For almost all its history, Chah Bahar has been nothing more than a remote fishing village on the desolate Indian Ocean coast of Iran between Pakistan and the entrance to the Persian Gulf.

But in 1974, the shah of Iran chose this barren locale for one of the most ambitious projects of his entire reign: transformation of Chah Bahar into a hugh, $8 billion "blue water" port with the mission of projecting Iranian military power into the Indian Ocean.

Hidden away in the plans, and adding at least $100 million to the costs, were provisions having far-reaching strategic importance for the United States. As envisioned in the early design, Chah Bahar was to have a harbor and drydock facilities specifically tailored to an American aircraft carrier task force.

The Chah Bahar plan was concieved at a time Congress, still gunshy from the war in Vietnam, was resisting attempts by the U.S. Navy to expand its presence in the Indian Ocean. No American carriers operated in that area when the shah issued his orderd for a giant base. And the Iranian Navy had no such ships and no known plans to abtain any.

A former Pentagon offical insists that the U.S. government never sought directly to get Iran to build it an Indian Ocean carrier base. The shah, he insists, acted on his own.

However, he and other top former officials of the Nixon and Ford administrations acknowlede that the shah's plan served U.S. strategic objectives and was agressively pushed by interests in the American Navy.

In this respect, Chah Bahar is a costly and melancholy symbol of a U.S. policy that repeatedly used Iran to adopt and finance vast programs that the American military could not undertake on its own.

Today, after an expenditure of an estimated $350 million by Iran, plans for Chah Bahar have been cancelled by the revolutionary Khomeini government. fHugh construction cranes, delivered only weeks before the shah's downfall last year are rusting in the sea air. Brown & Root, the Houston-based international construction firm that was to build the port with the help of more than 1,000 foreign companies, says the cranes were never used.

In this heyday, Chah Bahar was but one part of the shah's grandiose scheme to create a mighty arsenal of bases and sophisticated weaponry -- one that even Pentagon officials now say went far beyond Iran's legitmate needs, but was important to the broader U.S. strategic role in the area.

These plans also coincided with U.S. defense contractors' quest for new markets as the war in Vietnam began to wind down.

To meet the expanded role he had assumed, the shah placed military orders of $18.4 billion with the U.S. companies between 1973 and 1979, compared with less than $1 billion in the previous six years. This unprecidented arms buildup was to be financed through oil revenues, which skyrocked thanks to world price increases promoted by the shah.

Thus, in reality, it was American consumers of oil and gasoline who indirectly paid for Iran's arms.

Iran also paid a price, accordng to the present revolutionary government. It has branded this spending on planes, ships, missiles, radars, computers and bases a "criminal" squandering of Iran's resoruces.

The billions spent on arms is bound to be an issue if the Tehran government succeeds in convening a tribunal to examine the alleged crimes of the shah's government.

In the shah's military design, which Americans helped promote, Iran's mountaintops were to become platforms for the most advanced American air defense radars that money could buy.

Iranian pilots would fly the latest U.S. aircraft -- F14s and F16s, with technologies so advanced that even the U.S. military has had difficulties.

The Spruance class destroyers that Litton Industries was building for the Chah Bahar base were to have an air defense system more automated than the one approved for the Spurance versions used by the U.S. Navy.

An exotic intelligence collection system being put together with CIA direction would -- if it worked -- permit communication pictures from airborne cameras more sophiscated than those used by American aircraft.

Illuminating the futuristic nature of this military vision, the projects were identified by names that might have been borrowed from spy author Ian Fleming; Peace Crown; Peace Sceptor, Seek Sentry, Seek Swithch, Ibex. f

Pentagon consultants and U.S. officials say that some of the shah's programs were justified. Iran's location at a strategic crossroads beset with military dangers is underscored by the recent Soviet invasion of Afghanistan. m

But U.S. critics of that 1970s policy, including many who were directly involved in the buildup, assert that "reckless" sales promotion by U.S. military suppliers created pressures that contributed to the shah's downfall and actually undermined American security interests.

