The Middle East war of June 1967 initiated a worldwide oil scare, driven especially by changing realities in the international petroleum market.
The US was becoming increasingly dependent on oil imports, particularly from the Middle East, and oil exporting states were growing more and more empowered. The situation bolstered the shah’s belief that he should be rewarded for providing a continuing and reliable source of supply to the West.
In 1966 the shah had successfully pressured the oil consortium (British Petroleum and eight European and American oil companies) to increase production rates in Iran. Determined to come up with needed revenues for his Fourth Development Plan, he demanded another increase in 1968. Although American oil companies balked, the State Department — citing national security — pressured the oil companies to accept Iran’s terms, thus resolving the issue in Iran’s favor. As a result, following on the heels of Taiwan’s achievement of self-sufficiency:
. . . increases in Iran’s exports, in its Gross National Product, and in its industrial production led to the conclusion that Iran had reached the developmental “take-off” point. American aid was virtually terminated at the end of 1967, after having supplied Iran with nearly $1 billion during the preceding fourteen years. While the United States aid program in Iran had once been regarded as one of the “more inefficient and corrupted of American overseas aid efforts,” concluded The New York Times, Washington now pointed to Iran as “one of their more notable success stories.
Taken together, oil, the termination of aid, and the shah’s new relationship with the Soviet Union encouraged greater American arms sales to Iran.
Although the Iranian army had already received M-1 rifles, 106 mm artillery, M-47 tanks, 3.5 mm antitank rocket launchers, F-86 fighters, and C-47 transport plans, the shah wanted additional equipment. He insisted on a comprehensive radar system to guard against Soviet attack, a ground-to-air missile network to protect his Gulf coast, supersonic aircraft, and long-range surface-to-surface missiles.
American reliance on Iranian oil meant that the US was not in a position to refuse.
Both Senator William Fulbright, Chairman of the Senate Foreign Relations Committee, and the Defense Department’s International Security Agency (ISA) opposed the sales, but the provision of F-4D fighter planes was justified on the basis that the Soviets had supplied advanced fighters and bombers to both Iran and Egypt.
Fulbright argued that “. . . we are doing a great disservice to Iran by selling them these arms . . . given Iran’s poverty, it should have other priorities.
In 1968, after a comprehensive defense review, the British announced their intention of withdrawing “east of Suez” by 1970.
The British departure meant the end of the security system that had operated in the Middle East for over a century, and strategic requirements moved Washington’s objectives even closer to those of the shah.
The US could not afford a power vacuum in a region that supplied 32% of the world’s petroleum and that, at the same time, held 58 % of the world’s proven energy reserves. Consequently, President Nixon and Secretary of State Kissinger decided to employ a Nixon Doctrine, allowing the US to supply arms to selected client states instead of sending troops.
As David Packard, the Deputy Secretary of Defense, stated:
The best hope of reducing our overseas involvements and expenditures lies in getting allied and friendly nations to do even more in their own defense. To realise that hope, however, requires that we must continue, if requested, to give or sell them the tools they need for this bigger load we are urging them to assume.
The Nixon Doctrine relied on strong local allies to act as regional policemen. This policy, of course, meant that the shah could achieve his long held objective of acquiring substantial quantities of advanced weaponry.
Quickly Iran became “the key guardian of Western interests in the Gulf.
Iran bordered the Soviet Union and it was by far the largest and most advanced state in economic and military terms.” As the shah asserted:
The safety of the Gulf had to be guaranteed, and who but Iran could fulfill this function?
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