U.S. Military sales to Iran

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U.S. Military sales to Iran
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United States -- Congress. -- Senate. -- Committee on Foreign Relations. -- Subcommittee on Foreign Assistance
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Table of Contents
    Front Cover
        Page i
        Page ii
    Foreword
        Page iii
        Page iv
    Table of Contents
        Page v
        Page vi
    Summary
        Page vii
        Page viii
        Page ix
        Page x
        Page xi
        Page xii
        Page xiii
        Page xiv
    I. Introduction
        Page 1
        Page 2
        Page 3
    II. Evolution of U.S. military programs in Iran
        Page 4
        Page 5
        Page 6
    III. The demand for arms
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
    IV. Iran's major defense programs
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
    V. Demographic and socio-economic effects of Iran's military programs
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
    VI. The supply of arms
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
        Page 48
    VII. Concluding comments
        Page 49
        Page 50
        Page 51
        Page 52
        Page 53
        Page 54
    Appendix A. High level visitors to Iran
        Page 55
        Page 56
        Page 57
    Appendix B. Security assistance dollar value
        Page 58
    Appendix C. List of contractors and personnel
        Page 59
        Page 60
    Back Cover
        Page 61
        Page 62
Full Text

U.S. MILITARY SALES TO


IRAN


A STAFF REPORT

TO THE

SUBCOMMITTEE ON FOREIGN ASSISTANCE

OF THE

COMMITTEE ON FOREIGN RELATIONS

UNITED STATES SENATE


IDA


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JULY 1976


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NoTE.-Sections of this committee print, originally classified secret,
have been deleted at the request of the Departments of State and Defense.
Certain of these deletions are indicated 1)y the notation "[Deleted]."



Printed for the use of the Committee on Foreign Relations


U.S. GOVERNMENT PRINTING OFFICE


44.1"0


WASHINGTON : 1976


I


94th Congress C
2d Session COMMITTEE PRINT






















COMMITTEE ON FOREIGN RELATIONS

JOHN SPARKMAN, Alabama, Chairman


MIKE MANSFIELD, Montana
FRANK CHURCH, Idaho
STUART SYMINGTON, Missouri
CLAIBORNE PELL, Rhode Island
GALE W. McGEE, Wyoming
GEORGE S. McGOVERN, South Dakota
HUBERT H. HUMPHREY, Minnesota
DICK CLARK, Iowa
JOSEPH R. BIDEN, JR., Delaware


CLIFFORD P. CASE, New Jersey
JACOB K. JAVITS, New York
HUGH SCOTT, Pennsylvania
JAMES B. PEARSON, Kansas
CHARLES H. PERCY, Illinois
ROBERT P. GRIFFIN, Michigan


PAT M. HOLT, Chief of Staff
ARTHUR M. KUHL, Chief Clerk



SUBCOMMITTEE ON FOREIGN ASSISTANCE

HUBERT H. HUMPHREY, Minnesota, Chairman


FRANK CHURCH, Idaho
GALE W. McGEE, Wyoming
GEORGE S. McGOVERN, South Dakota


CLIFFORD P. CASE, New Jersey
JACOB K. JAVITS, New York
HUGH SCOTT, Pennsylvania


RICHARD MOOSE, Staff Associate


(II)








FOREWORD


On behalf of the Subcommittee on Foreign Assistance of the Senate
Committee on Foreign Relations, I am pleased to publish this report
on U.S. Military Sales to Iran. This is the first of a series of oversight
activities in the foreign assistance area to be undertaken by the staff
at the direction of the subcommittee.
The Iranian military sales program is the largest in the world in
terms of dollar value and the number of Americans involved in imple-
menting the program, both in Iran and the United States.
The size of the program, the strategic and political importance of
Iran and the Persian Gulf area, and reported difficulties in program
management and implementation are factors which led the Subcom-
mittee to direct that this study be undertaken as its first oversight
project.
The study's findings and conclusions indicate that there are serious
problems with some of the programs which merit the immediate atten-
tion of the executive branch. I am concerned that, although the Depart-
ment of Defense has taken initial corrective steps in the management
aspects of the United States-Iran sales programs, neither the President
nor the Secretary of State have recommended any basic policy changes.
My overriding concern is that both the executive branch and the Con-
gress have thus far ignored the substantial and far-reaching foreign
policy implications which result from our deep involvement in sales,
training and logistical supply programs with Iran. The decision to
sell is in most instances followed by a long-term U.S. involvement in
program implementation which affects the future foreign policy
flexibility of the United States.
The study was written by Robert Mantel, a Staff Associate of the
Committee on Foreign Relations, and Geoffrey Kemp, a consultant
to the committee for this project. Prior to joining the professional
staff of the committee, Mr. Mantel worked for seven years in the In-
ternational Affairs Division of the White House Office of Manage-
ment and Budget (OMB) on military assistance and sales programs.
Mr. Kemp is an Associate Professor of International Politics at the
Fletcher School of Law and Diplomacy. He served as a consultant in
the Department of Defense, Office of International Security Affairs.
(OSD/ISA) during 1975.
The authors conducted extensive research in connection with this.
study, including numerous interviews in both the United States and
Iran. They were in Iran between March 2-17, 1976. At the request of
Senator Case, the authors were accompanied during a portion of their-
research in Iran by Mr. Stephen Bryen of the committee staff.
HUBERT H. HUMPiREY,
Chairman, Subcommittee on Foreign Assistance.
(III)


















Digitized by the Internet Archive
in 2013












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TABLE OF CONTENTS

SUMMARY
I. INTRODUCTION Page
A. Reason for Study ------------------------------------------ 1
B. Scope and Focus of the Study ------------------------------- 2
II. EVOLUTION OF U.S. MILITARY PROGRAMS IN IRAN ------ 4
III. THE DEMAND FOR ARMS
A. The Strategic Setting -------------------------------------- 7
IV. IRAN'S MAJOR DEFENSE PROGRAMS
A. The Iranian Defense Budget --------------------------------13
B. Imperial Iranihn Ground Forces -----------------------------14
C. Imperial Iranian Navy ------------------------------------ 19
D. Imperial Iranian Air Force ---------------------------------25
V. DEMOGRAPHIC AND SOCIO-ECONOMIC EFFECTS OF
IRAN'S MILITARY PROGRAMS
A. U.S. Citizens in Iran --------------------------------33
B. Socio-Economic change ------------------------------------37
VI. THE SUPPLY OF ARMS
A. The Arms Transfer Process (General) ------------------------ 38
B. Roles of the Executive Branch Departments in Arms Transfers to
Iran -------------------------------------------------41
VII. CONCLUDING COMMENTS
A. U.S. Interests and Iranian Security Policy -------------------- 49
B. Policy Implications of U.S. Military Involvement in Iran ---------50
C. The Executive Branch Decision-Making Process on Iran Arms
Transfers ---------------------------------------------53
APPENDIX
A. High Level Visitors to Iran -------------------------------------55
B. Security Assistance Dollar Value ---------------------------------58
C. List of Contractors and Personnel --------------------------------59












SUMMARY


Iran is the largest single purchaser of U.S. military equipment.
Government-to-government military sales to Iran increased over
sevenfold from $524 million in Fiscal Year (FY) 1972 to $3.91 billion
in FY 1974, slackening off a little to $2.6 billion in FY 1975. The pre-
liminary sales estimate for FY 1976 is $1.3 billion. Sales in the 1972-76
period totalled $10.4 billion. The number of official and private Amer-
ican citizens in Iran, a large percentage of whom are involved in mili-
tary programs, has also increased from approximately 15,000-16,000
in 1972 to 24,000 in 1976; it could easily reach 50,000-60,000 or higher
by 1980.
Iran is and will remain an extremely important country to the U.S.
and its allies because of its geographical location and oil. Iran, on the
other hand, places great importance on its relationship with the U.S.,
in large part because of the Iranian belief that the U.S. may come to
Iran's defense if it is threatened. Iran has undertaken a major military
expansion and modernization program in recent years to protect, its
interests from numerous perceived threats. Iranian officials also view
the military buildup as the spearhead of a broader program to trans-
form Iran into a modern economic as well as military power within
twenty years.
U.S. officials share many of Iran's defense concerns, and U.S. and
Iranian foreign policy interests coincide in most instances, with the
notable exception of oil pricing. Thus, Iran wants to buy its most
sophisticated arms and defense equipment from the U.S. for political
as well as economic reasons; it prefers to contract through the Depart-
ment of Defense on a government-to-government basis rather than
deal directly with U.S. private companies. Arms sales are, therefore.
an important component of U.S.-Iranian foreign relations.
Because the U.S. has a major interest in the military security of
Iran, most Iranian arms requests have been favorably received.
In May, 1972, President Nixon and then National Security Advisor
Kissinger, agreed for the first time to sell Iran virtually any conven-
tional weapons it wanted and so instructed the bureaucracy in a mem-
orandum in late July, 1972. In 1973, oil prices were quadrupled and
from that time on Iranian purchases from the U.S. boomed. The
direct participation of U.S. Government and industry in Iranian
defense programs. which increased after this bonanza, has raised im-
portant procedural and policy questions about the magnitude and
nature of the programs, the manner in which they have been imple-
mented, and the implications they pose for the future.
In this study we focused our attention on the U.S. decision-making
process, the U.S. involvement manageriall and operational) in imple-
menting the arms sales programs to Iran. and on identifying and ana-
lyzing future policy and programmatic implications inherent in the
U.S.-Iranian military relationship as it has emerged. Based upon
IVII)





VIII


our research, extensive interviews with U.S. and Iranian officials and
private citizens both in the U.S. and Iran, and a close examination
of the current data on U.S. arms programs, the following findings
emerge concerning U.S.-Iranian military relations and U.S. arms sales
policy.
FINDINGS
1. Iran has purchased large quantities of some of the most sophisti-
cated equipment in the U.S. inventory including the F-14 Tom Cat
Fighter and the DD993 modified Spruance Class destroyer. The F-14
system is so complicated that the United States Navy is having major
difficulty keeping it operational; Iran's Spruance Class destroyer will
be even more spohisticated than those being procured by the U.S. Navy.
Iran is already the dominant military power in the Persian Gulf area.
Upon delivery between now and 1981 of equipment ordered to date,
Iran, on paper, can be regarded as a regional superpower. Although
future purchases of new U.S. equipment and related services are likely
to decline in 'absolute terms from the fiscal year 1974 and 1975 levels,
any additional sales will add to an already sizeable inventory.
-Iran is considering the purchase of additional sophisticated equip-
ment such as the F-16 or F-18, and AWACS aircraft;
-To pay for new systems and complete its planned purchases of
such systems as the Spruance Class destroyer, Iran has proposed
barter arrangements (weapons for oil) to compensate for a re-
duction in normal oil revenues;
2. The Government of Iran is attempting to create an extremely
modern military establishment in a country that lacks the technical,
educational and industrial base to provide the necessary trained per-
sonnel and management capabilities to operate such an establishment
effectively. Iran also lacks experience in logistics and support opera-
tions and does not have the maintenance capabilities, the infrastructure
(port facilities, roads, rail nets, etc.), and the construction capacity
to implement its new programs independent of outside support.
-Most informed observers feel that Iran will not be able to absorb
and operate within the next five to ten years a large proportion
of the sophisticated military systems purchased from the U.S.
unless increasing numbers of American personnel go to Iran in
a support capacity. This support, alone., may not be sufficient to
guarantee success for the Iranian program;
-The schedule for virtually every major program except equip-
ment deliveries to the point of entry into Iran ha slipped con-
siderably due to the limitations noted above;
-In the face of immense obstacles, our investigation indicated that
the Iranian Armed Forces are making a maximum effort to en-
sure the success of the modernization program; their efforts,
however, are hampered because of rapid expansion in the civilian
sector as well. The military, for example, has difficulty in match-
ing civilian salary offers to the growing, but still insufficient num-
bers of trained personnel.
3. The 1972 decision by President Nixon to sell Iran the F-14 and/or
the F-15 aircraft and, in general, to let Iran buy anything it wanted,
effectively exempted Iran from arms sales review processes in the State







and Defense Departments. This lack of policy review on individual
sales requests inhibited any inclinations in the Embassy, the U.S.
military mission in Iran (A RMISH-MAAG), or desk officers in State
and DOD to assert control over day-to-day events; it created a bonanza
for U.S. weapons manufacturers, the procurement branches of the
three U.S. services and the Defense Security Assistance Agency.
-Between 1973-75, the activities of U.S. arms salesmen, official and
private, were not closely supervised by Executive Branch officials
charged with doing so, or by the Congress;
-Each of the U.S. services, particularly the Air Force and Navy,
was trying to sell equipment for its own reasons, usually to lower
per-unit costs of its own procurements or to recoup part of its
prior research and development investment. On occasion, the
services fiercely competed with each other for sales to Iran, e.g.
the Air Force and Navy to sell the F-15 and F-14 respectively;
-The services often did not inform the Iranians of the full extent
of the training, logistics, and maintenance implications of the
systems they were trying to sell. Thus, Iran may have been un-
aware of the complexities involved in translating its purchases
into an effective fighting force. Problems in all of these areas are
very serious:
-Discussions both in Washington and Iran have confirmed that
until recently U.S. appreciation of the management problems of
the arms programs in Iran was extremely limited;
-Secretary Schlesinger's decision to appoint a senior civilian De-
fense Representative in Iran in September, 1975, to oversee and
coordinate U.S. military programs in Iran is considered by vir-
tually everyone to be a positive and necessary development, given
the chaos and problems that had emerged in program management
and implementation. Nevertheless, until there is clear policy direc-
tion and effective program management in Washington. the prob-
lems in the field (Iran) will continue. Deputy Secretary Ellsworth
issued a directive in February, 1976. that he hopes will ensure co-
ordination and policy direction within the DOD;
-Evidence gathered indicates that the Iranian arms sales program
is not yet fully under control. Only with more effective control
from Washington can the inherent propensity of civilian con-
tractors and U.S. armed services to sell in an unrestrained manner
be curbed.
4. The presence of large and growing numbers of Americans in Iran
has already given rise to socio-economic problems. Although many of
these have proven to be manageable, they could become worse should
there be a major change in U.S.-Iranian relations.
-On the whole, U.S.-Iranian personal relationships are excellent,
if somewhat formal;
-We were told that some of the early problems were due to the pres-
ence of large numbers of young, single American male civilians
without adequate recreational outlets. Decisions by some of the
private companies to limit the number of unattached male em-
ployees have improved social relations, especially in more tradi-
tional cities such as Isfahan;
-There are many other foreigners in Iran as well as Americans,
including British, German, South Korean, Frenoh, Filipino, In-
dian and Pakistani;


76-929 0 76 2







-Anti-Americanism could become a serious problem in Iran, as it
has elsewhere, if there were to be a change in government in Iran.
The possibility of a future crisis. situation cannot be totally ig-
nored and for this reason contingency plans to deal with such an
emergency are necessary.
5. The U.S., having sold sophisticated arms in large quantities to
Iran, has assumed a growing and significant "commitment" in terms
of supporting that equipment-an unstated but nevertheless real ob-
ligation to train Iranians and to provide logistical support for the
lifetime of the equipment. To the extent that the decisions to sell the
arms were politically motivated, a failure to provide follow-on sup-
port to the satisfaction of Iran would vitiate the political benefits of
having made the sales. The deep involvement of U.S. personnel assist-
ing Iran in program implementation has significant foreign policy
implications for the United States in the Persian Gulf.
-The U.S. cannot abandon, substantially diminish, or even redirect
its arms programs without precipitating a major crisis in U.S.-
Iranian relations;
-If Iran is not able effectively to use the equipment it has pur-
chased, it may blame the U.S. for the failures;
-There is general agreement among U.S. personnel involved with
the Iranian programs that it is unlikely that Iran could go to war
in the next five to ten years with its current and prospective inven-
tory, i.e., purchases to date, of sophisticated weapons (as distinct
from some of the less sophisticated ground equipment) without
U.S. support on a day-to-day basis.
6. The symbiotic relationship, and Iranian dependence on the U.S.,
has political advantages and disadvantages for both countries. In
theory, the U.S. has the capability to immobilize major components
of the Iranian armed forces, especially the Air Force, by cutting off
spares, munitions and maintenance support should Iran try to use U.S.
equipment for purposes contrary to important U.S. interests. Iran
knows this could happen and is therefore unlikely to precipitate a
showdown, e.g. by aiding the Arabs against Israel. However, if, in
extremi8, there were a crisis, the United States personnel in Iran could
become, in a sense, hostages. The most difficult potential problems are
likely to arise in those hypothetical "gray areas" when it is not self-
evident that Iran's use of U.S. equipment is contrary to U.S. interests
but when its use may embroil U.S. personnel in an on-going conflict
situation, e.g. a new war between India and Pakistan in which the
Iranians might participate with U.S. equipment. In this type of
situation:
-Any attempt to limit the end-use of U.S. equipment could result
in a sharp deterioration in U.S.-Iranian relations;
-Failure to limit the Iranians given our capabilities would amount
to implicit endorsement of their action and tacit approval of the
use of U.S. equipment which, in turn, would almost certainly
mean the use of U.S. personnel in a support capacity. Whether
this would mean front-line, i.e. base level, participation by uni-
formed U.S. personnel or rear-line involvement by U.S. official
or contractor personnel would depend upon the actual weapons
used and the duration and intensity of the conflict. Clearly the
most serious case would be the former;





XI


-Since Iran has memories of the abrupt cut-off of U.S. arms to
Pakistan in 1965, and to Turkey in 1974, and because of the
political symbolism that stems from a close supplier-client arms
relationship, it is not clear who really has influence over whom in
time of an ambiguous crisis situation. Senior U.S. officials have
expressed concern about the U.S. being labeled as an unreliable
supplier; this concern undoubtedly inhibits the U.S. will to exer-
cise its capability to terminate support;
-Thus far the U.S. has not had to face any serious problems con-
cerning the use of U.S. arms by Iran. Iran's participation in
counterinsurgency operations in Oman has not involved any U.S.
persomel and the U.S. has not opposed the use of U.S. equipment
in that conflict.
7. Iranian officials see actual or potential military threats from
all directions; they are particularly concerned about protecting Iran's
oil "lifeline," the source of virtually all of the country's wealth and
revenue. Iran views the Soviet Union as the major threat at the pres-
ent time, having resolved its immediate differences with Iraq over the
Kurds and the Shatt-al-Arab waterway. Iranian officials expressed
concern about indirect, as well as direct, Soviet threats in the future
through the latter's ties with neighboring India. Afghanistan, and
Iraq. These officials are also worried about Soviet support for radical
groups on the Arab side of the Gulf and Soviet encouragement of
separatist tendencies among certain tribes in Iran. U.S. officials are
also concerned about many of these threats to Iran; in particular, U.S.
officials stress the importance of stability in the region and the un-
interrupted flow of oil. The U.S., however, has officially neither
endorsed nor rejected the Iranian perception of the threat.
8. Iranian and U.S. officials do not feel that U.S. sales to Iran
promote similar requests from Saudi Arabia.
-Both states have substantially increased their defense expendi-
tures, but not in an obviously competitive fashion;
-The Saudi Arabian military buildup, a large percentage of which
is devoted to basic infrastructure such as roads, ports and housing,
is not primarily driven by the Iranian buildup;
-There is little resemblance between the two programs. The most
sophisticated weapons purchased by the Saudis are the F-5E
fig-hter aircraft with Maverick and Sidewinder missiles and the
Improved Hawk air defense system, whereas Iran has purchased
the F-4D, F-4E, and F-14 aircraft, DD993 Spruance class de-
stroyers, and Chieftain and M-60A1 tanks in addition to the
F-5E and Improved Hawk;
-Procurement decisions by both countries over the last decade
indicate that neither has regarded the other as a primary threat.
It is possible, but not likely, that as these countries expand their
forces, they will come to regard each other as potential
adversaries.
9. There is evidence of incipient military competition between Iran/
Pakistan, on the one hand, and India on the other. The Shah has stated
that he would not tolerate any further dismemberment of Pakistan
and has developed close milit.ar'y ties with Pakistan. That the Iranians
are constructing new bases and facilities in the southeastern part of
the country, in particular the huge tri-service (army, navy, air force)
complex at Chah Bahar, is evidence of its concern over potential





Xii


threats from the !region. Indian officials, on the other hand, have ex-
pressed concern over growing maritime threats in the Indian Ocean
and are seeking higher naval appropriations.
10. Although Iran is arming against a number of potential threats
ranging from the Soviet Union to blockage of the mouth of the Gulf
(the Straits of Hormuz) and external support for separatism in Balu-
chestan, it is clear from our discussions that factors other than opera-
tional effectiveness, such as deterrence and prestige, seem to motivate
Iran's hardware purchases.
-Iran apparently believes that possession of the most advanced
systems may serve as a deterrent;
-Many U.S. military personel believe that weapons such as the
F-14 aircraft and the DD993 Spruance class destroyers are not
very useful to Iran in the probable contingencies that it might
face in the next ten years;
-We were told that because of the priority given to "prestige"
systems such as the F-14, already trained personnel assigned to
other systems that are more relevant to near-term threats (F-5E
and F-4), have been transferred to the newer systems with a
resultant unmeasurable degradation in overall force effectiveness;
-Iran's military programs are having a profound effect upon the
socio-economic development of the country. Thousands of young
Iranians are learning skills that have application to the economy
as a whole. The creation of new bases, e.g. Chah Bahar, and the
expansion of existing ones, e.g. Bandar Abbas, are resulting in
the development of basic infrastructure and the creation of new
communities in sparsely populated regions of the country. Thus
the bases may be a catalyst for population redistribution and
industrial growth.
11. The recent history of U.S. arms sales to Iran highlights some
of the inherent strengths and weaknesses of the Executive Branch in
coordinating arms transfer policy and reconciling short with mid-to-
long-term foreign policy interests.
-The State Department and the Embassy in Tehran have tended
to take a strong, united position on the Iran issue. Senior State
Department officials appear not to have been prepared to tolerate
open debate on possible adverse implications of unrestricted arms
sales to Iran:
-Within the Department of Defense, on the other hand, there were
more diverse opinions due in part to the different missions, inter-
ests and power bases of its numerous components. The sales and
procurement representatives of the Defense Security Assistance
Agency (DSAA) and the military services tended to support
high levels of sales to Iran; those responsible for policy formula-
tion, training, 'and logistics and supply tended to be more critical;
-There have been no interagency studies in recent years dealing
with arms sales to Iran or the Persian Gulf. A portion of a study
of U.S. policy on arms transfers, pursuant to a directive issued in
May, 1975, deals with this subject. As of June, 1976, this study
had still not been completed. reflecting both the complexity of
the subject and the considerable disagreement within the Execu-
tive Branch;
-A current study of U.S. policy toward the Persian Gulf, begun
in April, 1976, is not yet completed.





