OFFICE OF
HENRY A. KISSINGER

Dear Professor Greenburger:

I am sorry I was unable to get
back to you before you left
for Europe.

I am enclosing the Parsky and
Robinson letters for your
review.

I have been unable to determine
whether Dr. Kissinger received
a reply from Mr. Leonard concerning
his May 29 letter. I may have
to wait until Dr. Kissinger returns
from Europe before I can find
out that information.

ENERGY TRANSITION CORPORATION

CHARLES W. ROBINSON, CHAIRMAN
422 WEST SAN FRANCISCO STREET
MAILING ADDRESS: P. O. Box 2224

SANTA FE, NEW MEXICO 87501

(505) 988-5589

June 2, 1980

Dr. Henry A. Kissinger
1800 K. Street - Suite 520
Washington, D.C. 20006

Dear Henry:

On May 15th I wrote a letter to Bill Leonard of CBS outlining
action you had taken on OPEC pricing during the Ford Adminis-
tration, a copy of which I sent to you.

I have just received a letter from Bill Leonard acknowledging
receipt of my letter and enclosing a copy of his letter to you
of May 16, 1980. A copy of Leonard's letter to me is enclosed.
It is clear that they will stick with their "story" and won't
be influenced by the facts.

Your approach on oil pricing was completely counter to their
basic thesis. Although they are not going to acknowledge this,
it is clear that your "actions" speak much louder than Dan
Rather's "words".

Please let me know if I can be of any further help.

Personal regards.

CWR/1f

Enclosure

JUN 6 1980

ENERGY TRANSITION CORPORATION

CHARLES W. ROBERTS, JR.
422 W. SAN FRANCISCO STREET
MAILLIS STREET
SANTA FE NEW Mexico
(505) 800-7580

May 15, 1980

Mr. William Leonard
President
CBS News
530 West 57th Street
NYC, NY 10019

Dear Mr. Leonard:

I am writing to protest the distorted and biased presentation of
Dr. Kissinger's role in dealing with oil pricing which appeared
on "60 Minutes", May 4th. Those interviewed on this program were
obviously uninformed or for a combination of reasons sought to
undermine and distort the significant and positive role played by
Dr. Kissinger in a continuing effort to moderate oil pricing during
the Nixon and Ford Administrations.

I worked closely with Dr. Kissinger, serving first as Under Secretary of State for Economic Affairs from December 1974 and later as Deputy Secretary of State. One of my prime responsibilities was to develop and implement specific programs for dealing with the oil price challenge within the context of over-all policies laid down by the Secretary of State. I participated in planning sessions and had full access to all documents relating to the oil price issue. I can state without reservation that Mr. Kissinger was engaged in a continuing effort to reduce oil prices and at no time did he suggest or imply that we should consider any other alternative.

Most of the State Department programs dealing with the oil issue
were conducted through quiet diplomacy, as it was clear that a pub-
licized effort would be counterproductive. Any conclusion regarding
Dr. Kissinger's work in this key area should be based on a knowledge
of this effort which was clearly missing in your "60 Minutes" pre-
sentation.

Specific actions undertaken by the State Department during the
Ford Administration which established Dr. Kissinger's role in
holding down oil price increases included the following:

--Continuing the initiative established in forming the International
Energy Agency which had as a primary objective ensuring cooperatio

W. William Leonard
Page 2

between the industrialized nations to reduce incentives for
unilateral oil purchase negotiations with OPEC. Unilateral
oil purchase negotiations were one of the primary causes of
oil price increases.

--Negotiation of an agreement with Iran in 1975 to provide the U.S. with 500,000 barrels of oil per day under a pricing formula assuring a significant reduction below the official OPEC price. This agreement obligated the Iranians to use the revenue for purchase of U.S. sourced materials and equipment with primary emphasis on nuclear power plants and general infrastructure development in Iran. This oil sales agreement would not only have provided the U.S. with a substantial discount below the OPEC price but would have signalled to OPEC a willingness to maintain a special relationship with the U.S. thereby threatening the unity of this organization. It is regretable that the agreement was not implemented due to opposition from other government agencies which argued that it represented a government intrusion into an area more appropriately restricted to the private sector.

--Conclusion of a letter of intent with the Soviet Union in November 1975 providing the U.S. an option to acquire oil from the USSR with a total value equivalent to Soviet purchases under the 5 year grain agreement. The special shipping arrangements under this agreement would have resulted in a significant saving in oil costs delivered to the U.S. compared with OPEC sources.

--The U.S. proposal for establishment of an International Resources Bank (IRB) which was presented by Dr. Kissinger at UNCTAD IV in Nairobi in May 1976. This called for a sharing of financial costs between OPEC and the Industrialized Nations to insure private sector investments in the Third World for development of natural resources, with primary emphasis on petroleum. This was intended to increase non-OPEC sources of oil to bring downward pressure on international oil pricing.

--Negotiation of an agreement in principle with then President-Elect Lopez-Portillo to increase Mexico's oil production. This provided for an increase from 1 million to 2 million barrels per day, generating a surplus of 2 billion cubic feet of gas per day to be delivered to the U.S. under a special pricing formula. This significant increase in oil and gas supplies available to the U.S. was intended to help moderate international oil pricing. It was this plan which served as the basis for the somewhat mangled version implemented subsequently by the Carter Administration.

Although these programs were not all implemented for a combination of reasons, they provide eloquent testimony to Dr. Kissinger's continuing efforts to reduce the price of oil during his tenure as Secretary of State.

George P. Shultz
Fifty Beale Street
San Francisco, CA 94105

May 14, 1980

Mr. Dan Rather
CBS News
530 West 57th Street
New York, NY 10019

Dear Mr. Rather,

I am deeply disappointed by your May 4, 1980 program, with its impli-
cation that oil prices rose in 1973-74 as a result of a conspiracy
between Henry Kissinger and the Shah for the purpose of providing the
Shah with money to buy arms in the United States.

I was Secretary of the Treasury from June 1972 to May 1974 and worked with Mr. Kissinger on energy problems throughout this period. I know of no evidence to support the accusation of your program. I can recall many conversations with Mr. Kissinger in which he expressed great concern about rising oil prices and, even more, about the increasing vulnerability of the United States and our allies to disruption of oil supplies from the Gulf states.

Among the projects we worked on together was a Presidential message to the Congress, delivered in April 1973, to which Mr. Akins contributed in his then role of a White House adviser. The message called attention to impending energy problems and called for actions, not taken by the Congress, but not strong enough in any case, to deal with these problems. Mr. Akins' voice was one of the principal ones warning that oil was coming into short supply, consumption was increasing at a rapid rate, and that dramatic price increases and shortages were in the offing.

Dan Rather

May 14, 1980

Page 2

He proved to be more prophetic than he knew, not because of any conspiracy between two people but because of the actions of the United States government toward the production and use of energy in the United States: long-standing price controls on natural gas, price controls on oil instituted during the Nixon administration in August 1971 and continued to this day, and regulatory warfare on other indigenous sources of energy.

You must realize that, by 1973, the Texas Railroad commission was, for the first time, allowing production at 100 per cent of capacity and that OPEC country production was also at capacity, with consumption throughout the world increasing rapidly. While the embargo provided drama, the underlying situation combined with a cut in Saudi production sparked the rapid price increases. Mr. Kissinger worked hard and successfully to get this cut restored. Without this restoration, oil prices would have escalated to even higher levels.

The fact that the price increases of the time were not the result of a conspiracy between Mr. Kissinger and the Shah is also shown by what has happened since. And the lesson of all this should be plain for all to see. The lesson is that we must come to our senses on energy policy in the United States, freeing the prices of oil and gas, not only from direct regulation but from indirect regulation in the form of a "windfall profits tax", and allowing the development of alternate sources of fuel and power to go forward on an economic basis.

I said I am deeply disappointed by your program and that is partly because of its unjustified attack on Henry Kissinger, whose public service was of the highest quality. What is the message to others about the personal consequences of public service if such a distinguished person is still harassed over three years after leaving office.

I am disappointed also because the program puts forth such bad economics. In fact the media generally continue to deliver a message that is tragically wrong and, because that message is delivered so effectively, the media becomes an active participant in the perpetuation of our energy crisis. The crisis is not the

Dear Dan:

I watched the "60 Minutes" show on Sunday and thought that it
express quite failry the views of the various participants. In
hearing from several people who were also watching I am concerned,
however, about the apparent confusion that his arisen between my
disagreements with Henry Kissinger on the tactics required to reduce
oil prices and any opinion of mine about the alleged deal between
Dr. Kissinger, President Nixon and the Shah.

I'd like to set the record straight by making it very clear that the
difference in opinion I discussed in the interview concerned how
best to lower oil prices and the pressures required to be brought
against the Shah in order to do so, while still maintaining Iran as
an important ally. At no time was I referring to the charge re-
garding an arms-oil pricing deal between the three. This deal-
if indeed it ever existed - would have been struck before I ever
took office in Washington and thus was not something with which I
was associated nor had any knowledge of in any way.

With warm regards.

Sincerely,

William Simon

As dictated by Mrs. Kissinger over the phone at 12:35.

