Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X

888.2553/6–651

No. 27
Prime Minister Attlee to President Truman¹

secret

[London, June 5, 1951.]

Thank you for your message of 31 May, conveyed to me through the United States Ambassador in London, on the Persian oil situation.² I was glad to receive this further confirmation that the United States Government shares the concern of His Majesty’s Government at the present situation in Persia, and recognizes the great importance to this country of reaching a satisfactory solution between the Persian Government and the Anglo-Iranian Oil Company. The information which has so far come to us does not entirely bear out your belief that “the present Persian Government are willing and even anxious to work out an arrangement with His Majesty’s Government which would safeguard basic British interests and which could satisfy the desire of the Iranian people for nationalisation of their petroleum resources”. On the contrary, the Persian Prime Minister and leading Persian officials, both in public statements and in unofficial conversations with His Majesty’s Ambassador, have so far maintained the view that they are only prepared to discuss the implementation of the Persian nationalisation laws, and then solely with the company. These laws, though they are in fact little more than a series of loosely-drafted resolutions, appear to involve unilateral cancellation of the company’s 1933 concession-agreement, and the taking over by the Persian Government of the whole oil industry of southern Persia. As you, Mr. President, will recognize, this could result only in grave harm to the Persian oil industry with the most serious repercussions on the whole free world. The effect on the economy of the United Kingdom would be most serious and might well affect our rearmament plans. Furthermore, a breach of contract of this nature might well jeopardize other overseas contracts, not merely those held by British and United States companies for the development of Middle East oil resources, but contracts for other products elsewhere. Finally, if Persia were to drift into economic chaos as a result of an interruption of her revenue from oil, only the Communists would benefit. His Majesty’s Government cannot, therefore, admit such a solution.

On the other hand, the aide-mémoire given to the company’s manager in Tehran on May 30³ by the Persian Finance Minister does seem to suggest a possibility that the Persian authorities might be prepared at least to listen to what the company has to say. Accordingly the company, with our full agreement, whilst of course reserving its full legal position, has proposed in replying to this aide-mémoire to send out a mission to Tehran as soon as possible to discuss the matter fully and frankly with the Persians.⁴ He shall of course keep in closest touch with these discussions. It is our earnest hope that it may be possible for the mission to convince the Persians of the practical impossibility of the measures which they apparently envisage and of the consequent necessity, if the future of the industry is to be assured and the economy of Persia saved from serious deterioration, of finding a solution which will enable the company to cooperate fully in the development of Persia. His Majesty’s Government will keep in close touch with these discussions, and would at all times be prepared to consider any further steps which might seem necessary to promote a just and reasonable solution. I am sure that we can count on the United States Government to exercise their influence to this end whenever it may be necessary.

1. Transmitted in telegram 6371 from London, June 5. (888.2553/6–551) Attached to a covering memorandum from McGhee to Acheson, dated June 6, recommending that the message be forwarded to President Truman. (888.2553/6–151)
2. Document 25.
3. For text of this message, see British Cmd. 8425, pp. 39–41 or Documents (R.I.I.A.) for 1951, pp. 492–494.
4. On June 3 Seddon replied to the Iranian note of May 30 saying that the AIOC would send representatives to Tehran as soon as possible to hold full and frank discussions with the Iranians. For text of Seddon’s note, see British Cmd. 8425, p. 41.