A few add that this process contains a warning for American policy toward other "Third World" countries vital to the United States.

In Saudi Arabia, Egypt, Morocco, Pakistan and other countries to which the U.S. government and U.S. defense contractors are supplying large quantities of sophisticated arms, there are dangers that the American policy disaster in Iran could repeat itself.

In May 1972, during a visit to Tehran, President Nixon and then-national security adviser Henry A. Kissinger told the shah he could purchase almost any conventional weapons he wanted.

The rational was clear. Iran was to "fill the vacuum left by British withdrawal, now menaced by Soviet intrusion and radical momentum," Kissinger writes in "White House Years."

Moreover, "all of this was achievable without any American resources, since the shah was willing to pay for the equipment out of his oil revenues."

Yet as the shah's oil revenues jumped after 1973, drawbacks became apparent.

The Iranian people saw money diverted from their own basic economic needs into an over-developed military. For example, a Pentagon consultant reports that civilian construction projects, such as housing, often were unable to obtain manpower and material in the late 1970s because of huge allocations to military construction.

At the same time, the booming arms trade had a seamy byproduct -- bribery, corruption and conflicts of interest generated by fierce competition among defense contractors.

Congressional investigations have disclosed millions of dollars of questionable payments by such companies as Northrop, Grumman and North American Rockwell.

A 1977 Defense Department study cites the "unsavory atmosphere" created by the presence in Iran of more than 1,000 retired U.S. military personnel working for defense contractors.

A July 1976 sudy on the Iranian arms trade by the Senate Foreign Relations Committee told of a "bonanza for U.S. weapons manufactures," and warned that in a crisis the large number of Americans in Iran "could become, in a sense, hostages."

According to numerous Pentagon consultants and former officials, ARMISH-MAAG, the U.S. military mission in Iran, was a center of service intrigue -- in the words of one, "captured by the aerospace industry."

The incentive for the U.S. military services was plain. Iran's purchase of a major weapons system reduced the cost of the same system to the Pentagon through savings achieved by mass production.

The commercial momentum in the arms business in the early 1970s was such that Westinghouse sold Iran $125 million worth of radars for an air defense system before Iranian planners had devised an accepted use for them. The unused radars were put in storage and reportedly remain there today.

As orginally conceived, the Iranian navy's planned base at Chah Bahar was to accomodate six Spruance destroyers to be built in Pascagoula, Miss., by Litton Industries at an estimated cost of $2 billion. From Chah Bahar, the destroyers were to patrol the Indian Ocean and the entrance to the Persian Gulf, through which about half of the West's oil passes.

However, some Pentagon officials say that such advanced ships were not required by Iran, a neophyte sea power. In any case, they add, the vessels could have been berthed at an expanded base already existing at Bahar Abbas.

These critics say that the decision to build Chah Bahar is even more questionable in terms of U.S. interests since the government of Oman on several occasions in the early 1970s offered to sell the United States an existing offshore island base vacated by the British. The price reportedly was as low as $3 million.

Who in Iran or the United States instigated the Chah Bahar project -- and who initiated an aircraft carrier component for it -- is unclear.

Adm. Elmo R. Zumwalt, chief of naval operations from 1970 to 1974, says that he strongly urged the building of the Chah Bahar port, but had no knowledge of any carrier facility.

Zumwalt said that the shah was "verbally quite clear" that the new port would be available to American naval vessels in a crisis. But details were part of "unique, personalized arrangements" between the shah and the Nixon administration, the admiral said.

Throughout the project, the U.S. Navy assigned its own liason officer to it even though the contract was with a civilian company, Brown & Root.

Former assistant secretary of defense Robert Ellsworth says that he knew of plans for an aircraft carrier drydock at Chah Bahar, but attributed them to the "flamboyant excess" built into the shah's own arms plans.