GIBSON, DUNN & CRUTCHER
LAWYERS

818 CONNECTICUT AVENUE, N.W.
WASHINGTON, D. C. 20006

(202) 862-5500

TELEX: 89-2501

CABLE ADDRESS: GIBTRASK WSH

May 7, 1980

LOS ANGELES
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LOS ANGELES, CALIFORNIA 90071
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WRITER'S DIRECT DIAL NUMBER

(202) 862-5520

Mr. William Leonard
President
CBS News
530 West 57th Street
New York, New York 10019

Dear Sir:

The purpose of this letter is to record my strong objection to the portion of the "60 Minutes" program that appeared May 4, 1980 and that dealt with Henry A. Kissinger and the Shah. I feel that it was one of the most unprofessional pieces of reporting I have ever witnessed. The American public deserves more on this subject than the vindictive, self-serving views of James Akins about Mr. Kissinger and what Mr. Akins declares was Mr. Kissinger's policy and U.S. policy. To elevate Mr. Akins to center stage on this important subject suggests to me that "60 Minutes" was more concerned about sensationalism than factual reporting.

I feel that I am qualified to offer the views outlined in this letter because I served as Assistant Secretary for International Affairs of the U.S. Treasury Department as well as Executive Assistant to the Federal Energy Administrator during the period in question. Among other things, I had primary responsibility at the U.S. Treasury for our policy with respect to the oil producing countries and had extensive dealings with Mr. Kissinger as well as with Mr. Akins. Further, most people who served in the U.S. Government during the period in question know that I had many policy debates with Mr. Kissinger and the State Department. Finally, during the period 1974 - 1977, I visited Iran and Saudi Arabia extensively and met repeatedly with the highest policy officials. Based on the above, I believe that I am an unbiased commentator on this subject.

With this background in mind, I would like to provide the following comments on Mr. Kissinger's actions toward Iran's oil pricing policy and on U.S. policy toward OPEC.

JAS. A. GIBSON, 1852-1922
W. E. DUNN, 1861-1928
ALBERT CRUTCHER, 1860-1931

SAN JOSE
100 PARK CENTER PLAZA
SAN JOSE, CALIFORNIA 95113
(408) 998-2000

EUROPE
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01-629-9502

CABLE ADDRESS: GIBTRASK LONDON WI
TELEX: 27731

OUR FILE NUMBER

Mr. William Leonard

May 7, 1980

Page Two

(1) The statement, or even the suggestion, that Mr. Kissinger colluded with the Shah to drive up the price of oil in 1973 or thereafter is simply not true. Mr. Kissinger held regular meetings with me on U.S. policy toward OPEC and he consistently emphasized the need for a coordinated policy against OPEC on the price issue. It was his idea to hold the Washington Energy Conference in February 1974. Further, Mr. Kissinger led the subsequent development of the International Energy Agency as a cooperative effort by the oil consuming countries to reduce dependence on OPEC oil and bring down the price of oil.

(2) On numerous visits to Iran, I discussed oil policy with the Minister of Oil, the Minister of Finance and other officials, and they always confirmed that there was a basic disagreement between the U.S. and Iran over oil pricing. They cited communications to the Shah by Mr. Kissinger, several speeches of Mr. Kissinger as well as the creation of the International Energy Agency, as Mr. Kissinger's way of pressuring Iran to refrain from advocating higher oil prices.

(3) During many visits to Saudi Arabia at the time, officials there did stress to me that Iran and others were pushing for higher prices, but no one said or even suggested that Mr. Kissinger was colluding with the Shah on this issue.

(4) The suggestion by Mr. Akins that he alone provided repeated warnings of an OPEC price rise and that Mr. Kissinger did not respond is also a falsehood. Most of us dealing extensively with the Middle East during this period knew that Mr. Akins' first statements on the price issue came at the same time as those of other ambassadors residing in OPEC countries. Further, Mr. Kissinger and all of us in the U.S. Government responded to the 1973 increase in the strongest terms, not only through public statements in the United States but also directly to the oil producing countries, including Iran. No objective reporting of U.S. policy during this period could conclude that we colluded with the Shah or anyone else on a price rise.

(5) To my knowledge, most everyone dealing with U.S. policy with respect to Saudi Arabia and OPEC recognized that Mr. Akins was engaged in a personal attack against Mr. Kissinger, even while Mr. Akins was Ambassador.

CBS
NEWS

A Division of CBS Inc.
524 West 57 Street
New York, New York 10019
(212) 975-2988

Bill Leonard, President

Dear Mr. Parsky:

Thank you for your letter of May 7. I regret that you felt that the reporting on the 60 MINUTES broadcast dealing with Mr. Kissinger was unprofessional or vindictive, but I am unable to agree with your view.

I think the first thing we have to straighten out is that there was no suggestion on our part, or on that of anyone else who appeared on the broadcast, that there was collusion between Mr. Kissinger and the Shah. I enclose a transcript, and you may satisfy yourself on that point. What Mr. Akins and others have stated was that Mr. Kissinger was warned that the Shah was planning to submit to the OPEC meeting in December of 1973 a new pricing formula that would increase oil prices substantially, and that he failed to intervene with the Shah to deflect him from that purpose.

Mr. Kissinger has since advised us that he heard from Mr. Akins only twenty-four hours before the OPEC meeting was to convene, but also advises us that he had heard from Ambassador Helms on the same day with essentially the same warning. Although he says he fired off protests to all OPEC members, he did nothing prior to the meeting in the way of a direct appeal to the Shah to dissuade him from submitting his new formula.

Subsequently, five days after the meeting, he sent a protest to the Shah, but this, of course, came after the fact, as did the developments since 1974 to which you refer. At that point, the damage was done.

Moreover, you seem to be at odds with your former colleague in the Treasury Department, William Simon, who has in effect confirmed Mr. Akins' story. As to offering a witness with a different viewpoint, we went to extraordinary lengths to offer the best of all possible witnesses, Henry Kissinger himself. Mr. Kissinger, in the end, refused to appear.

1

GEORGE BALL (former Undersecretary of State): Nixon said, in effect, we'll give you access to our F-14's, our F-15's, our laser-guided bombs, our Phoenix 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 it. The result was that the Shah became a—a megalomaniac.

DAN 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.

JAMES AKINS (former U.S. Ambassador to Saudi Arabia): If the oil prices were to go up, then the Iranians would 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?

WILLIAM SIMON (former Secretary of the 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 high oil prices.

MORLEY SAFER: If you were Superman, this is the way you'd discover the place. You'd glide over the great emptiness of the desert; then, as you approached the mountains, you'd pull up and over, and there it is before you—not your home planet of Krypton, but Palm Springs, California, the Krypton of the super rich. The old saying, "Ford and the world Fords with you, Rolls and you Rolls alone," applies to every place but Palm Springs; and in Palm Springs it doesn't even apply on the golf course. (Rolls golf cart shown)

(Instructor leading students in a reading exercise)

MIKE WALLACE: This is a seventh-grade reading class, but, of 28 students enrolled, only six are able to read at the seventh-grade level. Many can read only at third-grade or second-grade level; some can barely read at all. Who goes to the Washington public schools? Certainly not the children of Washington's liberal establishment. Washington's liberals, for the most part, have managed to find ways to keep their own kids out of schools like this one.

WALLACE: I'm Mike Wallace.

SAFER: I'm Morley Safer.

RATHER: I'm Dan Rather.

HARRY REASONER: I'm Harry Reasoner. Those stories and more tonight on 60 MINUTES.

(Announcements)

2

# "THE KISSINGER-SHAH CONNECTION?"

DAN RATHER: Is there a special relationship between Henry Kissinger and the Shah of Iran? Well, although the exact nature of their relationship has never been spelled out, speculation persists that there is. 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 in a position to know pointed us toward a link between Henry Kissinger, the Shah of Iran and the price you're now paying for gasoline.

## (Band playing martial music)

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 groundwork was laid for the Nixon Administration'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 in the Gulf a power vacuum.

GEORGE 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 Undersecretary of State, was brought in by President Carter as a special adviser 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 Teheran, 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.

3

Nixon said, in effect, "We'll give you access to our F-14's, our F-15's, our laser-guided bombs, our Phoenix 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 it, and they were to be the judges of what they needed. Even though the technology, the— the— the sophisticated equipment we were giving them, some of it was only on the drawing boards. They were just then being given to our forces in— in Vietnam. The result was that the Shah became a— 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 Akins, was warned by Saudi Oil Minister Yamani.

**JAMES AKINS:** 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 Akins. 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, "Then 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:** Akins 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.

**AKINS:** Well, the Saudis were very disturbed about this, because as Yamani 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?" Well, to explain to him that we didn't act because we couldn't get clearances during the Christmas holidays was— 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." And they were never able to understand why we didn't do this.

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

**AKINS:** Never.

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

4

AKINS: Never.

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

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

RATHER: And his response— did you— you— did you receive a response back?

AKINS: No, there was just no response. Generally no response. I was finally told by Joseph Sisco, 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 weren't accurate, no— no suggestion that the analyses was faulty. It was just that I was annoying the Secretary. Well, I wasn't a terribly— terribly alert ambassador, I'm afraid. I— I told Sisco at the time that if they really wanted people to report only things that— that they wanted to hear, then they could get themselves another boy. And they proceeded to do that fairly smartly.

RATHER: Kissinger fired Akins in August of 1975. He never gave him a reason. In fact, after 22 years in the Foreign Service, Jim Akins' career was over with 90 days' notice. Kissinger says now Ambassador Akins' reporting was faulty, his personality was abrasive, and he could not be trusted.

WILLIAM 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.

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 Akins, 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 Akins to testify under oath during an investigation in May, 1976.

SENATOR FRANK CHURCH (D-Idaho): Mister 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 sales.

AKINS: Yamani and— 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.

5

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

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 Shah 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 Akins told us—

AKINS: If the oil prices were to go up, then the Iranians would have the money to buy the arms.

RATHER: If we wanted the Shah to have access to our arsenal—

AKINS: Uh-hmm.

RATHER: —then why not just simply give him the arms?

