60 Minutes

May 4, 1980

Introduction

**GEORGE BALL** (former Under Secretary of State): ... of State not to argue, that if the Government of Iran asked for something they were to get it. ... The result was that the Shah became a megalomaniac.

**RATHER:** Under Kissinger's direction there was virtually no public debate when the Shah ordered $5.7 billion worth of military hardware from this country between October 1976 and September 1977.

**AIKENS:** If the oil prices were to go up then the Iranians will have the money to buy the arms.

**RATHER:** Could we have kept the price of oil down if Dr. Kissinger or anyone had fought the Shah on It?

**SIMON:** Yes, we could have and there was great belief and there is belief still in some circles today that the State Department, not necessarily Henry Kissinger, but the State Department was in favor of high oil prices.

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Twenty-Minute Segment

RATHER: Speculation persists that there is [a Kissinger-Shah connection]. Kissinger's name came up again recently when the President of Iran told an interviewer that Kissinger had engineered getting the Shah out of Panama and safely into Egypt before the Iranians could get their hands on him for an interrogation. Kissinger was mentioned prominently in connection with the Shah's trip to the United States for medical treatment -- the trip that touched off the taking of our embassy and the holding of the hostages. Whatever the truth of those allegations, they are as of this date unproven. President Carter has denied that Kissinger had a hand in the decision to permit the Shah to come to this country.

Kissinger, who one day said he would and the next day said he wouldn't, after many requests finally refused to appear in this story.

Recent events aside, there is little doubt that during the time he was Secretary of State Kissinger gave the ruler of the Peacock Throne preferential treatment, and the question is why? In attempting to find that out, people

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in a position to know pointed us toward a link between
Henry Kissinger, the Shah of Iran and the price you are
now paying for gasoline.

This is where it began. October 1969. The Shah
was in Washington for an official visit with President
Nixon and his first real encounter with Henry Kissinger.
They talked privately for one hour it is believed, during
which the ground work was laid for the Nixon administra-
tion's policy toward Iran of continuing military and
economic aid to the Shah.

But, the policy took on new and extraordinary
dimensions when Nixon and Kissinger stopped off in Iran
to see the Shah on their way back from the Moscow summit
in May 1972.

Nixon and Kissinger saw what they believed was a
dangerous situation in and around the Persian Gulf. The
British had withdrawn their military presence from the
area at the end of 1971. There existed now on the Gulf
a power vacuum.

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**BALL:** Nixon almost said to him, you will be our equal. You will do in the Persian Gulf what we do in the rest of the world.

**RATHER:** When George Ball, a former Under Secretary of State was brought in by President Carter as a special advisor on Iran, he reviewed the secret National Security memoranda covering the Nixon-Kissinger trip.

**BALL:** Well, in 1972, when Mr. Nixon and Mr. Kissinger came there to Teharan, they in effect said to the Shah, you are the protector of western interests in the Persian Gulf. The Shah in effect said to them, all right, if you stay out and you give me what I need I will undertake this. And what he needed was quite a few things, but principally unlimited access to all of our top military equipment.

Nixon said in effect, we'll give you access our F-14's, our F-15's, our laser-guided bombs, our Pheonix missiles, whatever. And he instructed the Secretary of Defense, the Secretary of State not to argue, that if the Government of Iran asked for something they were to get

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it. And they were to be the judge of what they needed, even though the technology, the sophisticated equipment we were giving them ______ was only on the drawing boards: They were just then being given to our forces in Vietnam. The result was that the Shah became a megalomaniac.

**RATHER:** If critics argued the Shah was becoming a megalomaniac as a result of unnecessary American arms sales, it was in the view of Kissinger's State Department a small price to pay for protecting our vital oil interests and keeping the Shah and Iran's borders safe from the Iraqis and the Russians.

But across the Gulf, in Saudi Arabia, there was a much different view of Kissinger and the Shah. At the OPEC meeting in January 1974 the Shah led OPEC into a massive increase in oil prices. The Saudis feared this would seriously threaten western stability and in turn their own vast holdings of American dollars. So they urged we intervene with the Shah immediately. We didn't. Our ambassador, James Aikens, was warned by Saudi oil minister Yomani.

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**JAMES AIKENS** (U.S. Ambassador): We were talking about Iran as he frequently did. And he said, look, he said you're not doing anything in Iran. You're leaving it to me to try to persuade the Shah. He said it's very easy for you, Jim Aikens. You talk to the King, King Faisal, you talk to me about the necessity of restraining oil prices. And, so we listen to you. He said we're intelligent, rational human beings and we restrain oil prices. He said, I have to go by myself and talk to the Shah. And the Shah says, God told me oil prices had to go up.

**RATHER:** Aikens first cabled the Saudi warning to the State Department in December '73, before the Shah led OPEC into quadrupling the price of oil. He never got an answer.

