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

888.2553/4–1354: Telegram

No. 456
The Ambassador in Iran (Henderson) to the Department of State¹

secret
priority

Tehran, April 13, 1954—5 p.m.

2120. Noforn. Limited distribution.

1. This morning Hoover and I had informal and friendly audience Shah lasting one and half hours. He primarily interested in various aspects impending negotiations with consortium but also asked many questions re coming compensation negotiations with British. Re latter we assured him it our understanding discussions limited solely to determination lump sum for loss and damages arising out nationalization, after consideration Iranian counterclaims. Compensation for value assets and for future profits would be included as part consortium agreement if satisfactory solution to other problems achieved.

2. Shah expressed concern re currency negotiations with British, that Iran would not have sufficient dollars if operations conducted in sterling. We explained matter one of extreme complexity and endeavored assure him we believed British would be sympathetic and fair in working out solution satisfactory both sides. We stated it our understanding Saudi Arabia, Kuwait and Iraq also operate on sterling basis, which he had not appreciated as had believed they still paid in gold. He appeared satisfied our explanation.

3. Hoover told Shah he had not had opportunity discuss currency matters with Ebtehaj in Washington for several months and did not know latter’s latest thinking, for which he had great respect. I asked directly if Ebtehaj coming Iran soon, but Shah appeared not to know. (We considerably concerned that Iran may not have competent negotiating advice on currency question, and hoped plant idea of getting Ebtehaj here soonest as British obviously playing cards very close to chest and have refused consult with us re their full intentions. We do not feel appropriate we attempt advise Iranians re these matters under present circumstances.)

4. As on former occasions Shah again asked re sincerity and good will of British. Hoover assured him he convinced that HMG sincerely wished arrive at fair settlement oil problem and cooperating fully bring it about. Shah then stated he had some doubts re sincere desire AIOC see solution effected and asked Hoover’s opinion. Hoover replied he believed AIOC fine organization, many of whose personnel friends and admirers Iran. But occasionally there were difficult personalities to contend with in industry just as there were sometimes in governments but that time usually took care such matters. I stated I sure HMG would not allow such factor interfere with reaching equitable settlement.

5. Shah asked further questions re management and refining as well as plans envisaged conduct negotiations. We answered in general terms and repeatedly endeavored assure him of good will and sincerity all concerned.

6. Negotiating group has since arrival been reviewing plans for negotiations with ourselves and British Embassy in anticipation first formal meeting with Iranians April 14.²

Henderson

1. Repeated to London.
2. The consortium negotiating team arrived in Tehran on Apr. 11.