U.S. may have had role in shah's fall

As high oil prices in the early 1970s began strangling the U.S. economy, Washington began to sour on Iran, the documents suggest. After an oil embargo over American support of Israel ended in March 1974, U.S. officials considered the shah the principal culprit in keeping oil prices from falling and wanted him to put on the brakes. At one point, Rumsfeld, who later served as the current President Bush's Defense secretary, warned Iran's chief arms procurement official that Tehran was losing friends in Washington.

"Don't try to get around me," he reportedly told Gen. Hassan Toufanian, in an encounter described by the Washington Post three decades ago and cited in the report. "Remember, Kissinger and I have to approve all [arms] exports."

Chief among those advocating pressure on Iran was William Simon, who served as Treasury secretary and energy czar under the Nixon and Ford administrations. He blamed the shah for high oil prices and wanted the U.S. to use weapons sales to Tehran as leverage.

"He is the ringleader on oil prices, together with Venezuela," Simon told President Nixon in July 1974, referring to the Iranian ruler. "Is it possible to put pressure on the shah?"

Over the years, Kissinger advocated a friendlier line on Iran and the shah, who had been brought back to power by a U.S.-engineered coup in 1953. The report suggests that Kissinger had special insights into the country's instability. At the time, university campuses in Iran were in turmoil, and guerrillas were attacking U.S. facilities and assassinating key officials. Even in 1974, a CIA analysis sounded the alarm, saying the shah's ambitious buildup of the country was causing economic polarization and cultural clashes that were roiling Iran.

By late 1976 the shah was in deep financial trouble, facing a huge cash crunch. He wanted the Organization of the Petroleum Exporting Countries oil cartel, or OPEC, to raise oil prices by 25%, a move the U.S. opposed.

"There is unanimity among my advisors that the world economy health is not good," Ford told Iranian Ambassador Ardeshir Zahedi in December 1976, according to the archives. "Any increase in the price of oil would have a serious impact on the world financial structure."

But U.S. officials, especially Simon, had been working with Saudi officials behind the shah's back to seek help on oil prices in exchange for political and military support for the Arab kingdom. The Saudis stunned OPEC by announcing at a December summit in Doha, Qatar, that they would boost production to 11.6 million barrels a day from 8.6 million barrels, driving down prices.