top military command are likely to remain loyal to the Shah and if necessary to use brutal force to keep him in power There is however evidence of growing discontent particularly among the junior officers Though I think it unlikely that we shall see the emergence of a Nasser or grOup of Greek colonels who would send the Shah packing we cannot rule out that possibility particularly if they are led down the road of increasing re- pression Though it would seem out of character it is not beyond own accord Were he to decide that he could not remain in face of a continued display of public disaffeotion he would probably try to arrange a regency If that proved una-cceptable we might haVe to deal With Iran without the Shah in which a case the military would he the only effective center IofI power I I I The most Serious question is whether if the Shah were- to leave the armed forces could ind another focus of loy- alty or discipline Failure to find such a focus could well lead to a power struggle that would not only be disruptive but could result in the installation of a military dictatOr who relied for legitimacy solely on force I For the time being therefore we should try to keep the Shah on the scene but only if he is prepared to trans fer power to a responsible civilian authority and some agreement can be reached with responsible representatives of the nationalist groups To continue to back him while he sought to hold power by continued repression would in my judgment not only be futile but lead in the longer term to the ultimate destruction of our authority in the area SECRET i The Process of Selecting a Civilian Government If there were one clearly outstanding leader of the oppositiQnr the Shah might designate that man as prime minister With full-authority to choose a government that would give appropriate representation to all responsible elements of the opposition ranging from the mullahs to the non- communist elements among the dissontented students But no single leader can be found who inspires confidence across a wide spectrum of opposition opinion If the Shah tries insteaito designate the whole govern- ment presumably in negotiation with some civilian politi-cians who claim to represent a cro ss section of respon sible opinion -- the result will bear the stigma of the Shah's creation and be automatically discredited If such a government should succeed in coming to power it would be unlikely to last very long Turbulence would continue while the problems facing any Such newly constituted government -would be far b eyond its capacities Sopular Election Yet if any g-overnment chosen directly by the Shah would be subject to popular suspicion immediate resort to the electoral process offers no realistic alternative Though the Shah has proposed an election in June for a new parlia- ment Majlis from which a new government might be formed according to n orma1 parliamentary procedures to try to hold an election so secn- before political parties have had time to organize -effectively -- would produc e political aberrations with violently divisive results Council of thab1es Though any government selected directly by the Shah would be automatically discredited we might try to avoid or at least minimize that danger by- having the Shah in consultati cn with moderate Spokesmen app oint a broadly repres entative body to name 51 gcvernment We might for example persuade him to nominate a Council of Notables carefully chosen to repreSe-nt the major sectors of responsible opinion The mandate of that Council which could expand its own membership would be to select a new government Since that government would be created by a representative body it would be at least one step removed from being the Shah's creation SECRET SECRET - -5- If we were to set this process in motion we could not risk leaving the choice of the Council solely to the Shah's discretion otherwise he would nominate only personalities compatible with his vieWs Instead we should ourselves suggest to him a carefully vetted list of individuals representing a wide spectrum- of responsible opposition together with some largely apolitical technic ians competent to run the government W1th1n the last few days with the help of the Agency we have been assembling such a list This has not b een an easy task since many o-f the most qualified men have been compromised through ass ociation with the Shah while those nut compromised have been out of political life for a quarter century Whether the Council of Notables would be able to agree on a new government is by no means certain Instead they might as Ambassador Sullivan has suggested agree only on demanding the abdication of the Shah But in the abSence of more practical alternativeS it would still seem a risk worth running The creation of such a Council would obvi ously require the agreement not only of the Shah but of the military Under this scheme the armed services though not SAVAK - would continue to be responsible to the Shah as Commander 1n Chief in accordance with 1906 Constitution But the Shah would have to accept explicit cons traints regarding his use of the military and he would have to let the parliament determine the military budget in the same way as it determines the allo cation of resources to any other area of government expenditure i - U Bargaining Power Before trying to gain the approval of the m1l1tary to this line of procedure we should Carefully assess our bar gaining leverage