Foreign Relations, 1969-1972, Volume E-4, Iran and Iraq
(This is not an official statement of policy by the Department of State, but is intended only as a guide to the contents of this volume.)
From 1969 to 1972, the United States viewed Iran as one of its staunchest friends in the Middle East and Iraq as a potentially dangerous opponent. Since Iran and Iraq were rivals, Washington’s close ties to Tehran only widened the gap with Baghdad. President Richard Nixon, like previous U.S. Presidents, regarded Iran under Shah Mohammed Reza Pahlavi as a stable pillar of U.S. security in the Middle East. The main point of contention in congenial U.S.-Iranian relations was the Shah's appetite for expensive, but unnecessary, high-technology weapons. Concerned that an arms build-up might imperil Iranian internal stability by diverting funds for social efforts and complicate regional relations, U.S. officials were torn between satisfying and restraining the Shah. As for Iraq, the Nixon administration viewed with suspicion if not hostility the Iraqi Ba'athist regime, which had severed relations with the United States in 1967. Washington conducted its minimal dialogue with Baghdad through the Belgian Embassy, acting through additional third parties when critical issues arose. Unlike the government in Tehran, however, the Administration tended to regard the Ba'athists as too fragmented and weak to pose a serious menace to the Gulf region. Repeated anti-Ba'athist coup attempts reinforced this opinion.
The Nixon administration's tilt toward Tehran led to significant shifts in its policy toward Iran and Iraq in 1972. First, the United States abandoned its sporadic efforts to rein in the Shah's extravagant military spending. During his May 1972 visit to Tehran, Nixon promised to sell the Shah any American arms (short of atomic weapons) that he desired. Second, at the same meeting, the President conceded the Shah's point that Iraq, now a close Soviet ally, was a security danger to the Gulf region. To help keep the Ba'athist regime off-balance, the U. S. Government began to support the Iraqi Kurdish rebellion under Mullah Mustafa Barzani in July 1972. Although the Shah had funded Barzani for years, Washington had resisted Kurdish appeals for aid on the principle of non-interference in the internal affairs of other countries. After the Iraqis signed a treaty with the Soviets in April 1972, however, U.S. officials—particularly in the Central Intelligence Agency (CIA)—agreed that the threat from Baghdad warranted U.S. attention.
Like the Johnson administration before it, the Nixon White House believed from the outset that Iran's role in the alliance system, particularly its strategic position in the Persian Gulf, justified U.S. arms sales to Tehran. Policymakers considered the $100 million per year, six-year military agreement that Johnson had signed with the Shah in 1968 to be the "touchstone" of the U.S.-Iranian relationship, which provided Washington with vital political and security privileges. (10) The country team at the Embassy in Iran—mindful of the Iranian-based U.S. intelligence facilities—warned of dire consequences for U.S. influence in Iran if the Shah were thwarted. (57, 63, 78, 85) If the United States failed to supply the weapons the Shah desired, he would obtain them elsewhere. (26, 55, 86, 182) Moreover, Iranian purchases improved the U.S. balance of payments position, since Washington was shifting military aid to Tehran from a grant to a credit basis. (13)
Yet policymakers also recognized that the Shah's arms build-up could threaten stability, both within Iran and in the Gulf region. The Shah was quick to defend his military requests by raising the specter of expanding Soviet influence through radical Arab regimes like Iraq. (1, 24, 53, 69) The danger would become acute once the British withdrew from the Persian Gulf in 1971, he claimed, and Iran assumed responsibility for insuring regional security. (35, 185, 186, 67) While Nixon administration officials recognized that Iran was the preponderant power in the Gulf, however, they saw the regional threat as less dire and believed that Persian Gulf security should depend upon joint Iranian and Saudi Arabian cooperation. (70, 75, 91, 97) Department of Defense officials were particularly outspoken in their view that there was little military justification for much of the equipment the Shah sought. (29, 60, 61, 88)
Department of State officials reconciled the arguments for and against arms sales by contending that supplying Iran's military program was the best way to control it. If the Shah trusted U.S. concern for Iranian security, military advisors could then counsel him to establish priorities and eliminate wasteful spending. (96, 99, 122) Nevertheless, a 1972 Department of State Intelligence and Research (INR) study acknowledged the inefficacy of this strategy: "There is little evidence that [the Shah] pays much heed to any efforts on the part of ARMISH/MAAG [U.S. Army Mission in Iran/Military Assistance Advisory Group] to influence the scope of his armament efforts or his concept of what Iran needs… [H]e has moved from a position of some dependence on his American advisers to one which sees them largely as a reliable and helpful channel to his American suppliers." (166)