XII'


12. Irrespective of the benefits and costs of U.S. sales programs to
Iran, its history provides valuable insights concerning (1) the policy-
making process which determined the nature and level of our current
and future involvement; and (2) the policy and programmatic impli-
cations of a deep U.S. military involvement with a major arms
recipient.
-The Iran case demonstrates that there needs to be more explicit
recognition that when the United States sells major weapons in
large numbers to a non-industrial state, it is, in effect, entering into
a long-term commitment to provide support to those weapons.
This life cycle support has military, political, economic and socio-
logical implications which are not easy to anticipate and may
eventually create new problems for the U.S.;
-Although the nature of U.S.-recipient relationships will vary
depending upon circumstances, there is no such thing as a "non-
binding" arms sales agreement. Even if the U.S. Government were
to play no administrative role in foreign military sales, i.e. rely
on the private sector for implementing arms sales, U.S. personnel
and inevitably the U.S. Government, would still be involved.

GENERAL CONCLUSIONS
Our first general conclusion is that for at least three years U.S. arms
sales to Iran were out of control and the programs were poorly man-
aged. Badly managed arms sales programs are not in U.S. interests.
We, therefore, believe that the Iran program demonstrates the im-
portance of and need for effective Congressional oversight to focus
attention on these issues and thereby ensure that the Executive Branch
takes further action immediately to correct the management defi-
ciencies in Iranian arms sales programs.
'Our second general conclusion is that, over time, the so-called
"back-end" implementation aspects of arms sales can have a strong
influence upon the flexibility of political leaders to change or modify
their "front-end" choices. Events leading up to a sale itself, the so-
called "front-end" issues, attract attention because they often deal
explicitly with grand strategies and require high level policy deci-
sions. The "back-end" process, i.e., what happens after a sales contract
has been signed, involves the entire spectrum of military operations-
procurement, finance, logistics, maintenance, and training-and may
continue for ten or more years after the sale itself. The participation
of large numbers of uniformed and civilian Americans, both in the
recipient country and in the United States, may be necessary. This
creates mutual commitments: the U.S. assumes the obligation of long-
term support for the equipment it has sold; the purchaser becomes
dependent on the U.S. in much the same manner as a local automobile
dealer is dependent on Detroit.
The long-run policy implications of these commitments or obliga-
tions are important. On the one hand the United States has consider-
able leverage over the recipient, who could not sever its military ties
with the U.S. without a devastating effect upon its military capabili-
ties for years to come. On the other hand, the United States reputation
as a dependable supplier is at stake and it may be reluctant to use the
leverage it has.





XiV

This mutual and entangling relationship is not unique to the United
States and its arms recipients. There is good evidence that the Soviet-
Egyptian arms relationship has many of these same features. There-
fore, a general lesson to be learned from the Iranian experience and
applied to other major sales recipients is the need for both the Execu-
tive and Legislative branches to become better informed about these
"back-end' aspects of military sales programs.








I. INTRODUCTION


(A) REASONS FOR THE STUDY
Iran will remain an extremely important country to the United
States and its Western allies for many years to come irrespective of
its leadership or political ideology. A strong, pro-Western Iran pro-
vides security for critical oil supplies from Persian Gulf oil produc-
ing countries. No competitive alternatives to these oil supplies are in
sight for at least the next decade. A strong, anti-Western Iran could
eventually threaten the oil infrastructure of the Gulf area, with po-
tentially catastrophic consequences for the West. A weak Iran, whether
pro or anti-Western, could act as a catalyst for instability and conflict
in the Gulf region. Any major conflict in the region would pose a
threat to the oil supplies.
U.S. officials, therefore, believe that it is in the overall policy inter-
ests of the United States to support a strong, pro-Vestern Iran. The
sale of military equipment and the provision of defense services such
as training and support are regarded as important instruments of this
policy. What is more controversial and more open to criticism, review
and reassessment is the magnitude and nature of U.S. military pro-
grams, the manner in which they have been implemented, and the im-
plications they pose for the future. The purpose of this study, there-
fore, is to examine in general terms the important factors influencing
the supply and demand for American defense articles and services,
and to discuss in more precise terms their potential effect upon U.S.-
Iranian relations.
There are at least seven specific but interrelated reasons for examiim-
ing the current status of U.S. military programs in Iran.
First, Iran is currently the largest purchaser of U.S. military equip-
ment and services. The value of the U.S. military sales to Iran over
the past four years (FY 72-FY 76) amounts to $10.4 billion. There
is every reason to expect requests for further major purchases from
the United States over the coming years.
Second, because of Iran's relatively underdeveloped infrastructure
and paucity of skilled personnel, the United States is assisting the
Iranian Government with the implementation of most of the U.S.
military programs and many civilian projects which are scheduled to
peak over the next five years. Thus, increasing numbers of American
personnel and their dependents are going to Iran for periods ranging
from a few months to several years. At the beginning of 1976. the
estimated numbers were 24,000. Most informed observers believe these
numbers will increase to 50,000-60.000 or higher by the end of the
decade. Although the presence of large numbers of Americans in Iran
should not necessarily be a source for concern, socio-political problems
have already been encountered and can be anticipated in the future.
In extremis, we cannot be insensitive to the fact that a major change
in the political climate of U.S.-Iranian relations or increased internal
(1)







or external conflict within Iran or between Iran and its neighbors
might pose security difficulties for the American residents.
Third, Iran's ability to buy more U.S. arms and to finance the im-
plementation of existing programs is sensitive to oil revenues and the
rising price of U.S. defense articles and services. A decline in Iran's
oil revenues and continued price inflation in the costs of U.S. weapons
has already led to the deferment of some orders for U.S. weapons and
there have been tentative proposals for barter agreements exchanging
oil for defense equipment. Thus, there is a direct relationship between
Iranian oil revenues and level of arms purchases from the U.S.
Fourth, the magnitude and nature of the Iranian military buildup
has prompted speculation about a Persian Gulf arms race, which, in
turn, could increase the prospects for armed conflict among the local
states and lead to a possible disruption of oil supplies. For this reason
among others, there has been increasing criticism of U.S. arms sales
policy, including proposals to embargo U.S. arms sales to the Gulf
countries. It is worth examining the credibility of the "arms-race"
argument.
Fifth, there has been growing concern within the U.S. Executive
Branch, especially in the Department of Defense, over the manage-
ment of U.S. military programs. It was for this reason that Defense
Secretary Schlesinger appointed in 1975 a senior civilian Defense De-
partment representative to go to Iran and take charge of all DOD
programs; this representative outranks the Chief of ARMISH-
MAAG, a two-star general. These serious managerial problems have
not been fully appreciated by the U.S. Congress. Since Congress has
ultimate authority over U.S. military programs in Iran. it should be
fully conversant with the facts and problems of our involvement.
Sixth, the United States is not the only industrial country selling
arms to Iran. Britain and France and to a lesser extent the Soviet
Union, Italy and West Germany have sold military items and are
capable of and anxious to obtain further orders. Thus we are, to some
extent, competing for arms sales and many non-military items Iran
wants to buy. This competitive market situation raises questions about
worldwide U.S. arms sales policy, especially vis-a-vis the European
allies, for there may be linkaares between Gulf arms sales and the desire
for more cooperation with NATO Europe over joint procurement and
standardization programs.
Sf ,enth, irrespective of the benefits and costs of U.S. sales program
to Iran, its history provides valuable insights concerning the policy-
making processes which determined the nature of our current involve-
ment. By understanding these processes, we can better understand
future foreign police issues that may emerge either in the context of
our Persian Gulf policy or in other geographic areas where major U.S.
military s~les may be contemplated in the future.
(B) SCOPE AND Focus OF THE STUDY
The scope and focus of this study will be limited to an analysis of the
political, military, and economic factors influencing the supply and
demand for U.S. defense articles and services, the scope and nature of
U.S. military programs in Iran, and the foreign policy implications
of the U.S.-Iranian defense relationship.*
*This study does not include an analysis of the military effectiveness of Iran's military
procurements. This issue, although very important to overall U.S. interests, was considered
to be beyond the scope of this particular review.







In assessing supply and demand factors it can be said that Iran's
requests for U.S. arms are a function of the Shah's perception of Iran's
strategic requirements and the amount of revenue Iran has available
to purchase weapons in the United States. Since the defense decision-
making process in Iran is very straightforward, an analysis of the
demand for particular defense programs requires three basic inputs:
an understanding of the Shah, an understanding of the regional secu-
rity environment which helps to condition his thinking, and an under-
standing of Iran's financial assets.
The factors influencing the supply of U.S. arms are more complex
and therefore subject to more varied interpretation. The precise rea-
sons why the U.S. Government sold Iran F-14's and DD993's rather
than other aircraft or smaller naval vessels, stemmed from decisions
based upon the visit of President Nixon and Dr. Kissinger to Iran in
Mlay 1972, the quadrupling of oil prices in 1973, the activities of the
U.S. armed services, U.S. defense contractors, the U.S. Embassy in
Tehran, the State Department and the Department of Defense. While
it is not intended to present detailed case studies of each major U.S.
sale, the procedures and practices that lead up to a sale, so-called
"front-end" operations, will be considered as will the activities that
occur after a contract for defense articles or services has been signed,
the so-called "back-end" operations.


76-929 0 76 3










II. EVOLUTION OF U.S. MILITARY PROGRAMS IN IRAN
The U.S. military relationship with Iran after World War II was
limited to a relatively small grant military assistance program, con-
tinuation of the U.S. Military Mission to the Imperial Iranian Gen-
darmarie (GENMISH) established in 1943, and the establishment in
1947 of the U.S. Army Mission Headquarters (ARMISH), a mission
to the Ministry of War and the Iranian Army to enhance the efficiency
of the army. Under the Mutual Defense Assistance Agreement of 1950,
the U.S. agreed to provide technical personnel to discharge the U.S.
government's responsibilities under the agreement. The U.S. provided
$687 million in grant aid between 1950 and 1965, an average of $45
million per year and an additional $149 million between 1965 and 1972.
The U.S. recognized the strategic importance of Iran but it did not
seek a dominant military role during the 50's and early 60's, in effect
deferring to the British economic and military presence in the region.
The creation in 1955 of the Baghdad Pact (Iraq, Turkey, U.K..
Pakistan and Iran), with a permanent political, military and eco-
nomic organization, formalized the existing bilateral defense relation-
ships that had developed since the war. In 1956, the U.S. became a
member of the Economic Committee of the Pact and set up a military
liaison office. In 1958, Secretary of State Dulles told the Baghdad Pact
countries that the Eisenhower Doctrine-a statement enunciated in
Mardh 1957 that the U.S. would take action to counter Communist
subversion in the Middle East--commits the U.S. to their defense as
effectively as would membership in the Pact. Iraq withdrew from the
Pact in 1959, and the remaining members renamed it the Central
Treaty Organization (CENTO). The U.S. and Iran concluded a bilat-
eral pact in March 1959 for cooperation in promoting the security and
defense of CENTO imembers. Identical agreements were signed with
Turkey and Pakistan.
During the Kennedy Administration, the Shah became concerned
with the- reluctance of the U.S. to underwrite the cost of upgrading
Iranian forces to a level that he felt necessary to match those of his
now hostile neighbor, Iraq. President Kennedy informed the Shah dur-
ing the latter's visit to the U.S. in March 1962, that future U.S. aid
would emphasize long-term economic development rather than mili-
tary strength. Presidential Counsel Theodore Sorensen commented on
the Administration's view of Iran at the time:
In Iran the Shah insisted on our supporting an expensive
army too large for border incidents and internal security and
of no use in an all-out war. His army ... resembled the
proverbial man who was too heavy to do any light work and
too light to do any heavy work.*

*Sorensen: Kennedy, N.Y., Harper & Row, 1965, p. 628.
(4)







However, President Kennedy reaffirmed the U.S. commitment to
Iran's independence. The Shah accepted a cutback in military aid
but determined to set upon a more independent course in foreign
affairs.
The Shah launched his "White Revolution" of economic and social
reform in January 1963. Considerable. opposition from religious
leaders and landlords threatened by the reforms led to rioting in
Tehran in June 1963. The Shah used these events to neutralize overt
opposition, and he emerged with considerable strength internally
that gave him more confidence in pursuing an independent foreign
policy.
President Johnson changed U.S. policy toward Iran in 1964 by
agreeing during the Shah's visit in June to provide Iran with foreign
military sales credits. Between 1964-1969, Iran's economy continued
to grow and the grant materiel, military assistance program was
terminated in 1969 because Iran was now able to finance procurement
of its defense needs. The U.S. concern and emphasis on promoting
economic development in Iran persisted however, as U.S. agencies
debated whether Iran could "afford" moderate levels of credit with-
out excessive diversion from development needs. Credits actually pro-
vided for military purchases were as follows:
[In millions of dollars
Fiscal years
1965 1966 1967 1968 1969 1970 1971 1972 1973 1974
FMS Credits_-48 90 161 100 104 ------------------------------
Ex-Im Bank Credits ----------------------------------------------------------------- 120 200 300 200

The qualitative and quantitative jump in the intensity of the U.S.-
Iranian military relationship in the 1970's stems from the British
decision in 1968 to terminate its military role "east of Suez" by 1971.
Iran and certain Arab states, most notably Saudi Arabia, decided to
increase their military forces to deter outside intervention and prevent
"radical" forces from taking advantage of the resulting vacuum.
The U.S. conducted a major review of its Persian Gulf policy at
this time and decided that, despite its strong interest in the "stability"
and independence of the region, it would not try to replace the British
with a U.S. military presence. The Nixon Administration decided to
rely on local powers to preserve stability in the Gulf area and, ac-
cordingly, adopted the "twin-pillar" policy that presumed cooperation
between Iran and Saudi Arabia and a coincidence of their interests
with those of the U.S.
Data on U.S. arms sales to Iran since 1950 are contained in Annex A.
The most significant arms transfer decision occurred during the May
1972 visit to Tehran of President Nixon and Assistant to the President
Henry Kissinger. The President informed the Shah (1) that the U.S.
would sell Iran the F-14 or F-15 aircraft; and (2) that in the future,
the U.S. would, in general, sell Iran any conventional weapons systems
that it wanted. The decisions were confirmed in instructions to the
bureaucracy.






6

Although these decisions are consistent with the "twin pillar" policy,
they marked the beginning of the arms sales boom to Iran. The bu-
reaucracy ceased its careful scrutiny of requests by Iran except for the
most sophisticated systems involving release of state-of-the-art and
highly classified technology. The dramatic increase in oil prices in
1973 provided Iran with the means to buy what, it wanted. To the best
of our knowledge, there was no formal review of the 1972 decisions in
light of the oil bonanza. The decisions are operative today, although
an interagency study of U.S. arms-transfer policies to Iran and other
countries in the area is currently underway.









III. THE DEMAND FOR ARMS


A. TIE STRATEGIC SETTING
The high levels of Iran's demand for U.S. defense articles and serv-
ices involve three basic factors. First, the decision-making process in
Iran which leads to requests for U.S. and other foreign military equip-
ment. Second, the strategic setting which influences threat perceptions
and, therefore, in theory, the choice of weapons systems and force
structures. Third, other factors, such as prestige and domestic political
considerations, that influence procurement decisions.

1. DEFENSE DECISION-MAKING
The defense decision-making process in Iran is relatively simple.
The Shah decides on all major purchases; his Vice Minister of War,
Air Force General Hassan Toufanian, implements these decisions. The
Shah is very knowledgeable about modern weapons technology; it has
been said that he reads "Aviation Week" before he reads the Iranian
press. He possesses enough expertise which, if combined with his power
as supreme ruler of Iran, is sufficient to dampen even the most profes-
sional opposition to his procurement plans. In other words, once the
Shall has decided that a particular system is required by the Iranian
forces, it is unlikely that the Iranian defense establishment will chal-
lenge it and present serious alternatives. There is virtually no input
into defense decisions by the civilian sector of the Iranian Government.
As a consequence there has been little overall coordination of the
total Iranian defense procurement plan. There is presently no
equivalent within the Iranian defense structure to the Program,
Planning and Budgeting System (PPBS), which contributes to, but
does not always determine the formulation of U.S. defense procure-
ment decisions. Our research indicates that many of the long-term im-
plications of Iranian weapons systems procurement, especially those
to do with manpower and logistics support, were not examined in
any detail prior to the procurement decisions.
One result is that the major problems facing Iran have to do with
the implementation or "back-end" of weapons programs. This is in con-
trast with the United States and most NATO countries where often
the most urgent defense problems relate to the "front end" decisions
(what to buy and at what cost). Once a system has been ordered by
U.S. or NATO/Europe forces, implementation is facilitated by the
pool of trained manpower available and the legacy of experience.*
In the past the U.S. Military Mission in Iran (ARMISH-MAAG)
played an important role in influencing decisions on procurement but
once Iran was able to buy its weapons rather than rely on the U.S.

*IT-owever. It should be remembered that even West Germany had nroblems lnplementitn
the F-104 program because at that time (the early 1960's) the West German air force
was not experienced in handling advanced equipment.
(7)







grant MAP, the degree of U.S. influence declined, especially during
the critical period 1972-75 when many of the decisions on the large
programs were reached. Furthermore, during this period vociferous
and often conflicting advice was being freely offered to the Iranian
military establishment and the Shah by a host of U.S. actors, includ-
ing the U.S. Navy, the U.S. Air Force, and U.S. weapons manufac-
turers, each of whom had vested interests in selling Iran different
weapons systems.

