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

888.2553/4–554: Telegram

No. 454
The Secretary of State to the Embassy in the United Kingdom¹

secret
niact

Washington, April 7, 1954—2:11 p.m.

5231. Limited Distribution.

1. Have discussed your Memorandum of Understanding (London 4354 rptd Tehran 204²) with Justice and others concerned and advised that we are in agreement with proceeding on this basis provided that clarification of Section b is made as follows:

“2.b. If a member transfers by assignment or otherwise the whole or part of its interest in the consortium the obligation of the member to make payments as set out in Paragraphs 1 and 2 above shall, unless otherwise agreed, continue unaltered. No part of the responsibility of the member for payment or offtake of petroleum or products from Iran shall be diminished, by such transfer, provided, however, such member or transferee shall, when petroleum or products have been offtaken from Iran, have complete and unhampered control of the disposition by sale, exchange or otherwise of such petroleum or products.”

and provided that small 4 under required conditions of transfer for participation by independents is clarified as follows:

“If there were more than one transferee they would agree to designate one common agent to deal with all matters relating to the consortium, provided, however, that when petroleum or petroleum products have been offlifted from Iran, all such transferees, independently of each other, should have free and unhampered right to dispose of such petroleum or petroleum products in their capacity as individual companies and without any restraint due to the joint representation of the group in consortium matters by the designated member.”

These clarifications are deemed necessary in order to conform to Attorney General’s opinion delivered to National Security Council.

2. With reference to limitation of five years on sales of stock by participants it would appear that the question is one of reasonableness and that a one-year or two-year limitation would be preferred. However, if the five-year limitation is determined to be essential to the prompt settlement, the Attorney General would not object.

3. Department of Justice points out, of course, that any agreement between consortium members and third parties or any provision for future dealings must be maintained within framework of opinion heretofore given by Attorney General to NSC.

4. Regarding proposed exchange letters re Memo of Understanding (London’s 4354 and Tehran’s 2067³) Department would prefer have no reference to US–UK “understanding”, but in view London’s 4393, sent Tehran 209,⁴ willing accept inclusion reference to “understanding between HMG and US Government on this subject.

5. Department appreciates importance of considerations set forth by Hoover in para 1 of Tehran’s tel 2067, rptd London 639, and hopes companies will make textual changes as suggested.⁵

6. For information US officials only. Re independents, we are proceeding on basis Hoover’s feeling there little chance success reopening matter now with British (Tehran tel 2055, rptd London 634)⁶ but, should this course appear desirable in future, we would expect reopen question participation independents in light circumstances then existing.

Dulles

1. Repeated to Tehran for Hoover. Drafted and signed by Byroade after being cleared with Deputy Secretary of Defense Anderson and by Assistant Attorney General Barnes.
2. Document 452.
3. Document 452 and supra.
4. In this telegram, Apr. 6, the Embassy in London informed Hoover that Caccia reported that the British Government had had the greatest difficulty in getting Fraser to agree to omit a specific reference to the U.S.-U.K. memorandum of understanding of Mar. 26 (see Document 447). It would be impossible, however, to get Fraser to agree to delete all general references to the understanding reached between the United States and United Kingdom in handling the AIOC’s claims. (Telegram 209 to Tehran, repeated to the Department as 4393; 888.2553/4–654)

5. On Apr. 8 Hoover informed the Department that he believed the Department of Justice stipulations were reasonable and should not delay the consummation of the consortium memorandum of understanding, which was necessary before the consortium negotiating team could depart for Tehran. (Telegram 2088; 888.2553/4–854)

   That same day the Embassy in London informed the Department that the British companies comprising the consortium had serious objections to the inclusion of the Department of Justice language in the memorandum of understanding, and that Koegler of Standard of NJ would be explaining these objections to the Department. (Telegram 4453; 888.2553/4–854)

6. Not printed. (888.2553/4–454)