We have of course ample clout with the Air Force which is the apple of the Shah s eye We provide them with nearly all of their equipment including 5 illion of highly sophisticated hardware now on order We also have a strong position with the Navy whiCh has a large' pipeline of orders for American ships and advanced systems it But neither the_Air Pores nor the Navy is likely to play the major role in political decisions The Army alone has the power to dominate the streets and and take repressive measures - SECRET SECRET -7- Unfortunately we do_not have the same degree of lever- age with the Army as with-the other services Only 25 percent of the Army's equipment is American made and its American procurement program for the future calls for little more than the supply of spare parts Our appeal to the Army mu st therefore be more in terms of our willingness to guard Iran - against Soviet aggression We should make it clear that our defense efforts will subatantially depend on the establishment of a government in Iran that we can support with self-respect I do not know who is in the best position to exercise maximum persuasion on either the Shah or the military The Shah might be left to Ambassador Sullivan _who has already established some relations of confidence 0n the other hand it might be well to ask Secretary Harold Brown or someone else from the De fense Department to conduct discussions with the Army and the other military services - Timing Although negotiations have been underway for some time between the Shah and opposition elements thEre is no indie cation that any Significant progress has be-en made Both sides are looking for a signal from us about how to proceed The pub -ic and private positions we take will Strongly in- i fluence the direction of _the negotiations We should not delay in conveying our private Views to the Shah that a transfer o-f pewer is indispensable and urgent The next few weeks provide the last opportunity fer the Shah to take initiatives which could let the st eam out of the cppo- Sition fetus their attenticn on the formation of a- government and generally engage the political forces of the country in something more po sitive than a monotonous denunCiation of -the Shah Delay or equivoeation on our part in making-our position clear can only let the situation drift create the impression that we are satisfied with the status 0 and tempt the Shah to maintain an unrealistically unyielding posture in his ne- gotiations with the OppositiOn We should try to avoid in- jecting ourselves actively into the negotiation process until the parties specifically request assistance and we should avoid giving the impression of endorsing partiCular candidates for particular jobs Our endorsement can became a political kiss of death as it has been for Dr Amini SECRET w-Linh-Ifl-l We have everything to gain if the Iranians can -- with our SECRET indirect guidance -- work out their own problems Our objective should be to'make sure that they approach the task realistically work at it intensively and do not simply talk themselves into an endless stalemate broken by sporadic outbursts of new dissatisfaction Finance and In the very short term Iran' economic picture i_s manageable The government has roughly $10 billion in reserves there are stocks of most staples and some new supplies are reportedly on order If the political obstacles to the normal functiOning of the economy can be removed in the relatively near future there is no overwhelming reaSon why the economy could not be brought back to health However the longer the strikes go en particularly in the'oil fields but also in utilities distribution retail and banking the more difficult it will be to avoid an economic collapse So far the effective breakdown of the banking industry has interfered with normal payments to creditors which has in turn resulted in lack of obnfidence among lenders an absence of short term financing for commercial orders and growing uneasines-s on the part of foreign - investors If the loss of oil revenues and disruptiOn of all aspects of Iranian esonomic life continue severe effects will begin to be felt in the new year Under the best of circumstances inflation will go back to the- 30 percent level or higher unemployment increase due to the general slowdown of econom-ic performance and shortages of some items will almost certainly occur- All of these effects will be magnified the longer the crisis of confidence continues In the longer term Iran faces Sizable problems of a structural nature I understand that Treasury is looking at this At some point we may have to addreSs the possible rescheduling stretching out or renegotiation of the $12 billion in military equipment-sales currently in the pipe line However it will be possible to deal with longer- term economic issues only when the political situation has been clarified and hopefully some degree of stability restored Dealing with Khomeini The Ayatollah Khomeini by his fanatical opposition to the Shah for more than 15 years - has come to personify the revolt The Iranian people view him as a legendary almost sacred figure whose actions are beyond reproach In the SECRET SECRET -9- near future any political solution that does not have his expressed or implied acquiesence will be difficult to achieve He could well provide an insurmountable obstacle to any so lution that leaves the Shah with even titular authority and it is by no means clear that he