I. W. Ussery, Brown & Root's representative in Tehran until 1975, says he learned of the carrier plan in late 1974, at the same time he was informed that his Texas-based company had been chosen by the Iranian Navy to perform the work.

Ussery recalls his first question on discussing the project with Adm. Ramzi Attai was, "What do you need with an aircraft carrier facility?" a

"You have heard of the Indain Ocean fleet," Ussery quotes Attai as responding. Some months later, Attai and many fellow officers were arrested and jailed on corruption charges and a new Iranian naval team took over the negotiations.

A revised plan submitted to Brown & Root in mid-1975 by the Iranians also included the carrier component.

Almost up to that time, Congress had turned down Navy proposals for even an "austere naval facility" in the Indian Ocean area. In mid-1974, congress authorized the Navy to spend $14.8 million for improvements to a harbor at Diego Garcia, Britain's is land base in mid-Indian Ocean. But Congress indicated its clear intent to limit any significant expansion of the U.S. presence by requiring the president to certify that even this limited outlay was in national security interests.

From the outset, American contractors and advisors played a dominant role in the Chah Bahar project on both sides. Advising the Iranian Navy on development and cost studies was Robert N. Pomeroy, a San Francisco businessman. Chief contractor Brown & Root was selected without international bidding. Excutives say the shah was impressed with their work on the port of Camranh Bay in South Vietnam, as well as offshore drilling structures in the Persian Gulf.

After signing a letter of intent in 1974 to perform the work, Brown & Root negotiated a number of arrangements in connection with the harbor project.

It recieved authority to draw money on accounts in Tehran and Houston banks to pay for equipment before it was shipped to Chah Bahar. When funds for the project were depleted, they were replenished through the sale of 100,000 barrels of Iranian oil a day to a Bahama Island refinery then controlled by a brother of Gov. Hugh Carey of New York.

In early 1978, shortly after the Iranian Navy signed a final contract with Brown & Root, Tehran's parliament passed a special "enabling act" giving the Navy full control over contracts, customs and work permits at Chah Bahar.

Brown & Root counsel Ben Powell acknowledged that the company saw copies of the draft law prior to passage, and "I would imagine we commented on" the drafts. But he denied that the company had any influence over the law's final language.

In late 1976 or early 1977, the carrier facilities were deleted from the Chah Bahar plans for undisclosed reasons apparently having to do with costs. By then "phase one" costs had risen from $700 million to slightly over $1 billion -- in part because local rocks proved unsuitable for the harbor breakwater and plans had to be hastily devised to haul rock by a new road or rail link from 60 miles away.

As plans for Chah Bahar were growing more expensive, similar distortions were occuring in other huge defense projects to which the shah had given his blessing.

The complications were acknowledged as early as 1973 by the Pentagon, which had the largest vested interest in the arms buildup. That year Secretary of Defense James Schlesinger dispatched a special representive to attempt to coordinate and control the programs. This representative was followed two years later by still another high-level Defense Department troubleshooter.

One concern was the rivalry among the U.S. serives, as they fought to sway the shah and his lieutenants toward their own pet projects.

For example, CIA and Air Force fought for control of the electronic system to gather military intelligence from neighboring countries. The Air Force and its supporters sharply criticized such costs as $250 million for IBEX's own communications system.

Two different Air Force teams were unable to agree on how Iran's air defenses and its advanced communication system could be coupled.

The ultimate clash occured when the two representatives of the secretary of defense found themselves on opposite sides of the argument over the final shape of Iran's multibillion air defense system.

These battles over billions, it now seems apparent, took place under the gase of an increasingly baffled and later irritated Iranian monarch.

Looking back on these events of the 1970s in Iran, Defense Department officials nowadays wax ruefully philosophic. Ultimately, they say, the shah's own weaknesses were a factor in his inability to sort out these problems. Said a verteran hand:

"He had a good strategic sense and he understood weapons systems. The trouble was that he had a poor grasp of the real needs of his country and his people."