To finance the type of military he envisioned, the Shah required ever-increasing oil revenues, and appealed for U.S. support in his battles with the western oil consortium that lifted Iranian oil. In 1969, the Shah began to threaten unilateral legislation to achieve an extra $100 million in oil revenue over the consortium's planned $900 million off take, invoking the UN principle that mineral resources belong to countries rather than to the foreign companies that exploit them. (3) Emphasizing that the U.S. Government did not control the American oil companies, U.S. officials declined to intervene, and the consortium secured a favorable deal that year. (4, 16, 17) Still determined to solicit Washington's help, the Shah planned to broach the issues of oil and Iran's military requirements in his first State visit with Nixon in October 1969. (24, 25, 26)
On the eve of the Shah's visit, Secretary of State William Rogers sent the President and Secretary of Defense Melvin Laird two memoranda that highlighted conflicting U.S. impulses towards Iran's defense program. To Nixon, Rogers described the traditional U.S. policy towards the Shah's military program as an attempt "to contain the Shah's military appetite, without creating a negative impression, since the need for so much additional equipment is questionable in our view and its purchase diverts resources from development." (27) U.S. officials recognized that despite Iranian economic progress, exploding military expenditures might depress living standards and arouse popular discontent. (10, 13, 117) Simultaneously, however, Rogers emphasized to Laird the importance of conveying to the Shah "the clear impression that we are making a determined effort to help him to continue to meet his defense needs." (28) In essence, U.S. officials were not willing to risk good relations with Iran for the sake of a more prudent arms policy.
In his meetings in Washington, the Shah proposed that United States import a large quota of oil from Iran, the proceeds of which he pledged to spend within the United States on military equipment. (25, 32, 33) For his prized air force, the Shah sought two additional squadrons of F-4 Phantom fighter-bomber aircraft, along with pilot training and U.S. air force technicians. (35, 37) Stretched thin by the Vietnam War, the administration initially could comply only on the question of pilot training. (30, 49) The Shah, however, encouraged by officials' expressions of general support, pursued his objectives of oil income, F-4s, and technicians in subsequent discussions with American officials. (46, 67, 73)
Although the Shah left Washington convinced that Nixon had vowed to order the oil companies to purchase more Iranian oil, the administration was willing only to encourage the consortium to provide the Shah with higher revenues. (44, 45, 51, 54) Disappointed, the Iranian leader renewed his threat of a legislative solution to the oil problem, leading President Nixon to warn the oil companies in October 1970 that American security was at stake in the negotiations. (89) By December, a satisfactory arrangement had, for the moment, been reached, but it was soon overtaken by an Organization of Petroleum Exporting Countries (OPEC) decision to increase oil prices, with Iran leading the charge. (101,108)
The Department of Defense remained concerned that Iran was acquiring arms beyond its needs and absorptive capacity, but its reservations were ignored. (61, 82, 90) To relieve the annual tension over military sales, in April 1970 the President approved a plan to stretch out the 1968 military agreement over 7 or 8 years, thereby extending the U.S. commitment as Iran's arms supplier. (57, 60, 62, 64) In August 1970, when Congress delayed approval of the foreign military sales financing, Washington provided the Shah with $120 million in Export-Import bank credits, $20 million above the $100 million annual military credit. (48, 74, 83) Despite Defense opposition, State and the CIA argued for the proposal that the Shah be allowed to use the credit for the F-4 aircraft, which he felt Nixon had promised him during his Washington visit. (85, 88, 90, 93) After considerable debate, the White House sided with State. (103, 107) As Iran splurged on a lavish 2500th anniversary celebration of the Persian monarchy in October 1971, the United States still provided Tehran grant military training in addition to the military credit, which was raised to $140 million in 1972. (133, 134, 160, 173)