2. THREAT PERCEPTIONS AND DEFENSE PLANNING
Decisions about weapons procurement are closely held, rarely, if
ever, subject to open debate, but frequently criticized by some Ameri-
cans and privately by some Iranians; in contrast, however, there is
more openness with regard to threat analysis. One reason for this is
because there appears to be, a greater consensus in Iran on the threats
to Iran's security than on the desirability of buying specific weapons
systems such as the F-14 aircraft.
Iran's geography and oil give it strategic importance.
During World War II Britain and the Soviet Union invaded and
partitioned Iran primarily to secure oil supplies and a logistics route
from the Persian Gulf into the Soviet Union.
The Shah, whose father, Reza Shah, abdicated after the invasion, has
not forgotten this experience, which, coupled with the Soviet reluct-
ance to evacuate Azerbaijan after the war, have made him and most
Iranians extremely sensitive to the Soviet threat.
Three factors need to be weighed when analyzing the threats to
Iran's security: geography, the military capabilities of adversaries or
potential adversaries, and the time frame. In terms of geography it
can be argued that Iran faces threats or potential threats from all
directions and therefore it requires a "from all directions" defense
policy. However, the military capabilities of Iran's possible adver-
saries vary, ranging from the "high intensity" threats posed by the
Soviet Union and other well-armed countries to "low intensity" threats
posed by poorly-armed or weak adversaries such as internal terrorists
or the insurgents in Oman. If the time factor is taken into account the
threat potential of more distant countries, such as India, must be con-
sidered. These three variables are summarized in the following table:
Threats to Iran
"High Intensity" Threats "Low Intensity" Threats

Present USSR Oman
Iraq Separatism
Terrorism
Future USSR Arab Gulf
Iraq Separatism
India Terrorism

a. Threats to the Oil:
Perhaps the most tangible threat to Iran concerns the vulnerability
of her oil economy. If the flow of Iranian oil to the Western world
were significantly reduced owing to military conflict, or the threat of






military conflict, the political and economic impact would be grave.
Hence it is not surprising that considerable thought and a great deal
of money has been devoted to ensuring the security of oil supplies.
Iran's oil is vulnerable to different threats at different points in the
oil-flow cycle: the oil fields, the collecting system, the local terminal
facilities and the oil sea lanes along which the super tankers tranship
the oil to Europe, Asia, North America and Israel.
The most important oil fields are located in the foothills of the
Zagros Mountains in the Southwest of the country at the head of the
Persian Gulf. Although these fields are fairly close to the Iraqi border,
they do not present as easy or as vulnerable a target as the major Saudi
oil fields or other targets in the oil cycle. Sabotage and air strikes could
threaten the oil wells and the oil field pumps, but it would be difficult
for Iraq or any other adversary to occupy these fields without mount-
ing a major offensive.
A more serious threat to the oil cycle concerns the vulnerability of
the collecting system (pipelines and pumps) and local terminal facili-
ties which Iran has developed to bring the oil from the fields and the
terminals and to refine and/or tranship it. Major refineries are located
at Abadan on the Shatt-al-Arab waterway adjacent to Iraq. at Ker-
man Shah, a little over 100 miles from the Iraqi border, and at Tehran.
The first two refineries are especially vulnerable to air attacks and the
Abadan refinery is within artillery range of Iraq.
The major storage and loading facilities for Iranian crude oil des-
tined for export are located on Kharg Island near the major naval
base at Bushehr. Kharg Island will remain an important strategic
target so long as Iranian oil is exported by super tankers.
The final threat relates to the sea lanes and the oil tankers as they
sail from Kharg Island down the Persian Gulf and through the Straits
of Hormuz into the Gulf of Oman, the Arabian Sea and the Indian
Ocean. The Straits are the most important choke point along this
route; therefore, protection of the Straits is a major mission of the
Iranian armed forces.
Knowledgeable military planners have identified two targets within
the Straits: the deep water channels themselves, which can be mined.
and the tankers which can be threatened or attacked in several ways.
The tankers are vulnerable to artillery and missile attack from land.
attacks from air, and attacks from submarines and surface ships which
can use a variety of weapons, including mines, torpedoes, missiles,
glns and frogmen. In short, the existence of a choke point such as
Hormuz presents a number of opportunities for would-be attackers
which are less readily available at other points along a sea line of
communications. Perhaps the most important contingency is that the
Straits of Hormuz could be mined. Mines can be laid by sea or by air
and -have the great advantage that they can be laid covertly by "un-
seen" forces. However, unlike certain other strategic straits such as the
Straits of Tiran leading into the Gulf of Eilat or Bab el Mandeb or
the Jubal Straits leading into the south and north end of the Red Sea,
it would probably be very difficult to block Hormuz by sinking a tanker
in the navigation channel. The ITormuz Straits are fairly wide and
deep for effective physical obstruction.
Once tankers have safely moved through the Straits of Jlorrmiz they
face more diffuse potential threats as they transit the Gulf of Omani





10


and proceed into the South Arabian Sea and the Indian Ocean. When
they reach the Indian Ocean they proceed in two different directions.
Some bear to the east and sail for Japan and the Far East; others, the
majority, proceed around the Cape of Good Hope into the South At-
lantic and on to Europe and North America. Along these two sea lines
of communication, different countries and political groups could pose
different types of threats. Since it is reasonable to assume that con-
flict and competition may increase along the Indian Ocean and the
South Atlantic littoral, potential threats to the sea routes in this area
cannot be lightly dismissed. From the perspective of Iran, the ques-
tion is to what extent it, as distinct from the U.S. and West Europe,
needs a credible sea control capability beyond the Straits of Hormuz
and the Gulf of Oman to help deter possible threats.
Clearly the relationship -between these threats and Iran's defense
programs is important. Each of the perceived threats listed above
requires somewhat different military preparedness, although there
are some common elements. For example, the requirements for pre-
venting threats to Iranian oil fields include capabilities for air defense
and antisabotage measures. In contrast, requirements for protecting
the sea lanes in the open seas are very different and include a long-
range maritime capability and a basing structure to support it. Pro-
tecting the Straits of Hormuz includes contingencies to prevent the
emergency of hostile or potentially hostile regimes on the Arab side
of the Gulf. Thus, Iran's occupation of the Tumb Islands and Abu
Musa Island in 1971 and its participation in counter-insurgency
operations in Oman have been designed to protect the entrance to the
Straits and to prevent the spread of radical governments from the
mouth of the Bab el Mandeb Strait, over which the Peoples Demo-
cratic Republic of Yemen exercises some control, alone the southern
Arabian peninsula to the straits of Hormuz themselves. Iran's military
activity in Oman primarily involved the use of land forces with
lo ,istics support and reconnaissance provided by air and naval
elements.
b. The Soviet Threat:
Iran shares a 1,250 mile border with the Soviet Union and most
Iranians clearly regard that country as its most serious potential
adversary because of the history of Soviet-Iranian relations and Iran's
generally pro-western stance. However, given the military capabili-
ties of the 'Soviet Union, the Iranians believe that in event of direct
military confrontation between the two countries, they, standing alone,
would not stand a chance. For this reason Iran's options for coping
with a direct Soviet attack at the present time are limited: delay the
Soviet advance as long aj possible and then either accept defeat or
wait for the United States to intervene.
In other words, Iranians feel that because the Soviet threat is so
ominous, there is little that they can do about it except to raise the
costs of a Soviet victory, contribute towards -an overall western defense
posture against the Soviet Union, and hope that the United States
comes to its assistance if attacked. At present Iran is said to be more
fearful of indirect Soviet support (1) for some of their neighbors,
especially Iraq, Afghanistan and India., and (2) potentially dissident
internal forces, as well as Soviet maritime activity in the Gulf and
Indian Ocean, than a direct Soviet ground threat from the North.







c. The Arab Threat:
Iran, because of potential and existing military rivalries with the
Arab countries of the Persian Gulf, especially Iraq and Saudi Arabia,
perceives a threat from the West.
Until Iran reached an accord with Iraq in 1975, relations between
the two countries were extremely poor and there was a distinct possi-
bility that serious fighting between them might have occurred along
the Iranian-Iraqi border. However, the Shah's decision to terminate
support for the Kurdish insurgency coupled with the termination of
U.S. covert support not only permitted a relaxation of immediate
tensions but also paved the way for a settlement of the long-standing
dispute over the boundary lines between Iraq and Iran in the Shatt-al-
Arab waterway.
At the time of writing (June 1976) the military relations between
Iran and its Arab neighbors are good. Iran has been cooperating with
Oman, Saudi Arabia and Jordan in the conflict in the Dhofar Province
of Oman and relations with Bahrain have improved immeasureably
now that Iran has relinquished its historic claim of that important
island.
However, the possibility of conflict with the Arabs in the future can-
not be discounted, especially if there were to be a revolution in Saudi
Arabia and the present regime was replaced by more extremist anti-
Western elements.
d. The Threat From the East and the Southeast:
The possibility of conflict in the East involving Iran, Afghanistan,
Pakistan and India is probably more serious than all other contin-
gencies aside from the insurgency problems along the Arabian
Peninsula and the threat to oil.
Iran is especially concerned about the centrifugal tendencies within
the Baluchestan regions of southeast Iran and Pakistan. A new con-
flict between Pakistan and India, perhaps prompted by separatist
tendencies in Baluchestan, could result in Iranian support for Pakistan
since the Shah has stated that Iran would regard any attempt by India
or another power to further dismember Pakistan as a threat to its
own security. Although the Indian government is reluctant to openly
criticize Iran's buildup, preferring to cite the U.S. and Pakistan's
maritime activity, the close political, religious and military relations
between Iran and Pakistan have not been ignored by Indian defense
planners.
India is beginning to worry more about the possibility of maritime
conflict in the Indian Ocean. Recent statements by senior Indian de-
fense officials called for increases in naval appropriations to balance
the growing capabilities of other maritime forces in the Indian Ocean.
The best empirical indicators of Iran's increased perception of the
potential threat from the East, and the possibility of Iranian-
Pakistani-Indian hostility, are the new basing programs which the
Iranian armed forces have initiated in the central and southeastern
sectors of the country. (These are discussed in more detail in Section
IV.)
e. The Internal Threat:
The internal threats to Iran come from three primary sources: left
wing Communist guerrilla groups (the "Red" threat); right wing
Moslem guerrilla groups (the "Black" threat); and the separatist


76-929 0 76 4





12


movements, especially in Baluchestan. So far these have all been con-
tained by the Iranian internal security forces.
However, the most important factor which prevents the outbreak
of more internal violence and separatist tendencies is the strength
and loyalty of the Iranian armed forces. The Shah's decisions on
weapons procurement, together with the* preferential treatment ac-
corded to the Iranian military in terms of pay and privileges, are
designed, in part, to to keep the military content. This phenomenon,
therefore, must be factored into any analysis of the Iranian demand
for arms.
THREAT SU3131ARY
The military threats to Iran's security seem to be sufficiently real
rtnd diverse to enable the Shah to justify major investments in military
forces. It is, therefore, not difficult for the Shah to make a rational
case for high levels of investments in U.S. equipment, and the Execu-
tive branch to respond positively, if the threat analysis is regarded
as the primary determinant of procurement policy. In short, it is
difficult to criticize Iran's perception that it needs a modern military
force. What is more debatable and what will be considered in the
remainder of this study is the suitability of and problems with the
particular defense programs in which Iran has chosen to invest its
resources and how these, in turn, relate to the United States.









IV. IRAN'S MAJOR DEFENSE PROGRAMS


Iran has purchased sophisticated U.S. equipment for all three mili-
tary services. This section describes the growth of the Iranian defense
budget and discusses some of the major programs, focusing on tie
nature and extent of present and future U.S. involvement in assisting
the Iranians to overcome some of the problems that have emerged in
their implementation.

A. THE IRANIAN DEFENSE BUDGET
The Iranian defense budget, in current dollars, has increased from
approximately $880 million in the Iranian fiscal year ending March .20,
1970, to $9.4 billion in the year ending March "20, 1977, almost an
1100% increase in seven years. This percentage increase is equivalent
to the U.S. defense budget going from $100 billion to $1.1 trillion in a
seven-year period. The estimated total Iranian defense budget by
Iranian fiscal year is as follows:
[$ millions in current dollars
1970 1971 1972 1973 1974 1975 1976 197
Defense budget ------------------------ 880 1,065 1,375 1,525 3,680 6,325 8,925 9,400
Percent increase from previous year ------------------ 17 29 11 141 72 41 5

The largest percentage increase followed the oil price increase in the
Iranian fiscal year ending March 20, 1974. The defense budget esti-
mate for the current year is 616% larger than the last pre-oil price
increase budget of 1972-73.
Despite these. increases, the percentage of the total Iranian budget
allocated to defense has decreased from 32% in 1974 to 22% in 1975
and 24% in 1976, as total Government expenditures increased from
$11 billion in 1974 to $3G.9 billion in 1976. The revenue increase, al-
most entirely from oil, was of sufficient magnitude to fund virtually
all programs, civil and military: choices between guns and butter were
not necessary. The increase in GNP from $10 billion in 1970 to over
$50 billion in 1975 is ample evidence of the boom atmosphere.
Financial discipline also broke down with such a favorable cash
flow situation. Virtually every program, civil or military, had an im-
port component, and Iran often had to compete with other countries
for commodities that were in short supply. It tended to pay top dollar
to obtain what it needed, often tying itself into long-term contracts.
Not surprisingly, inflation rates soared. The waste factor in the
Iranian economy has been estimated by informed observers to be as
high as 40% because of asysmnetrical development and poor coordina-
tion among key factors such as manpower availability, infrastructure,
port and rail facilities, etc.
The turndown in revenues in late 1975 has had a sobering effect, and
the Shah has taken steps to restore some fiscal discipline, inclidinr In
(13)





14

anti-profiteering campaign, a divestiture program requiring that 49%
of certain industries be sold to the workers, and a stretchout of num-
erous projects. The only new projects in the 1976-77 budget are in the
nuclear energy field.
The defense sector has been directly affected by the revenue shortfall.
For example, Iran cut back its projected purchase of Spruance class de-
stroyers from six to four, and has placed a hold on construction of the
new air and naval base at Chah Bahar; we understand that payment to
a number of contractors for work already completed at the base is
being held up pending further review of the budget
For all these reasons, the defense budget is unlikely to increase sig-
nificantly in future years and may have peaked in 1976-77. Iran is not
expected to purchase military equipment from the U.S. or third coun-
tries at the levels of the past three years, unless barter agreements
with U.S. companies to exchange additional weapons systems for off-
take are negotiated.

B. IMPERIAL IRANIAN GROUND FORCES (IIGF)
The Iranian Army is the largest and most established of the three
services. It accounts for the bulk of Iran's military manpower; plans
are underway for major increases in ground force strength. The Army
is purchasing some of the latest American artillery and missiles, the
British Chieftain Tank and Scorpian Light Tank and American and
Italian helicopters.
If the planned expansion of the Iranian Army continues on schedule
it will have, by 1978, an army at least twice as large as Britain's in
terms of manpower, armor and army aviation. In view of Britain's
former role as a major occupying power and later as policeman of the
Persian Gulf, the shift in relative force levels is significant.
IMPERIAL IRANIAN GROUND FORCES (IIGF): PRESENT AND PLANNED FORCE LEVELS
1975 1978 (Planned)
Personnel ------------------------------------------------- 222,720(103%)
Divisions -------------------------------------------------
Tanks ---------------------------------------------------------- 1,108 deletedl
Artillery ---------------------------------------------------------- 102
Helicopters ---------------------------------------------------------------- 327

The budget for the I!GF for 21 March 1976 through 28 March 1977
is estimated as follows:
Thousands
Personnel ---------------------------------------------------[deleted]
Operations & Maintenance -------------------------------------[deleted]
Procurement/Production ---------------------------------------[deleted]
Special Activities ---------------------------------------------[deleted]

Elements of the Iranian Army, together with support from the Air
Force and Navy, have been actively engaged in counterinsurgency
operations in Oman. As far as can be ascertained, its performance
steadily improved in that theatre and we have no evidence of any
major direct U.S. assistance in the operations.







:BASING AND DEPLOYMENT
At present the deployment of the major forces of the IGF and the
major bases are in the western part of the country, reflecting Irans
recent concern with the Iraqi threat. The disposition of the front line
main force units is as follows:
Northwest:
[deleted I ------------------------------------Rezaiyeh
[deleted] -------------------------------------------- Sanandaj
[deleted] -------------------------------------------Qazvin
West:
[deleted] ------------------------------------------- Khorensabad
[deleted] -------------- ----------------------------- Kerman Shah
[deleted] -------------------------------------------Ahwaz
Northeast :
[deleted] -------------------------------------------Mashad
Over the next few years the IGF will deploy a [deleted].
There is evidence that the IIGF intends to build many of its future
bases in the southeastern part of the country. One of these bases (Chah
Bahar), currently under construction, will have a distinctive tri-
service (army, navy, air force) character. This may be seen as a reflec-
tion of a change in threat perception from the north and west towards
the south and east.
MAJOR WEAPONS PROGRAMS
The major weapons programs currently programmed for the IGF
are listed in the following table:

















IMPERIAL IRANIAN GROUND FORCES: MAJOR NEW U.S. PROGRAMS, COSTS AND DELIVERY SCHEDULES

Orders Fiscal year
March Case value 1973
Category and item U.S. service 1976 Deliveries (millions) prior 1974 1975 1976 1977 1978 1979 1980 1981 1982

Helicopters:
AH-I J ---------------------------------- U.S. Army------ 202 108 $367.0 6 73 89 34
214 A/C- -- --------- 326 57 496.8 ---------------- 7 125 120 65 9
Artillery and missiles:
M113AI --------------- : -------------------- U.S. Army ------ 358 ------------ 41.7 325 --------------- 239 11 -------- 108
M109 (155mm-SP)-----------. .--------- 390 140 122.7 50 -------- 140 123 127
M107 (175mm-SP) --------------------------------do 8 13.1 38 ---------------------------- 8
M110 ---------------------------------- do --------- 37 ------------ 16.2 14 ----------------------- 28 9
TOW ----------------------------------- do ------- 15,000+ 103.9 2,333 -------------( 12, 667+ )
DRAGON -------------------------------------- do -------10,000+ ------------- 146.8 -------------------------------( 10, 000+ )
Third country:
Chieftain tank --------------------------------- United Kindgom. 2, 250 435
Scorpion COMSAT RECCE vehicle ---------------- do --------- 250
Helicopters ------------------------------------ Italy ----------- 312

Compiled From a Var!ety of Unclassified Sources.







I"AJOR U.S. PROGRAMS
The two largest U.S. programs in the IIGF are armor and army
aviation. Most of the new armored vehicles are being procured from
Britain (it has been reported that u total of 2,250 Chieftain medium
tanks have been ordered, of which 435 had been delivered by Feb-
ruary 1976). The British are providing support for the Chieftain
program, as well as the smaller Scorpion tank, which Iran is also
buying.
1. Army Aviation:
Iran intends to expand army aviation from its current level of ap-
proximately 8,000 men and 406 aircraft to 14,000 personnel and over
800 late model helicopters by 1978. The initial costs of this program
for procurement, installation and training is estimated at about $4
billion.
The United States is the largest provider of helicopters for the
army aviation program. This program will account for the largest
single component of the U.S. personnel presence working directly with
the IIGF.
The IIAA-U.S. program concept was generally agreed to in the
fall of 1972; a direct/letter contract was signed between Bell Heli-
copter International (BHI) and the Government of Iran (GOI) on
'21 February 1973 to train both pilots and technical personnel. Train-
ing started on 10 April 1973 for both groups. Because serious difficul-
ties arose in implemeting the direct commercial contract, at the request
of the GOI the Direct/Letter Contract was converted to FMS (gov-
ernment to government) cases on 11 March 1974.
The deliveries of the two basic U.S. helicopters (AH-IJ and 214)
are scheduled to be completed by mid-1977 and the end of 1979 re-
spectively. The original plan was that the training and maintenance
programs progress from a 100% reliance on the U.S. to zero percent
reliance by mid-1978. Thus the programs, which are being conducted
at the Imperial Army Aviation Training Center (II-A-ATC) in Is-
fahan and the Helicopter Logistics Department (HLD) in Tehran,
are approximately at the mid-point of the schedule.
As of February 29, 1976, the prime U.S. contractor, BHI,
employed 1,843 personnel to provide managerial, flight and mainte-
nance training. It is expected that this figure will increase to about
2,100 by the end of 1979. Although the majority of these personnel will
will be located in Isfahan and Tehran, two additional Forward Area
Support Centers to train intermediate/depot maintenance personnel
will be established.
Based upon scheduled training, BHI will be able to phase out of the
training program by mid-1978. However, in the view of those most
familiar with the program, there is virtually no chance that these
schedules will be met and it appears that GOI reliance upon front-line
American skills, especially in automatic data processing (ADP) and
engineering, will extend tar beyond the April, 1978 time frane.
Already major sociological problems have arisen in the helicopter
program. Some difficulties, especially those relating to the cultural
differences between single male employees of BHI and the residents
of Isfahan seem to have been dampened. Housing conditions for U.S.
personnel have improved and there are now strict quotas for the numn-
ber of single U.S. males in the program (about 10 percent).







Secondly, a strike by 140 Bell helicopter pilots in August 1975
resulted in their dismissal, further delaying the scheduled program.*
2. TOW Missile Program:
Iran purchased the TOW Heavy Antitank Weapon in 1973. The
initial procurement was about 250 launchers in two FMS sales. Sub-
sequently, it initiated an FMS case for approximately 100 more
launchers. Iran has also contracted with Emerson Electronics for the
co-production of up to 1,000 TOW missile launchers through 1980 and
is expected to sign an agreement to co-produce the missile. The co-
production program will permit the IIGF to replace the 106mm Re-
coilless Rifle with the TOW system in the future.
[deleted]
Depot maintenance support is provided by Iran Electronics Indus-
tries (IEI) through a contract with Hughes Aircraft Corporation.
Direct and general support maintenance is provided by IIGF person-
nel trained in the U.S. Of the 26 personnel trained to date, 14 are still
working on the TOW system. IIGF has initiated a program to train
additional personnel in wire-guided missile maintenance at IEI and
in the U.S. Currently 44 personnel are undergoing intensive English
language training before entering maintenance training.
Since the GOI has elected to establish a depot maintenance capa-
bility for the TOW system, the IIGF will continue to be dependent
upon the U.S. for the foreseeable future.
3. The M109 155mm SP Howitzer Program:
The M109 155mm SP Howitzer is not a new weapon system in the
IIGF; therefore, Iran's ability to absorb this piece of equipment
should be an important indicator of their overall ground force self-
sufficiency. The first M109's were purchased in 1968 and delivered in
1971. More were purchased in 1972, 1973 and 1974. When all deliveries
are completed IIGF will have roughly 400 M109's.
Although purchases of the M109 represent a modernization of an
existing capability, extensive training in vehicle operation and main-
tenance has been required. This training is conducted at the Artillery
School in Isfahan with the assistance of a U.S. advisor. Maintenance
training is conducted at the Combat Support Training Center at
Tabriz.
The self-propelled artillery system requires more maintenance and
more spare parts resupply than towed weapons. The IIGF logistic
system can meet the maintenance and spare parts requirements. How-
ever, it will take additional time and a continued advisory effort to
make the logistical system fully effective.
ARMISH-MAAG estimates that the M109 system can be sustained
with current IIGF capability and a continued advisory effort at the
present level.
*100 of the pilots left Iran and returned to the United States. 40 were rehired along
with replacements for the 100 who left. The company is currently fully staffed,





19
SUMMARY

The major problems relating to the U.S. involvement with the IIGF
concern the army aviation program. As with other advanced pro-
grams the main difficulties relate to training schedules, basing facili-
ties, and maintenance and logistics support tasks.
The formal training schedules prepared by U.S. companies which
indicate a rapid rise and equally rapid decline in the direct U.S. in-
volvement after 1978 are not considered to be realistic by U.S. officials.
From our obs ervations and discussions we believe that the U.S. will
remain directly associated with the IIAA program well into the 1980's.