AKINS: Oh, we can't do that. Congress is never going to appropriate the money for the arms. That— that can't be done. He has to have the money for it. 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?

AKINS: 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 besieged in the closing days of Watergate. We didn't need any trouble in other parts of the world. And we had to 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're prone to do, in other parts of the world.

RATHER: But if that's true, we paid one hell of a price for arming the Shah.

6

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

MANSOUR FARHANG: 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 it? You can remember in 1970-71, 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 somebody 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 the evidence, that Dr.
Kissinger did try to use his influence with— with the Shah to keep the prices down?

BALL: No.

RATHER: I've 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— he's never made any—
any pretenses of knowing anything about economics. And I think his judgment on
that is right.

RATHER: Privately you and any— any number of other people have said, "Look,
Henry 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— 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'll agree, though, was a very big one to lose?

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

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

7

MAN: Ambassador, I hope you enjoy that airplane. We think it's great.

ARDESHIR ZAHEDI: I'm sure it is.

RATHER: Zahedi 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.

Zahedi 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 Zahedi 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, Zahedi sent the following message to the Shah. Translated from the Persian, it reads: *"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."*

FARHANG: I'm not saying there was a conspiracy. There was a conspiracy of values, a convergence of perceptions, a confluence of interests. 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. (Laughing) This is— if you— that is Kissinger's typical reasoning for doing anything. But how did militarization of Iran help the Iranian people? In a very perverted and unintended way it did. It perhaps speeded up the development of revolutionary conditions—

RATHER: Speeded it up, not (indistinct) 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 the— in that sense, God was with us, if Henry Kissinger was not.

AKINS: 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—quote—"malicious, ridiculous and untrue". He says of former Secretary of Treasury Simon—quote—"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 Akins, Kissinger says—quote—"Akins is lying and engaged in a personal vendetta against me." Kissinger says former Undersecretary of State Ball is—quote—"a partisan political opponent...jealous of me...and long engaged in a personal campaign to destroy me."

Dr. Kissinger, as we said, refused to appear on this broadcast.

(Announcements)

CBS
NEWS

June 11, 1980

Dear Dr. Kissinger:

One further and perhaps important thought concerning our involved
correspondence relating to the 60 MINUTES piece of May 4.

Your very strong concerns about the segment, as expressed not
only in your letters to me but in wide contacts that you have had
with members of the press or with mutual friends, certainly under-
scores the strength of your feeling that your point of view had
not been represented to your satisfaction. So, whatever your
reasons may have been at the time for not appearing on 60 MINUTES,
I wonder if your interests would not be served by an appearance
now or in the near future.

With the full endorsement of Don Hewitt and Dan Rather, I would
 invite you to appear on a segment of approximately equal length
to the original segment. This segment would consist of an
informal interview between you and Mr. Rather confined solely
to questions concerning the original show, and you would be
given full opportunity to voice your views of the events and
policies pertinent to the original piece. You would be inter-
viewed by Dan in the normal 60 MINUTES fashion: that is, for a
longer period than the length of the original segment, and that
material would be subject to the normal editing process, as were
all the people in our original story.

It must be apparent that through an interview of this kind, you
would be reaching almost precisely the same audience, in com-
position and number, that viewed the original segment. I can
think of no better way for the story to be put in additional
perspective which, of course, was why we had hoped and expected
that you would participate originally.

I hope you will see fit to accept this invitation, a sentiment
in which I am sure the principals on 60 MINUTES share.

JUN 16 1980

CBS
NEWS

Bill Leonard, President

Dear Dr. Kissinger:

This will acknowledge your detailed letter of May 29.

I am content to let you have the last words, not because your
letter could not stimulate a lengthy response, in line with our
earlier exchanges, but more that I fear another detailed reply
would in turn trigger still another reaction, and so on, until
one of us, undoubtedly me, throws up his hands and cries 'uncle'
from sheer literary exhaustion.

So I shall retreat from the field of battle, but in the spirit
of your last paragraph in which you "recognize that there is no
likelihood that you (I) will admit to second thoughts".

I will, of course, share your letter of May 29 with Mr. Rather,
because so much of it refers to statements of his and conversa-
tions you had with him. If he has a personal answer to all or
part of it, I am sure he will be in touch with you directly.

Dr. Kissinger, I do regret that any CBS News broadcast, par-
ticularly one that dealt so directly and in such detail with
your activities and policies, should have caused you the pain
and concern that this one obviously has. But, again, for the
reasons that we have spelled out in detail, we must stand by
the broadcast and do so.

With all good wishes.

Dr. Henry A. Kissinger
1800 K Street, N.W.
Suite 520
Washington, D.C. 20006

May 30, 1980

HENRY A. KISSINGER

May 29, 1980

Dear Mr. Leonard:

I have your letter of May 16. My
response has been delayed by a trip to Europe.

Assure yourself that I relish this ex-
change even less than you and wish even more
heartily that the need for it had never arisen.
But it has. The plain fact of the matter is
that the May 4, 1980, "60 Minutes" segment,
"The Kissinger-Shah Connection?", was an attack
on me and my motives which I can hardly ignore.
All of it, with the exception of a short post-
script--which itself was a distortion of my
position--was selected and produced to show that
my own "intentions at the time" (to quote your
letter) were to accept or encourage or welcome
the quadrupling of world oil prices to subsidize
the Shah's arms purchases, and that this accounts
for the price "you," the American consumer,
now pay for gasoline.

Your letter of May 16 evades the central
issue, which is that your program was filled with
factual errors and gross distortions of the
truth and that you proceeded to broadcast it even
after you were provided with facts and evidence
that proved its principal assertions to be false.

My objections to your program are, if anything,
reinforced by your letter. They fall under three
headings:

Mr. William Leonard
President, CBS News
530 West 57th Street
New York, New York 10019

(Y)

2

-- The false charge of collusion.

-- The systematic misrepresentation of fact.

-- The overall unfairness of the presentation.

I shall deal with these in turn.

## The False Charge of Collusion

After reading your letter of May 16 I suppose I should be grateful that you and "60 Minutes" now feel so strongly that there is no basis for the charge of collusion between the Shah and me in OPEC's oil price rises of 1973. Your viewers might be forgiven if they received a contrary impression from a program entitled "The Kissinger-Shah Connection?" Your program had, after all, no other point except to charge that I shared in the responsibility for the decision, in ways amounting to either explicit or tacit collusion. I have encountered no viewer who derived a different impression; any impartial panel would come to the same conclusion.

The charge of collusion is not only implied by the title (regardless of the disingenuous question mark) but is underscored from the very outset by Mr. Rather's opening series of innuendos of dark doings: "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." (The special quality of this sentence is that almost every word in it is untrue or misleading. I was not Secretary of State for most of this period. Most of the orders were approved in the Carter Administration. All sales were put before the Congress as the law required. What the phrase "under Kissinger's direction" can possibly refer to in this context is obscure, to say the least.)

Mr. Rather then goes on to cite a miscellaneous collection of accusations--none of which was even remotely true—including such "authorities" as the Iranian President, to imply a continuing special personal affinity for the Shah--citing no

3

evidence whatever and not reporting my publicly
available denials. He then advances his
answer to the puzzle of why the Shah received
such "preferential treatment": "People in a
position to know pointed us toward a link between
Henry Kissinger, the Shah of Iran and the price
you are paying for gasoline." If this is not
a charge of collusion, then I doubt if it is
possible to make one.

In all events, that is precisely the way
one of the people Mr. Rather selected to inter-
view on the program--Mr. Simon-- interpreted it
in a letter to you. I think it likely that a
typical viewer came to the same conclusion.

Mr. Rather pursues the point of collusion
relentlessly and falsely in the paragraph
immediately following: "This is where it began
[presumably the high oil prices]. 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
groundwork was laid for the Nixon administration's
policy toward Iran of continuing military and
economic aid to the Shah." Once again there are
no facts whatever to support this statement. My
schedule of appointments shows no private
meeting between the Shah and me in October 1969
(or in May 1972 for that matter), if that is what
you are charging. No record confirms that any
major decisions were taken during the Shah's
conversations with Nixon in 1969. It appears to
have been a tour d'horizon. Nothing, in short,
"began" on that visit.

Mr. Rather then poses the "theory" to Mr. Simon which, of course, your program implies over and over is correct and continues the collusion theme: "Dr. Kissinger knew full well what he was doing...he wanted the Iranians and the Shah to have the weapons...," etc. (page 5 of the transcript).* The false implication of conscious action on my part encouraging the oil

*I am using from here on the pagination of your
official transcript rather than the rough
record done by my lawyers.

4

price increases in 1973 and afterward, acquiescing in them, deliberately failing to object or to "use my influence with the Shah" to lower oil prices or keep them down is in fact confirmed by your letter. It is the theme of every interview and portion of the program, particularly the repeated (false) assertions by Dan Rather, George Ball and James Akins that I consciously ignored repeated warnings to do something.

You now say that the program was meant only to suggest an awareness of a "commonality of interests rather than collusion." This is both hair-splitting and disingenuous.

There is not much difference of consequence that I can see between a belief on my part that a world oil price increase was in the national interest of the United States so that the Shah could buy arms and colluding with him to that end, which is what your charge that I did not object--or even your later refinement that I objected inadequately--amounts to. But of course the program clearly went further, beginning with the very title. It did not imply a similarity of world view by Kissinger and the Shah; it was aimed at a "Kissinger-Shah Connection."

