Guns-for-oil talks

Press, 7 August 1976, Page 6

Guns-for-oil talks

NZPA-Reuter Teheran The American Secretary of State (Dr Henry Kissinger) and the Shah of Iran will hold talks today on guns-for-oil barters aimed at maintaining the pace of Iran's drive for military growth. Such deals would help Iran soften the impact of its declining oil income. The two men will meet at the Caspian sea town of Now Shahr.

Their talks will centre on Iran’s desire to continue buying sophisticated United States weapons such as Fl 5 jet fighters and naval destroyers to continue its trans-

formation into a major military power in the Arabian Gulf and the Indian Ocean despite its drop in crude oil sales. The Nixon and Ford Administrations have incurred a good deal of criticism in the United States in recent years for allowing virtually unrestricted arms sales — practically everything short of 852 bombers and nuclear weapons — to Iran in an attempt to build it into an anchor of stability.

Dr Kissinger was expected to voice some of the Ford Administration’s misgivings about an Iranian attempt to swap oil it cannot sell at current high prices in return for modern American weapons. The administration is reluctant to increase American oil imports, even by barter, at a time when it is seeking self-sufficiency in energy. It is also unwilling to let Iran gain control over some small American domestic oil companies, as some of the plans envisage. But it is also expected that guns-for-oil swaps could be a way of circumventing the high minimum prices set by the Organisation of Petroleum Exporting Countries (0.P.E.C.) and thus create pressures for lower prices. Iran has already bought SUSIO,OOOM dollars worth of

American weapons, including highly sophisticated Fl 4 and Fl 5 jet fighters, in the past four years. But its oil revenues have fallen this year and it has begun discussing oil-for-arrhs swaps with two major United States arms manufacturers. General Dynamics and Litton Industries, American officials said, American officials said it was unlikely that Dr Kissinger and the Shah would reach a long-proposed agreement on the sale of six to eight American nuclear reactors to Iran because of disagreement over safeguards. The deal — for reactors to generate 8000 MW of electricity — has been stalled by Iran’s refusal to accept strict United States safeguards against the possible use of the spent fuel for nuclear weapons. Before flying to Iran, Dr Kissinger had a two-hour breakfast meeting in London with the British Prime Minister (Mr Callaghan) in which United States policy towards South Africa and Rhodesia was closely examined. They discussed Britain's conditions for a settlement of the 10-year-old Rhodesian independence dispute and how their policies could be translated into concrete terms, British officials said.