C. IMPERIAL IRANIAN NAVY (IIN)
The IIN is the smallest of the three services; however, it plans to
triple the number of naval personnel and double the number of ships
in the inventory by 1978. By 1981, it plans to have at least four DD993
Modified Spruance Class destroyers operating out of a new naval base
to be built at Chah Bahar on the Gulf of Oman. Chah Bahar is only
50 nautical miles from the Pakistan border and approximately 800
nautical miles from Bombay.
The strategic and political implications of the Iranian naval expan-
sion program are potentially far-reaching and have heretofore received
little attention.
IMPERIAL IRANIAN NAVY CURRENT AND PLANNED FORCES
1976 1978 1984
Personnel ---------------------------------------------------- 12,721 [deleted]
Bases---- 6 [deleted[
Ships ---------------------------------------------------------- 30 [deleted]
Hovercraft__- -12 [deleted]
Fixed Wing A/C ---------------------------------------------------- 6 deleted]
Helicopters ------------------------------------------------------- 15 Ideleted]

The budget for the IIN for the current Iranian year (21 March 76
through 20 March 77) is estimated as follows:
Dollars in
thousands
Personnel ---------------------------------------------------- [deleted ]
Operations & Maintenance -------------------------------------- [deleted]
Procurement/Production ------------------------ ---------------[deleted]
Special Activities --------------------------------------------- [deleted]
BASING AND DEPLOYMENT
The IIN currently operates from six naval bases of which Bandar
Abbas, Bushehr, and Khorramshahr are the most important. There is
a training base at Bandar Pahlavi on the Caspian Sea and smaller
bases on Kharg Island and Hengam Island in the Persian Gulf.
The largest of the new bases will be located at Chah Bahar but at
the time of writing construction has not yet begun. Most of the money
to be allocated for new base construction will be for expansion pro-
grams at Bandar Abbas, Bushehr and Chah Bahar. Some idea of the


76-929 0 76 5





20


magnitude of the overall expansion of IIN construction can be seen
from the following table:

IIN Construction: Growth Comparison (Budgetary Estimates)
[$ Millions]
Third Plan: (1963-68) ------------------------------------------5.5
Fourth Plan: (1968-73) -----------------------------------------55.0
Fifth Plan: (1973-78) ....... 1200.00


MAJOR WEAPONS PROGRAMS
The following table shows the major weapons programs for which
the IIN has signed contracts. It does not include items of equipment
that are currently under negotiation or may be considered in the
future:

















IMPERIAL IRANIAN NAVY: NEW PROGRAMS, COSTS AND DELIVERY SCHEDULES


Category and item


U.S. service


Ships:
DD993 Sprumnce ------------------------------- United States
Navy.
Tani Submarine---------- -------------- do.
MK Il '65 Patrol Boats.. ... .... ... .... .... do


Orders
M rch
1976


Case value
Deliveries (millions)


1973
prior


Fiscal year
1974 1975 1976 1977 1978 1979 1980 1981 1982


4 -----------$1,466.5------------------------------------------


3
19


53.5 --
9.6


2 2......


. . . . ...- 1 1 1


Helicopters:
RH 5 3----. 6 ------------ 185.7 3 3 ----------------------------------------
Missiles: Harpoon----------------.. --------- ---------- -200+ -------------140.0 --------------- --------------( 200+ )


Third country:
Le Comatante Missile Patrol Boats France_
Logistics Support Ship ---------------------.. .United Kingdom.
SH-3D.. .. .. .. .. .. do .


12 ------
18


. .. . .. ..-.. . .. ..-------------------------- .-------------
7 363.0 -------------------------------------------------


May increase to 115.0
Compiled From a Variety of Unclassified Sources.





22W


MAJOR U.S. PROGRAMS
DD993 (Modified Sprance ClZss Destroyer)
In December 1973, the Shah authorized purchase of two anti-air
warfare (AAW) configured DD963's (designated DD993) at a unit
price of $238 million. In September 1974, a letter of offer for an ad-
ditional four ships was signed.
In October 1975 the U.S. Navy informed the GOI that the cost of
the six-ship Iranian program (including training and support) had
increased from about $1.47 billion to about $2.0 billion. The GOI
expressed sharp concern over the price increase. In January 1976, the
GOI cancelled two DD993's and decided to limit the program to four
ships. The program cost savings would be approximately $513,370,000,
with an additional $35 million savings in training costs.
According to latest U.S. (June 1976) estimates the delivery of the
first DD993 to the IIN is scheduled for April 1980. Deliveries of the
remaining three ships will be on or about October 1980, April 1981,
and September 1981. If the IIN is to introduce the DD993 into opera-
tional service in a reasonable time frame, the schedules for two major
requirements--crew training, and the base, maintenance, and logistics
facilities which are to be located at Chah Bahar-will have to be
accelerated.
CREW REQUIREMENTS AND TRAINING
Each DD993 will require a fully trained crew of 264 personnel for
a total of 1,056 for the four ships. It is estimated that at least 2,000
people must be recruited into the training program since an attrition
rate of about 50 percent can be anticipated.
The original training schedule in the United States was to have
commenced on July 1, 1975, with an input of 16 people per week. As
of March 1976, only 23 had begun U.S. training, as opposed to about
450 who were authorized. Unless there is a marked increase in this
rate, it is unlikely that the original delivery date for DD993 to the
IIN can be kept if the ships are to be manned by IIN crews.
BASING FACILITIES-THE IMPORTANCE OF CHAH BAHAR
It has always been the intention of Iran to base the DD993's at
Chah Bahar. However, as of March 1976, work on the naval facilities
had not begun and, indeed, no contract for construction had been
signed (this is not to be confused with the Air Force base at Chah
Bahar, which is nearly finished). Those familiar with the program
believe that if a contract for Chah Bahar were to be signed in the near
future, an absolute minimum of five to seven years would be required
to ready the facilities to accommodate the DD993's. This means that
the very earliest Chah Bahar would be ready would be between 1982-
1984. If the DD993's arrive on schedule in 1980 and 1981, an alternative
home base would be needed for at least two years.
The most logical alternative base would be Bandar Abbas but for
the fact that extensive modification of its facilities would be required
to accommodate the DD993's. These modifications had not begun in
March 1976, and we were told that no decision had been taken on this
issue.





23


DEPENDENCE OF DD993 UPON U.S. PERSONNEL
It is presently estimated that about 344 U.S. personnel will be re-
quired by the late 1970's to support the DD993 program. Of these 14
will be uniformed personnel (2 MAAG's and 12 TAFT) and the re-
mainder will be contractor personnel. The contractor personnel should
begin to arrive in 1978 and are scheduled to remain for at least five
years.
CONCLUSION
Given the slippage in both the timing and support for the DD993
program, these ships are not likely to become fully operational until
the mid-to-late 1980's.

Tang Class Submarine Peograi,
Iran has purchased three U.S. Tang class diesel submarines (late
World War II vintage)-Trout, Wahoo, and Tang-for a cost of $54
million. Current plans call for the overhaul of the first submarine
(Trout) in the U.S. in 1977, and the overhaul of Wahoo and Tang in
1978 and 1979. Trout would then be turned over to the TIN in early
1979; Wahoo would be delivered towards the end of 1979 and Tang in
1980.
Concurrent with the overhaul of the submarines, present Iranian
plans call for the training of 500 highly qualified, sea experienced,
petty officer volunteers to satisfy submarine crew requirements. This
plan would provide for three certified submarine crews (300 men) and
two crews to be used as replacement personnel (200 men). The first
crew was due to begin training in the United States in the second quar-
ter of 1976. However, at the time of writing (June 1976) there seem to
be difficulties for the IN in recruiting the necessary personnel given
the overall demands of the fleet and the competing requirements for the
DD993 program. We understand, however, that this situation is
improving.
The U.S. Navy has made it clear that any slippage in the training
program may increase costs and complicate the scheduled overhaul of
the ships.
The IIN RH-53D Program
The IN has ordered six RH-53D helicopters from the United
States. They are scheduled to be delivered in 1976 and 1977. The
Iranians hope to attain complete operational capability, a complete
logistics support system, and an established depot level maintenance
capability for this program by 1981. This date may well be delayed,
however, because construction of the base for these helicopters at
Bandar Abbas has slipped by about two years, to 1978. Use of an
interim location will delay the achievement of an independent oper-
ational and maintenance capability. In addition, the support con-
tract for 29 Sikorsky and EDO technicians had not been signed by
March 1976. If these people do not arrive by the time the RH-53D's
arrive in Iran, a day-for-day slippage can be anticipated. The IIN
is also experiencing difficulty getting its personnel through the highly
technical electronics schools which are required for the RH-53D
helicopter.






24


TOTAL 'U.S. PERSONNEL SUPPORT FOR 11N THROUGH FY 81

Based upon recent estimates (April 1976) the following table reflects
past, present and projected personnel figures for current contracts to
provide U.S. personnel support for the Iranian Navy:

Fiscal years
1975 1976 1977 1978 1979 1980 1981

Military Assistance Advisory Groups (MAAG)---------------------17 17 27 27 27 27 27
Uniformed Personnel
Technical Assistance Field Team (TAFT)--- -------------------35 138 137 125 120 115 115
Mobile Training Teams (MTT's) (Man/Years)---------------------4 5 6 11 11 11 6
Subtotal-------------------------------------------56 160 170 163 158 153 148
Civilians
Contractors
DD 993 ------------------------------------------------------ 330 330 330 330
RH 53D ----------------------------------------- ---------------------- 35 35 35 ? ?
Tang ----------------------------------------------------- ------ 50 5 50 50
Stanwick' .............---------------------------------------200 200 200 200 200 200 200
Subtotal------------------------------------------200 200 235 615 615 580 580
Total ------------------------------------------------------ 256 360 405 778 773 733 728

I Assumes IIN continues to employ 200 U.S. personnel under contract with the Stanwick Company.

These figures do not include additional American personnel that
may be required in connection with any major new purchases of U.S.
weapons, or the expansion of the existing programs. Nor do the
figures include U.S. contract personnel who may be involved in the
construction of the Chah Bahar naval facility.
Using these figures as a rough guide for the level of U.S. involve-
ment it is possible to estimate the total numbers of Americans who
will be in Iran associated with IIN programs (including dependents)
by applying an overall multiplier of 3.2 to include dependents for per-
sonnel on accompanied tours:

Fiscal years
1975 1976 1977 1978 1979 1980 1981

1. Total U.S. personnel (less unaccompanied TAFT's
& MT's)--------------------------------217 217 202 642 642 607 607
2. X 3.2 factor ------------------------------------- 694 694 838 2,054 2,056 1,942 1,942
3. TAFT's & MTT's----------------------------39 143 143 136 131 126 121
Total--------------------------------950 1,054 1,183 2,832 2,829 2,675 2,670

SUMMARY
The implications of the Iranian Navy's expansion program should
be viewed in both the strategic and political contexts. In strategic terms
the development of a naval force capable of sustained operations in
the Indian Ocean could have an impact upon the overall balance of
maritime power in the area. Iran is buying warships theoretically
capable of important sea control missions along the vital oil sea lines
of communication from the Persian Gulf to Japan and Europe. How-
ever, given the slippages in the DD993 program it will be years before
this capability becomes fully effective.





25


On the political level, Iran's naval program means a growing rela-
tionship with the United States Navy. As with other programs the
inevitable slippages and bottlenecks in the program could result in
friction between the U.S. and Iran.
D. IMPERIAL IRANIAN AmR FORCE (IIAF)
The Iranian Air Force (IIAF) is said to be the pride and joy of
the Shah. Of the three services, the Air Force has received the bulk of
the funds available for modernization in recent years and is the inost
technologically advanced. In fact, the IIAF inventory will be one of
the most modern in the world, including the F-14A with the Phoenix
missile system, F-4E, F-4D, RF-4. F-5E, P-3F. and C-130H aircraft.
The IIAF is assigned the usual missions of any air force, plus the air
defense mission, including operation of ground-to-air missiles. Project
Seek Sentry, an air defense radar network, and eight battalions of
I-Hawk are. on order to help fulfill this mission.
On paper the IIAF in the early 1980's would appear to be extremely
potent. The ability of the IIAF to absorb and effectively utilize these
systems by that time is, however, open to question.
IIAF: ESTIMATED CURRENT AND PLANNED FORCE LEVELS
1976 1978 1981
Personnel ---------------------------------------------------- 74,000
Bases ---------------------------------------------------------------------- 8
Squadrons ----------------------------------------------- 23
Aircraft -----------------------------------------------------392
(Fighters) ---------------------------------------------------(320) Ideletedl
(Transport) ---------------------------------------------------(56)
(Other)- (16)
Rapier Bns------------- ---2
I-Hawk Bns ----------------------------------------------------

IMAF PERSONNEL LEVELS
The IIAF will probably have to increase personnel levels b)y over
fifty percent by 1981 to operate effectively the sophisticated systeiiis
that will be in the inventory at that time. The following table ,I)'esellts
a breakdown of existing authorized personnel and projected iiicreases
in authorized levels through 1979:
[deleted]
The IIAF is likely to attain its recruitment ol)jectives in terns of
total numbers. The critical variable, however. in determining tle effec-
tiveness of the IIAF in the years ahead and its success in achievilw7
self-sufficiency is the degree to which the IIAF can recruit and train
the technical personnel required to perform operation, maintenance
and logistical functions associated with its sophisticated in ventoy.
Technical manpower requirements in the IIAF, currently esti-
mated at about 20.000. are likely to double by 1981. The existing shlort-
ag,e is estiillate(l at 7.0)()0; it inay increase to at least 8,00() by 197S a-,
10,000 bv 1981 as growing reluirements associated with F-14'te -s,
I-Hawk's and F-4E's outdistance the output of the training pro-
grams. Iran is becoming increasingly aware of the gal) between tle
technical requirements of IIAF weapons system and its ability to
perform them adequately. Whether this increasing awareness affects





26


Iran's procurement decisions on new systems under consideration re-
mains to be seen.
BASING AND DEPLOYMENT
The IIAF currently has seven operating bases, all of which are in
the northwest, west and southwestern part of the country, with three
forward operating bases in the east. Under construction are three new
operating bases--one at Chah Bahar on the Gulf of Oman in the
southeastern part of the country, a second, Khatami, at Isfahan, and
the third, Omediah, at the head of the Persian Gulf.
MAJOR PROGRAMS
The following table lists major IIAF programs for which contracts
have already been signed or for which signature is imminent, e.g.
Peace Log, and their status.












IMPERIAL IRANIAN AIR FORCE: MAJOR PROGRAMS, COST AND DELIVERY SCHEDULES


Category and item


U.S. service


Orders March 1976


Case value 1973
Deliveries (millions) prior


Fiscal Year


1974 1975 1976 1977 1978 1979 1980 1981


Aircraft:
F-14/Phoenix Missile ....... U.S. Navy------------80 a/c -------------- 10 $1,919 -----------------------1 8 42 20
400+ missiles ...... 0 282
F-4D --------------------- U.S. Air Force ----------- 32 ---- ------------ 32 106 32 -----------------------------------------------------
F-4E ------------------- do .177------------------ 141 857 34 52 35 20 31 5-----------------------.
F-5E-------------------.1.....do---41 --141 377 15 82 52 ................................................
F-5F --------------------------- do ------------- 28- 0 102 .-------------------------------- --28.----------------------------
RF-4E------------------------- 12 --------- 0 143 12 ----------------------------------------
P-3F ---------------------- U.S. Navy ------------ 6 ------------------ 6 73 6 -..............6. .--------------------------------------
KC-707 ------------------- U.S. Air Force3------------- 6 277------------------------------------------------------------
747------------------Commerce ------------- 124 -------------------- ------------------------------------------- ----------------
Missiles: Maverick ------------ U.S. Air Force ---------- 2,500 -------------- 2,500 64------------------------------------------------------------
SAM: I-Hawk ---------------- U.S. Army-37 Batt ------------- 16 -------------0 2 8 ( 27 )------------
1,800+ missiles-.--- 650+ 600+ 0 0 1150 )
Radar: Seek Sentry ------------- U.S. Air Force .....-58------------------------------------------------------------
COMMO: Seek Switch do---------------- 25------------------------------------------------------------
Logistics:
Peace Log-----------------do--------------.--------------------.............................------------------------------
C-130 ----------------------do-- --5656 -------------------56--------------------------------------------------------------------
Helicopters: Many types -------- U.S. Army and U.S. Air 72-.....-34 ? ----------------------------------------------------------------------
Force.

Compiled From a Variety of Unclassified Sources.


1982






28


POSSIBLE FUTURE PURCHASES
The Iranian Government is considering the purchase of additional
fighter, attack and special purpose aircraft. Although no decisions
have been made, the Iranian Government is reported to be considering
a buy of 250-300 of either the F-16 or F-18 fighter aircraft, from 2 to
6 Airborne Warning and Control Aircraft (AWAC's), additional
747 aircraft, between 4 and 10 E-2C "Hawkeye" electronically equip-
ped aircraft, and 12 HH-53 long-range search and rescue helicopters.

U.S. PERSONNEL
The 307 Air Force TAFT Personnel are working in the following
weapons systems and support areas:
Aircraft Maintenance: (127) F-4(76), F-5(51); Communications/
Electronics/Meteorology (74); Logistics (62); Training & Adminis-
tration (31) ; Air Defense (7); Command Element (6).
They are assigned to the following operating areas:
No. per-
sooniet/
Locations or Program: FY76
Doshen Tappeh --------------------------------------------101
Mehrabad -------------------------------------------------49
Shahrokhi -------------------------------------------------- 40
Shiraz ----------------------------------------------------- 23
Vahdati ---------------------------------------------------35
Tabriz ----------------------------------------------------19
Bushehr ---------------------------------------------------25
Bandar Abbas ----------------------------------------------15
307
I-Hawk (Army) ---------------------------------------------58
F-14 (Navy) ------------------------------------------------15
380
MAJOR U.S. PROGRAMS
1. F-14A :
President Nixon agreed to sell the F-14 and/or F-15 to Iran during
their visit to Tehran in May 1972. The U.S. Navy and U.S. Air Force
actively promoted their respective aircraft. Iran decided to buy the
F-14, primarily because it carries the Phoenix weapons system which
is the only system capable of reaching the high flying Soviet MIG-25's
that are reported to periodically overfly Iran.
Iran signed a letter of offer (LOA) in January 1974, for 30 aircraft
at $845 million, and a second LOA in June 1974, for an additional 50
aircraft at $1.1 billion. Subsequent support contracts and purchase
of the Phoenix missile system ($304 million) have increased the total
cost of the F-14/Phoenix weapons system to $2.33 billion. As of the
end of May 1976, ten aircraft had been delivered. An additional eight
aircraft will be delivered before October 1, 1976, forty-two will be
delivered in U.S. fiscal year 1977, and the remaining twenty by May
1978. A recent decision to reduce the number of F-14 bases from three
to two, Khatami and Shiraz, has lowered the total projected system
cost.
Iran will probably operate five F-14 squadrons. By 1981, it is esti-
mated that 6,500 personnel will be required to support the aircraft.
of whom about 2,650 must be technically trained.





29


U.S. PERSONNEL
Currently there are only 15 U.S. personnel working in Technical
Assistance Field Teams (TAFT) on the F-14, two in Teheran and
thirteen at Khatami Air Base in Isfahan; an increase to 23 is planned
for 1977. The number of official U.S. personnel is relatively small
because of heavy contractor involvement. There are 353 contractor
(Grumman, Hughes, and Pratt and Whitney) personnel in Iran asso-
ciated with the F-14/Phoenix program, of whom 322 are presently
located at Khatami Air Base. The existing contract for contractor
support expires in 1978, with peak staffing of 800 in June 1977. Grum-
man's contract, however, states that the company will maintain the
aircraft until the IIAF is ready to take over.
The original plan called for base construction, training and aircraft
delivery to coincide. Overly optimistic target dates, and 9 to 12 month
construction delays in base support facilities at Khatami Air Base,
have significantly affected the overall schedule. For example, delays in
constructing on-site training facilities have resulted in a backlog of
200 maintenance personnel awaiting training. Grumman, as noted, esti-
mates that self-sufficiency in in-country training and the phase-out of
contractor personnel is two years away, but this is generally regarded
as an extremely optimistic estimate. The need for external assistance
is likely to extend into the 1980's, given the delays in nearly all aspects
of the program except equipment deliveries.
Producing pilots and weapons systems officers, i.e. flight crews, is
likely to be an easier task for the IIAF than producing logstics and
maintenance personnel because the IIAF is shifting some of its best
F-5E and F-4 air crews into the F-14, which it considers its most
prestigious program.
U.S. PERSONNEL AND THE F-14 PROGRAM
1973 1974 1975 1976 1977
M A A G ---- -- -- ---- ------ ---- -- ---- -- -------------------------- ---- ---- -- ---- -------------------- -------- --
TAFT -------------------------------------------------------------------15 23
Contractor -------------------------------------------------------------------------- 26 353 537

2. F-4D/E:
The backbone of the IIAF is the F-4 aircraft. Iran has purchased
32 F-4D's ($106 million), 177 F-4E's ($857 million), and 12 RF-4E's
($143 million), all of which have been delivered except 36 F-4E's and
the 12 reconnaissance planes. The F-4D's are capable of delivering
laser guided bombs. All of the F-4E's will have leading edge slats for
increased maneuverability, some will be equipped for the Maverick
air-to-ground missile, and others equipped with an electro optical
target identification system.

IRANIAN PERSONNEL
The F-4 program requires 11,000 personnel at the present time,
increasing to about 25,000 by 1978 and leveling off thereafter. There
will be a requirement for over 7,000 trained personnel in the air crew
and maintenance categories by early 1977; projected manning, how-
ever, is likely to be about 4,000, resulting in a gap of 3,000.





30


OPERATIONAL STATUS
Most observers report that combat readiness in the F-4 is less than
desired due to shortage of trained air crew and maintenance person-
nel as noted above. The training program is hampered because of (1)
a limited night and foul weather training program (2) a shortage of
instructor pilots. In addition, some of the most highly trained person-
nel are being diverted to the F-14 program.

U.S. INVOLVEMENT
In the initial stages of the program, virtually all operational train-
ing was done in the U.S. or by mobile training teams. The IJAF con-
tinues to rely on the U.S. for instruction in new tactics or on new
systems that are added to the aircraft, but otherwise is self-sufficient
in operations.
Maintenance and logistics support of the F-4D/E is very dependent
on the U.S. personnel-MAAG, TAFT, contractor engineering tech-
nical services, and USAF logistical command assets. Many of the
complex maintenance skills must be purchased from USAF schools.
There are 90 official U.S. personnel assigned to the F-4 program in
FY 1976-three in the MAAG and 87 with TAFT's; the number of
TAFT personnel is expected to decrease to 75 in FY 1977. McDonnell
Douglas has 57 contractor personnel in Iran at the present time, most
of whom will remain in FY 1977. This assistance will be required for
several more years if the IIAF is to maintain its requisite number of
flying hours and maintain operationally ready aircraft.
3. F-SE/F Program:
The U.S. had provided Iran with 104 F-5A and 23 F-5B fighter
aircraft in the late 1960's and early 1970's, largely under the grant
military assistance program. Iran is replacing the A & B models with
the 141 F-5E's ($377 million) and 28 F-5F's ($102 million), the two-
place version which will serve as a trainer at the Combat Crew Train-
ing Center at Vahdati Air Base. All of the F-SE's have been de-
livered and the first F-5F will be delivered in August 1976. The F-
5E/F fighter is relatively easy to operate and maintain. Because of its
experience with the F-5A/B, the IIAF should be able to absorb the
F-SE/F's with relative ease compared to the more sophisticated F-14
and F-4 aircraft. The IIAF has eight F-5E squadrons.
IRANIAN PERSONNEL
This program will require 6.000 personnel by 1978. The extent to
which the F-5E program will be affected by the reported transfer of
some of the best air crews to the F-14 program remains to be seen.
As with the other IIAF programs, the most critical shortage is trained
technical personnel in the logistical and maintenance areas.
U.S. INVOLVEMENT
The IIAF is heavily dependent on official and contractor personnel,
despite the fact that the F-SE is a relatively easy to operate and
maintain aircraft. The F-SE was introduced into Iran prior to qualifi-
cation and delivery of much of the support equipment. Also, certain







IIAF modifications precluded concurrent deliveries of spares, aero-
space ground equipment (AGE) and technical data. -
Thus MAAG, TAFT, and contractor personnel will be required for
some time in the future to assist in providing maintenance and logisti-
cal support for the system. The IIAF is also dependent on the USAF
for the development and implementation of advanced air-to-air and
air-to-ground tactics.
U.S. PERSONNEL AND THE F-5E PROGRAM
1973 1974 1975 1976 1977
MAAG ------------------------------------------------------------- 3 3 3 3 3
TAFT------ 30 30 45 57 28
Contractor-.---- 18 53 52
Mobile Training Team-....-16 5 4

4. Improved Hawk (I-Hawk):
The IIAF has purchased 37 improved Hawk batteries, about 1,800
missiles, and a related training and support package for a total cost
of upwards of $600 million.
This program is one of the largest and most complex of all programs
undertaken by the Iranian military. In addition to the batteries them-
selves, Iran has purchased an automated fire distribution system, a full
depot maintenance capability for all ground support equipment. and
a missile firing range. Over 1,000 buildings in 50 locations must be
designed and constructed for the I-Hawk system at a cost of over $400
million.
Sixteen batteries and over 650 missiles have been delivered to (late.
IRANIAN PERSONNEL
The schedule calls for about 2,000 Iranians on the I-Hawk program
at the present time, increasing to about 12,000 by 1981, most of whom
must be technically trained. Trained manpower may be -up to 2,500
short of required levels by 1978-79.

OPERATIONAL STATUS
The IIAF, which purchased the I-Hawk in 1973 and received its
first delivery in March, 1975, is having initial difficulties in operat-
ing this system. This results from a number of factors, most notably
construction delays, non-operational training equipment, lack of a
formal on-the-job training program, allocation of qualified students
to higher priority programs, and a faulty automated logistics system
that has resulted in some instances in up to a year's delay in the sup-
ply system. Spares adequate to support the batteries already delivered
are in Iran, but the IIAF logistics system is slow in locating and pro-
viding the spares to individual units.

U.S. INVOLVEMENT
The I-Hawk problems remain, despite the assistance of over 200
U.S. official and contractor personnel. Success in such a complex pro-
gram depends on a phased integration of site construction, person-





32


nel training and system delivery. As noted earlier, there axe serious
delays in the first two of these areas.
Unless there is a stretchout in virtually all aspects of the program.
it may fail. Alternatively, it could take nearly 1,000 U.S. technicians
to ensure operational status for all I-Hawk sites follotving completion
of the necessary construction.
U.S. PERSONNEL AND THE I-HAWK PROGRAM
1973 1974 1975 1976 1977
MAAG -------------------------------------------------2 2 2 2 14
TAFT -------------------------------------------------------------------------------------- 58 63
Contractor ------------------------------------------------------------------------- 116 150 254
MICOM ------------------------------------------------------------------------------------ 9 24
Total ------------------------------------------------------- 2 2 118 219 355

IIAF SUMMARY
The IIAF has clearly purchased the most advanced equipment
which has prestige and deterrent value, although it is highly question-
able whether such systems, particularly the F-14 and I-HAWK, will
be effectively operating before the early to mid-1980's.
This acquisition pattern extends to support systems as well. The
anticipated IIAF purchase of Project Peace Log (a program to de-
velop a functional logistics organization costing $300-$500 million
dollars over a number of years) will require about 14,000 Iranian per-
sonnel by 1981, many of whom will require technical training, and up
to 460 U.S. contractor personnel working in line jobs in the Iranian
logistics system until the entire 14,000 Iranians are trained and on
duty. That the Iranians need an effective logistics system is obvious.
Nevertheless, the Iranians selected the largest, highest cost option pre-
sented to it by the U.S. Air Force. Given Iranian difficulties in recruit-
ing trained personnel, the U.S. contractor is likely to be directly in-
vol ved for a long period of time.
There have been slippages in nearly all major programs due to
shortfalls in training. construction, and maintenance and logistical
support. As a result of the shortage of trainable personnel and other
training delays, already-trained personnel are being shifted from
their current programs to those of higher priority, e.g. trained air
and maintenance crews from the F-5E to the F-14. The impact of
this "poaching" on the lesser priority programs remains to be seen.
Similarly, the better new personnel are likely to be assigned to the
prestige programs, engendering further delays in programs such as
I-Hawk, which are immensely complicated, but apparently of lesser
priority.
In conclusion, self-sufficiency is not attainable in the foreseeable
future, even if the IIAF makes no additional major purchases. Con-
tinued U.S. involvement, and a concomitant dependency of the IIAF
on the U.S. is unavoidable until the mid-1980's. New purchases will
further exacerbate the problems.
If the IIAF, the Shah's primary interest, faces these difficulties in
surmounting manpower and infrastructure limitations, other pro-
grams that must compete for limited human and financial resources
will probably experience even greater problems.








V. DEMOGRAPHIC AND SOCIO-ECONOMIC EFFECTS OF
IRAN'S MILITARY PROGRAMS

A. U.S. CITIZENS IN IRAN
Estimating the number of U.S. citizens in Iran is difficult because
of the lack of hard data. The U.S. Embassy estimates that there were
15,000-16,000 U.S. citizens in Iran in 1972, and about 24,000 at the
present time; it expects an increase to 33,000 to 35,000 by 1980-81.
The Embassy projection for 1980 seems to be extremely conservative,
since the ARMISH-MAAG projects contractor personnel on existing
military projects alone to be 11,000 by 1980, or 36,000 including de-
pendents. The key point is that the trend line is sharply rising, and
many informed observers believe the number may reach 50,000-60,000
by 1980. It could go higher if Iran purchases more sophisticated U.S.
military and civilian products over the next few years.
After 1981, the Embassy expects the U.S. population to level off
and begin to decline as civil and military projects are completed and
greater numbers of trained Iranians enter the work force. Assuming
no major new programs, the population trend line will certainly fol-
low this pattern, but it is unlikely to decline very rapidly after 1981.
The schedules for many projects have already slipped two to three
years. Although there are varied reasons for such delays, one of the
most frequently cited is the lack of trainable and trained indigenous
manpower. There is no evidence that the supply of trained manpower
will increase sufficiently to recoup these slippages; in short, U.S. per-
sonnel are likely to be required in large numbers for several years
longer than is currently estimated.
About two-thirds of the Americans in Iran are located in Tehran.
This percentage should decrease given Iranian efforts to develop in-
dustrv in other areas of the country. In the future, more Americans
will probably be located in Isfahan, Shiraz, Bandar Abbas, Bushehr
and Tabriz.
For comparative purposes, U.S. Embassy estimates of other skilled
foreign populations in Iran at the present time are:
British---------------------------- 6, 000-7, 000
German ---------------------------- 6,000
French ----------------------------- 5, 000
Russian ----------------------------5, 000 (partly emigre)
Japanese --------------------------- 2,000
Pakistani --------------------------- 2,000
Indian -----------------------------2, 000
South Korean -----------------------1,500
Philippine-------------------------
Most of these national groups are also expected to increase rapidly.
1. U.S. PERSONNEL IN IRAN (MILITARY PROJECTS)
The official U.S.-Iranian military relationship dates from World
War II when the first U.S. mission went to Iran. The evolution of
these missions from 1943 to the present is discussed in this section.
(33)





34


a. GENMISH:
The United States and Iran signed an agreement on November 27,
1943, establishing the U.S. Military Mission to the Imperial Iranian
Gendarmarie (GENMISH). The purpose of the Mission was to advise
and assist the Ministry of Interior of Iran in the reorganization of
the Gendarmarie and to advise on organizational and training matters.
The initial agreement was for two years and was extended on an
annual or biennial basis until the organization was deactivated on
March 21, 1976. Selected GENMISH personnel figures for the 1954-
1976 period are as follows:

Military Civilian Tota
1954 ------------------------------------------------------------------ 18 16 34
1957 ------------------------------------------------------------------ 19 16 35
1960 ------------------------------------------------------------------ 20 16 36
1962 -------------------------------------------------------- 21 16 37
1963--------------------------------------------------------24 16 40
1967 ------------------------------------------------------------------ 23 16 39
1968 -------------------------------------------------------- 22 16 38
1969 ------------------------------------------------------------------ 19 11 30
1971 -------------------------------------------------------- 16 11 27
1976 ------------------------------------------------------------------ 16 11 27

b. ARMISH:
A second component of the official U.S. presence is the U.S. Army
Mission Headquarters or ARMISH. The agreement establishing the
ARMISH was signed on October 6, 1947. Its function was to work
with the Ministry of War to enhance the effectiveness and efficiency of
the Iranian Army. This agreement has been extended regularly since
1947.
MAAG:
The Military Assistance Advisory Group (MAAG) was established
pursuant to an agreement in May 1950, to enable the U.S. to discharge
its responsibilities for 'administering the grant military assistance
program.
c. ARMISH-MAA G:
In 1958, the United 'States decided to consolidate the ARMISH and
the MAAG into a single organization entitled ARMISH-MAAG. The
consolidation was completed in 1962. In recent years ARMISH-
MAAG's primary functions have been (1) to advise the Iranian
Armed Forces, primarily Vice Minister of War General Hassan
Tcufanian, on weapons procurement; (2) to process government-to-
government (FMS) sales; and (3) to assist Iran in assimilating
equipment purchased from the U.S. ARMISH and ARMISH-
MAAG authorized personnel levels since 1956 are as follows:

Military Civilian Total
1956 ------------------------------------------------------------------- 382 21 403
1957 ------------------------------------------------------------------ 387 21 408
1958 ------------------------------------------------------------------ 418 21 439
1959 ------------------------------------------------------------------ 772 22 794
1960 ------------------------------------------------------------------ 683 21 704
1961 ------------------------------------------------------------------ 551 22 573
19621 ----------------------------------------------------------------- 538 23 561
1963 ------------------------------------------------------------------ 475 21 496
1964 ------------------------------------------------------- 488 21 509
1965 ------------------------------------------------------------------ 452 21 473
1966 ------------------------------------------------------- 446 21 467





35


Military Civilian Total
1967 ------------------------------------------------------------------- 446 21 467
1968.- -... .. .. .. .. .. .. .. .. .. 417 30 447
1969-------------------------------------------... 402 26 428
1970-----------------------------------------------319 27 346
1971-----------------------------------------------250 22 272
1972--- -------------------------------------------250 22 272
1973 ------------------------------------------------------------------- 192 16 208
1974--- -------------------------------------------192 16 208
1975 ------------------------------------------------------------------- 191 18 209
1976 ------------------------------------------------------------------- 191 18 209
1977 ------------------------------------------------------------------- 191 18 209
1 NOTE: Year the ARMISH and MAAG consolidation was completed.
d. lAFTs:
The idea of TAFTs (Technical Assistance Field Teams) origi-
nated in 1969 to provide in-country instruction to foreign personnel
on specific equipment, technology, weapons and supporting systems on
a scale beyond the scope and capability of mobile training teams
(MTT's) and normal training programs. The initial concept resulted
from the perceived problems that Iran would have in assimilating the
F-4 aircraft. The concept was tested by sending 43 personnel to Iran
to assist on the F-4 program.
When (1) the Iranians requested that the U.S. agree to increase
the quantity and quality of its military sales on 1972, and (2) the
U.S. responded favorably during the May 1972 visit of President
Nixon, it became apparent that Iran would require substantial help
from U.S. technicians in order to incorporate successfully the pro-
jected purchases into its forces. At that time there was also consider-
able pressure from the Concress to reduce the size of overseas
INAAG's. To both assist Iran and to avoid increasing the size of
ARMISH-MAAG, the U.S. Government signed a TAFT contract
with GOI in January 1973 for 52 personnel at a cost of $16.6 million.
The Department of Defense currently makes a conceptual distinc-
tion between ARMISH-MAAG and the TAFTs, namely:
-That ARMISH-MAAG is concerned with advisory and staff
functions of a continuing nature whereas the TAFT's are "short-
term" teams focusing on the introduction of new equipment and
associated logistics systems, i.e. "train the trainers."
-That Iran pays all expenses associated with the TAFT's and 70%
of the cost of the MAAG.
-That the MXAG is largely located in Tehran whereas 40% of the
TAFT's are located elsewhere in the country.
These distinctions are generally valid, but it should be noted that in
the 1950's and early 1960's, when MNAAG strengths were generally
larger worldwide, a large number of MAAG personnel performed the
same. tasks currently assigned to the TAFT's in Iran.
The "short-term" description of the TAFT's in Iran also needs clar-
ification. While any specific TAFT job or function may last only two
or three years we were told that new TAFT's will be constantly re-
quired over the next five to ten years if the major U.S. military pro-
grams in Iran are to succeed. Logistical and maintenance sut)port for
major systems appears to be a primary area in which the TAFT's will
continue to play an essential role.
The Government of Iran pays for all direct and indirect costs of
the TAFT's, including:






36


-Personnel pay, allowances, and retirement;
-Special training to meet requirements peculiar to TAFT assign-
ment;
-Transportation;
-Administrative costs associated with TAFT.
TAFT personnel levels and the dollar value of FMS support cases
are as follows:

Value
Year Number (millions)

CY 196972----------------------------------------------------------43
CY 1973------------------------------------------------------------552 $16.6
CY 1974 (FY 75) ------------------------------------------------------------------663 1M 2
FY 1976 (15 months) ---------------------------------------------------------------- 868 93.4
FY 1977 (est.) -- . ..-------------------------------------------------------- 825 120.0

2. CONTRACTOR PERSONNEL
At the present time over forty U.S. companies have personnel in
Iran to work on military contracts. By far the largest operations over
the next several years will be those of Bell Helicopter International
(Army Aviation) and the Grumman Aircraft Corporation (F-14)
in Isfahan. Each company expects to have over 2,000 employees and
dependents in Iran. A July 1975 study estimated contractor personnel
in Iran as follows.

1980/
1967 1973 1975 Projection

Contractor ------------------------------------------------------------ 1,627 2,746 2,935 11,000
Dependent --------------------------------------------- 3,693 6,234 6,665 25,000
Total --------------------------------------------5,320 8,980 9,600 36,000

The best estimate as of October 1, 1975 was that the forty-four firms
employing 2,941 personnel were operating in Iran. Sixty percent of
these personnel were located in Tehran. Their geographical distribu-
tion is as follows:
Tehran -------------------------------------------------1, 758
Isfahan ----------------836
Bandar Abbas----------------------------------- 163
Shiraz -------------------------------------------------
Sharobi 3---------------------------------------------------
Masjid-e-Soleman-------------------------------------------- 3
Buhehr--..6------------------------------------------------2
Tabriz -------------------------------------------------
Vahdati ----------------------------------------------------4
Bandar Pahlavi --------------------------------------------- 1

Total ------------------------------------- --------------,941
A detailed list of U.S. companies and their personnel in Iran in
October 1975 is at Annex B. A large and growing number of these
contractor personnel are retired U.S. military, estimated as follows:

1972 1973 1974 1975 1976

Retired U.S -------------------------------------------- 168 273 324 732 1,270
Dependents ---------------.-------------------------------------- 271 322 423 834 1,662
Total ------------------------------------------------------- 439 595 797 1,566 2,932





37


3. AGGREGATE DOD PERSONNEL
With over 1,200 currently authorized spaces, the DOD operation in
Iran is by far the largest U.S. security assistance program in the world
in terms of personnel. The ARMISH-MAAG and the TAFT account
for a large part of the DOD total:

1972 1973 1974 1975 1976 1977 (est.)
Authorized MAAG ------------------------------- 272 208 208 209 209 209
Authorized TAFT--------------43 552 552 663 868 825
Total-----------------------------------315 760 760 872 1,077 1,034
Assigned DOD personnel in Iran, including those assigned to the
Embassy, for three representative periods is as follows:
June 1973 June 1974 February 1976
Military-750 993 1, 176
Civilian ----------------------------------------------------------- 111 163 259
Dependents ---------------------------------------------------------- (1,941)
Total DOD --------------------------------------------------- 861 1,156 1,435
Total DOD plus dependents ------------------------------------------ 3, 376

B. Socio-EcoNoiic CIANGE
Iran's military programs are having a profound effect upon the
socio-economic development of the country and will continue to do so
for many years to come.
The growing requirements for trained military personnel means that
thousands of young Iranians are being taught skills that have wide
application throughout, the economy as a whole. Furthermore, the
decision by the Iranian government to use English rather than Farsl
as the basic language for most skilled military operations means that
virtually every young Iranian officer and many of the NCO's will have
a reasonably proficient command of English. Aside from the economic
and operational benefits of English as a primary language, it is a tell-
ing indicator of the degree and extent of the Iranian commitment to
the United States as its primary supplier and friend.
In addition to creating new skills the inilitary programs are also
helping to develop entire new communities in sparsely populated re-
gions of the country. For instance, the rapid growth of Bandar Abbas,
which may reach a population of 500,000 within a decade, and the
potential growth of the Chah Bahar base complex on the Gulf of Oiman
are, or are likely, to result in the development of basic infrastructure-
roads, water supply, electricity, ports, houses, communications-which
will have socio-economic effeet6 far beyond the military needs of the
bases. The physical growth of these bases may, in turn, act as a catalyst
for population redistribution and industrial growth.
The development of Chah Bahar may have a direct impact on tlie
long-term political stability of southern and southeastern Iran, which
includes large numbers of Baluchi tribesmen. Manv Iranians are Coll-
cerned about potential instability in this area. If sizeable numbers
of Americans were involved in 'construction programs in this area
there could be additional problems relating to the safety of Am ericai
personnel in Iran.