You substantiate the alleged commonality of interests with a quote from *White House Years* which you never mentioned on the program and which has absolutely nothing to do with my view on oil prices. The quotation explains the reasoning behind Nixon's decision to sell F-14's to Iran in July 1972, fifteen months *before* the Yom Kippur war and the consequent oil price rises. There was no crisis over the oil price then; we were convinced--as the relevant documents made clear--that Iran could pay for this weapons system out of then existing oil revenues. I have never seen a document to allege the opposite; I never heard anyone suggest that Iran's oil income was insufficient to buy the planes. You simply twist my analysis that American and Iranian strategic interests in the security of the Persian Gulf and the Middle East were parallel into the totally erroneous assertion that they were also parallel with respect to oil prices. Your allegation of a perceived "commonality of interests" with respect to oil price increases

5

rests on no evidence, only insinuation.

In a recent communication to former Assistant Secretary of Treasury Gerald L. Parsky, you seem to claim that my transgression consisted of willfully not making "a direct appeal to the Shah to dissuade him from submitting his new [price] formula." It happens that a formal démarche was made in Tehran protesting the projected price increase; it was coupled with protests in all OPEC capitals and a démarche to all OECD nations urging a concerted protest on the part of all industrialized countries. This took place within 24 hours of the warnings received. The relevance of protests to other OPEC capitals comes from the simple facts (unmentioned on your program) that OPEC decisions were made unanimously and that we were facing an Arab oil embargo and a Saudi production cutback which were the immediate cause of the buying panic and the inflated prices at the December auction. Of course your program made no such hair-splitting distinction between the possible methods of making a démarche in Tehran; your program asserted over and over again that nothing was done. This is an absolute falsehood, and you had reason to know it was a falsehood.

Your letter to Parsky alleges that Simon confirms your new version (never broadcast); this too must be false. Simon never offered a view I am aware of in December 1973 that we should follow a different course. Treasury was aware of the circular cable and made no contrary recommendation. My disagreement with Simon occurred in August 1974 in a totally different context. All this is essentially irrelevant since no viewer could possibly come away with the impression left by your letter. You cannot seriously argue that you devoted a whole program to the wisdom of a circular dispatch to which you do not even refer or whether it should have been a single cable--all this seven years after the event.

6

Systematic Misrepresentation and
Omission of Facts

There were, as I have said, a host of other
factual errors in addition to the charge of
collusion. Some were plain misrepresentations,
some misstatements by omission.

The Central Misrepresentation--Of all the
misstatements, one was central. Mr. Rather
and the "60 Minutes" staff gave James Akins the
lead in the program. They did so because he
was putting forward his claim to have been a
martyred voice, crying in the wilderness, valiant
and alone in his opposition to OPEC price rises,
ignored by me and finally fired because his heroic
warnings had been "annoying the Secretary."
Preposterous. Akins played no such role.

The point, in any case, is not the timing of
Akins's alleged warning but Mr. Rather's re-
peated statement that the warnings, whether Akins's
or Helms's, were ignored: "We didn't [intervene]"
(page 3 of transcript); "He [Akins] never got an
answer" (page 3); "No response" (page 4). Akins's
charade about the Christmas holidays clearly relates
this to the December 1973 OPEC price rise. This
assertion is central to your program's thesis;
it occupies two transcript pages. My letter to
Dan Rather of May 1, three days before the program
was aired, supplied considerable evidence that
this assertion was simply wrong.

In addition, your viewers were told (on
page 7 of the transcript) that "the Shah personally
led OPEC into quadrupling the price of oil."
This is another falsehood. Any serious journalis-
tic inquiry into the facts would have discovered
that OPEC oil prices were first nearly doubled
in mid-October, at the instigation of the Saudis; it
was as a result of the extraordinary market
disruption caused by the Arab oil embargo against
the Western world and the Saudi production cutback--

[4]

7

which the Shah of Iran opposed--that conditions arose for another increase in December.

Omissions -- The omissions in your program were an equally serious affront to the public understanding of the issue. You admit in your letter of May 16 that the loss of American energy self-sufficiency and the Arab-Israeli war coupled with a Saudi production cutback "set the stage" for the OPEC price rises. I do not know your definition of "set the stage," because your program ignored all of this essential background and reduced a major and complex problem to the comic book level of two evil personalities (and in the end, to me alone, which is the implication of the claim that I "blew it"). And your letter goes on to reiterate your central thesis ascribing it to "commonality of interest" and stressing the crucial role of my "state of mind." All my correspondence with you has refuted your simplistic account with factual evidence or offers of expert testimony. So have George Shultz, Gerald Parsky, Charles W. Robinson, and Professor M.A. Adelman of MIT in letters to you or Mr. Rather or Mr. Wallace with which I am familiar. As with all facts that contradict your tendentious thesis, you simply ignored these letters.

A program allegedly dealing with the reasons for today's energy costs that does not even mention the end of American self-sufficiency, the changing relationship between the host governments and the companies beginning in 1969, the Arab oil embargo of 1973, and the Saudi production cutbacks can scarcely be called serious journalism. That oil prices had already been nearly doubled under Saudi leadership two months before December 1973; that since I left office oil prices have risen from $14/barrel to around $30/barrel; that Iran's 1979 price rose from $17

8

to $35/barrel at the time of the fall of the
Shah; that Iran's price today, *without* arms
purchases and *without* the Shah, is the highest
of the OPEC countries, are all facts relevant
to the validity of your loaded thesis that
there is "a link between Henry Kissinger, the
Shah of Iran and *the price you're now paying*
*for gasoline.*"

The background information on the economics
of oil, that I tried vainly to inject into your
consciousness, obviously does not make for an
exciting, action-packed TV program. Its only
merit was that it would be crucial to any
intelligent, as well as fair, analysis and
judgment.

What you did was to present the Saudi
version of events as seen through the eyes of
Mr. Akins without informing your viewers that
both the Saudis and Mr. Akins are highly
interested parties. Saudi Arabia, as I have
shown, was in fact crucial in triggering the
whole 1973 sequence of events. Indeed, Saudi
Arabia was in 1973, and has remained, central
to all OPEC price decisions since it consistently
produces *below* capacity and hence its production
determines world supply. This is pertinent, one
might think, to any assessment of the price
rises of the 1970's, and particularly one like
CBS's that relies to a substantial degree on
obviously self-serving Saudi claims via Akins
that it was all someone else's fault. That
Yamani's argument as presented by Akins should
be taken with a grain of salt is proved by the
fact that Saudi Arabia could have stopped or
at least mitigated the December 1973 oil price
rise by the simple device of ending its produc-
tion cut. Instead it reaffirmed it.

What your thesis comes down to is that a
country which did not join the 1973 embargo
against us and selected countries of Western
Europe and which continued maximum production is
blamed for the oil price rises while the country
which organized the embargo, curtailed its
production and maintained the cut for several more
months is the passive bystander; indeed that its

9

version of events is the only admissible one.

Your letter of May 16 makes the false assertion that "curiously your [my] chronology [in my letter to Rather of May 1] stops in January 1974 as if this were the end of your significant diplomatic efforts to undo the OPEC price increase."

As to that, I repeatedly told Mr. Rather before the program to look into my actions in 1974 and 1975, since they would have proved my commitment to a strategy of restraining oil prices beyond doubt. He argued that this was beyond the scope of his inquiry. Had he taken up my suggestion, he would have found that at the end of December 1973 we sent sharp protests to the key OPEC countries including Iran (as indeed my letter of May 1 makes clear); that in early January 1974 we sent out invitations to key consumer countries to organize opposition to high oil prices; that the Washington Energy Conference met in February 1974 under my chairmanship and resulted later in 1974 in the International Energy Agency, still the sole consumer organization in existence. And since the program you have learned--what serious investigative journalism would have discovered before--of the consistent American policies and actions to stabilize the market and lower prices as described in the letter to CBS News of former Deputy Secretary of State Charles Robinson, the official responsible for all negotiations in this field.

I gave Rather a list of my public statements on the subject on May 1, three days before the program was aired. You dismiss these in your letter as "an assortment of speeches" apparently not worthy of your attention. But I cited these speeches because they were careful statements of governmental policy worked out under my leadership by all relevant departments, including Treasury, over periods of weeks. Their common theme is opposition to high oil prices and the need to organize effective action against them. Had Rather read them before airing his

10

charges he would have found that on February 3, 1975 I proposed a floor price for alternate supplies of oil to prevent any reduction of OPEC prices from wrecking new sources of energy and thus destroying the market again--a proposal which would have made no sense had we not sought to bring down OPEC prices. And the assertions of Dan Rather, George Ball, and James Akins on your program that I made no effort to reduce prices after 1973 are also undermined by the fact that the price of oil in real terms *declined* by 15% between 1973 and 1978. Your failure to examine these speeches, which is apparent from your letter of May 16, raises obvious additional questions about your willingness to verify assertions on your program.

## The Overall Unfairness of the Presentation

It is a curious definition of journalistic independence that uses only witnesses that support a preconceived thesis on a program watched by tens of millions. That Akins has made a career out of peddling this line (and has even been called "the Ambassador from Saudi Arabia" by three reputable journals--*The Economist* of August 25, 1975; the *Washington Post* of March 14, 1976, and *Forbes* of April 15, 1976); that George Ball has been a long-time critic of me on a hundred other issues; that Khomeini's ambassador to the UN has no personal knowledge of any of these events of course does not disqualify them from appearing on your program. Obviously, Bill Simon is a Republican and a friend, but he and I disagreed on some of these matters in the period after 1973, after the price rise had already occurred and not on the 1973 events that are the central concern of the program. The problem is that *all* your witnesses gave only one point of view, which was both tendentious and demonstrably erroneous, while *no* independent participants were presented to give a different view.

11

It is striking that two of the critical witnesses you presented on your program have since written to you dissociating from the more egregious accusations broadcast on it and objecting to the deceptive editing which created the impression that everyone was speaking about the December price rise:

— George Ball wrote you on May 8 that he was criticizing the 1972 decision to sell sophisticated arms to Iran. He explicitly repudiates your program's implication that he had examined the files relevant to the oil price decisions of 1973-1974 during his two week stint in the White House in 1978.

— William Simon has written you that he has no basis for endorsing the thesis of an "alleged deal" between the Shah, myself, and President Nixon as was implied by your program. Nor does he claim knowledge of the events of 1973. His disagreement with me occurred in August 1974. He was not involved in the December 1973 decisions.

— Mr. Rather read, moreover, from an alleged document from March 1973, nine months *before* the OPEC decision in December, at a time when OPEC was making no decisions to alter the low oil prices. Immediately following this, Khomeini's UN ambassador—without any pretense of personal knowledge whatever—speculated on the link between oil prices and arms purchases.

In short, your program strung together quotations referring to three different periods; this not only distorted the views of two of your witnesses but presented itself as evidence when in fact you had no evidence to prove the "link."

In this context, the refusal to put on any other witnesses is indefensible. I did not insist on "friendly witnesses," as you allege. What I proposed was an interview of some noted authority on oil prices who could testify to the

IYI

12

uncontroverted fact that the supply and demand
situation in 1973, as compounded by the Arab
boycott and Saudi production cut, made for the
rise in the price of oil. Had this point been
established by experts, I would have been happy
to comment on those matters within my knowledge
such as the messages I sent and other steps
I organized.

Your letter, and indeed your only claim
to fairness, rests entirely on your invitation
for me to appear. Yet it clearly emerged as
an afterthought less than 72 hours before the
program was to be aired. I first heard of your
project on April 17, while I was in London.
I returned Mr. Rather's phone call and informed
him that his central thesis was untrue; I also
said that in judging my emphatic denial he should
remember that I never had made a flat assertion
to a journalist which I knew to be false. I
gave him a list of names he could consult to
support what I told him. I offered to let him
review evidence upon my return on April 21. Mr.
Rather assured me that he would not proceed with-
out talking to me in person and reviewing the
evidence; he implied that he would consult some
of the persons I mentioned for his own background.

The next time I heard from Mr. Rather was
late in the evening on April 24. He now informed
me that he planned to proceed with the story
as it stood on April 27. He had seen no need
to consult additional witnesses. Reminded of
his promise to review evidence and talk to me
he said that this required a postponement for
which he needed your approval. You were returning
from a trip and would look at the segment the next
morning.

Around noon on April 25, a little more
than fifty hours before broadcast time, Mr. Rather
conveyed to me what he said was your decision.
There would be no review of evidence and no
interviews of other witnesses, expert or not. Any
rebuttal would have to come from me alone. This
was followed by a series of phone calls and a

[Y]

13

personal visit by Mr. Rather, who--in the presence
of my wife--stated that the program as it stood
was extremely damaging to me but it would go
on unchanged and without further research
unless I appeared. He never told me that the
title of the program was the "Kissinger-Shah
Connection." I learned that only on Sunday
from looking at the television listings. He
gave me an hour to respond.

Was CBS being fair or was I being blackmailed?
Had I agreed to an interview, would Mr. Rather
have sought the truth or attempted to support
the thesis which he had so relentlessly and
incorrectly established in the central segment
of the program? Whatever the answer to these
questions, the shortness of time--and your need
to postpone the broadcast--came solely from the
fact that you prepared the program to suit your
thesis and then approached me only at the last
minute in response to my strong protests.

The brief "rebuttal" from me which was aired
on the program hardly met any standard of jour-
nalistic responsibility. Mr. Rather quoted
distorted fragments from what I had thought was
a private conversation. He neither asked my
permission nor did he check the alleged quotes
with me. Mr. Rather avoided any substantive
material I had given him and emphasized ad hominem
comments that did not reflect the basis of my
denials. I doubt that it would have compromised
CBS News' vaunted independence to permit me at
the conclusion of an unrelentingly hostile
program a few sentences of substantive rebuttal.
This could easily have been in my own words
and read by Mr. Rather from my letter of May 1,
which presented material factual evidence.

A Final Point -- The Price of Military Hardware

The statistics of your letter of May 16
regarding military hardware miss my point completely.
You claim now that your program focused on my

[Y]

14

motives--my "conscious state of knowledge,"
my "intention." The fact that the U.S. govern-
ment raised the price of its arms to Iran
proves the very opposite of acquiescence,
approval or Mr. Rather's "theory" that we
tolerated the oil price increase to subsidize
the Shah's weapons purchases.

You cite the data to show that the Shah
earned much more from the oil price increases--
$16 billion from 1972 to 1974--than he spent
in arms purchases--$4 billion at peak. This
shows on the face of it that much more fundamental
factors must have been involved than the desire
of a single OPEC nation to finance arms acquisi-
tions. The data, in short, disprove the thesis
of the program. Pity they weren't used.

I note your threat--itself highly inappro-
priate for a presumably unbiased news organiza-
tion--that you could make a good case on the
air that if oil prices had not risen in 1973
the Shah could not have bought anything
"approaching the volume of military hardware
that he in fact purchased subsequently." This
argument, if presented, would be as untrue as
your program. It would advance the same mis-
statement that oil prices could have remained
at the 1972 level but for policy errors in 1973.
No serious person accepts this given the growing
imbalance between supply and demand. There is
no telling what a highly rated program can make
people believe. But it can not make truth out
of a falsehood even by misusing its access to
a large audience.

## Conclusion

Your broadcast was not only unfair to me;
it was a profound disservice to the American
people. The international oil price has risen
between 1973 and 1980 from around $3.00 a barrel
to its current price around $30 a barrel by a

(4)

15

series of increments. You arbitrarily selected the increment that took it from around $6 a barrel to $11 a barrel. Ignoring what went before or after you treated this one increase as decisive. You assigned the blame for "the price you're now paying for gasoline" to two individuals and strongly implied a collusive conjunction of motives without which oil prices would still be at the 1972 level (without a shred of evidence). You therefore give the American people the impression that it was not the increase in world consumption, not the slow pace of developing alternative sources, not the indecision and conflict over our national energy policy, not the lack of consumer-nation solidarity that caused the present situation but the misguided and secret action of one or two individuals. Instead of major efforts to overcome an authentic crisis CBS calls for a witchhunt. Three successive Presidents of both parties have asked for a national dedication to overcome an accelerating crisis. Your program's contribution was to turn the call for a national effort, which alone can solve the problem, into a bizarre search for scapegoats.

When I initiated this correspondence I was, to be sure, outraged. But I was convinced that a news organization of the reputation and influence of CBS News would be sufficiently responsible to look at the full panoply of facts and arrive at an honorable solution, even if it meant admitting its own fallibility. I would have thought that a viewership of tens of millions would inspire a special obligation for fairness. It would have been easy to settle our dispute by a serious discussion among individuals who have heretofore dealt with each other on the basis of mutual respect. Instead you have disregarded a host of letters by men of the highest repute challenging your thesis, and supplying you with data that refute it. You have ignored the documentation supplied by me that also refutes it. You have thrown all the resources of your organization into proving an untenable thesis by tortured interpretations and hair-splitting

HENRY A. KISSINGER

May 12, 1980

Dear Mr. Leonard:

I have your letter of May 9. It addresses the tone but ignores the content of my earlier letter. "60 Minutes" may be popular, but it did not meet just principles of fair and balanced journalism in this instance. This is clear from the attached transcript of the program, to which some preliminary marginal comments have been added; as you will see, there is scarcely a page without a misstatement of fact:

-- Many of these constitute deliberate falsifications, defamations or personal attacks. The facts with respect to most--for example that, though Mr. Akins claimed to the contrary, I did "respond" promptly and forcefully to his alleged "warnings" and have the documents to prove it--were fully known to Mr. Rather and the producer prior to the show and they failed utterly to take those facts into account or to reflect them in the program.

-- Perhaps even more serious than the misstatements of fact is the deliberate omission of material and vital information which would have exposed the spuriousness of the allegations. Every expert on the subject of oil prices would agree on the following facts:

(1) Until 1970 the United States' self-sufficiency, and our ability to export oil, stabilized world oil prices.

2

(2) Beginning in 1970 we became net importers; imports had reached 30% of our requirements by mid-1973. Coupled with major increases in imports by other industrialized countries, this fundamentally changed the relation between world petroleum supply and demand.

(3) The Arab-Israeli war of October 1973 and the late-1973 Arab oil embargo against the United States and some of our allies further upset the balance and set off a wave of panic buying.

(4) The Saudi production cutback of 1973 of 2 million barrels a day further exacerbated the situation.

(5) Iran joined neither the embargo nor the production cutback.

It was these fundamental facts which set the stage for the OPEC price rises of 1973-1974--not some hidden understanding with the Shah. Similar fundamental factors have been involved in the oil price rise from $14 a barrel, when I left office, to over $30 a barrel today. It is profoundly misleading to the American people to suggest otherwise, as the "60 Minutes" program did. Yet not one of these undisputed facts was mentioned or even hinted at on the program. Not one expert was put on or even interviewed to testify to them.

I urged Mr. Hewitt to present these facts through economic experts familiar with them. He refused. It was the refusal to include in the program a fair presentation of the economic realities of the 1973-74 oil price increases, about which I do not possess independent expertise or personal involvement, that caused me to suspect that the program would focus on individuals rather than on substance.

