January 7, 1969

U.S. EXPORTS FOR IRANIAN OIL PROGRAM

Two critical problems confronting the United States, its deteriorating trade balance and the Middle East, can be alleviated measurably by implementation of a program involving major American industries and the Kingdom of Iran.

In essence this program would permit export sales from the United States which will otherwise be lost, while strengthening Iran economically, socially and militarily. It proposes that the Government of Iran would deliver some of its crude oil to the United States against payment to blocked United States accounts which would be utilized solely for the purchase of our capital goods, equipment and military supplies. Existing Iranian loan commitments for purchases of U.S. military equipment might hereby be reduced or alternatively, oil sales proceeds might be considered as a further guaranty of repayment of loans.

Since the initiation in 1956 of Iran's first economic and social development program evidence abounds of the expansion of every sector of its economy. The world is especially aware of the success achieved by His Imperial Majesty in implementing a land reform program which in terms of individual people benefited and land distributed is unparalleled in contemporary history.

Recognition of Iran's growing economic viability is implicitly found in the U.S. Government's action of discontinuing its AID program to Iran several years ago.

Continued economic and social progress for Iran's twenty-five million people can be insured by its Government's planned industrial expansion over the next five years. That expansion envisions the expenditure of twelve billion dollars during that period. But Iran must sell its oil here in order to finance a substantial portion of the heavy expenditures it wishes to make in the United States.

American industry faces strong competition in its sales to Iran due principally to the willingness of foreign suppliers, particularly East European countries, to forego payments in hard currency. One major American company, employing two hundred and fifty thousand people in the United States, General Electric, offers an excellent example of our export opportunities. General Electric now believes it can sell one hundred million dollars worth of electric power plant facilities in Iran over the next five years. Proof is furnished in the form of a contract between General Electric and the Iranian Ministry of Water and Power calling for delivery of General Electric equipment valued at seventy million dollars if, but only if, payment therefor can be effected

under the Iranian oil for United States goods program outlined above. The broad spectrum of Iran's requirements for United States capital goods makes evident the fact that the General Electric order represents but a fraction of the possible export sales.

Discussions at the White House and Cabinet level with His Imperial Majesty and other representatives of the Iranian Government took place last year concerning initiation of the program. A further step in this direction was taken when in July 1968 the National Iranian Oil Company contracted with Planet Oil and Mineral Corporation, an American company for the sale to it of all Iranian Government crude oil which might be imported into the U.S.

In suggesting the subject proposal neither American industry nor the Iranian Government is unmindful of the limitations placed on crude oil imports in the interests of United States national security and both parties subscribe in principle to the oil import programs recognized objectives.

It is respectfully suggested however, that the limits of our national security are not circumscribed by our territorial waters and the maintenance of Iran as a bulwark of freedom in the Middle East serves in

complementary fashion the identical national security objectives. It is also suggested that accommodation for meaningful quantities of Iran crude oil imports can be found in a portion of the annual incremental increase in United States petroleum consumption which is forecast to continue at an annual rate exceeding four hundred thousand barrels of oil a day.

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