could be placated by the creation of a regency Thus we urgently need to open a disavowable channel of communications with him or his en-i 'tourage If we are to undertake a more active role in poli- tical developments we will at least need a means of passing messages or seeking private vieWs We should'also consult closely with the French at a very high level in an attempt to make Khomeini' 5 visit to France as brief as possible and to limit the extent to Which he and the shadowy group around him are permitted to manage events in Iran We must avoid actions that could be mis- represented as harassment or persecution since that would arouse fury in Iran and might threaten French or 0 5 inter- ests But there is a range of actions short'of expulsion th at could reduce his ability to coordinate activities in general his exposure and ability to communicate and freely would probably be less in an Arab country than in Paris Lessons Frem PaSt EXperience Our handling cf the Iranian crisis will tee-t whether or net we have learned from our experience in the past de- cades that experience we should have distilled three painful but relevant leescns The first is that we mnst avoid the catastrophic illusion that because we support a foreign country our vital interests are in every way congruent with the in ' terestSwof that -ccuntry- as perceived by the- government power Pricr to the Carter Administration we Sometimes indulged that illusion with regard to Israel The issue with Iran is mere complicated Since it does not concern that country' relations with other nations but rather the arrangement and distribution of power within the country itself The second principle is that we should not as we did with General Diem encourage the overthrow of an existing government until we are reasonably sure that the successor government would offer a better chance of_stability The third principle is that'we should not as we did with'President Thieu become the prisoner of a weakened leader out of touch with his own peOple who induces us to act against our own interests by constantly threatening like the heroine in an 18th century novel to collapse if we say a disagreeable word sense SECRET -10- IRAN -- TWO YEARS FROM now The most likely prospect for Iran is that two years from now there will be either a military government with or without the S-hah a weak civilian government without the Shah or with a regency or the with the Shah exercising limited powers or civil war and anarchy Military Government If there is a military government with the Shah still trying to assert full control it will be because the Shah and the generals have opted to try to save his regime- through repression Whether a cruelly harsh regime could laSt years is impossible to predict At some point it would likely become so onerous that the people or the young officers who are closer to the people would throw it out but only after great bloodshed Meanwhile one could expect the economy to sink to a low level even though the generals would no doubt do everything possible to keep the oil flowing and might well be able to do so What should be our posture towards such a regime Certainly wecould not maintain the same close relations as in the past with a group resembling the Greek Colonels and still make any pretense of championing human rights But Should we continue to provide the same vast amounts of military hardware To cut off the present pipeline for th Air Force would be a highly provccative act that would cause violent reactions among the military though not so much in the ranks of the Army which would most likely be controlling Certainly also we would have to rely less on Iran for the protection of the Gulf But if we continue to think of defense in the Nixon Doctrine terms of a prime dependence on local powers there are no real alternative s in the area - Saudi Arab1a is far too small in population while any attempt to improve its military strength would create awkward American domestic problems with proersraeli groups Thus we would almost c ertainly be driven to changing our emphasis to a greatly increased reliance on our own direct defense capabili- ties Civilian Government - If the Shah retires or becomes a constitutional monarch we could not look forward to a strong stable central authority Nor is such stability assured even if the Shah goes and the milit SECRET SECRET -11- let a civilian government or a succession of such govern- ments take over Unless a man on a white horse-shouldqcome riding on stage and there is none on the horizon we could hope for nothing better than the French Fourth Republic without the benefit of the French Administration which kept the country going Thus now that the Shah can no l onger wield absolute power Iran is likely to appear as a far weaker and country no matter how well it_adju3ts to civilian control Moreover any civilian government will be far less complaisant than the Shah has been since it will have to take account of the anti-American overtones of the struggle that created it Thus whatever happens an we shall no longer be able to rely on Iran as a strong anchor of support in the Persian Gulf area Although Iran is probably fated for a long period of instability and political uncertainty the situation is not entirely without some hopeful signs Iran has great natural and human resources Iran's oil reserves and great production capacity provide a solid base for economic recovery once the strikes have