Washington officials had not entirely abandoned hope of using their advisory role to check the Shah's excesses. The Shah, however, disregarded State's advice to purchase only necessary jet aircraft appropriate to the regional balance of power. (55, 106, 156) U.S. officials still took some satisfaction when, on the MAAG's advice, the Shah reduced the number of F-4s needed for accelerated delivery from 16 to 8 aircraft. (169, 172, 174) Moreover, to operate the new F-4s, the air force technical assistance team in Iran extended its stay through 1974. (154) In 1972, as the Shah requested, the military advisory group was expanded by 36, despite the Defense and Congressional mandate to reduce MAAG sizes worldwide. (79, 177) Defense objections notwithstanding, the administration also allowed Major General Hamilton Twitchell to accept contract employment as advisor to Tehran upon his retirement as Chief of ARMISH/MAAG, believing that Twitchell would direct Iranian military purchasing toward American suppliers. (135, 143, 149)
As a friend of the Shah, President Nixon placed great stress on Iran's role in the Persian Gulf. If he regarded the Shah's more grandiose regional ambitions with skepticism, Nixon accepted the Shah's claim that Iran was the only dependable U.S. ally between Europe and Japan. (75, 122) While Kennedy had emphasized the importance of shoring up the regime's internal position with a broad reform program, the Nixon administration believed that the Shah's "White Revolution" had been successful, despite the regime's narrow base and dependence on the army and security services. The President and other officials believed that Iran was not prepared for constitutional democracy and, at its current stage of development, was best served by a benign dictatorship, a view the Embassy in Iran corroborated. (1, 122, 181) So long as an apparently steady and strong Shah directed a growing economy and an expansive foreign policy, all was well in Iran. (183, 185) U.S. officials responded warmly to the Iranian leader's claim that his "independent nationalism" of self-reliance and self-defense dovetailed with the Nixon Doctrine of letting friends defend themselves. (23, 123, 197)
There were signs, however, that all was not well in Iran. The Shah's territorial claims in the Gulf, which the United States tended to support, irritated Arab-Iranian relations. (75, 119, 146, 155) Americans in Iran also remarked on the quickened tempo of Iranian student protests and terrorist incidents, including a 1970 assassination attempt on Ambassador Douglas MacArthur II. (50, 84, 102, 126) Yet given the tumult at home during the Vietnam War, the administration was relatively inured to student protest. (84, 122) Wary of expanding Soviet influence, many American observers accepted Tehran's claim that forces outside Iran were directing a small Iranian minority engaged in anti-government subversion. (126, 127, 144) A wide audience within Iran, however, revered the regime's opponents, such as exiled religious leader Ayatollah Ruhollah Khomeini. (76, 181)
The Shah's relationship with Washington was itself a source of grievance for many Iranians, and by occasionally striking an anti-American pose, the Shah answered his critics. In several 1972 press statements, the Shah condemned the U.S. MIDEASTFOR [Middle East Forces] naval presence in Bahrain, excusing his outbursts to U.S. officials privately as a public relations gesture. U.S. observers also theorized that the Shah was attempting to place himself on record as opposing any external powers in the Gulf in order to counter a future Soviet presence. (161, 162, 164, 165) The Shah's disapproval of MIDEASTFOR, however, was genuine. (105, 165, 206) To express displeasure with Washington's policy towards anti-Shah protestors in the United States, the Shah allowed a former student on the government news outlets to accuse American organizations of collaborating with anti-Iranian student groups in the United States. (130, 131, 132) The Shah also attempted to relieve one of the major sources of Middle East strife and U.S. unpopularity, the Arab-Israeli struggle. However, he received only non-committal replies to his urging that the U.S. Government pressure Israel to accept an Arab-Israeli peace settlement. (124, 128, 129)
Where U.S. and Iranian interests conflicted, as on the issue of narcotics, Washington found Tehran intractable. The Shah rejected the U.S. request for help in controlling opium production, which Tehran resumed in 1969 after a 14-year hiatus. Many Iranian dissidents accused the Shah's family of complicity in the drug trade itself. (178, 179, 180, 187) Still, American officials declined to pursue the matter with the Shah, allowing that Iran was a "victim" country of the drug trade because of its high number of users, and convinced that Iran would not export opium, despite some evidence to the contrary. (136, 192, 218, 221) As in other fields, American officials inclined towards optimistic analyses of Iran's drug policies. When Tehran pledged to reduce the authorized poppy cultivation of 1973 to 10 per cent of the 1972 level, American officials celebrated. (222)