VI. THE SUPPLY OF ARMS


In order to understand the primary motives determining the supply
of U.S. arms to Iran, a review of the U.S. arms sales process both in
theory and practice is necessary. In this section the "normal" roles of
the most important U.S. actors will be considered followed by a review
of what actually happened in the case of major arms sales to Iran.
A. THE Aiims TRANSFER PROCESS (GENERAL)
The United States does not have a world-wide "arms transfer pol-
icy;" therefore, there are no general clear-cut guidelines for those
charged with implementing arms transfer programs oi a day-to-day
basis. In fact, policy-level officials believe that a general arms sales
policy is not feasible and is unwise. They view arms transfers as an
instrument of U.S. foreign policy toward specific regions and coun-
tries, and argue that the issue to be addressed is U.S. foreign policy
toward such regions or countries and, secondarily, the role of arms
transfers in support of that policy. in their view, arms sales should
not be extracted from the overall policy equation and examined as an
independent variable.
Officials who authorize military sales tend to base their decisions on
perceived short-run political, military and economic benefits. Longer-
term implications are often not taken into account.

1. THE PRESIDENT
The President has the authority to participate in or make any deci-
sions he deems to be of sufficient importance to merit his attention.
When a particular arms sale is of paramount importance t6 U.S. inter-
ests, the President will be directly involved, e.g. President Kennedy's
decision to sell Britain the Polaris missile or President Ford's reported
personal participation in sales decisions to Israel. However, normally
he does not make decisions on individual sales, or even the total sales
level to recipient countries. The President's involvement in arms sales
is usually, therefore, indirect. He may, for example, decide to pursue
policy x or policy y toward a given region or country based on options
and analysis presented to him following interagency review, a Na-
tional Security Study Memorandum (NSSM), in the NS3 system.
His decision, based on an NSSM, is set down in a National Security
Decision Memorandum (NSDM), which then becomes policy. The
NSDM guides the bureaucracy in implementing policy and would
probably affect subsequent arms sales decision. For example, the cur-
rent Executive Branch study on the Persian Gulf may result in a
Presidential decision affecting arms sales to countries of the area.
Another area of Presidential involvement is in the annual budget
process. Based on material presented to him by the Office of Manage-
ment and Budget, the President determines the levels of grant and
credit military assistance to major recipients. Although the President
(38)





39


does not usually decide, in the budget review, on the items to be sold,
his budget decisions may influence subsequent sales decisions by the
bureaucracy.
2. THE DEPARTMENT OF STATE
The State Department is charged with formulating U.S. foreign
policy, including policy on foreign military sales. Policy guidance
regarding arms transfers to specific countries or regions varies as to
specificity and clarity.
The State Department tends to view arms transfers almost exclu-
sively in a political contact. When a country indicates that it wants
to purchase a weapons system, State's primary concern is usually the
impact that the U.S. response-favorable or unfavorable-will have
on U.S. relations with that country and its immediate neighbors. There
is often an unstated bias toward a favorable response unless there are
specific reasons for refusing to sell. Criteria for evaluating requests
for arms transfers, e.g. impact on regional arms balances, level of
technology to be transferred, cost, etc., are applied to requests on a
case-by-case basis, but the rigor with which they are applied often
depends on the perceived importance of the prospective purchaser and
its neighbors.
Specific policy guidance on arms transfers is more likely to exist
for countries and regions where arms transfers are not perceived to be
central to U.S. foreign policy. For many years the U.S. refused to
sell supersonic jet aircraft to Latin America and. indeed, today it will
not sell the F-4 or comparable aircraft to countries in that region.
Similar policy guidance has been promulgated for African countries.,
but no such guidance exists for most other areas where sales are
usually reviewed on a case-by-case basis.
The State Department has divided all countries eligible for military
sales into two groups:
-Category A countries are those to which the DOD may sell defense
articles and services without referral to the State Department for
policy guidance; countries in this group are the W~estern indus-
trialized countries, e.g. most of NATO, Japan, Australia.
-Category B countries are those whose requests for )urchase of de-
fense articles & services must be cleared by the State Department.
Because these sales must be referred to State. those with policy
responsibilities in DOD, e.g. the Office of the Assistant Secretary
for International Security Affairs, also review them.
Aside from the Secretary of State, authority in the State Depart-
ment for approving arms sales is dispersed. Nominal authority is dele-
gated to the Under Secretary for Security Assistance (U/SA) for
government-to-government sales and to the Bureau of Political-Mili-
tary Affairs, Office of Munitions Control (PM), for issuing licenses
for commercial sales. Because arms sales are viewed primarily in a
foreign policy context, those charged with overall policy responsibility
toward specific countries or regions. the regional bureaus, also play
a major role.
The regional bureaus report to the Under Secretary for Political
Affairs. The bureaus, given their policy responsibilities, tend to view
arms transfer decisions in a bilateral political context. They usually





40


have little expertise on the technical military aspects of proposed
transfers.
U/SA and PM are more likely to examine the military implications
of proposed transfers; they also have more direct contact with those
offices in the DOD with similar responsibility for arms transfers,
namely, the Defense Security Assistance Agency, and within the office
of International Security Affairs, the regional and desk officers, Policy-
Plans. and Strategic Trade and Disclosure. The U/SA relies primarily
oil the Security Assistance and Sales Office in PM for staff advice on
government-to-government sales, and the Office of Munitions Control
for advice on commercial licenses.
The relative influence of these offices in determining outcomes varies
depending (1) on the issue to be decided and (2) the status within the
Department of the persons holding the key offices.
In general, the more important an arms transfer decision to U.S.
foreign policy toward a given country the greater the influence of the
views of the regional bureaus and the Under Secretary for Political
Affairs.
3. THE DEPARTMENT OF DEFENSE (DOD)
The Defense Department, as an entity, sometimes does not take
positions on arms transfer policy issues (1) because it tends to defer
to the State Department (particularly if there is a strong -Secretary
of State) ; and (2) because the diversity within the DOI) makes it
(ifficult to develop a unified policy position on important issues unless
the Secretary or Deputy Secretary are personally involved.
The key offices within the Office of the Secretary of Defense (OSD)
dealing with arms sales are the Assistant Secretary for International
Security Affairs (ISA) and the Defense Security Assistance Agency
(I)SAA). The Director of DSAA is also Deputy Assistant Secetary
for Security Assistance in ISA; thus the occupant has both policy-
nia king and policy-implementation responsibilities.
The relative influence of these factors varies from issue to issue but
on day-to-day matters the most influential has been DSAA. DSAA has
overall responsibility for the management of all foreign military sales
(FMS) decisions. The Director has direct access to the Secretary/
Deputy Secretary. DSAA has control over all data relating to pend-
ntg arms sales negotiations, the status of arms deliveries, and pay-
mients for arms sales and is also fully involved in all intra-DOD and
interagency decisions on arms sales. In short, the Executive Branch
and the Congress rely on DSAA for information concerninz all but
the most political and sensitive FMS agreements. DSAA, ouite apart
from its delegated authority, is therefore, in a unique position to be
well informed on and to influence all aspects of arms transfer policy.
DS.kA personnel have access and close -day-to-day relations with the
military services, the State Department and the Con"r'ess, unlike nny
other entity within the DODon qrrnq sales matters. Thus DSAA has
considerable influence, particularly if overall policy guidance on arms
sales is lacking, is not clear, or is not )eriodically reviewed.
Although the Director of DSAA (wearing his ISA hat) formally
must report to and through the ASD/ISA on policy matters, the dis-
tinction between policy and implementation is necessarily ambig'uous.
With direct access to the Secretary/Deputy Secretary, the Director of







DSAA has tended to emphasize his DSAA rather than his ISA role
as Deputy Assistant Secretary for Security Assistance.
In theory, the military services do not have a major role in arms
transfer decisions. Their role is limited to executing and implement-
ing decisions within policy guidance promulgated by others; a few of
their responsibilities are:
-Provide data on price, availability and lead time;
-Provide technical militarv advice to OSD, the JCS, the Unified
Commands and the MAAG's on weapons systems, tactics and doc-
trine. training and logistics support ;
-Conduct training, and prepare and deliver articles and services:
-Within policies and criteria established by ASD/ISA and under
the direction of the Director, DSAA. execute sales agreements for
approved programs.
The regional bureaus in ISA used to play a major role in arms trans-
fers but their influence in this area has, with some exceptions, declined
coincident to DSAA's rise. The bureaus maintain contact with the
corresponding regional bureaus in State and their interests tend
to correspond.
B. POLES OF TILE EXECUTIVE 13RANCII I)EPARTMENTS IN ARMs
TrANSrErS TO IRAN

1. TIHE PRESIDENT
President Nixon personally informed the Shah during his May
1972 visit to Tehran that the U.S. would sell either the F-14 or the
F-15 to Iran. A subsequent memorandum informed the bureaucracy of
this decision and stated that. in general, future decisions on other
requests for conventional w eapons should be made by the Government
of Iran. Whether the President communicated this second decision to
the Shah during the visit to Tehran is not known.
The President's decision to sell Iran virtually any weapons system
it wanted was unprecedented for a non-industrial country; there was
apparently no major interagency review of arms sales to Iran prior
to the visit.
The decision not only opened the door to large increases in sales to
Iran, but also effectively exempted sales to Iran from the normal arns
sales decision-making proesses in the State and )efense Depatmnents.
Insofar as is known, the May 1972, decision has never been formally
reconsidered, even though the large oil price increase in 1973 enabled
Iran to order much more than anyone anticipated in 1972.
2. THE STATE DEPARTMENT
The State Department accepted the President's decision and pro-
ceeded to implement it. In practice this meant that Iranian arms re-
quests received little or no scrutiny unless they involved highly classi-
field technology, or co-production (licensed assembly and fabrication
of sonie parts) in Iran. Detailed analysis of such factors as Iranian
military requirements, absorptive capacity, and manpower avail abil it
was considered to be superfluous, given the sweeping nature of the
President's decision.
As a result of the dramatic increase in oil i>iices in 197'., Tani:in
orders increased from $98 million In FA 19l and million in







FY 1972, to $2.1 billion in FY 1973, $3.9 billion in FY 1974, and $2.6
billion in FY 1975. It became clear that Iran intended to apply a large
portion of its new wealth to a massive expansion and modernization
of its military establishment.
At the staff level within State there was concern about the long-
range implications of an unlimited sales policy to a country with such
large financial resources, but attempts to raise this concern to policy
level officials were not successful. Those who were in position to know
state that the senior officials of the department did not want to re-
examine current policy.
Co-production requests were an exception. The staff of the Depart-
ment's Bureau of Political-Military Affairs, with support from the
Office of Management and Budget, initiated a review to develop cri-
teria for evaluating the increasing number of co-production requests
from Iran, e.g. Maverick and TOW missiles. Congressional concern
about the impact of co-production on domestic U.S. employment, as
expressed in Section 42(b) of the Foreign Military Sales Act, served
to support this effort. The review led to the establishment of an inter-
agency review procedure for such requests; it is too early to evaluate
the effectiveness of the review procedure.
If senior officials in the State Department were concerned about
reports in the last two years that Iran was experiencing problems in
absorbing the equipment it had purchased, it was certainly not evident
in their public and semi-public statements about Iranian military pro-
grams and the U.S. involvement. The evidence indicates that the State
Department has not formally reviewed U.S. arms sales policy to Iran
since the 1972 decision and continues to support it wholeheartedly.
3. THE DEPARTMENT OF DEFENSE AND THE EMBASSY
The role played by the DOD with regard to arms transfer policy
towards Iran has varied since 1972-sometimes reflecting competing
interests within the DOD and other times reflecting the different time
frames during which different factions first became aware of major
problems with Iran programs.
Secretary Schlesinger and, to a limited degree, Deputy Secretary
Clements were personally involved at various times. Other elements of
the Office of the Secretary of Defense (OSD) that played major roles
were the Defense Security Assistance Agency (DSAA) and the Office
of the Assistant Secretary for International Security Affairs
(ASD/ISA). The Office of Program Analysis and Evaluation
(PA&E) was concerned about the military implications of large arms
transfers to I-ran and the growth of the U.S. population in Iran hut
did not play a major role. Outside of OSD the most important actors
are the three military services and ARMISH-MAAG.
The 1972 sales decision coupled with the increase in Iranian revenues
following the quadrupling of oil prices created a situation not unlike
that of bees swarming around a pot of honey. Defense industries, both
U.S. and foreign, rushed to Iran to persuade the Government to pro-
cure their products. Each of the U.S. services, on occasion, sought
to persuade Iran to buv its weapons, in part because a large Iranian
"buy" of an item in a U.S. service inventory could (1) reduce the per
unit costs to that service and (2) enable the service to recoup some
of its prior investment foi research and development.





43


On occasion this resulted in fierce sales competition between the U.S.
services. For example, following the decision to sell either the F-14 or
F-15 aircraft, the U.S. Air Force and the U.S. Navy entered into an
intense competition to sell their respective aircraft. The Navy was
particularly eager to sell the F-14, given its contract problems with
the Grumman Corporation and rapidly rising costs.
The military services' contact with the host country on new sales
is nominally to be through Unified Command and MAAG channels,
following consultation with ISA and DSAA. The services, however,
often worked (1) with contractors who had direct access to the Iranian
military, or (2) through the service sections in the MAAG, without
regard to the appropriateness of the systems they were selling to Iran,
Iranian absorption capabilities, or inter-service tradeoffs.
DSAA, having day-to-day control over major arms sales negotia-
tions and a close relationship with both the services and the contrac-
tors, also played a major role in sales to Iran.
Since a primary function of DSAA is to execute sales programs con-
sistent with policy guidance, and such guidance with regard to Iran
dictated a positive response to most sales requests, DSAA also played
a salesman's role. The 1972 Presidential decision coupled with the
Iranian appetite for arms unleased commercial and official arms
salesmen.
By 1975, however, problems associated with the implementation of
policy had become serious. Those responsible for implementing policy,
i.e. DSAA, the Services, the Embassy, and the MAAG, stated, justifi-
ably, that they were carrying out the policy directive of the President
and Secretary of 'State. DSAA's job is not to review policy. Never-
theless, in early to mid-1975, DSAA became sensitive to attempts by
others within the DOD to surface the problems of implementation and,
indirectly, question policy. This was due to two somewhat different
reasons. First-the one cited above-DSAA could claim that the Presi-
dent and Secretary of State had determined U.S. policy toward Iran.
Second, any challenge to current policy within the DOD could be
interpreted as a challenge to the power and authority of DSAA.
The Near East and South Asia (NESA) region of ISA has primary
responsibility for formulating DOD policy in the Middle East and
South Asia. It maintains close liaison with the Near East Bureau in
the State Department and other offices in the DOD who have direct
interests in the region. However, NESA was not in a position during
the 1974-75 period to challenge seriously prevailing policy or the re-
sultant arms sales activities of the services, DSAA and the contractors,
even though there were those in NESA who were becoming increas-
ingly concerned about that policy. Iran, for example, was never added
to the list of Middle East countries whose military requests were
regularly reviewed by the Middle East Task Group (METG), chaired
by the Deputy Assistant Secretary of Defense/NESA. The METG
was initially created to review military sales to Israel and the Arab
countries. The membership of the METG includes representatives
from all major offices within DOD, including DSAA. Major requests
for weapons purchases from METG countries received careful
examination.
The Office of Policy Plans and NSC Affairs in ISA, with the en-
couragement and support of the ASD/ISA and his Principal Deputy,






44


undertook in early 1975 a mid-to-long term policy analysis of U.S.
arms transfers toward the Middle East. This study recommended that
an immediate review of U.S. Persian Gulf policy be undertaken,
focusing on the political and strategic benefits and costs in various
time frames of current U.S. policy.
About the same time, in May 1975, the NSC directed a review of
overall U.S. arns transfer policy to be completed by June 25, 19,75.
Many of those involved in the project came to believe that the senior
NSC officials were not interested in a serious analysis of arms transfer
issues or an in-depth examination of the nuances and implications of
U.S. arms transfer policies to the Middle East and Persian Gulf areas,
the focal points of the study.
Although the mandate and scope of this study was subsequently
expanded to permit a wider and more analytical review of policy,
endless disagreements delayed the response; a formal submission to
the NSC has still (June 1976) not been made. .
The checkered history of this review is illustrative of the growing
diversity of opinion on arms transfer issues within the Executive
Branch. Several factions had emerged within the DOD. The "critics"
of current policy (i.e. those calling for a major review of policy) had
differing motivations. Some (ISA-Policy Plans, ISA-NESA and
PA&E) argued that the long-term military and strategic consequences
of the Iranian FMS program needed more careful analysis. Others
more directly involved in implementation of sales were critical be-
cause of the impact of Iranian and other Middle East arms sales on
the U.S. armed services. The Joint Chiefs felt that the draw-down of
U.S. inventories for the Middle East was impacting adversely upon
the readiness of the U.S. military. The three military services were
becoming aware of the impact of arms transfers upon their own man-
power requirements as they realized that more uniformed personnel
would be required to help FMS recipients absorb the large quantities
of arms they were buying. The Installations and Logistics (I&L)
branch of OSD was becoming very sensitive to the long-term problem
of providing spare parts and general support for the burgeoning sales
programs (most large FMS recipients participate in the integrated
U.S. logistics systems, as though they were U.S. service customers).
In contrast to the DOD "critics" during the 1972-early 1975 period,
DSAA tended to support existing U.S. arms transfer policies.
a. Role of the Secretary of Defense and the Assistant Secretary for
International Security Affairs
Throughout the 1973-5 period, different attitudes on the Iranian
question were emerging from these important office,. It seems clear
that Secretary Schlesinger and Assistant Seretary/ISA Ellsworth
were becoming increasingly skeptical about the management of Iran's
FMS programs and therefore more concerned about the impact of
future sales.
Secretary Schlesinger has stated that, during his tenure of office,
he perceived a general problem with respect to U.S. arms sales
policy-namely, that the boom in the arms market provided major
incentives for U.S. industry and the armed services to push sales
which, in time, might result in the dumping of unnecessary and very
sophisticated equipment upon unsuspecting recipients. This, he felt,
would lead to problems of resource allocation and assimilation for the






45


recipient, potentially eroding long-run confidence in the DOD as the
main agent for U.S. arms sales. In the case of Iran, this could raise
serious policy questions regarding the credibility of the United States
Government. If Iranian defense resources were badly allocated, the
operational effectiveness of its forces would be downgraded with ad-
verse effects upon the regional security posture.
Schlesinger expressed his view that the DOD, and OSD in par-
ticular, should act as an "honest broker" between the GOI and U.S.
industry, fending off the inherent pressures from the U.S. services and
industry to sell sophisticated arms, regardless of whether Iran needed
or could handle them. Schlesinger has stated that he wanted to ensure
that would-be recipients of U.S. arms be given complete briefings, i.e..
be told what it takes to utilize a given system effectively, including
potential problem areas. This procedure, he believed, would at least
give the U.S. the option of saying "you were warned" if things did
begin to go wrong.
In late 1973, Schlesinger briefed the Shah on some, of the implica-
tions of buying sophisticated U.S. hardware. In response to the Shah's
request for assistance, Schlesinger sent Richard Ilallock, a retired
Army Colonel to Iran as his unofficial representative, on a consultant
basis (ARPA contract). Hallock was to report directly to the Secre-
tary, or indirectly through Martin Hoffman. then General Counsel of
the DOD, Admiral Ray Peet, former Director of DSAA, or his suc-
cessor, General Howard Fish.
We understand that Hallock's role was (1) to provide the Shah and
General Toufanian with independent analyses on weapons procure-
ment and (2) to keep Schlesinger informed of the Shah's views and/
or problem areas as they developed. It was apparently Schlesinger's
hope that Hallock's advice to the Shah might serve as a counterweight
to the hard sales tactics of industry and, on occasion, the services.
Hallock operated outside of the DOD chain of command, in part
because he and the Secretary suspected that some DOD components
may be functioning primarily as salesmen rather than advisors.
Hallock established a close relationship with the Shah, General
Toufanian, senior U.S. Embassy officials, and other Embassy officers
concerned with military programs. The Government of Iran appar-
ently developed a high sense of confidence in Hallock's advice while
Hallock simultaneously provided Schlesinger with reports on what the
contractors, services and the MAAG were doing in Iran.
At the same time that Schlesinger was reviewing reports on condi-
tions in Iran from Ilallock, Robert Ellsworth. Assistant Secretary of
Defense for International Security Affairs, was also becoming aware
of problems in Iran. With Schlesinger's approval in March 1975. le
appointed a Special Assistant for Iranian Affairs in ISA to examine
DOD activities in Iran.
The Special Assistant's first task was literally to find out what was
happening in Iran. He worked for six months with a small staff alm
prepared a report for Ellsworth. The report was not made public :ii!d
not distributed within the DOD. Informed sources have stated that
the report recommended that an office be created within ISA to (deal
exclusively with Iran. Secretary Schlesinger subsequently sent a
memorandum to the President that, we understand, reviewed DOI)
activities in Iran and noted DOD's concern over emerging nilanat-e-
ment problems in the sales program.





