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C» April :i, 1948 Chairman McCabe Mr, Kn&pp Proposed credit to Iran for purchase of eurpiug military equipment A special SAC Staff meeting w&r> called yesterday afternoon to consider a proposal by tfa© State Department and the national Defense establish^ isent for giving a credit to the Government of Iran covering surplus military equipment required to equip the Iranian array. This, ie an unprecedented kind of transaction. ?b® military equipment in question is located in the United States, but it its planned to declare it surplus and to transfer it directly to the OFLC, which ordinarily handles only surplus located abroad* The sales price of the property is 10 million dollars, but in addition there will be costs of repair, packaging, and transportation amounting to 16 million dollars* So funds are available in the f*§« Government to cov^r this latter expenditure, nor is the Government of Iran prepared to finane© it* It is therefore proposed to request • Congressional appropriation of thie gum which vould b© advanced to the Government of Iran as a long-term credit bearing the S H O * terse as those of the OFL.C covering the purchase of the property (interest at 2-3/8 per cent—maturity 30 years). Owing to the military nature of this project, there is some doubt as to vheths-r the Council would desire to becom© involved. It has never taken any action, for example, in connection with the military aid program for Greece and Turkey* 0a the other hand, tbs Council h&s passed on all surplus property credits. The Staff Committee ha© therefore decided to have the Secretary of the Council report this proposal at this afternoon^ meeting so that &rxy member of the Council can raise objections or request formal Council setien* In vi«v of the very special character of this transaction, it vould be my recommendation that the Council let this proposal go by simply with a notation in the ainuteg that no objection to the proposal was expressed.
@FedFRASER