Between 1970 and 1978, the Shah of Iran ordered $20 billion worth of arms, ammunition and other military merchandise from the United States in what one member of Congress called ‘the most rapid build-up of military power under peacetime conditions of any nation in the history of the world.’ This extraordinary accumulation of war-making capabilities was intended to transform Iran into a major military power and thus fulfil the Shah’s ambition of restoring ‘the Great Persian Empire of the past.’ American leaders, who cultivated and nourished the Shah’s imperial visions, hoped in turn that U.S. arms would make Iran the ‘guardian’ of Western oil supplies in the Persian Gulf area. Never have arms transfers played such a central role in US foreign policy as they did in Iran. But, in the end, the illconceived arms supply program became a major factor in the Shah’s downfall. Though Iran was considered an important ally of the United States throughout the Cold War period, the real turning point did not come until December 1967, when then Prime Minister Harold Wilson announced that Britain would terminate its military presence in the Persian Gulf by the end of 1971. Wilson’s announcement caused consternation in Washington: US strategists had always relied on London to serve as the official guardian of Western interests in the vital Gulf region. Now Washington had to construct its own Persian Gulf strategy. In the conventional wisdom of the time, the British withdrawal would create a ‘power vacuum’ which the Russians would inevitably fill - unless someone else were there to stop them.
Who would protect Western interests in the Gulf? Many US leaders would certainly have opted for a direct American presence as the surest way of filling the impending vacuum. But there were several major obstacles to such a choice: it was 1969, and the United States was deeply embroiled in an unpopular war in Southeast Asia. Not only would a Persian Gulf presence divert forces needed for the war effort in Vietnam, but it would arouse the ire of Congress, which had already become disenchanted with America’s role as ‘the world’s policeman’.
Only one option was left: find a surrogate. This choice accorded nicely with the Administration’s newly adopted ‘Nixon Doctrine’ - avoiding direct US involvement and getting a friendly ‘puppet’ to execute foreign policy. But who could be relied upon to serve US interests in the area?
Iran was the prime candidate. Unlike its Arab neighbours, Iran possessed a sizeable navy and air force, and its wellequipped army of 150,000 was considered among the most powerful in the region, And U.S. Iranian alliance had another advantage: Washington needed to consult only one individual - the Shah - when critical decisions had to be made.
US analysts believed the Shah’s position was unshakeable. With control over Iran’s abundant oil wealth, he could buy off the most ambitious bureaucrats and entrepreneurs, while the constant vigilance of SAVAK ensured that all dissidents would be quickly dealt with. The only institution with the power to question the Shah’s survival - the army - was kept in line by lucrative perquisites on the one hand and the oversight of SAVAK on the other. ‘Iranian society is like a pyramid,’ US News & World Report observed in 1973, ‘with the Shah at the apex and the army a privileged caste.’
For US policymakers, forced to grapple with the agonies of Vietnam and growing discontent at home, a US-Iranian alliance must have seemed irresistible. But there was to be a price tag for this unprecedented partnership - a modern military arsenal. While the Shah was more than willing to serve as the US surrogate in the Persian Gulf, he expected to acquire military capabilities to match his country’s new stature. Not content with the obsolete hand-me-downs supplied through the Military Assistance Program, he began to eye America’s latest and most sophisticated military hardware. And the first thing he desired was a modern air force, equipped with America’s newest fighters, the McDonnell Douglas F-15 Eagle and the Grumman F-14 Tomcat.
Never before had Washington sold such an advanced aircraft to a Third World nation, and there were feelings that such a move could compromise US security by entrusting American defence secrets to foreigners. Such hesitations must have infuriated the Shah, who had come to view Iran’s role in increasingly grandiose terms. Eventually he must have handed Washington an ultimatum: either \ sell \ us what we want or the whole surrogate arrangement is defunct. Lacking an alternative policy, Washington gave in. In May 1972, President Nixon and Henry Kissinger flew to Tehran and signed a secret agreement with the Shah. Iran was then permitted to order virtually any weapons systems it wanted.