From the U.S. perspective, the practical value of the relationship outweighed its drawbacks. Iran could be a useful friend, as in 1972 when the Iranians responded to a U.S. plea to turn over their entire force of F-5A's to South Vietnamese forces in operation "Enhance Plus." (223) Yet the Shah drove a hard bargain for his aid, providing only 32 of the 90 aircraft requested, and insisting that more advanced aircraft replace those he had surrendered. (225, 226, 227, 228) While Ambassador Joseph Farland supported the Shah's demands, Under Secretary of State U. Alexis Johnson dragged his feet, prompting the President's National Security Advisor Henry Kissinger to intervene with a compensation package that exceeded the ambassador's recommendations. (231, 232, 234, 235)
The U.S. Government was similarly willing to pay a high price for even a semblance of Iranian moderation over the issue of oil. In late 1970, the Shah rejected U.S. appeals on behalf of the oil companies, and called for higher oil prices for the Persian Gulf countries of OPEC, based on the threat of cutbacks. (109) In January 1971, Nixon dispatched Under Secretary of State John Irwin to Tehran as intermediary in the crisis, but Irwin and Ambassador Douglas MacArthur II quickly adopted the Shah's position that the consortium should negotiate a separate Persian Gulf agreement rather than the OPEC-wide deal the consortium preferred. (110, 111, 112) Signed in February 1971, the Persian Gulf agreement with Iran left the oil consortium vulnerable to successive rounds of price rises, or "leap-frogging," as the Gulf producers and other OPEC members competed for the best terms. (115, 125, 139)
As negotiations heated up in 1972 over the critical issue of the participation of producing countries in the oil industry, Americans persisted in regarding Iran as a stalwart of moderation, despite the Shah's own far-reaching ambitions for control of Iran’s oil resources. (141, 157, 199) Although the Shah did not insist on the 20 percent industry ownership that some Arab producers then demanded, he asked the consortium for higher oil income and aid for Iran's national oil company and refinery. In return, the Shah undertook to extend the consortium's oil agreement beyond the current 1979 expiration date. (199, 207) Pleased at the promise of stability and at Iranian independence from OPEC, the President sent the Shah a congratulatory note on the negotiations, and Kissinger termed the agreement "tough but responsible." (208, 209) The Shah, however, was aghast when Saudi Arabia won more generous participation terms for itself and certain other OPEC Gulf producers, complaining that this settlement undercut moderate forces like himself by offering greater rewards to extremists. He promptly insisted that his own agreement be revised, either by raising Iranian revenues to the Saudi level, or by transferring significant industry control to the Iranians in a long-term contract. (237) His demands seemed in no way to dent his reputation for moderation within the Nixon administration.
In fact, the Shah felt that the United States took him for granted since Iran was not a hotbed of instability. (184) By 1972, responding to the Shah's increasingly strident reminders about Nixon's long-deferred visit, the White House arranged a Presidential trip to Tehran to affirm the Shah's special relationship with the United States and acknowledge his concerns over Soviet regional objectives. (158, 159, 197) Since the Shah was likely to raise his pet topic of military cooperation, the Embassy and Rogers counseled the President to assure the Shah that Washington viewed Iran as "an outstanding example of national independence and self-reliance, that we value our close relationship highly, and that we have every intention of continuing to cooperate with it," while also urging Iran to work closely with its anti-Soviet neighbors. (188, 193) Kissinger suggested that the President offer the Shah F-4 and F-5E aircraft, avoid commitment on F-14 and F-15s, and reject the sale of laser-guided bombs. (190, 197)
During the May 1972 meetings with the Shah in Tehran, however, Nixon made two commitments of far-reaching importance. (200, 201) First, contrary to his advisors' counsel, Nixon agreed to provide laser bombs, F-14 and F-15 aircraft, and more air force technicians--in short, "all available sophisticated weapons short of the atomic bomb." (204, 205, 210, 215) The second commitment was to aid the Iraqi Kurds (see Iraq section, below). Nixon's response represented the administration's new position that, as Kissinger phrased it, "it is not repeat not our policy to discourage Iranian arms purchases" and prevent Iranian overbuying, which merely sent the Shah elsewhere to the detriment of U.S. suppliers. Instead, "decisions as to desirability of equipment acquisition should be left in the hands of the Iranian Government and the United States should not undertake to discourage on economic grounds." (211, 213) Despite Iran's enhanced oil income, American officials recognized that the Shah was likely to persist in deficit spending. In 1972, the Iranian military budget totaled $1,023 million, 22 percent of the total budget and 10 percent of the GNP, and was expected to rise to 25 percent of the GNP by 1975 if spending patterns continued. (117, 166, 167) Although U.S. officials believed that Iran could afford both guns and butter, many alienated Iranians sharply disagreed.