ended There is a wealth of young well-educated and energetnzmen and women who have systematically been excluded from the political process or even the administrative areas of government Many of the mostrtalented of these have gone into self-imposed exile or spend most of their time outside Iran If that body of talent could be mobilized and put to work Iran's future need not be bleak Civil War and_Anarchy No matter what actions we may take in the crisis we cannot look forward to a tranQnil future-for a nation as socially economically and spiritually disturbed Wand divided as Iran is today W We must frankly face the possibility that perhaps after a period of repressive government -- we might well have to cope with an Iran torn by civil conflict and with the Soviet Union threatening to intervene in response to leftist elements that had managed to exPloit the revolutionary turmoil In that event we might have to face down the Soviet Union in a direct political confrontation If Moscow persisted we might even have to contemplate the occupation of at least the southern half of the country which includes the oil-fields No matter how unattractive that prospect we must be ready for that contingency We simply dare not let Iran fall within the Soviet power orbit Not only would that critically tilt the global balance of power but Saudi Arabia and the Gulf states would be thrown SECRET SECRET rig- into total shock by hostile forces just across the Gulf and able to interdict Gulf traffic That danger is increased significantly by the presence of Iranian populations on the apposite side of the Gulf A very Significant proportion of the resident populations are of Iranian origin in B-ahrain 40- the UAE especially Dubai 25 Kuwait and others Part of this population is well established and- goes back several generations others are laborers who have migrated in search of petrodollars M-any of the Iranian shops are run by youngeduoataimen who have come to escape Iran particularly the draft This Population and particularly the young shop keepers constitutes a builtein channel for the distribution of radical nationalist ideas across the Gulf This could 'become a factor if Iran goes into a prolonged period of domestic violeHCe and radicalization THE IMPACT or THE IRANIAN CRISIS on OTHER STATES Saudi Mdpia and theGulf States The Saudis and many of the smaller Persian Gulf states look to the United States for reassurance and leadership as they watch what appears to be an encirclement of the Gulf by an expanding Soviet presenCe in the Horn of Africa South Yemen and new Afghanistan However any tangible 'shift of -U S policy toward a higher profile or closer mili- tary cooperation -would als o require some difficult policy choices on the part of the Saudis and the smaller principali ties of the Gulf In the past their calls for the United States to do something about Soviet advances have not -only lacked_ spe-cificity but have also been notable for the - absence of any apparent the Gulf themselves to pay a significant political price If the United States is to increase the tangible evidence of its security commitment to the Gulf it will require not only the acquiesence but the active cooperation of its friends in the region We -should begin as Soon as possible to consult frankly with the Saudis about the options we face We must invite them to address with us the painful choices associated with Security planning for the area A more vigorous U S security policy toward the Gulf would not be popular in Baghdad Damscus Tripoli and elsewhere Would the Saudis be prepared to risk criticism from-those sources SECRET 7 SECRET -13- In any event the fact that we chose to consult seriously in advance of difficult policy choices might be reassuring evidence of our seriousness of purpose as compared with the largely sterile exchange of formal assurances that has characterized so much of our dialogue over the past year Impact on Soviet Enion Brezhnev' 5 statement of November 19 and his letter to the President strike an ominous note in sugg-esting that because the Soviets have a long border with Iran they should enjoy a special position of influence in that country at least balancing our own This bears a close and disquie ting resemblance to the Brezhnev Doctrine -- the asserted claim of a right to intervene not hecauSe Iran is a socialist country but-merely because it is adjacent to the Soviet Union and thus can'affect its security interests The possibilities for conflict are heightened by two documents One is our own Mutual Defense Treaty with Iran _of 195 9 though that requires us to do little more than consult and take such actions as we deem fit More important is a Sov1et Iran1an Cooperation Agreement that dates back to 1921 The key passage is Article 6 If a third Party should attempt to carry out a policy of usurpatiOn by means of armed intervention in Persia Or if such Power should desire to use Persian'territory as a base o f operations against Russia or if a Foreign Power should threaten the frontiers of Federal Russia or those of its Allies and if the Persian wwumwGovernment should not -he -able to- pu-t- a stop -to such menace after having been once called upon to do so by Russia Russia shall have the right to advance her troops into the Persian interior for the purpose of carrying out the military operations necessary for its defense Russia undertakes however to withdraw her troops from Persian territory as soon as the