Within months of the May 1972 showdown, the Shah ordered eighty F14s at an estimated cost of $2 billion, as well as dozens of other US weapons systems. Iranian spending on U.S. arms soared from $500 million in 1972 to $2.2 billion in 1973 and a staggering $4.3 billion in 1974. In addition to the F-14s, major Iranian purchases included:
- 169 Northrop F-5E/F fighters for $480 million.
- 209 McDonnell-Douglas F-4 Phantom fighter-bombers for $1 billion,
- 106 General Dynamics F-16 fighters for $3.2 billion.
- 7 Boeing E-3A AWACS radar suveillance planes for $1,2 billion.
- 202 Bell AH 1J Cobra helicopter gunships for $367 million.
- 25,000 TOW and Dragon anti-tank missiles for $150 million.
- 4 DD-963 Spruance-class heavy destroyers for $1.5 billion.
To round out the Iranian shopping list, one would have to include billions of dollars worth of such mundane items as transport planes, armoured personnel carriers and artillery pieces. All told, the Shah ordered $20 billion worth of US arms between 1972 and 1978, or about double America’s military sales to all countries of the world for the twentyfive years following World War II.
Modern weapons require constant maintenance, servicing and inspection by skilled technicians, and Iran simply lacked the trained manpower to do this. Consequently each new purchase of sophisticated gear by the Shah created an additional need for backup support which could be provided only by US technicians. By 1973 an estimated 3,600 U.S. technicians were employed on arms related projects in Iran, and the number was expected to rise to 25,000 or more by 1980. These ‘white-collar mercenaries’ rapidly became an essential component of the Shah’s high-technology war machine - and thus Washington, by threatening to recall them, could exercise a form of ,veto power’ over Iranian military activities.
But if the Nixon Administration’s original decision to sell the Shah ‘anything he wants’ was prompted largely by strategic considerations, its adherence to the agreement was soon to be assured by another consideration - the oil-inspired balance-of-payments crisis. Following the fourfold rise in oil prices announced by the OPEC nations early in 1974, America’s balance of payments went rapidly into the red. With the nation heading into a recession, the White House was under immense pressure to recover as many US ‘petrodollars’ as possible by selling the oil-producers whatever they could be persuaded to buy. And there is no doubt what the Iranian government wanted to buy - arms, arms and still more arms.
Military sales became a critical economic as well as military objective. As then Deputy Secretary of Defense William P. Clements told Congress any slowdown in the export of arms ‘decreases the potential contribution of sales … to strengthening both free world security and the U.S. balance-of-payments position.’
If the rise in oil prices created new incentives for Washington to sell weapons, it also furnished the Shah with a vast increase in funds with which to buy them. And his appetite for arms was fed by an obsession with weaponry. A licensed pilot who often test-flew the warplanes he intended to buy, the Shah prided himself on his technical knowledge of military systems and made no effort to hide his zeal in buying arms.
Thus Iran soon became the largest single outlet for US arms exports. And at this point, a new factor entered the picture: greed. A certain amount of corruption had always been endemic in Iran, but it never approached the multimillion dollar bribes and ‘commissions’ paid by US firms to secure Iranian arms contracts. Grumman reportedly paid as much as $28 million in commissions to Iranian government officials while negotiating its $2 billion sale of F-14s, and Northrop shelled out at least $10 million to expedite sales of its F-5E fighter telecommunications equipment. Iranian military officials became immensely wealthy as a result of the American arms programs. One US official, writing in Armed Forces Journal, admitted that the Shah’s brotherin-law and Air Force supremo, Mohammed Khatemi, netted millions through deals with the US Air Force while ‘lower-level officials also took their cuts and money began to pour into safe hiding places in the West.’ Corruption on this scale could not be concealed and by 1976 it was common knowledge that high government officials were on the take. Although the Shah belatedly tried to dissociate himself from the spreading infection by arresting a few cronies whose extortions could no longer be hidden, his government had been tarnished and he began to lose the support of the smaller merchants and businessmen who suffered from the pervasive corruption.
Buy now, pay later
By the late 1970s, US arms programs began to backfire in other ways. In the halycon days of 1973-74, the Shah had consumed his new oil wealth as if the petrodollars would go on accumulating forever. But the OPEC price rise precipitated an economic recession in the West, and sales of Iranian oil began to decline. Unwilling to curtail his massive arms programs and disinclined to listen to the advice of his economists, the Shah went on buying arms as if his wealth was inexhaustible. Although Iran’s oil exports dropped by 12.5 per cent in 1975, the Shah ordered a 26-per-cent spending increase - much of it for arms and other military-related projects. The results were predictable: Inflation, already a problem in suddenly affluent Iran, soared out of control. By 1977, it was running at the rate of 30 per cent a year, far out stripping wage increases for most salaried workers. Civil servants, oil workers, rank-and-file soldiers, and most of the middle class experienced a drop in real income at the same time that high-level corruption was becoming common knowledge. Resentment was directed particularly at the Shah’s efforts to create his own arms industry. By 1976 he had signed contracts with several American and British firms to begin construction of new arms factories in Iran. And this was just the beginning: before he was forced out of the country in 1979, the Shah had announced plans to establish an aerospace industry and a tank factory.
The projects were described by the Shah as the cutting edge of his efforts to introduce modern industrial technology. But many Iranians viewed them as a diversion from less glamorous but more important development programs. The critics argued that the arms projects would create a small enclave of capital-intensive, high-technology production in an otherwise underdeveloped economy. At the same time more broad-based and labourintensive projects were being allowed to languish because of Iran’s budget crunch.
At this point, the presence of large numbers of foreign technicians also became a serious problem. Weapons began arriving at an ever-increasing pace in the mid-1970s, placing enormous strains on Iran’s other resources. The Shah responded in characteristic fashion: he hired still more Americans to help staighten out the mess. The number of US technicians working on arms-related programs in Iran jumped from 1,207 in 1975 to 4,473 in 1977 - an increase of 270 per cent. Other Americans (along with British, French, and West German specialists) were recruited to help manage Iran’s overstrained transportation, communications and energy systems.
The conspicious presence of affluent Westerners at a time of declining income for most Iranians created much bitterness. Moreover, these foreigners - recruited at high salaries and with lucrative expense accounts - began competing with middle-class Iranians for apartments in Tehran’s already tight housing market, thus driving up rents and adding to the inflation rate. This was followed by religious animosity as foreigners began introducing Western behaviour - public drinking, revealing clothing, sexually explicit movies - which offended Iran’s Moslem population,
Within the military, the Shah’s recruitment policies upset nationalistic cadets and technicians who found themselves under the supervision of foreigners. Iranian technicians, who lacked the privileges accorded to high-ranking officers, felt their skills and commitment were being short-changed by the Shah.
The day of reckoning
But before these divisions became obvious, the Shah had ordered Iranian troops into the streets to crush antigovernment demonstrations by students, workers, and religious leaders. Thousands of unarmed civilians lost their lives. Many more were wounded or taken to prison. As the protests gained momentum, American arms sales again became controversial. Iranian troops began using their US-supplied weapons against unarmed civilians. Just as the Shah declared martial law the Carter Administration announced an emergency delivery of riot sticks, tear-gas, helmets and shields to the Iranian army, providing a highly visible sign of U.S. support for the faltering regime. As Iranian pilots fired into the streets of Tehran from their US-supplied helicopters and as Army units patrolled the streets in their American tanks and armoured vehicles, the United States became irretrievably identified with the Shah’s bloody efforts to retain power. It is hardly surprising that the anti-Shah demonstrations eventually took on an anti-American cast as well.
Long before the Shah’s final departure, it had become painfully obvious that the extraordinary US-Iranian arms relationship would never be restored to its original stature. With oil production down to zero and the economy devastated by months of turmoil, there was no money left to pay for imported arms. And even the Shah’s hand-picked successor, Dr Shapour Bakhtiar, announced in January 1979 that Iran would no longer serve as ‘the gendarme of the Persian Gulf.’ The arrival of Ayatollah Khomeini and the final ascendancy of his ‘revolutionary government’ merely sealed the fate of U.S. policy in the Persian Gulf.