**AIKENS:** Well, the Saudis were very disturbed about this because as Umani put it to me, he said I didn't tell you this for your own delectation. This was because I assumed that you would act on it and the American Government would act on it. You did nothing. Why not?

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Well, to explain to him that we didn't act because we couldn't get clearances during the Christmas holidays was difficult and was never very convincing. This continued throughout 1974. The Saudis would come to me, and their point was consistently the same -- you must bring the Shah into this. You can do this. He's your friend. He's your ally. He depends on you. You must put pressure on the Shah to cooperate with us on this.

They were never able to understand why we didn't do this.

**RATHER:** Were you able to understand it?

**AIKENS:** Never.

**RATHER:** Did you ever have an explanation?

**AIKENS:** Never.

**RATHER:** The Saudis would say, you must use your influence, you must do something. You passed that along to Washington. No response. Would it be safe to assume that Dr. Kissinger probably saw that . . .

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**AIKENS:** Oh, I've never assumed anything other than
that. How can you?

**RATHER:** And his response . . . did you receive a
response back?

**AIKENS:** No, there was just no response. [By way of]
their response I was finally told by Joseph Scisco, who
was then a high ranking officer of the State Department,
that these reports were annoying the Secretary. This
I found really quite puzzling because there was no question
that the reports were inaccurate, no suggestion that the
analyses was faulty, it was just that I was annoying the
Secretray.

Well, I wasn't a terribly alert ambassador, I'm
afraid. I told Scisco at the time that if they really
wanted people to report only things that they wanted to
hear, then they could get themselves another boy. And
they proceeded to do that fairly smartly.

**RATHER:** Kissinger fired Aikens in August of 1975. He
never gave him a reason. In fact, after 22 years in

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the Foreign Service, Jim Aiken's career was over, with 90
days' notice.

Kissinger says now Ambassador Aikens' reporting
was faulty. His personality was abrasive, and he could
not be trusted.

* * *

Could we have tipped the price of oil down if Dr.
Kissinger or anyone had fought the Shaw on it.

**WILLIAM SIMON** (former Secretary of Treasury): Yes, we could have, and there was great belief, and there is belief still in some circles today that the State Department, not necessarily Henry Kissinger, but the State Department, was in favor of higher oil prices.

**RATHER:** William Simon was Secretary of the Treasury in the
Nixon and Ford cabinets, serving alongside Henry Kissinger
from 1974 to 1977.

**SIMON:** I feel I had something to do with Jim being appointed Ambassador to Saudi Arabia. I was a well-known friend and advocate of Jim Aikens because I respected his judgment, his opinion, his ability, his experience. He was a true expert on the subject of the Middle East and oil.

**RATHER:** That's why the Senate Foreign Relations Committee called Aikens to testify, under oath, during an investigation in May 1976.

**SENATOR CHURCH:** Mr. Ambassador, since the increase of five or six hundred percent in the price of crude oil dating from October 1973, the United States has quadrupled its sales of arms worldwide and particularly in the Persian Gulf area. So we seem to be caught in an escalating cycle of higher oil prices followed by massive U.S. arms sale.

**AIKENS:** Yamani and several other Saudi officials were and I think still are convinced that the United States is not entirely serious about wanting to bring down world oil prices.

**RATHER:** Senator Church, who led the investigation, had this to say.

"The appetite for sophisticated weapons feeds the need for revenues to pay for the arms. This leads to more pressure for oil price increases, particularly for countries like Iran."

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* * *

Essentially, our policy toward the Shah never changed
during the time you were in Washington?

**SIMON:** No, it did not, and I wasn't looking for a change
as much as I was looking for a shift.

**RATHER:** Why did it not even shift?

**SIMON:** Because I believe that the State Department and
Henry felt that it would put our relationship with the Shah
in jeopardy, and they didn't wish to do that.

**RATHER:** So there was virtually no public debate when the
Shaw ordered over five and a half billion dollars worth of
military hardware from the Ford and Carter administrations
between October 1976 and September 1977. Jim Aikens told
us:

**RATHER:** If we wanted the Shah to have access to our arsenal,
then why not just simply give him the arms?

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**AIKENS:** Oh, we can't do that? Congress is never going to appropriate the money for the arms. But that can't be done. He has to have the money for them. We can supply him the arms, but we can't give them to him.

**RATHER:** So he had to get the money to buy the arms.

**AIKENS:** He had to have the money to buy the arms and oil really was the only way he could get the money for the arms.

**RATHER:** What do you personally think of the theory that Dr. Kissinger knew full well what he was doing, that he wanted the Iranians and the Shah to have the weapons, in order to get the weapons they had to have the money, and the way they got the money was to raise the oil prices?

**SIMON:** Well, there could very well be some truth in that. And the fact of the matter is, at that time we were heavily involved in Vietnam. We were trying to extricate ourselves. We had a president that was being deceived in the closing days of Watergate. We didn't need any trouble in other parts of the world, and we had to

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make sure that our allies were in strong positions so that
the Russians could not take advantage of not only our
domestic problems but the Vietnam problems and become
mischievous as they are prone to do in other parts of the
world.