danger has been removed This treaty has a long history and there have been subsequent statements and agreements There are also responsibilities spelled out in _the treaty g agreement not to permit the formation of groups within the territory of one state called for acts of hostility against the other which the Soviets systematically disregarded for years The Iranians have therefore maintained that the treaty has been invalidated by these repeated violations SECBET SECRET -14- But the Soviets consider the treaty to be valid and in force and might well employ it as the juridical excuse for inter vention if the Soviets saw a reasonably safe opening Such an opening might occur if Iran were torn after a protracted ordeal of repressive military government and the Soviets saw a chance to exploit the pent up discon- tent IRAN AND mm NIXDN DOQTRINE In considering longer term Plans with regard to the Persian Gulf area we should consider the effect of current events on the so oalled Nixon Doctrine which held that the United States should try to reduce its own overseas commitments by arming friendly regional powers to provide the principal protection o-f their oWn areas That furnished our principal conceptual rationalization for pumping vast' quantities of arms into Iran On paper Iran o fered an almost perfect setting for the application of the Nixon Doctrine Not only did it occupy_a strategic location on the Soviet border dominating the Perisan Gulf- and most of the world' oil but it was ruled by a man who owed a conside-rable debt to the United states which h ad kept him On the throne in 1953 The Shah was moreover a proclaimed anti Communist who saw the world in the same geopolitical framework as Nixon and Kissinger The event that established the trends which cuLminated in the prESent crisis occurred in May 1972 when-Nixon and Kissinger visited Iran _Having recently traveled to China President Nixon came to Tehran direct from Moscow full of Confiidence that - his global were firnal_ly_coming _together as a coherent Whole Oil he told the Shah must never again be out off as had oocurred under Mossadegh The Shah was quite prepared to continue the oil flow and resist the Soviets but his price was high He demanded the most modern weapons United States cooperation in dealing with the Kurdish revolt and American military technicians The Shah had a broad vision and vaulting ambitions He declined the offer of an increased United States naval presence in the area on the ground that he could defend the Gulf himself His relations with Haile Selassie in Ethiopia and with the regime in South Africa furnished the key to his Indian Ocean strategy As for Iran he was con- fident he could deal with his domestic problems by putting the subversives in jail SECRET SECRET -15- The Shah agreed with President Nixon on the need to prevent the students from becoming infected with sub versive tendencies Nixon agreed to help the Shah by pro viding any weaponry he needed The Shah's immediate requests were approved by Dr Kissinger who was National Security Advisor He directed the Secretaries of State and Defense to offer to sell F l4 and aircraft then still in development laser-guided bombs that were just being introduced to American units in Vietnam and an increased number of uniformed technicians Decisibn on the acqui sition of military equipment Kissinger decreed should be left primarily to the Government of Iran and the Unite d States should not discourage Iran' appetite for highly sophisticated equipment Nixon' laying on of hands and his willingness to treat the Shah as the guardian- of western interests in the whole Gulf area greatly contributed to the megalomania that ultimately produced- the current debacle When two years later the quadrupling of oil pric es provided Iran with an enormous increase in revenues -the pre sent crisis became almost inevitable With arms flowing in and p1enty of money to buy more the Shah felt commissioned- by Allah to transform Iran into one of the maj or hatio ns of the world Overnight he sought to build a ba ckward religious country into a mod ern though highly corrupt indns trial state Meanwhile he- accumulated vast stores of the most advanoed equipment which is now dangerously spread out over the Iranian deSert and -- in caSe Iran slipped into anarch-y could prove an enormous temptation to the Soviet Union The past events reveal the fragilit-y of the_ -Nixon - Doctrine and suggest a reconsideration of the whole policy m1n1t1ated-at Guam - Though theoretically the United States should find it useful to entrust the de ense of strategic areas to local nations or regional combinations of nations -- the concept is fraught with dangers - Never again should we transfer such vast military res ouroes to an antiquated monarc hy that rules largely by erce without the consent of the pe ople The over enthusiastic applica- tion of the Nixon Doctrine by President Nixon and Dr Kissinger bears a direct responsibility for the predicament in which Iran -- and America 1- now find themselves SECRET _15_ CONCLUSIONS 1 The Shah and his regime have been irreparably damaged by the even-ts of the past year The situation can never return to the status quo ante with the Shah exercising absolute control 2 There is no quick or risk-free way to restore stability to the country In my view however we would be inviting disaster if we were to continue trying to prop up the Shah as a monarch retaining any substantial powers of government Even were we'to succeed momentarily it would lead to-an inevitable deterioration of events in which our interests would greatly suffer 3 There is danger that the relatively small amount of violence during the Ashura weekend will delude the Shah into concluding that only cosmetic concessions are necessary for him to hold on to power That would be the certain prescripw tion for continuing strikes demonstrations the disruption of the economy and brutal repression with the danger of anarchy at the end of the road 4 Already there is increasing evidence of dissension on the part of some-younger officers and the more the Army is required to fire on civilians the greater the chances of mutiny while increasing radicalizaticn and the factionalism within the ranks may lay the basis for a military coup and petential civil war 5 All parties are looking to the United States for signals Our public and private posture will play a large role in determining whether the Shah and the opposition can achieve a non-v1olent accommodation -inev1tably- relieve the Shah of most of his powers 6 Though we should use our influence to try to bring into power a civilian government we should reco gnize that any such government will be weak and difficult Its weak- ness will result not-only erm inexperience but from the fact that while recent mass demonstrations have given an impression of common purpose leaders involved repres ent mutually antagonistic groups and philosophies utilizing the slogans of religion only because they have no other central unifying theme Since it will owe its creation to a nation- alistic civil uprising marked by anti AmeriCan slogans it will be less accommodating to our interests than the absolute monarch with whom we have been working But it will still be a better long-term bet than a repressive military government or anarchy which are the most likely alternatives SECRET SECRET -17- 7 We should take prompt steps to reassure the Govern- ments of-Saudi Arabia and the Gulf states that no matter what developments occur in Iran we will do everything necessary to guarantee the security of the Gulf Meanwhile we should offer the Saudis the opportunity to review possible measures to strengthen their security making it clear that a more forward security posture on our part will require their active cooperation 8 we should co-ntinue to try to detect and confront every Soviet effort to increase its influence in Iran and develop contingency plans fer a vigorous response 9 Ever since Vietnam the United States has come to' 'rely increaSingly on regional powers and allies for the pro tection of our own interes-ts overseas To some degree that is inevitable and desirable But the Iranian eXperience suggests that we have permitted the balance to shift too far in one direction It may be time to take a reasoned look at the possibilities and implications of a shift back toward greater self-reliance on our own capabilities and a more vigorous assertion of our own objectives abroad -At a minimum we should be aware that overloading underdeveloped nations with the we 1ght of large armies and advanced mili ' tary equipment risks the fatal weakening of their social and economic structures Suesi fic Steps l ambassador Sullivan should inform the Shah that the benign outcome of Ashura now offers him the last remaining possibility to pres_erve his dynasty and bring peace to his country But the minimum condition he must meet is to trans- 13 3 his powers to a- c1v1lian government and_ become a 99nr_ww u stitutional monarch 2 Ambassador Sullivan should urge the Shah to appoint a Council of Notables in the next week or two before the opposition has had a chance to regroup _ The Council would be mandat ed to select a civilian government to which the Shah would transfer all of his powers over the civil life of the country The s ame message should be given separately to the Empress and to General Ashari 3 AmbasSador Sullivan or the Station Chief should provide the Shah with a list of candidates for the Conncil of Notables making clear that while we are not prOposing to dictate his appointments that list represents the kind of individuals he should appoint -- men not compromised by association with his own regime SECRET SECRET -13 4 The Agency should begin exploring immediately the possibility of es tablishing a disavowable channel of commu-' nication to Khomeini and his entourage some point _we will probably need to send and receive mes sages if the mechanism is to be in place when it is needed we should start now i 441 f 5 Our public posture during the next few weeks should 1 Emphasize the importance of the Shah' role as a symbol of unity and continuity 2 Oppose a return to violence 3 Call for political accommodation and national- reconcili ation 6 If thi s plan should fail becaus-e of continued strong nationalist resistance to any scheme that would leave the Shah with even nominal power we should be prepar ed to take further action in the light of con ditions at the time possibly 'ineluding pressing for a regency In any event we should use all our leverage with the military to persuade them not to resort'to repressive measures to'prop up a bankrupt regime 'detested'by the people SECRET This document is from the holdings of The National Security Archive Suite 701 Gelman Library The George Washington University 2130 H Street NW Washington D C 20037 Phone 202 994-7000 Fax 202 994-7005 nsarchiv@gwu edu