During Nixon’s trip to Tehran, opponents of the Shah orchestrated a bombing campaign that the Embassy believed was the result of "a violence-inclined ‘youth underground’ [that] has taken root in Iran with possibly serious consequences for the country's long-term stability." Violent protests and demonstrations followed. While these dissidents posed a disproportionate threat, however, officials did not judge them an immediate danger to state security. (203) By August 1972, the Embassy reported that despite a government crackdown, terrorist activity was unlikely to abate in the absence of major political, social, and administrative reforms. (216) Iranian observers, moreover, were less sanguine than Americans that the attacks constituted no decisive threat, accusing the Iranian Intelligence and Security Organization of the Country, SAVAK, of fueling anti-Shah opposition to dangerous levels. One journalist dated the spate of terrorist incidents to the harsh SAVAK crackdown on students protesting the 1970 bus fare hike, many of whom had been beaten, expelled, and left without future recourse. (50, 219) Moreover, the chairman of a U.S.-based dissident organization, the Iran Free Press, warned Washington that revolution was near, and that "it is a clear moral wrong for the United States or any other party to advise Shah Pahlavi to spend hard earned exchange currency on weapons, unneeded and ludicrously expensive, to guide his choice, and moreover to back this choice with personnel, when most families in Iran must survive on less than two dollars per day." (224) Regarding the author's organization as offensive, White House officials did not reply to this letter. From the administration's perspective, despite the dissatisfaction of a few, the Shah's position was fundamentally sound.
Washington's minimal relations with Iraq following the rupture with Baghdad during the 1967 Arab-Israeli war were carried out by the Belgians. (7) With no presence in Baghdad, the United States had little leverage. In 1969, when the Ba'athist government evinced interest in the former U.S. Embassy property in Baghdad "for security reasons," the result was a foregone conclusion. Following years of fruitless negotiations, the Iraqis seized the property in May 1971. (10, 12, 45, 46) Along with the need for better reporting, this incident helped inspire the Nixon administration to establish an American-staffed Interest Section in the Belgian Embassy in Baghdad in 1972, like that the Iraqis had established in Washington in 1967. (51, 64, 78)
The Nixon administration confronted its lack of influence in Iraq early in 1969 when it tried to prevent Israeli retaliation on Baghdad for the public hanging of Iraqi Jews and others accused of spying for Israel. (1) To mollify Tel Aviv, Secretary Rogers condemned the hangings in a statement forwarded to the United Nations. (2, 3) U.S. officials also devised plans to permit Iraqi Jews to immigrate to the United States, but, recognizing that essential Iraqi cooperation would not be forthcoming if Washington were involved, the Department of State discouraged Congressmen from proposing a UN Security Council meeting on the subject. (5, 13) By October 1970, the Belgian Embassy reported that conditions had improved for Iraqi Jews, although renewed reports of arrests of émigrés in March 1971 prompted Washington to call for an inquiry by the UN High Commissioner for Refugees. (32, 35, 37) The Commissioner, along with other US allies to whom Washington appealed, successfully petitioned Baghdad on behalf of Iraqi Jews, although the issue periodically resurfaced. (38, 39, 72) American officials interpreted the ongoing persecution of Iraqi Jews as an attempt to rally public support behind the Ba'athist regime by playing up the military threat from Israel. According to INR, internal political weakness had led the regime to launch its spy executions. (8) Early on, US officials deemed the Baghdad government a trial rather than a threat.