(LY)

3

This, and the fact that the program would be entitled "The Kissinger-Shah Connection", emerged only after I had discussed my appearance with CBS. Furthermore, the "Periscope" item in *Newsweek* which came to my attention on Monday, April 28, reported that CBS had forced me to appear to defend my overall relationship with the Shah. These made it increasingly apparent that I was being set up for the role of a defendant on the show.

In all my experience with news organizations I was never exposed to the pressure and threats employed by "60 Minutes. Within a 24 hour period I received eight phone calls from Mr. Rather, Mr. Wallace and Mr. Hewitt and a personal visit from Mr. Rather on the day of the failed rescue mission in Iran when there were many other demands on my time-- all giving me deadlines of two hours to respond. Their theme was identical: "60 Minutes" would proceed with the presentation that I had told them was untrue without consulting additional documents or other witnesses unless I personally rebutted charges I had insisted were fabricated and malicious.

The program should have presented a fair and balanced picture on the issue. This was CBS' obligation as a matter of both law and good journalism. (Nor did my non-appearance discharge CBS of that responsibility.) Had it included such a presentation, then I would have been glad to appear with respect to those matters of which I had some personal knowledge. But Mr. Rather's narration during the program leaves no doubt that my judgment about the real character of the presentation was correct.

Enclosure

CBS
NEWS

Bill Leonard, President

Dear Dr. Kissinger:

May 16, 1980

I have your letter of May 12. Since it expresses concern that my May 9
reply to you addressed tone and not content, despite my indication that
Dan Rather and the 60 MINUTES staff would address the specifics of your
complaint, this letter will reflect the combined response of my colleagues
and myself. I sincerely hope that this response will settle this matter,
inasmuch as I do not believe that a protracted debate on the many points
raised by your letters would serve either your interest or ours.

I must state at the outset that this voluminous correspondence serves
only to reinforce our original judgment that the best means of ensuring
fairness and balance in our story was the means we attempted, an inter-
view with you. The points you make, the messages and steps you cite,
would have been less than persuasive coming second or third hand. And
we know of no national security reasons that would have prevented you
from saying publicly what you are now saying privately.

Moreover, at the risk of belaboring a sore point, your insistence on the
inclusion of one or more "friendly witnesses," from a list of your own
suggestion, coming as it did in the context of a condition for an inter-
view with you, is something to which you must know we could not agree.
To have done so would have constituted a surrender of journalistic
independence, particularly in light of your earlier agreement to do the
interview without conditions.

As to the so-called "pressure and threats" by Messrs. Rather and Hewitt,
and the imposition of a deadline, you must understand that since their
discussions with you involved the postponement of the story for a week
—a postponement which would have had to be announced in advance—it was
necessary by Friday afternoon, April 25, to substitute another story for
the broadcast of April 27. Since the discussions involving an interview
began only the night before, it was obviously necessary for us to set a
deadline. The number of calls is easily explained—a combination of our
own eagerness for your participation, and your own continuing attempts
to impose conditions and groundrules.

MAY 2, 1980

MAY 2, 1980

[LC]

Dr. Henry Kissinger

May 16, 1980

Page 2

Having said all that--and it was necessary to do so--I would like to address content. To summarize what follows, I would say that we believe our report was accurate, that your objections to our report are based on your interpretations--in many instances inaccurate--of what our broadcast stated, and that there is no need for correction of the points made in our broadcast to which you have objected.

To be specific, it appears that your objections to our broadcast can be grouped in five principal areas. Below, I have listed those objections and our response to each.

(1) Kissinger: 60 MINUTES unfairly charged that I "colluded to push up oil prices" with the Shah of Iran.

CBS News: Despite repeated statements in your letters that a charge of "collusion" was made, no such charge was ever made. Instead, what our broadcast stated was that there may have been a commonality of interests between the United States government's desire to have the Shah of Iran protect Western interests in the Persian Gulf area by increasing his military capability and the Shah's need for increased revenue, through higher oil prices, to pay for military armaments.

Thus, on page 12 of the annotated text which you included in your letter of May 12, you state that "the theory of collusion is false". This point is made alongside a question asked of William Simon by Dan Rather as a "theory"--"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?" This you cite as evidence of "collusion." Dr. Kissinger, methink you may protest too much. For there is nothing in this quote--which, please recall, was advanced only as a question and a "theory" by Dan Rather--which implies collusion. What the question does imply is that there was a conscious state of knowledge on your part that an increase in oil prices might be helpful in securing a key goal of Nixon Administration foreign policy--the arming of Iran to protect Western interests in the Persian Gulf. Never is the charge of any collusive action involving you and the Shah raised in Dan's question.

You do not seem to wish to address your own intentions at the time; instead, you attempt to deflect the issue by claiming we insinuated collusion. Unfortunately, that deflection does not reach the central issue, which you have chosen to ignore.

Indeed, I would like to quote a noted foreign policy expert on the interplay of interests between the United States and Iran during this period.

Dr. Henry Kissinger

May 16, 1980

Page 3

"The real issue in 1972 was that the required balance within an area essential for the security, and even more the prosperity, of all industrial democracies appeared in grave jeopardy. More than 15,000 Soviet troops were still in Egypt, with which we had as yet no diplomatic relations and which was tied to the Soviet Union by a Friendship Treaty signed a year earlier...Syria had long since been a major recipient of Soviet arms—and had invaded moderate Jordan twenty months earlier. Britian at the end of 1971 had just completed the historic withdrawal of its forces and military protection from the Persian Gulf at the precise moment when radical Iraq was being put into a position by Soviet arms to assert traditional hegemonic aims. Our friends—Saudi Arabia, Jordan, the Emirates—were being encircled.

"It was imperative for our interests and those of the Western world that the regional balance of power be maintained so that moderate forces would not be engulfed nor Europe's and Japan's (and as it later turned out, our) economic lifeline fall into hostile hands. We could either provide the balancing force ourselves or enable a regional power to do so. There was no possibility of assigning any American military forces to the Indian Ocean in the midst of the Vietnam war and its attendant trauma. Congress would have tolerated no such commitment; the public would not have supported it. Fortunately, Iran was willing to play this role.

"The vacuum left by British withdrawal, now menaced by Soviet intrusion and radical momentum, would be filled by a local power friendly to us. Iraq would be discouraged from adventures against the Emirates in the lower Gulf, and against Jordan and Saudi Arabia. A strong Iran could help damp India's temptations to conclude its conquest of Pakistan. And all of this was achieveable without any American resources, since the Shah was willing to pay for the equipment out of his oil revenues." (emphasis added).

This, of course, is from White House Years, pages 1263-64. I have quoted you at such length and without ellipses to make a simple point: our broadcast did not imply collusion; it implied commonality of interests. Your book implied the very same commonality of interests. Your protest seems out of phase with your own writings.

(2) Kissinger: In contrast to the 60 MINUTES version, I did attempt vigorously to block the OPEC price increase in December, 1973. Contrary to his assertions on the broadcast, Ambassador Akins gave me only one warning

Dr. Henry Kissinger

May 16, 1980

of an impending increase, his warning was not the first such warning, and I responded vigorously to that warning with efforts aimed at forestalling an OPEC price increase.

CBS News: You seem to place great emphasis on the alleged falsity of Dan Rather's statement that "Akins 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." You state, on page 6 of your annotated text, "False. first warning came from Helms. First Akins warning was barely 2 days before OPEC decision and HK responded within 24 hours."

A number of points are in order. First, you have obviously misread the Rather statement. "Akins first cabled" does not mean "Akins was the first to cable", but rather "the first time Akins cabled." As a student of the English language, surely you are aware of this; your attempt to change the meaning of this sentence is strange indeed. Neither Akins nor 60 MINUTES ever claimed that his was the first warning, if indeed this point is relevant in any event.

To argue your point, however, you stated that Ambassador Helms was the first to warn you. Yet in your letter of May 1 to Dan Rather, you state that Helm's warning was received on December 21, exactly the same date on which you indicated on page 6 of your annotated transcript you received the warning from Akins. In other words, whichever one was technically first, both warnings came on the same day, and clearly both warnings must have been in response to the sudden awareness on the part of State Department officers in the Mideast that an OPEC price rise was imminent.

Of greater interest, however, is that in attacking Rather for his alleged mistatement about Akins' warning, you totally ignore the key substantive statement made by Rather--"Akins first cabled the Saudi warning to the State Department in December, '73, before the Shah led OPEC into quadrupling the price of oil." Nowhere do you dispute the fact that it was the Shah who led the OPEC price increase. Indeed, you state in your May 1 letter to Dan Rather that "in a cable to Washington received on December 21, Helms reported that the Shah was considering a new pricing arrangement that would peg oil prices to other energy sources and, therefore, lead to an increase in oil prices." Your incorrect chronological objections seem to mask a failure to dispute the real substance of our broadcast.

You also contend that you did in fact respond swiftly and vigorously to the Akins/Helms warnings of an impending OPEC price increase. Yet, in

Dr. Henry Kissinger

May 16, 1980

Page 5

your letter of May 1 to Dan Rather, the chronology of your actions seems
to place the bulk of its emphasis on actions you took after the OPEC
price increase had taken place. Thus, you discuss actions taken on
December 28 and 29, 1973, and during January of 1974. Curiously, your
chronology stops with January of 1974 (other than to list an assortment
of speeches), as if that were the end of your significant diplomatic
efforts to undo the OPEC price increase. Yet Ambassador Akins, in
discussing his conversations with the Saudis, indicated that they continued
to press the point of U.S.-Iranian dialogue on oil prices for much
longer.

To quote Ambassador Akins on the broadcast: "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'...." Why
your chronology chose to stop only one month after the OPEC December
price increase is interesting, since no rollback of this price increase
ever occurred.