**RATHER:** But if that's true we've paid one hell of a price
for our . . .

**SIMON:** Yeah, and I suggested it was an unnecessary price
to pay if that were true.

**MANSOUR FARHANG** (Iranian Diplomat): Their relationship was
very close.

**RATHER:** Mansour Farhang is the only Iranian diplomat left in
this country now. He is Iran's ambassador to the United
Nations.

**FARHANG:** They complemented one another. For example, if
Mr. Kissinger determined that Iran ought to be an outpost
of American power possessing the most sophisticated weapons
in the world, the next question is who is going to pay for

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it? You can remember in 1977 ... would it be possible
for Nixon and Kissinger to go to Congress in the midst of
the war in Vietnam to say we want a million dollars or
five billion dollars in military grants for Iran?
Obviously not. Somebody had to pay for it and that some-
body could not be the United States.

Where could the money come from? Where would Iran
get the money? Logically, the only way Iran could receive
such enormous amount of money was by increasing the price
of oil.

**RATHER:** Do you have any indication, have you ever seen
any evidence that Dr. Kissinger did try to use his in-
fluence with the Shah to keep the prices down?

**BALL:** No.

**RATHER:** I have been told by a number of people that Dr.
Kissinger is brilliant, but that his short suit is economics.
Would you agree with that assessment?

**BALL:** Well I think he would agree with that. I mean he
has never made any pretenses of knowing anything about

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economics. And I think his judgment on that is right.

**RATHER:** Privately you and any number of other people have said, look, here he did great work on a number of things, but here's one he blew.

**SIMON:** Well, obviously I believed at the time terribly strongly, and I think history has proven my position correct. And in that respect, perhaps Henry did blow it.

**RATHER:** You wouldn't want to scratch perhaps out of that, would you?

**SIMON:** Well, I think it's there for everyone to see, just like all my mistakes as Secretary of the Treasury are there for all to see. We don't have any perfection or angels in government. You win some and you lose some.

**RATHER:** This one I think you will agree there was a very big one to lose.

**SIMON:** Yes, it was. And it's becoming bigger every day.

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**RATHER:** Today this $30 million F-14 is somewhere in Iran, one of 80 we sold the Shah. Shown here in 1976 at the Grummann plant on Long Island, it was a symbol of our close relationship with Iran. The Shaw's former son-in-law, Adashir Sahidi, was on hand to accept the first shipment.

**RATHER:** Sahidi was also the Shah's eyes and ears in Washington. His ambassador and closest confidant. From his embassy office, he was in constant touch with the Shah right up until the Iranian revolution began.

Sahidi fled to Switzerland with the contents of that file cabinet. It contained the most sensitive documentation of the Shah's personal dealings in Washington. But upstairs in the telex room were left behind copies of secret cables dating back to 1973 from Sahidi to the Shah, that there apparently had not been time to destroy once the embassy was taken over.

Nine months before the Shah personally led OPEC into quadrupling the price of oil, Sahidi sent the following message to the Shah. Translated from the Persian it reads:

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During talks and luncheon with Kissinger
today, when the topic of oil came up
Kissinger said in front of all present
that sometimes differences have existed
between America's views and the Shah's,
but the Shah's views have always proven
right.

[Cable is dated March 10, 1973]

**FARHANG:** I am not saying there was a conspiracy. There
was a conspiracy of values, a convergence of perceptions,
a confluence of interest. So, it's a mistake to say who
influenced whom and in what direction.

**RATHER:** But let's consider Dr. Kissinger's argument, then
and now, that it was in Iran's best interest, in your
country's own best interest to arm itself against the
Soviet Union.

**FARHANG:** There was nothing new about that. That is, that
is Kissinger's typical reasoning for doing anything. But
how did militarization of Iran help the Iranian people?
In the very perverted and unintended way it did. It
perhaps speeded up the development of revolutionary con-
ditions . . .

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**RATHER:** Speeded it up, not slow it down.

**FARHANG:** Sure, exactly. Speeded it up. Yes, because it led to a great deal of corruption and concentration of wealth and dependency on the United States and therefore mobilized and intensified . . . In that sense, God was with us if Henry Kissinger was not.

**AIKENS:** Had we put pressure on the Shah would he have listened to us or would he have said I'm going my own way? Can't say. But we didn't try, so we'll never know.

**RATHER:** Henry Kissinger calls the whole story "malicious, ridiculous and untrue." He says of former Secretary of Treasury Simon "We had honest differences over policy, but that had nothing to do with financing the Shah's weapons with oil price increases."

About former Ambassador Aikens, Kissinger says:

"Aikens is lying and engaged in a personal vendetta against me."

Kissinger says former Under Secretary of State Ball

is: