Iran’s transformation into a regionally dominant power, rooted in the shah’s longstanding interpretation of his nation’s security needs, was made possible by both phenomenal oil profits and the 1969 Nixon Doctrine. As previously discussed in The Nixon Doctrine Empowers the Shah of Iran, the Nixon-Kissinger announcement provided supporters with a new justification to buy arms that would be used in the Washington interest, a policy which would also allow American defense companies to extract huge profits.
In May 1972, President Nixon personally promised all necessary weapons and technical aid short of nuclear capability to the Iranian regime. The president’s personal promise to the shah made possible large increases in sales to Iran. More importantly, it exempted “sales to Iran from the normal arms sales decision-making processes in the State and Defense Departments.”
Nixon agreed to sell Iran “‘virtually any conventional arms it wanted,’ supported by unlimited American technicians in Iran . . . . It was the first time that any non-industrial country had been allowed to reach the same level as the United States in the ‘state of the art.’ There had been no major review beforehand and Nixon’s decision was passed to the Pentagon with no chance to revise it. It opened the way for the Shah’s next massive expansion and thereafter . . . the Pentagon had difficulty maintaining any logical policy towards Iran, for Nixon’s decision was based not on what the United States thought best, but on what the Shah wanted.
The ability to acquire advanced weaponry solved the shah’s problem as well. As Bromley notes:
In any nation faced with sudden wealth, arms provided the easiest and quickest way to spend money, bringing prestige and new authority to the rulers. Hospitals, schools, or welfare provided huge problems of administration and social disruption, but arms companies brought their own infrastructure and training, making the links with high technology which rulers longed for. And commissions or other bribes increased the incentives, while redistributing part of the wealth on the way.
Moreover, the US was not inclined to discourage orders for arms.
The quickest way to recycle oil money or to ‘sop up the surplus,’ it was said was to sell arms in exchange — much safer and stabler than having the surplus of oil-money ‘sloshing around the short-term capital markets of the world.’
America’s foreign military sales program to the shah rapidly became the largest in the world both in terms of dollar value and in terms of the number of Americans involved in program implementation. Worldwide, America’s arms sales increased from $3.9 billion in 1973 to $8.3 billion in 1974. Of the 1974 total, nearly half — $3.9 billion — went to Iran. Government to government military sales to Iran increased from $524 million in Fiscal Year (FY) 1972 to $3.91 billion in FY 1974, lessening slightly to $2.6 billion in FY 1975. The preliminary sales estimate for FY 1976 was $1.3 billion. Overall, sales in the 1972-1976 period totaled $10.4 billion.
The number of Americans in Iran also jumped, rising from 15,000-16,000 in 1972 to 24,000 in 1976. In the absence of revolution, the number was expected to reach 50,000-60,000 or higher in 1980. Since this activity was predicated on the ambitions of the American defense industry as well as on US and Iranian security considerations, it is worth taking a look at the role that US civilian defense contractors played in Iran’s weapons acquisition program and their impact on urban development.
The operations of two of the major contractors — Bell Helicopter International (BHI) and the Grumman Corporation — were located in Isfahan. In fact, it was in this metropolitan area that oil and arms coalesced, creating conditions which contributed to urban transformation.