46


Schlesinger, it appears, finally decided against a proposed office in
ISA to deal with Iran. For several months, he and Hoffman had felt,
however, that a high ranking civilian, a Secretary of Defense repre-
sentative, was needed in Iran. The Secretary during this period also
consulted frequently with the Director of DSAA.
The official selected was Eric von Marbod, a former Comptroller of
DSAA and Principal Deputy Assistant Secretary (Comptroller) of
OSD, who had been the DOD official in charge of the Vietnam with-
drawal and the South Vietnamese refugee program. Approval was
sought, and obtained, to send von Marbod to Iran in September 1975.
b. LRole of the Embassy*
We were told that the U.S. Embassy in Tehran, which had worked
closely with Schlesinger's unofficial representative Hallock, initially
opposed the appointment of a Senior Defense Representative for the
following reasons:
-Concern that the appointment might lead to a more independent
DOD operation in Iran;
-It felt that any effort to change arms policy or management
thereof was the responsibility of the State Department;
-The Embassy felt that the key management and coordination
problems were in Washington, not Tehran. Sending a Senior Rep-
resentative appeared to be treating the symptoms rather than the
cause.
The Embassv had strongly supported the 1972 policy decision, but
Embassy officials felt that they were losing control of the situation in
the 1973-75 period when the official and commercial salesmen flocked
to Iran following the increase in oil prices. The Embassy did not feel
that it was fully informed on what was going on, and may have sus-
pected that some elements of DOD were cooperating with the contrac-
tors in promoting sales.
Embassy officials believed that the solutions to these problems had to
come from the State and Defense Departments in Washington. In
fact, Embassy officials sympathized With the plight of a two-star
MAAG chief charged with coordinating the U.S.-Iran military rela-
tionship while the Army, Navy, and Air Force were often Pursuing
their own objectives through the service sections of the MAAG. (See
Annex C for details of official high level visits to Iran.)
By early 1975, the Embassy Perceived the emerging management
problems but responsible staff officers did not feel that it was in their
province to question basic policy guidance. We believe that they were
reluctant because:
-The Embassy may have operated on the assumption that senior
officials in the State Department were not interested in informa-
tion or opinions that questioned general policy toward Iran;
-The views of successive MAAAG chiefs apparently varied as to the
extent of the problems associated with Iran's assimilation of the
equipment it purchased;
-Everyone seemed to be basically pleased. The Government of
Iran was getting the enuinment it wanted; the State Department
was happy because U.S.-Iranian relations were good; DOD was
actively selling in accordance with policy; the contractors were
pleased because they were making money;
*The authors regret that they were unable to schedule an interview with the U.S.
Ambassador to Iran, Richard Helms, due to mutually conflicting travel schedules.





47


-The State Department had never been deeply involved in the
management and implementation aspects of arms sales; the Em-
bassy, with limited staff resources, may have decided to devote its
energies to higher priority interests of the Department.
It is clear that the Embassy's primary concern paralleled that of
its superiors in Washington-namely, preserving the good U.S.-
Iranian relationship created, in part, by the 1972 decision. The Em-
bassy's primary concerns about problems with military sales and
program management seemed to be (1) that the Embassy be fully in-
formed of what was going on, and (2) that DOD efforts to correct the
situation be under Embassy control and be presented in a manner that
could not be interpreted in any way by the Iranian Government as
reflecting a change in basic policy.
c. Role of the Defense Representative in Iran:
The Embassy ultimately accepted the appointment of von Marbod
and upon his arrival, -Ambassador Helms told him that he had his
full support. The iALXAG was initially skeptical of the appointment
because it interpreted the appointment of an official civilian repre-
sentative who outranked the MAAG chief as a vote of no confidence.
Mr. von Marbod arrived in Iran in September, 1975, on a one-year
appointment with terms of reference which were carefully negotiated
both within the DOD and with the senior State Department officials.
Before leaving Washington von Marbod had discussions with Schles-
inger, Ellsworth, General Brown, Chairman of the JCS, General
Jones, Air Force Chief of Staff, and General Fish. He stopped at U.S.
European Headquarters in Stuttgart on the way to Iran and met with
General Huyser, Deputy Commander in Chief, and General Ryder,
head of the Security Assistance Directorate. Shortly after Mr. von
Marbod arrived in Tehran General Vandenberg, the chief of
ARMISH-MAAG, was relieved of his post for unexplained reasons.
lie was replaced by Air Force Major General Miles, who arrived in
March 1976.
The Defense Representative, having no staff or support upon ar-
rival, sought to work with ARMISH-MAAG and allay its initial re-
sentment over his appointment. This task was probably facilitated by
the vacancy at the head of MAAG miSsion. Apparently he was suc-
cessful, perhaps because lie made a special point of working with the
MAAG and reported through military channels to Washington, in
direct contrast to Schlesinger's previous unofficial representative.
The mission of the Defense Representative was (1) to identify prob-
lem areas; (2) to recommend solutions; and (3) to see that DOD
play the "honest broker" role that the Secretary deemed critical to the
credibility of the DOD and the U.S. Government. He was guided in
his mission by the following considerations:
-It was important that the Government of Iran carefully manage
its defense resources given that oil revenues were (by 1975) not
keeping up with defense costs:
-That Iran's procurement decisions had led to problems of assimi-
lation, burdening Iran's manpower and infrastructure resources;
-That the U.S. should help the Iranian Government to reach deci-
sions that will maximize return on its defense dollar and minimize
associated burdens.





48


Mr. von Marbod's first and most important task was to ensure that
the Iranian Government be fully informed on a routine basis about all
perceived problems and constraints concerning the introduction of a
new U.S. weapons system.
His second task was to develop factual, objective presentations for
review by the Iranian Government of actual or potential problem areas
with systems already under contract, e.g. construction of support fa-
cilities, manpower and logistics shortfalls, thus presenting the "com-
plete picture" to the Government of Iran. While doing this, however,
the Defense Representative had to make clear that procurement deci-
sions were still the responsibility of the Iranians, and that his mission
did not represent a change in basic U.S. policy.
In this connection, Deputy Secretary Robert Ellsworth (promoted
from ASD/ISA by the new Secretary, Donald Rumsfeld) issued a
directive to all components of DOD on February 24, 1976 (1) outlining
some of the problems encountered in implementing programs in Iran;
(2) stating that it is essential that all DOD components seek to achieve
objectives similar to those outlined earlier in connection with the De-
fense Representative; and (3) delegating to the Assistant Secretary
for ISA primary responsibility for addressing policy issues, making
recommendations for decision by the Secretary or Deputy Secretary,
assuring effective policy coordination with the Department of State,
and exercising policy supervision over, and coordinating security as-
sistance with other DOD activities in Iran. The Ellsworth memo-
randum was not intended to suggest a shift in basic U.S. or DOD
policy toward Iran, but to ensure that all proposals were rigorously
examined in DOD prior to submission to the Department of State. A
thorough review would also generate the data needed to inform ac-
curately the Government of Iran on all aspects and ramifications of
systems it proposed to purchase.
Ellsworth, who earlier had favored creation of an Office in ISA
dealing exclusively with Iranian Affairs rather than sending a De-
fense Representative to Iran, moved following 'Schlesinger's departure
to establish such an office. Presumably this office will carry out the
authority delegated to ISA in the February 24 directive. At the time
of writing (June 1976) it is too early to evaluate its effectiveness.
The Defense Representative has apparently had some success in his
efforts to "routinize" security assistance programs in Iran. If the Ells-
worth directive is implemented, programs will be adequately scruti-
nized by the DOD in Washington, and communicated to the Govern-
ment of Iran through the proper channel, i.e. the MAAG, and im-
i)lemented by DSAA and the services in an objective manner. It should
be noted that until very recently Richard Hallock, Secretary Schles-
inger's unofficial representative in Iran until the appointment of Eric
von Marbod in September, 1975, was employed, as a private citizen, by
General Toufanian. He was apparently advising the General on weap-
ons procurement matters.











VII CONCLUDING COMMENTS


A. U.S. INTERESTS AND IRANIAN SECURITY POLICY
The prevailing view within the Executive Branch is that the United
States has a major interest in a strong, pro-IVestern Iran for political,
economic and strategic reasons:
-It is a large, populous, resource-rich country located on the pe-
riphery of the Soviet Union and between the Near East and
South Asia;
-The flow of oil from the Persian Gulf is vital to the economies of
Western Europe and Japan and to a lesser extent the United
States itself;
-A hostile presence or political instability in Iran or the lower
Gulf region could threaten access to this oil:
-U.S. trade with and investment in Iran is large and growing.
The foregoing perception of U.S. interests combined with a policy
decision by the U.S. in the late 1960's not to replace the British with
a direct U.S. presence in the Persian Gulf, and Iran's desire to
develop a deterrent capability to protect its own interests and oil life-
line, are the factors that explain the positive U.S. responses to Iranian
arms requests.
However, the sweeping nature of the 1972 Presidential decision
to permit the Shah to purchase without prior review led to problems,
many of them unanticipated. The evidence indicates that the 1972 deci-
sion was not reassessed following the oil bonanza in 1973; apparently
senior officials did not believe that the increase in Iranian oil revenues
fundamentally changed the reasons for the 1972 decision. Hence, the
US. sought to avoid short-term negative political repercussions that
might have resulted from occasional negative sales decisions at the
cost of contributing to future problems associated with high levels
of sales. The Executive Branch began to lose control of the situation.
Since the late 1960's the U.S. Government has been both arms sales-
man and adviser to Iran. These roles have not been easy to reconcile.
ARMISH-MAAAG was supposed to offer professional, neutral advice
on arms acquisitions; at the same time the military services to whom
ARMISH-MAAG reports and the civilian contractors, who are in
frequent contact with ARMISH-MAAG personnel, had strong in-
terests in selling weapons systems for their own piirposes. Given the
1972 decision, the salesman's role often predominated.
One significant reason advanced by Executive Branch officials to
explain U.S. policy is that since Iran had other sources of military
supply and was a leader of OPEC, the U.S. should not confront the
Shah concerning the difficulties that would be incurred in absorbing
his proposed acquisitions. This attitude probably underestimated U.S.
leverage with Iran, or rather, the importance that Iran placed on its
relationship with the United States. There is no question that Iran
would have purchased equipment from other suppliers if it determined
(49)





50


that a given capability was vital and the U.S. refused to sell it. In the
case of the F-14 and F-15, however, there were no comparable alterna-
tives available.
Iranian officials regard the relationship with U.S. as vital to Iranian
interests. If Iran is attacked by the Soviet Union, they believe that the
survival of Iran would be dependent on U.S. intervention; no other
country has the capability or the will to assist Iran in this ultimate
contingency. Thus Iran appears consciously to view the defense link
with the U.S. as a form of insurance. Iran may, and has, purchased
equipment from third countries, but it is very doubtful to most ob-
servers that Iran would have risked its U.S. relationship had the U.S.,
as a good friend, openly and forthrightly given its unvarnished opin-
ion on several of the proposed large-scale purchases.
B. POLICY IMPLICATIONS OF U.S. MILITARY I.NVOLVEMENT IN IRAN
Barring a dramatic change in Iran's leadership, the future course
of the U.S.-Iranian military relationship is already being determined
by the level of U.S. activity in the country. Iran has invested so heavily
in American weapons and technology that through the early 1980's it
will have to rely upon American maintenance and logistics support
to the extent that most Iranian decisions regarding a major and sus-
tained use of military power must inevitably take into account atti-
tudes of the United States.
The two most potentially difficult issues. that, in the future, may
confront U.S. policymakers as a result of this relationship are: (1)
what to do if the current programs run into further trouble and Iran
requests an even deeper U.S. involvement and (2) what to do if, on
the contrary, the Iranians are in a position to use sophisticated equip-
ment effectively in combat and, in fact, do so. In both cases there is
the potential for friction or serious tension in U.S.-Iranian relations.
The first issue may arise if Iran is unable, over time, to develop the
trained personnel and the support infrastructure to utilize effectively
the large amounts of sophisticated military (and civilian) equipment
that it has purchased. If the weapons systems do not "work," Iran
may blame the United States for the fact that its equipment is not
fully operational.
It is necessary to be more precise about what is meant by "fully
operational." Based upon the record to date, there seems to be no doubt
that Iranians are capable, in time, of operating their current inventory
under normal "peace time" conditions. They will probably not operate
most systems as effectively as would a similar U.S. unit, but it is their
own definition of success that is important. There are questions, how-
ever, as to (a) how well they would perfrom under "war time" condi-
tions, and (b) how dependent they will continue to be upon active U.S.
participation in the maintenance and logistical support of their equip-
ment in both "peace time" and "war time" conditions. For example,
informed U.S. personnel believe that it is unlikely that Iran could
engage in major combat operations during the next five to ten years
with its current and prospective inventory i.e. purchase to date, of
sophisticated weapons (as distinct from some of the less sophisticated
ground equipment) without sustained U.S. support.
It will be recalled that Iran faces different types of threats to
its security. In this report a distinction has been made between
"high" and "low" intensity threats, or conflicts, and whether or







not these threats or conflicts were likely to be of "long" or "short"
term duration. If a further distinction is made between what
might be termed "sophisticated" and "less sophisticated" American
weapons, it follows that, at least for the next ten years, Iran has the
possibility of engaging in "high" or "low" intensity conflicts for "long"
or "short" duration using "sophisticated" or "less sophisticated" U.S.
weapons. (For illustrative purposes the distinction between "sophisti-
cated" and "less sophisticated" U.S. weapons is a function of the level
of U.S. support required to make them operationally effective over
the next ten years. Thus, the F-14/Phoenix system and the DD993
Spruance class destroyer fall under the category of "sophisticated,"
whereas the C-130's and the M113 armored personnel carrier would be
classified as "less sophisticated.")
From these simple definitions the following proposition can be
suggested:
The higher the level of intensity of conflict and the longer
its duration, the greater the probability that "sophisticated"
U.S. arms will be used, thereby requiring direct U.S. support.
Conversely, the lower the intensity of conflict and the shorter
its duration, the lower the probability of the use of "sophisti-
cated" U.S. arms and direct U.S. support.
Between these two extremes are many other options, which, in
all likelihood will be those to materialize over the next ten years. Iran
can probably continue to fight insurgency-type wars (such as Oman)
without direct U.S. participation but once the fighting requires the use
of sophisticated U.S. weapons, the involvement of U.S. personnel be-
comes unavoidable, if such weapons are to be used effectively. (It
should be pointed out that the Defense Department Directive on Tech-
nical Assistance Field Teams (TAFT's) states that: "TAFT person-
nel will not engage in or provide assistance or advice to foreign forces
in a combat situation. Additionally, they will not perform operational
duties of any kind except as may be required in the conduct of on-the-
job training in the operation and maintenance of equipment, weapons,
or supporting systems.")
At this point it is important to elaborate on what is actually meant
by U.S. "involvement." This includes activities performed for the
Iranian armed forces by uniformed or contractor personnel who par-
ticipate in two types of roles: (1) advisory and managerial; (2) logis-
tics and support. Each of these roles can involve either: (1) front line
service with the Iranian military in the field or at Iranian bases; or
(2) a supporting role in Iran at rear bases and headquarters, or U.S.-
based logistical support.
From a political perspective, U.S. uniformed personnel actually
helping the Iranians maintain F-4's and F-14's in day-to-day combat
is quite different from providing long-term logistics support from the
United States; phrased differently, the greater the possibility of Amer-
icans, especially uniformed Americans, being drawn into fighting, the
greater the immediate political problems.
Thus, while it is true that a "visible" U.S. involvement entails
greater political risks, the less controversial but nonetheless real in-
volvement resulting from a common logistics base also has important
political and military implications for the United States. Although it
is correctly assumed that the United States has less influence over the
choice of systems purchased by a country on a cash basis than those





52


provided under the grant military assistance program, it is less ap-
preciated that recipient countries, such as Iran, are taking advantage
of certain economies of scale that come from buying into the U.S.
armed services logistics systems. In practice, this means that an Ira-
nian logistics officer obtains spare parts for the F-4 aircraft in the same
manner, within the same system, as does a U.S. F-4 logistics officer.
The net result is that the Iranian forces are, in many instances, inte-
grated into the U.S. logistics and support system. In theory, therefore,
the U.S. Air Force has the ability, literally, to halt the operations of
the IAF over time by cutting off spare parts. While Iran has greater
freedom to choose the weapons it buys, its freedom to operate that
equipment is, in the last resort, dependent upon the good graces of the
U.S. Government.
This dependency can only grow as recipient countries such as Iran
buy increasingly sophisticated U.S. weapons systems. Iran cannot be-
come "self-sufficient" in F-4E or F-14/Phoenix operations anymore
than a local automobile dealer can become independent of Detroit.
Understanding the umbilical relationship between the supplier and
recipient of advanced weapons becomes particularly important in view
of the frequently heard arguments that a recipient such as Iran or
Egypt can easily "switch" suppliers if it is not satisfied with its treat-
ment by a supplier. Theoretically, this is true, and there are undoubted
political advantages in stressing this option; in reality, however, once
a recipient has committed itself to a particular supplier for the mainte-
nance of its active combat forces, it can only "switch" at the risk of
losing its operational capabilities for a very long time. More specifi-
cally, if there were a revolution in Iran and the Shah were replaced
by an anti-U.S. regime, that regime would find it virtually impossible
to maintain the current inventory of U.S. weapons without sustained
cooperation with the United States. This might moderate a new
regime's policies. However, if the regime were intent upon eliminating
the U.S. role and presence in Iran, the United States could retaliate
by bringing Iran's military machine to a virtual standstill.
While the U.S. could "ground" Iranian forces (particularly the
Air Force), its ability to do so is circumscribed by the political im-
plications of such an act. The U.S. has been and is the largest seller
of arms in the world. The forces of many nations are almost entirely
equipped with U.S. weapons and are, consequently, dependent on the
U.S. for follow-on support. Indeed, the U.S. Government often pro-
vides assurances that new weapons systems can be supported through-
out the "lifetime" of the equipment purchased.
A decision by the U.S. to terminate such support to Iran in a com-
bat situation could cause other past or potential purchasers to call into
question the wisdom of relying on the U.S. as a military supplier.
The ramifications of such a decision would not be limited to Iran.
Senior Iranian officials, for example, have indicated that Iran's deci-
sion not to stretch out delivery schedules of equipment it has purchased
from the U.S., notwithstanding its unreadiness to receive the equip-
ment, is in large part based on lessons learned from the 1974 U.S.
embargo on arms sales to Turkey.
Countries such as Iran, who are deeply involved militarily with
the U.S., seem to have, therefore, a curious kind of "reverse influence"
on the U.S. (the original U.S. decision to sell arms to Iran was based,
in part, on the presumed influence that an arms relationship would pro-







vide the U.S. in and over Iran). The effect of this "reverse influence,"
is to seriously limit, in political terms, the ability of the U.S. to exercise
the policy option of cutting off military support to Iran. This option
is thus limited to extreme situations such as an Iranian military in-
volvement that is diametrically opposed to or threatens important
U.S. interests.