(3) Kissinger: The background of declining U.S. oil self-sufficiency and the Arab-Israeli war of October 1973, coupled with a Saudi production cutback of 2 million barrels per day in 1973, and not any actions on my part, caused the OPEC price rises of 1973.

CBS News: There is no question that the factors mentioned above "set the stage for the OPEC price rises of 1973-1974", as you indicate. Once again, however, you have chosen to ignore the central issue. There is no debate over what _set the stage_ for these increases. The issues in question are what were the motives of the Shah (whom you admit on page 1262 of _White House Years_ was "partly responsible for the severe OPEC price rise of 1973") in pressing for this increase, what your intentions and perceptions may have been, and what commonality of interests may have existed between the United States and Iranian governments regarding this price increase. Once again, you have chosen to ignore this issue, but to ignore it is not to refute the central contention of those knowledgeable persons interviewed on the 60 MINUTES broadcast.

(4) Kissinger: The CBS News thesis regarding the relationships
between the Shah and me regarding oil price increases is "disproved by
White House meeting Dec. 28, 1973 which decided price of U.S. arms would
go up to compensate for excessive oil price rises" (your note on page 12
of the text of the broadcast).

CBS News: If indeed prices of military hardware sold to Iran were
increased as a result of December, 1973 meeting, "to compensate for

Dr. Henry Kissinger

May 16, 1980

Page 6

excessive oil prices rises," it must rank as one of the least effective
retaliatory actions in our history. Total revenues to Iran from export
of crude oil and petroleum products rose from $2.4 billion in 1972, to
$4.4 billion in 1973, and then-after the OPEC price rises-to $20.8 billion
in 1974. In other words, there was an increase to Iran of over $16
billion in revenue between 1973 and 1974, as a result of those price
increases. At the same time, the value of contracts signed between Iran
and the United States for purchase of military equipment rose from
$2.158 billion in Fiscal Year 1973 to $3.966 billion in FY 1974-a rise
of under $2 billion-and then dropped to $1.314 billion in FY 1975.

These figures obviously are not dispositive, since we have not been able
to obtain specific increases in specific weapons systems between 1973
and 1974. What these figures do show, however, is that the total dollar
increase in the cost of military hardware to the Shah-if indeed there
was any per unit increase at all--is only a very small fraction of the
increased revenues to Iran, and hence increased costs to the United
States, resulting from the OPEC price increase.

It is also interesting to note that based on the 1972 oil revenue
figure of $2.4 billion, if oil prices had not risen in 1973 the Shah
would not have been able to purchase anything approaching the volume of
military hardware that he in fact purchased subsequently, since a portion
of oil income went to internal development projects. In other words,
based on the oil revenues to Iran before and after the 1973 OPEC increases,
there is a good case to be made-one we did not make on the air, but
which we certainly could make in the future-that there was indeed a
strong motivation for the Shah to want increased oil prices to pay for
military hardware.

(5) Kissinger: Those interviewed on the program were all disqualified
from offering opinions on this subject by personal bias, political
ambition, personal vendetta or similar reasons.

CBS News: We of course cannot comment on either your motivations
or those of the individuals interviewed on the broadcast, other than to
state once again that you had the opportunity on air to dispute any and
all of the claims made regarding your role. You chose not to do so.

Certainly Mr. Ball is a distinguished foreign policy expert, who personally
reviewed extensive records last year as part of his Iran-related assignment
for President Carter. And if his principal alleged disqualification is that
he is a "leading Democratic foreign policy commentator," we would assume
this gives some extra qualification to William Simon, a staunch Republican
who served alongside you in the Nixon Administration. As to your charges
regarding Ambassador Akins, we would prefer not to characterize them, other

Dr. Henry Kissinger

May 16, 1980

Page 7

than to quote once again what William Simon stated on the 60 MINUTES
broadcast: "he (Ambassador Akins) was a true expert on the subject of
the Middle East and oil."

As to Ambassador Farhang, we are sure the viewing audience factored in
its own evaluation of his statements because of his current position and
sympathies. However, I should note that he did not, as you claim he
did, accuse you of collusion, and he did not, as you claim he did, "read
from an alleged document citing neither context nor precise meaning and
dated nine months before the event in question." In fact, Dan Rather
read from a memo sent by Ambassador Zahedi on March 10, 1973. The
message was read in context, and Ambassador Farhang's response was "I'm
not saying there was a conspiracy." We hold no particular brief for
Ambassador Farhang; he was simply expressing his opinion, an opinion you
could have addressed had you chosen to participate in the broadcast.

I believe this letter has addressed your principal points of contention. As I stated above, we believe the broadcast was accurate and stand by it fully.

Sincerely,
B. O. Lunard

Dr. Henry Kissinger
1800 K Street, N.W.
Suite 520
Washington, D.C. 10022

cc D. Hewitt, D. Rather

CBS
NEWS

Dear Dr. Kissinger:

I have your letter of May 6 together with the accompanying press
release from your office dated a day earlier. Dan Rather and the
60 MINUTES staff who worked on the May 4 segment to which you
refer will later address themselves to specifics contained in
your press release and your letter to Mr. Rather.

Let me say, meanwhile, that CBS News stands by the broadcast. I
am obviously disappointed that you failed to live up to your un-
qualified commitment to appear on the May 4 broadcast. As you
are fully aware, we took the extraordinary step of postponing
the segment for a week in order to accommodate your participa-
tion in it, and I have little doubt that the full flavor of Henry
Kissinger in person before many millions of people would have had
a far deeper impact than the invective of your letter and the
accompanying press release. I am, in fact, at a loss to under-
stand why you elected not to participate in the broadcast after
committing yourself to it.

Dr. Kissinger, you have had dealings with CBS, with CBS News,
with 60 MINUTES and with me over the years. The nature of these
relations has been, I believe, one of mutual respect. Therefore,
I am somewhat taken aback by the tone of your letter to me, to
Mr. Rather, and of your press release, and I must vigorously
reject your charge that the broadcast was "neither fair nor
truthful", that our attempts to have you participate was in some
way related to a "deliberate presentation of untruths", or that
the broadcast showed "outrageous bias". 60 MINUTES, as you are
aware, is perhaps the most honored as well as the most popular
public affairs series in the history of television broadcasting.
Its journalistic standards are of the highest. The reporters,
researchers and producers involved with this particular segment
were fully aware of the importance and delicacy of their subject,
and treated it accordingly.

MAY 12 1980

CORRECTED COPY

three days before the program was shown. It
cannot be irrelevant to the fairness of your
program that George Ball is a leading Democratic
foreign policy commentator and has been con-
sistently attacking me on every conceivable
issue for a decade.

(4) William Simon was talking of tactical
disagreements we had a year later; he too would
deny the basic thesis. The other side of these
tactical disagreements was never mentioned,
nor their nature, nor were witnesses for the
other side put on.

(5) Mr. Rather made no reference to any
of the facts in the detailed rebuttal I had
sent to him. Instead he quoted distorted ad
hominem fragments of a private conversation.

(6) "60 Minutes" had no shred of evidence
that our government believed that the Shah would
be unable to pay for the arms he had ordered.
Nor could it have, since no evidence exists.
You should also know that on December 28, 1973,
in a meeting chaired by me and attended by
Secretary of Defense James Schlesinger, Chairman
of the Joint Chiefs of Staff Admiral Thomas
Moorer, CIA Director William Colby, and Deputy
Assistant for National Security Affairs General
Brent Scowcroft, it was decided to raise the
cost of military equipment to the Shah to com-
pensate for the unjustified increase in oil
prices--disproving the basic thesis of the program
that it was the US government's policy to raise
oil prices to enable the Shah to purchase more arms.

(7) Offering me an opportunity of personal
rebuttal does not compensate for the deliberate
presentation of untruths. The program's refusal
to put on any of the officials and experts I
mentioned and its insistence that no one except
me would be acceptable was a calculated device to
cast me in the role of the defendant. It was a
maneuver to hype the program. It was neither
fair nor truthful.

CORRECTED COPY

2

HENRY A. KISSINGER

May 6, 1980

Dear Mr. Leonard:

I issued the attached press release yesterday.

This letter is to protest the gross unfairness and outrageous bias of the "60 Minutes" program of May 4, 1980. The producer and Mr. Rather had before them sufficient facts to indicate that there was the most serious question about their thesis; they proceeded without even indicating any doubt as to motive or veracity.

I wish to emphasize the following examples of extreme, unprofessional bias:

(1) The charge that I colluded to push up oil prices was made by an Ambassador whom I fired and who has been on an unremitting vendetta against me ever since--a fact well known to every serious journalist in Washington.

(2) The charge was supported by, of all people, Khomeini's ambassador to the UN--a hardly unbiased source--who read from an alleged document citing neither context nor precise meaning and dated nine months before the event in question. This makes CBS a party to propaganda garbage of a country holding American hostages and publicly exhibiting American corpses.

(3) George Ball, another so-called "witness", has been out of government for many years and has no personal knowledge of events surrounding the oil price rises of 1973. His claim that I never protested the price increase was explicitly dis-proved by my letter to Mr. Rather of May 1, 1980,

2

(6) "60 Minutes" had no shred of evidence
that our government believed that the Shah would
be unable to pay for the arms he had ordered.
Nor could it have, since no evidence exists.
You should also know that on December 28, 1973,
in a meeting attended by Secretary of Defense
James Schlesinger, Chairman of the Joint Chiefs
of Staff Admiral Thomas Moorer, CIA Director
William Colby, and Deputy Assistant for National
Security Affairs General Brent Scowcroft, it
was decided to raise the cost of military equipment
to the Shah to compensate for the unjustified
increase in oil prices --disproving the basic
thesis of the program that it was the US govern-
ment's policy to raise oil prices to enable the
Shah to purchase more arms.

