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The Secretary of State to the Embassy in the United Kingdom 1
225. Dept concerned UK attitude AIOC dispute and believes failure UK to take positive action re AIOC intransigence inappropriate to current internal Iran and world conditions. Conversations with UK officials including Bevin at FM mtg indicated UK well informed internal situation in Iran and equally concerned about possibility collapse Iran with resulting loss to West.2
Iran has now installed Govt which appears capable of bringing some sort of order out of traditional chaos and UK has indicated approval installation this Govt. New PriMin Razmara is confronted at outset by all important question of AIOC agreement and in his first approach to AIOC has encountered usual inflexibility. Dept at loss understanding AIOC attitude in view seriousness present situation and fact that most observers agree some slight face-saving gesture needed secure ratification present agreement. If Razmara is obliged to press present agreement he may fall which is in interest of neither US nor UK and if agreement is withdrawn from Majlis AIOC can contemplate endless delays before new agreement is signed.
Dept fears AIOC not sufficiently concerned about delay and is content let matters slide making royalty payment under old agreement. Such an attitude can only be disrupting force politically and is of advantage to no one except possibly the Sovs. If situation in Iran is to be stabilized, agreement must be reached in immed future. Iran will be unable proceed with seven year plan, resolve present econ crisis or correct age-old abuses. Responsibility rests on both AIOC and on Brit Govt and Dept believes they shld give serious consideration to making gesture to Irans such as mentioned previous cables [Page 570] including specific requests by Ebtehaj for renegotiation in ten years and by Razmara for advances on new royalties (Weeka No. 23, June 93). Dept wld particularly favor application of 5–10 year royalty review clauses to all Near East concessions.
Accordingly Dept wld appreciate Amb’s raising matter on highest level pointing out again if necessary we are not attempting interfere with UK–Iran commercial affairs but are stating our views solely because of our serious concern that stakes are too high in Iran permit matter drag any longer.