This perception of Iraqi weakness guided U.S. policymakers for the first few years of Nixon's administration. Despite the Shah's tendency to invoke the threat of attack or Soviet subversion from Iraq, Washington remained unconvinced of Iraq's power to take action against Iran, Iraq's reliability as a Soviet ally, or the Soviets' willingness to sacrifice their relations with Tehran to those with Baghdad. (Iran 34,195; Iraq 23, 28) U.S. officials recognized that the Iraqis had been slow to implement modern weaponry, and that although the Iraqi army could maintain internal security and defend borders against the Arabs, it could not repel a Turkish or Iranian attack. The Ba'athists' determination to subordinate the army had left it in poor condition. (52, 63) Aware that the Soviets had built naval facilities in the Iraqi port of Umm Qasr, Washington also received intelligence on Soviet disappointment with their Iraqi allies, who had failed to make peace with Kurdish rebels in the north or pay installments on their loans from Moscow. (25, 26, 30, 34) Cessation of hostilities between the Ba'athists and the Kurdish minority, U.S. officials recognized, could strengthen Iraq and free it to turn to the Gulf. However, even after Baghdad signed a ceasefire agreement with the Kurds in March 1970, the Ba'athists' reluctance to share power signaled that Kurdish unrest would continue. (27, 29, 52, 65)
Notwithstanding their distaste for the Ba'athists, U.S. officials saw little need to aid the Kurds. Since 1969, the Nixon administration had received pleas for help from Iraqi Kurdish leader Mullah Mustafa Barzani for his uprising against the Ba'athist government. U.S. officials rejected the overtures on grounds that Washington would not interfere in the internal affairs of other countries, and that an independent Kurdish state was not a U.S. goal. Officials also felt that, regardless of Kurdish complaints of inadequate aid, the Kurds could get the help they required from the Iranians and the Israelis. (14, 15, 22, 47) Both countries had long supported Barzani in an effort to destabilize their enemy in Baghdad. Throughout 1971, despite Barzani's insistence that the Ba'athists could be toppled only by a Kurdish-led insurrection, the United States maintained its refusal to assist. (47, 48)
Washington probably expected the Ba'athist regime to fall on its own, perhaps through an anti-Ba'athist coup. In August and December 1969, Iraqi émigrés unsuccessfully turned to the U.S. Government for support in their coup attempts. (17, 18, 19) Another coup mounted by SAVAK with anti-Ba'athist elements failed in January 1970. (20, 52) U.S. officials received news of a third coup planned for September 1970, led by Muhammad Ja'far Al-Numayri, a Shi'a Muslim enraged by Sunni Muslim Ba'athist discrimination. (31) American officials also followed the turmoil within the Ba'ath party itself, which in October 1970 resulted in the dismissal of Defense Minister Hardan Tikriti at the instigation of Saddam Hussein, Vice Chairman of the Revolutionary Command Council. (33) Overall, U.S. officials judged Iraq to be chronically unstable, fragmented, and erratic. (63)
Even so, the regime seemed to be consolidating its power, and by 1971 some American officials concluded that the Ba’athist government would be around for some time, persistent economic woes and Kurdish discontent notwithstanding. (36, 41, 49, 63) Internal instability remained likely to prohibit the Ba'athists from spreading their political influence abroad. Soviet influence in Iraq, however, was growing, as evidenced in an agreement for $250 million in military equipment and more in aid. Moscow seemed to be parlaying its investment in Iraq into a platform from which to attain a position of ascendancy in the Middle East. (50, 52) To American alarm, Saddam Hussein led a delegation of Ba'ath officials to Moscow in February 1972, resulting in a Soviet-Iraqi communiqué and, later, a treaty. A precondition of the treaty was the formation of a united front Iraqi Government, including communists and Kurds. (53, 55)
As the Soviets prodded Barzani to join a National Front government, the Kurds again approached Washington through the CIA, insisting that without help, they would have to come to terms with Baghdad. The Shah added his plea to Barzani's, warning that Iraq had fallen under Soviet domination. Yet in March 1972, the White House, with CIA and State concurrence, declined the request once again, repeating that Iran and Israel could provide for the Kurds, who were unlikely to succeed in any case. The Americans were also reluctant to make a move that Moscow could interpret as anti-Soviet. (54, 56, 57, 58) As late as April 1972, the Department of State felt the balance of factors opposed Kurdish support, arguing that Iraq's alliance with Moscow would endure a change of regime, and that the leak of news of U.S. aid to the Kurds would damage U.S. relations with the other Arab states. Further, aiding the Iraqi Kurds would give hope to Kurds in Iran and Turkey of a separate Kurdistan, thus weakening those U.S. allies. (59, 65)