ANNOTATED

[x]

[Dictated as draft from
the program as
broadcast.]

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.

Totally misleading + irrelevant.
Overwhelming majority of these sales occurred in Carter Admin., which was in office 8 out of 12 months mentioned. (And it was aime duck in 3 out of the remaining 4 mos.) All these sales, moreover, were 4-5 years after events described in the program -- in some cases, concerned weapons that did not exist in 1972-73.

- 2 -

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.

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

**False:** HK

had no contact with Shah, Panamanians, Egyptians, or Carter Adams. on this question.

**Tendentious:**

HK made repeated public statements that his role was less than charged.

**Tendentious + misleading:**

implies that there may be some proof not yet found.

No evidence for this charge.

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.

False:

No such conversation took place!

**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

- 6 -

**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 Hamani 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?"

**Misleading:** Program gives no indication that it was settled Saudi policy to blame the Shah for OPEC oil decisions. High price depended on Saudi production cut of 2 million b/d.

**False:** First warning came from Helms. First Aikens warning was barely 2 days before OPEC decision +HK responded within 24 hours. US responded vigorously + immediately. See HK letter to Dan Rather, May 1, 1980, + evidence there given.

- 7 -

False, HK

responded
within 8
hours.

Protest was
made to all
OPEC numbers
including
Iran.

difficult and was never very convincing. This con-

their point was consistently the same -- you must bring

This is
Saudi
version.

See 11:
5-6
above.

This is
false.

Real price
of oil
declined

from 1973
to 1978,
with Shah's
cooperation.

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

**AIKENS:** Never.

**AIKENS:** Never.

**RATHER:** The Saudis would say, you must use your influence, you must do something. You passed that along to Washington.

False,

as
demonstrated
in HK letter
to Dan Rather,

May 1, 1980.

probably saw that . . . .

- 8 -

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

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

FALSE.

This seems to refer to 1974--when the Shah was cooperating with us to keep price from rising. (Real price of oil declined from 1973-78, + Shah was negotiating special arrangement with us to reduce prices, as HK informed Dan Rather.)

**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 Secretry.

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.

MISleading.

HK gave Dan Rather names of 2 officials who could have given the reasons.

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

- 9 -

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 Shah 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:

- 11 -

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?

Misleading.
See note
on p.1

Thesis is
false: This
ignores
Shah's use
of revenue
for economic
development.

- 12 -

**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.

Revenue was used for economic development also.

**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.

Theory of Collusion is false.

Disproved by White House meeting Dec.28, 1973 which decided price of US arms would go up to compensate for excessive oil price rises.

**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 besieged in the closing days of Watergate. We didn't need any trouble in other parts of the world, and we had to

False. In 1973-74 we were out of Vietnam!

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

- 14 -

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.

**RATHER:** Do you have any indication, have you ever seen any evidence that Dr. Kissinger did try to use his influence 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

This thesis
is probably
false.

See p.12.
(We raised
the price of
arms !)

M

False.

Disproved
by evidence
in HK letter
to Dan
Rather,
May 1, 1980.

[LY]

- 15 -

**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.

- 16 -

**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 Bahādi, was on hand to accept the first shipment.

**RATHER:** Bahādi 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.

Bahādi 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 Bahādi to the Shah, that there apparently had not been time to destroy once the embassy was taken over.

What is relevance of a quote nine months before into quadrupling the price of oil, Bahādi sent the following OPEC price message to the Shah. Translated from the Persian it reads: decision?

There was no problem over oil prices at that time, since Shah favored low oil prices then.

- 17 -

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 conditions . . .

Pro-Khomeini propaganda, + by a man with no personal knowledge of events in Iran.

- 18 -

**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.

**False:**

For next 6 years, Shah worked to keep price from rising. Price declined in real terms from 1973-78, largely because of Shah's cooperation.

**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."

**Misleading.**

Rather simply ignores 4½ pages of factual evidence in HK's letter of May 1, 1980.

Nor did Rather interview any of the nine witnesses HK proposed in that letter.

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:

HENRY A. KISSINGER

May 1, 1980

Dear Mr. Rather:

Your secretary telephoned to say that you were
called out of New York yesterday and therefore
had to cancel the appointment we arranged at
which I proposed to outline the facts about
Ambassador Akins' allegations, as you had
explained them. Today and tomorrow I must be
away. I therefore am taking the liberty of
writing to you.

If I understood your account of the program
correctly Ambassador Akins will claim (1) that
the Shah and I colluded to drive up the price
of oil in order to give Iran the revenues to
purchase arms; (2) that he warned me repeatedly
of the Shah's intentions to force an oil price
rise and that I ignored these warnings. The
period involved is November-December, 1973.

These charges are untrue and malicious. Had
you kept the appointment I would have been able
to give you the following facts:

(1) During the November-December 1973 period, we were preoccupied with lifting the oil embargo against the United States and to restore the production reduction of 2 million barrels a day ordered by Saudi Arabia--which created the shortage which brought pressure on the oil price. In my numerous conversations with Middle Eastern leaders including one with the Shah on November 9 there was no mention by any of them of possible price increases. Moreover, Ambassador Akins met

Mr. Dan Rather
"60 Minutes"
555 W. 57th Street
New York, New York 10019

2

frequently with the leaders of Saudi Arabia to discuss the oil embargo, and the subject of prices apparently arose only once, two days before the actual December meeting in Teheran, where the decision was made to raise prices. In any case, a price rise was contrary to our policy and we strongly opposed it.

(2) Our first indication that the OPEC meeting of December 23 would discuss a price rise rather than lifting the embargo and the production restriction came not from Ambassador Akins but from Ambassador Helms in Teheran. In a cable to Washington received on December 21, Helms reported that the Shah was considering a new pricing arrangement that would peg oil prices to other energy sources and, therefore, lead to an increase in oil prices. Akins' only warning arrived on the same day; it was a result of a conversation that he had with the Saudi Minister of Petroleum who informed Akins that he had little hope of preventing a significant price increase at the OPEC meeting. Akins sent in this report with a recommendation that the U.S. protest the reported price rise, even though the meeting was convening within twenty-four hours.

(3) There were hundreds of reporting cables from Saudi Arabia in this period, but I am certain that Akins did not warn of a price increase in any of the cables that were normally brought to my attention until the single report of December 21; certainly he did not consider it significant enough to put it in a high priority message that I would have been sure to see.

(4) I was in Geneva on December 21 for the opening of the Middle East peace conference. Based on the cables from Helms and Akins my associates in the Department of State drafted a statement to all OPEC countries protesting any price increase; this was coupled with an appeal to all industrial countries asking them to join our protest.

3

(5) I approved these instructions within eight hours of their dispatch from Washington to Geneva. They were delivered in the relevant capitals--including Teheran--on December 22, in other words within 24 hours of receiving the warnings from Helms and Akins. Akins' alleged warning was thus not the first, it came on the very eve of the meeting, and I acted on it immediately.

(6) Immediately after the OPEC decision, on December 28, I wrote a strong letter of protest to the foreign minister of Saudi Arabia and to President Sadat. President Nixon, on the basis of my recommendation and draft, sent a strong letter of protest to the King of Saudi Arabia. On December 29 I sent an even stronger protest to the Shah. The cable to the Shah included the following sentences: "The President is greatly concerned over the destabilizing impact that the price increases agreed to at Teheran for Persian Gulf crudes will have on the world's economy and the catastrophic problems it could pose for the international monetary system... We believe this drastic price increase is particularly unreasonable coming as it does when supplies are being artificially restrained."

(7) On December 29 I wrote to British Foreign Secretary Alec Home expressing my grave concern and proposing urgent cooperative action by consuming nations to combat the price increase. That letter contained the following sentence: "The decisions were taken of course unilaterally without even the semblance of negotiation with the international companies or consumer nations."

(8) I spent the month of January organizing the Washington Energy Conference which met February 11. Out of it emerged the International Energy Agency--a grouping of consumer nations to deal with OPEC.

4

(9) In addition to private approaches I made the following public speeches proposing concerted action by consumer nations on energy matters including action to drive the price of oil down: Pilgrims Society, London, December 12, 1973; the Washington Energy Conference, February 11, 1974; University of Chicago, November 14, 1974; National Press Club, February 3, 1975; IEA Ministerial Meeting, Paris, May 27, 1975; OECD Meeting, Paris, May 28, 1975; UNGA Seventh Special Session, September 1, 1975; OECD Meeting, Paris, June 21, 1976.

In short, far from colluding in the price rise our government opposed it when it happened, we resisted it afterwards and sought to organize concerted action against it. There were of course occasional disagreements as to the tactics, and some were with my friend Bill Simon. But these were always amicably settled in a framework of common objectives.

The following individuals are prepared to support the fact that my policy aimed at reducing oil prices and/or rebut Akins' charges as untrue or malicious:

-- George Shultz, Secretary of the Treasury during the period in question.

-- Charles Robinson, former Deputy Secretary of State who handled negotiations with Iran looking to a price reduction in 1974-76.

-- Joseph Sisco, former Undersecretary of State for Political Affairs and my principal aide on Middle East policy.

-- Tom Enders, former Assistant Secretary of State for Economic Affairs.

-- Jules Katz, who succeeded Enders after serving as his deputy.

-- Richard Helms who served as Ambassador to Iran during the period.

-- Arthur Burns, then Chairman of the Federal Reserve Board and a close associate on energy policy.