C. TiaE EXEcuTrV BRANCH DECISION-MAKING PROCESS ON IRAIN ARMS
TRANSFERS
Some important general lessons can be drawn from the Iran experi-
ence concerning the U.S. arms transfer decision-making process.
WASHINGTON
At the most conceptual level it can be argued that once a potential
recipient of U.S. arms assumes, for whatever reason, great importance
to the U.S., the "normal" arms transfer review processes that determine
whether or not to sell what types of goods and services in what numbers
become less relevant. Decisions on arms sales to such countries are
often taken at the highest level (President and Secretary of State) and
must be viewed differently from more routine arms sales.
In the case of Iran, absent any other explanation or evidence, it must
be inferred that the 1972 decision was based upon broad geostrategic
and political considerations rather than exacting calculations about
the balance of military power in the Persian Gulf. When arms deci-
sions are made at the highest level., the probability that potential fu-
ture policy and programmatic problems will take a back seat to per-
ceived tangible political benefits is increased.
Once the basic policy decision was made, the Iranian armed forces,
the U.S. Defense Department and private U.S. defense contractors
became the primary actors. The ensuing problems might never have
occurred but for the hike in oil prices in 1973 which gave Iran the means
to buy far more arms than had been anticipated at the time of the
decision. The increased oil revenues made billions of dollars available
for new military orders. The immediate effect was to increase the stakes
in arms to sell to Iran.
The overall effect was to overwhelm the U.S. Government systems
that normally execute routine arms sales. The only institution in the
United States (or Iran) capable of managing and monitoring this
boom in sales was the Department of Defense. During the period 19738-
75, various factions within the DOD, especially the Navy and the Air
Force, pursued their own, often competing, objectives with respect to
major sales to Iran. "Alliances" between private industry and the pro-
curement branches of the Air Force and Navy resulted in major sales
efforts in Iran. In practical terms, it would have been extremely diffi-
cult for the U.S. Embassy in Tehran, ARMISH-MAAG, the policy
desks in State and DOD and DSAA to exercise control over events
had they chosen or been able to do so.
Thus for a period of time a situation approaching anarchy existed
within the Executive Branch. A telling indicator of this is that when
Schlesinger and Ellsworth came to the conclusion. somewhat, independ-
ently, that all was not well with DOD activities in Iran, their respec-
tive efforts to deal with the problems were not fully coordinated. If the
DOD leadership was in doubt over what was actually happening iii





54
Iran, it would be unreasonable to expect other Executive Branch agen-
cies to be better informed.
Once the various elements in the DOD, including those responsible
for program implementation, began to recognize the extent of the
problems of the FMS program in Iran, Schlesinger and Ellsworth
began to exert policy level control over the entire operation. The ap-
pointment of a Defense Representative to Iran in September 1975
by Schlesinger. and the issuance of a directive by Ellsworth in Feb-
ruary 1976 on DOD activities and interests in Iran were intended to
ensure coordination within the DOD, and were seen as first but essen-
tial steps to bring the situation under firm policy control within the
DOD.
Since the expertise on weapons systems management, logistics,
training and manpower requirements is in Washington, not Iran, all
DOD departments and agencies, including the services who are in-
volved in programs in Iran, are now required to cooperate and pro-
vide analytical backup in support of the Defense Representative's tasks
in Iran.
The foreign policy problems resulting from the U.S. military in-
volvement in Iran have been less explicitly noted in the State Depart-
ment and the White House. However, the current review of U.S.
policy in the Persian Gulf, at least acknowledges the need for a re-
examination of policy.
IRAN
In Iran the major difficulties with current U.S. defense programs
relate to some but not all of the so-called "back end" (implementing)
operations-logistics, maintenance, training, etc. This is now clearly
recognized within U.S. defense circles, and has been communicated to
senior Iranian officials by the U.S. Defense Representative in Iran. If
the Defense Representative's mandate is to be performed effectively
and routinely, ARMISH-MAAG will need to have a larger percentage
of its personnel trained in weapons system management. planning. and
resource management. General Miles, the current Chief of ARMISH-
MAAG, has a weapons systems management background himself and
acknowledges the importance of such expertise. Whether the three
services respond remains to be seen.
The DOD's task is particularly difficult (1) because the U.S., di-
rectly or indirectly, is responsible for not having fully briefed the
Iranians on the implications of its proposed purchases, and (2)
because the issues art politically sensitive in that the responsibility
for many of the current problems and delays lies ultimately with the
Iranians. On the whole, the U.S. Government and U.S. contractors
have met their schedules but the Iranians have not. Indeed, one of the
most serious problems is that the delivery schedules for U.S. equip-
ment have been on time while Iranian training and construction
schedules have slipped, and the entire support infrastructure in Iran.,
is inadequate. The Iranian armed forces are working diligently to
overcome these obstacles; the tasks confronting them, however, are
enormous.
That Iran is considering additional purchases of large quantities of
sophisticated weapons, perhaps on a barter basis, indicates that Iran
has not altered its "front-end," i.e. new purchases, policies because of
the "back-end" difficulties of which it is now fully aware.








APPENDIX



A. HIoI LEVEL VISITORS TO IRAN

There have been numerous high level visitors to Iran in the 1973-76
period, particularly U.S. military general officers. Altltough the pur-
pose of most of these visits is not known, and not all relate to the
military sales program, the intense interest in Iran of various offices
in the DOD and the military services is evident.
By contrast, the number of State Department visitors is much lower.
The reasons for the difference may be merely that there are more
general officers with larger budgets than State Department officials.
The difference may also relate to the diversity of the defense programs
in Iran.
On the other hand, it may also reflect the interest of the services in
making new arms sales to Iran or in troubleshooting problems that
emerged in implementing the programs after a sale had been made.
The most significant point regarding the list of State Department
visitors is the absence of a single visitor in 1974-75 from the Bureau
of Political-Military Affairs, the Bureau charged with overseeing

arms sales programs and dealing on a day to day basis with OSD/ISA
and DSAA in the Pentagon.
List A contains visits by general officers and other senior officials
between September 1, 1973 and March 19, 1976, for which ARMISH-
MAAG had primary responsibility.
List B contains senior State Department visitors in 19 74-5.

LIST A.--GENERAL OFFICER AND OTHER SENIOR LEVEL VISITS: 1 SEPTEMBER 1973/19 MARCH 1976

Visitor Service Title Dates


RADM Dowd --------------------------
GEN Catton ...............
RADM Hanks -------------------------
RADM Gerhard -----------------------
BG Healy -----------------------------
M G Appel ----------------------------
M G Stoney ---------------------------
BG Gordon ---------------------------
MG Locke
LTGEN Moats -------------------------
G EN Zais -----------------------------
GEN Davisrn -------------------------
MG Klingenhagen ---------------------
MG Hughes ......................
B G Fix ... .. .. .. .. .. .. . .. .. . . .
BG W erbeck --------------------------
M G Hayes ----------------------------
LTG Hollis .....................
GEN Eade ................
M G Patton ---------------------------
RADM Feightner ----------------------
VADM Turner .......................
GEN Carlton --------------------------
MG Glauch ..........................
BG Newby ---------------------------
BG Gilbert ----------------------------
ADM Bagley --------------------------
BG Swenson .........................


USN
USAF
USN
USN
USA
USA
USAF
USAF
USAF
USAF
USA
USA
USA
USA
USA
USAF
USAF
USA
USAF
USA
USN
USN
USAF
USAF
USAF
USA
USN
USA


Ch, Navy Supply Systems.------------- 2-8 Sept 73
Cdr, AFLC 7-9 Sep 73
COMIDEASTFORCE----10-14 Sep 73
Dir, OPS 63 ---------------------- Sep 73 (Date
known.)


CG, JFK Center for Mil Asst ....
Dir, USEUCOM ...............
Cdr,AFCS
Cdr, 1035 Tech Ops Gp
Hq Cmd, USAF --------------------------
Cdr, 6th Tac AF (NATO) ............
Cdr, NATO Ground Forces South Eastern
Europe.
USCINCUSAEUR.
DCS LoR, USAREUR ---------------
CG, MEDCOMEUR-..
Dir, Int Log (AMC) ----------------------
Cdr, AFCS. .
Dep Dir, J-4, USEUCOM ......
CENTO
Dep CINC European Command-
J-7, EUCOM ------------------
Dep, Naval Air Systems Command --------
President, Naval War College...
Cdr, MAC ..............................
DCS/Ops, MAC
DCS/Log, MAC --------------------------
Cdr, ECA -------------------------------
CINCNAVEUR ---------------------------
DCS, CE USAREUR -----------------------
(55)


13-17 Sep 73
15-17 Sep 73
25-27 Sep 73
10-12 Oct 73
12-15 Oct 73
21-23 Oct 73
21-23 Oct 73
4-7 Nov 73
4-7 Nov 73
4-7 Nov 73
15-19 Nov 73
17-20 Nov 73
29 Nov-2 Dec 73
30 Nov-6 Dec 73
1-5 Dec 73
1-5 Dec 73
16-19 Dec 73
16-22 Dec 73
20-22 Jan 74
20-22 Jan 74
20-22 Jan 74
21-23 Jan 74
5-7 Feb 74
11-15 Feb 74





56


Visitor Service Title Dates


MR Jacobs -------------------------- DOD
BG Hill ------------------------------ USA
BG Werbeck ------------------------- USAF
GEN Carlton ------------------------- USAF
MR Tremblay ------------------------ State
MR Shea ---------------------------- DOD
MG Heinrichs ----------------------- USA
RADM Feightner --------------------- USN
ADM Moorer ------------------------- USN
MR Noyes --------------------------- DOD
GEN Anderson ----------------------- USMC
GEN Brown -------------------------- USAF
VADM Bayne ------------------------ USN
RADM Feightner --------------------- USN
RADM Lake ------------------------- USN
MG Kearney ------------------------- USAF
BG Dunlap -------------------------- USA
BG Kelly ---------------------------- USAF
MG Maddox ------------------------- USA
BG Rippitoe -------------------USAF
RADM Nance-., ............... USN
RADM Alvis ------------------------- USN
Mr Alne ----------------------------- DOD
VADM Cagle ------------------------- USN
MR Gibson -------------------------- USA
RADM Gerhard ---------------------- USN
RADM Alvis ------------------------- USN
MR Middendorf ---------------------- DOD
RADM Gerhard ---------------------- USN
MR Constanty --...------------------ State
MR McLucas ------------------------- DOD
RADM Alvis ------------------------- USN
HON M Hoffman ---------------------- DOD
MG Slay ---------------------- USAF
MG Creech ------------------------- USAF
ADM Holloway ----------------------- USN
RADM Gerhard ---------------------- USN
BG Swenson ------------------------- USA
ACCOM
BG Hill ----------------------------- USA
MG Hinrichs ------------------------- USA
GEN Eade --------------------------- USAF
MG Hall ----------------------------- USA
ADM Nance ------------------------- USN
MG Ryder --- ....--------------------- USA
MG Yancey -------------------------- USA
MR Muljer -------------------------- State
GEN Haig ---------------- ---------- USA


GS-18 (re ESD/FMS) ---------------------
Ch., USMTM (Saudi Arabia) --------------
Cdr, AFCS
Cdr, M AC ------------------------------
FSO-2 ----------------------------------
GS-17 ----------------------------------
CG, AVSCOM ----------------------------
Dep. Naval Air Systems Command ---------
Dep Ass't SecDef -----------------------
Ass't Cmdt, USMC
CSAF . . . . . . . . .
Cmdt NWC
DeNaval
Dep, Air Systems Command..,..,
Dep, Nav Elec Systems Command..._.,
Ch, Nurses Corps, USA -------------------
USAF Logistics
CG, USAA Center & Aviation Sch ----------
Cmdr, TAC Control Wing -----------------
EUCOM Cmd Insp Team
F-14 Project Manager- -
DOD/ISA (GS-17) ------------------------
Cdr, Nay Ed & Trng -------------------
DCS Log USAREUR .....................
Dir, Ops 63 -----------------------------
F-14 Project Manager
Secretary of the Navy --------------------
Dir, OPS 63 -----------------------------
Dep IG, State Dept. ................
Secretary of the AF ----------------------
F-14 Project Manager --------------------
Asst SecDef -----------------------------
PEACE CROWN Program -----------------
PEACE CROWN Program
Ch, Nay Ops...................
Ch, Nay Ops ........................ ..
DSC, Comm Elec, USAREUR ...


10-16 Feb 74
15-16 Feb 74
16-20 Feb 74
4-7 Mar 74
4-7 Mar 74
4-7 Mar 74
7-16 Mar 74
7-16 Mar 74
7-12 Apr 74
7-12 Apr 74
25-27 Apr 74
29 Apr-2 May 74
6-8 May 74
4-7 May 74
9-15 May 74
14-16 May 74
18-21 May 74
19-21 May 74
19-29 May 74
1-6 Jun 74
8-12 Jun 74
6-11 Jun 74
6-11 Jun 74
5-18 Jul 74
15-17 Jul 74
22-28 Aug 74
3-7 Aug 74
10-12 Sep 74
10-12 Sep 74
11-12 Sep 74
4-7 Oct 74
16-23 Oct 74
19-24 Oct 74
19-24 Oct 74
19-24 Oct 74
3-8 Nov 74
3-8 Nov 74
4-8 Nov 74


Ch, Mil Training Mission Saudi Arabia_____ 16-20 Nov 74
AVSCOM------------------..... .18-23 Nov 74
Deputy CINCEUR ----------------------- 27-28 Nov 74
Dir, J-3, EUCOM------------------27-28 Nov 74
Dep Chief of Staff EUCOM -------------- 27-28 Nov 74
Dir J-4/7 EUCOM ---------------------- 27-28 Nov 74
Dir, -5, EUCOM------------------27-28 Nov 74
FS6-1, POLAD, EUCOM ---------------- 27-28 Nov 74
CINCEUR ------------------------------ 3-6 Dec 74


Visitor Service Dates


RADM Hanks.
RADM Marshall
BG Persons --------------------------------------- ----------------
MG Albright----
A D M Shear -------------------------------------------------------
BG Post -----------------------------------------------------------
MG Nash
LTGEN Fish --------------------------------------
MG Slay-.----- .
MGRebh
BG Post ..........................................................
M G Hinrichs ------------------------------------------------------
GEN Jones
ADM Shear -------------------------------------------------------
LTG Kornet
RADM Bigley -----------------------------------------------------
ADM Cramer
MG Gibson
M G Hoefling ------------------------------------------------------
RA DM Alvis ------------------------------------------------------
M G Sum ner ------------------------------------------------------
BG M cInerney ----------------------------------------------------
GEN Weyland
BG Gast ----------------------------------------------------------
MG Green................................................
VADM Custis.. . . . . . . . . . . . . .
MG Gorman
MG Kingston-
VA D M Lee -------------------------------------------------------
RADM Alvis
BG ast ..........................................


USN
USN
USA
USA
USN
USAF
USAF
USAF
USAF
USAF
USAF
USA
USAF
USN
USA
USN
USN
USA
USA
USN
USAF
USAF
USA
USAF
USA
USN
USA
USA
USN
USN
USAF


7-10 Jan 75
27 Jan 75
31 Jan-5 Feb 75
1-5 Feb 75
17-19 Feb 75
21-23 Feb 75
5-6 Mar 75
9-17 Mar 75
9-17 Mar 75
4-5 Apr 75
12-24 Apr 75
19 Apr-1 Ma 75
26-30 Apr 75
2-3 May 75
7-12 May 75
16-18 May 75
17-24 May 75
30 May-4 Jun 75
9-12 Jun 75
10-15 Jun 75
20-24 Jun 75
11-14 Jul 75
26-30 Jul 75
8-12 Aug 75
25 Sep 75
26-29 Sep 75
5-12 Oct75
7-11 Oct 75
10-17 Oct 75
10-17 Oct 75
27-30 Oct 75





57


Visitor Service Dates

BG Racke-----------------------------------------USA 2-5 Nov 75
GEN Blanchard --------------------------------------- USA 8-10 Nov 75
VADM Wilson ----------------------------------------USN 8-13 Nov 75
MG Johansen--USA 13-23 Nov 75
GEN Huyser -----------------------------------------USAF 1-3 Dec 75
MG Ryder ------------------------------------------ USA 1-3 Dec 75
BG DeFiori ----------------------------------------------------- USA 18-23 Jan 76
RADM Avis- --- USN 25-31 Jan 76
GEN Deane ------------------------------------------------------- USA 8-18 Feb 76
MG Fix -------------------------------------------- USA 8-18 Feb 76
RADM Dowd ------------------------------------------------------ USN 26 Feb-3 Mar 76
MG Harris ------------------------------------------ USA 5-19 Mar 76


LIST B.-SENIOR STATE DEPARTMENT VISITORS

Visitor Title Dates

Peter Constable ----------Director, Office of Pakistan, Afghanistan, Bangladesh..--------- February 1974.
Philip Stoddard---------- Bureau of Intelligence and Research---------------------March 1974.
Sidney Sober ------------ Deputy Assistant Secretary-September 1974.
Henry Kissinger -------------------------------------------------------November 1974.
Charles Naas. Country Director, Iran ------------------------------ February 1975.
Charles Robinson --------- Undersecretary for Ecopomic Affairs ---------------------February 1975.
Charles Robinson-.--------- Undersecretary for Economic Affairs ---------------------June 1975.
Sidney Sober ------------Deputy Assistant Secretary ---------------------------September 1975.
Charles Robinson ---------Undersecretary for Economic Affairs ---------------------October 1975.
Carlyle Maw ------------Undersecretary for Security Assistance- - February 1976.
Myron Kratzer -----------Acting Assistant Secretary for O.E.S ---------------------February 1976.









B. SECURITY ASSISTANCE DOLLAR VALUE
[In thousands]


A. Total grant aid and government-to-government sales (FMS)__
B. FMS orders by U.S. service:
.1. Fiscal year 1950 through Fiscal year 1975:
Army
Navy_
USAF_
2. Fiscal year 1973, $2.1 Billion:
Army _
Navy_
USAF
3. Fiscal year 1974, $3.9 Billion:
Army_
Navy_
USAF
4. Fiscal year 1975, $2.5 Billion:
Army_
Navy...................................
USAF_
5, Fiscal year 1976, $1.3 Billion (est)


$11, 200, 000


2, 800,
4, 200,
3, 300,

890,
468,
755,

629,
2, 433,
853,


000
000
000

651
299
554

437
985
699


800, 784
1, 166, 999
550, 509


C. GOVERNMENT-TO-GOVERNMENT MILITARY SALES BY FISCAL YEAR

To be
Fiscal year Ordered Delivered delivered

1950-64 ------------------------------------------------------------- $1,285 $1,211
1965 ------------------------------------------------------------- --- 68,857 12,896
1966 ----------------------------------------------------------------- 207,809 52,188
1967 ----------------------------------------------------------------- 144,373 38,866 .
1968----------------------------------------------------79,369 56, 717 ...........
1969 ---------------------------------------------------------------- 239,392 94,894
1970----------------------------------------------------113,197 127,717
1971 ----------------------------------------------------------------- 397,956 79,352
1972----------------------------------------------------523,957 197,169
1973--------------------------------------------------2,114,503 234,309
1974 ----------------------------------------------------------------- 3,917,121 509,738 ------------
1975 ----------------------------------------------------------------- 2,567,903 944,650 -----------
1976 (est) ------------------------------------------------------------.1,256,619 ?
Total-------------------------------------------1 11,622,619 2,358,000 $7,906,000

I The $11,622,619 figure includes $.101 billion undefinitized details.
D. FMS PROGRAM BY CATEGORY
[In thousands of dollars]

To be
Ordered Delivered delivered

Aircraft------------------------------------------------5,021,845 1,217,567 3,844,278
Ships- ------------------------------------------------1,446,815 22,670 1 424,146
VehiclesfWpns-------------------------------------------- 410,933 219,429 191,504
Ammunition---------------------------------------------- 619,409 198,372 421,037
Missiles-------------------------------------------------906,115 169,510 736,605
Comm Eqpt-----------------------------------------------298,650 113,672 184,978
Other Eqpt ------------------------------------------------------------- 199,340 78,739 120,600
Construction ------------------------------------------------------------ 17,598 308 17,289
Rep/Rehab/Ovhl ---------------------------------------------78,742 5,747 72,995
Supp.Opns ------------------------------------------------------------- 326,739 77,763 248,976
Training- -----------------------------------------------237,231 130,870 106,361
Other Svcs ------------------------------------------------------------- 702,433 123,513 578,920
Total (through fiscal year 1975) ------------------------------------ 10,265,850 2,358,161 '7,906,689

I Through 1980's.
(58)












C. LIST OF CONTRACTORS AND PERSONNEL

Number of
Company Major field of activity personnel

AAI Corp.-Aircraft Electronics--3
Augusta Bell ---------------------------Aircraft Maintenance --------------------------- 10
Avco Corp/Lycoming ----------------------Aircraft Engine Maintenance-------------------- 13
Bel Helicopter Int- Flight Training-1,424
Booz Allen & HamiltonProgram Management--------------------------- 7
Bowen-McLaughlin-York-Tank Rebuilding--------------- 35
Brown & Root E&C ----------------------Shipyard Construction-------------------------- 16
Cessna Aircraft Co Aircraft------------------------------1
Collins Radio_--Communications Electronics --------------------- 4
Computer Sciences Corp-Computers Software --------------------------- 264
Emerson Electric-Armament Maintenance ------------------------ 1
Epsco Inc -----------------------------Electronics ------------------------------------ I
General Dynamics.-Missiles ------------------------------------- 11
General Electric -------------------------Engines and Armament-....- 15
General Motors/Allison_ Aircraft Engine Maintenance -------------------- 3
Grumman Aerospace Corp ------------------Aircraft Maintenance-....- 19
Hazeltine Corp --------------------------Electronics ------------------------------------ 1
Hughes Aircraft-Aircraft Electronics & Munitions ----------------- 7
ITT -----------------------------Communications Electronics 4-------------------- 4
International Technical Product-------------- Communications ------------------------------- 85
Itek Corp--Electronics------------------------------------ 3
Kaman Aerospace Corp --------------------Aircraft Maintenance --------------------------- 3
Litton ------------------------------- Electronics ------------------------------------ 7
Lockheed -----------------------------Aircraft Maintenance --------------------------- 1 23
Logistics Support Corp --------------------Aircraft Maintenance --------------------------- 160
Martin-Marietta ------------------------- Electronics ------------------------------------ 4
McDonnell Douglas -----------------------Aircraft Maintenance-....- 41
Northrup -----------------------------Missiles/Aircraft Maintenance ------------------- 29
Page Communic5tions--Communications-.....- 5
Philco-Ford- -. Electronics--------------------- 35
Pratt-Whitney --------------------------Aircraft Engine Maintenance -------------------- 4
Raytheon ----------------------------- Missiles ------------------------------------ 126
RCA Corp ----------------------------- Electronics ------------------------------------ 7
SOC___-Air Defense Systems Training 4------------------- 4
Singer Co..-Electronics ------------------------------------ 1
Stanwick -------------------------------------- Shipyard Construction -------------------------- 07
Sylvania Corp ------------s----------------------------------- 3
Texas lrstruments-Armament ------------------------------------ 2
Westinghouse--------------------------Electronics------.............-140
Total ---------------------------------------------------------------------------------- 2,728

Note.-As of October 1, 1975.


0
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UNIVERSITY OF FLORIDA

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