Soviet influence in Iraq, particularly in the oil industry, continued to expand. In 1969, the Soviets had provided a $70 million loan for the development of North Rumaila, the former Iraq Petroleum Company (IPC) oil field whose concession Baghdad had unilaterally rescinded in 1961. Moscow also agreed to supply the Iraqi-owned Iraq National Oil Company with $72 million in oil exploration equipment. In all, the U.S.S.R. committed at least $170 million to Iraq's oil industry. (9, 52, 62, 66) In April 1972, Soviet Premier Alexei Kosygin took part in ceremonies marking the start of production in North Rumaila, which, to the Department of State, "reflects the special Soviet effort to gain influence over much of the Iraqi oil complex in order to assure the Soviets of alternative sources of oil for their markets in Western and Eastern Europe." (60)
That same month, Baghdad and Moscow signed the anticipated Soviet-Iraqi "Treaty of Friendship and Cooperation." The treaty "symbolizes recent Soviet advances in the area and reflects the considerable and increasing Soviet presence in Iraq." (60) Article Nine of the Treaty, promising cooperation in defense, hinted at an enlarged Soviet military presence in Iraq with Gulf-based support facilities. (63, 76) Promoting internal Iraqi stability for the sake of the Soviet investment, the treaty provided American policymakers with cause for concern. Iraq, U.S. officials thought, "has the potential for trouble-making in the Gulf if it can adeptly use Soviet support, and the Soviets have greater prospects for increasing their influence if they move cautiously." (63)
In talks with the Shah the following month in Tehran, President Nixon promised to contribute to the Kurdish effort to maintain independence from the Ba'ath. By aiding the Kurds, the administration hoped to foster Iraqi instability and thwart Soviet establishment of a Middle East base, as well as ensure the security of the Iranians, Jordanians, and Israelis by tying up Iraqi forces. For Washington, achieving these goals outweighed the risk of complicating the 1972 Moscow summit talks. (71, 76) While shunning direct support for the Kurds, the United States pledged to join a collaborative aid effort with the other interested regional parties. (73)
Meanwhile, Baghdad appeared emboldened by Soviet support. On June 1, 1972, the Iraqi Government nationalized all the assets of the IPC following a protracted dispute. After demanding a rise in oil prices in April 1971, Baghdad threatened unilateral legislation or nationalization the next month if the IPC did not sign an agreement to increase liftings, invest new capital, and settle old claims. (40, 42) The IPC, seeking compensation for the North Rumaila field, cut Iraq's share of OPEC member benefits. Baghdad consequently justified the nationalization as compensation for back payments due from the IPC. Americans speculated that Iraqis would struggle to find oil markets, since the IPC companies controlled a significant share of the world market. Although the Iraqis had already turned to the U.S.S.R. for help selling the oil, Washington thought Moscow, itself an oil exporter, unlikely to assist. (66, 68) Nonetheless, the Department of State determined to quietly support boycott measures to ensure satisfactory compensation for the IPC, and try to isolate the Iraqi nationalization from Middle East and OPEC politics. (68, 70, 72, 76)
In early June, Director of Central Intelligence Richard Helms relayed a formal request on behalf of the Shah that Henry Kissinger meet with two Barzani representatives in Washington. The Shah reminded Washington that the Kurds, pressed by the Soviets to make peace with the Ba'athists, should be protected from Communist influence. (69, 74) Based on his discussions with Barzani's representatives, Helms forwarded a proposal to the White House for covert assistance to the Kurds on July 28. (74, 76) The President approved the proposal for $3 million in financial assistance per year and $2 million in military supplies; he agreed that the 40 Committee principals should be informed but not meet on the subject. In the interest of maintaining plausible deniability, aid would be funneled through other contributors to the operation. The first progress report on the operation deemed it a success. (76, 77, 79) A 1972 CIA National Intelligence Estimate examining Iraq's role in regional problems in the Middle East summed up the American perspective on the Ba'athists: Iraq was friendly to the Soviets; hostile to its neighbors, particularly Iran; cold to the Arab states; opposed to Arab-Israeli peace; and hostile to the United States. (83) From the U.S. perspective, the effort to destabilize such a troublesome power seemed justified.