Office of the Historian

888.2553–AIOC/7–2450: Telegram

The Secretary of State to the Embassy in the United Kingdom 1

secret
priority
Washington, August 7, 1950—7 p. m.

683. Dept fully endorses Amb Grady’s recommendations para 4 Tehran’s 204 July 25,2 and, despite Fraser3 statement that co. unable advance sums due under supplemental agreement, is stressing these recommendations with Brit Emb and AIOC reps at this end. You shld [Page 577] do same at top level in London with all contacts in and out of FonOff who cld be instrumental in effecting desired results. Dept’s views on importance of settlement this issue to political stability Iran given in previous cables.

Dept not inclined to disregard Razmara threat of concession cancellation which would have most direct impact on UK interests and which it is believed wld have almost total Iranian support.

Dept still does not understand Brit Govt failure exercise control of govt co. at this time. Fraser’s vacation appears to reflect continued disregard for Brit Govt views and treatment of issue as commercial proposition without economic, political and strategic considerations important to outside world. It is hoped that despite vacation Fraser can be contacted at all times and that full examination is made of means bypassing legal obstacle raised by co. Emb shld emphasize Grady’s suggestion that Jackson4 or other high ranking AIOC official visit Tehran immediately. Since US and UK Govts appear completely in accord, Dept wld welcome other suggestions aimed at overcoming last remaining obstacle, AIOC.

Dept believes imperative press on all possible fronts for immediate payment at least greater portion amounts due under supplemental agreement. It is understood AIOC has already received full tax credit for these sums from Brit Govt and money only awaiting transfer to Iranian Govt. For sake UK and AIOC prestige, payments shld be supported by combined US–UK publicity facilities.

Interim period before next meeting Majlis shld be used to develop Brit Amb points a and c of Tehran’s 2045 with fullest publicity possible but without ref to renegotiation.

Above approach designed to assure Iran sums necessary for internal situation, to increase UK and AIOC prestige and to prepare Iranians for agreement ratification at next meeting Majlis. 6 million pound loan being considered by Fraser wld, in Dept’s view, completely miss [Page 578] these objectives, particularly since Brit Amb indicates that AIOC already owes 7½ million pounds under old royalty agreement.

Acheson
  1. Repeated to Tehran and Cairo.↩
  2. Not printed; in paragraph 4 Grady suggested that the AIOC should announce that it was making funds available to Iran unreservedly. This would clear the atmosphere, strengthen the Razmara Government, and avoid the danger of reopening the supplemental agreement for negotiations. (888.2553–AIOC/7–2450)↩
  3. Sir William Fraser, Chairman of the AIOC.↩
  4. Basil R. Jackson, Deputy Chairman of the AIOC.↩

  5. Points a through c of telegram 204 read as follows:

    “(a) The finding of formula satisfactory to Government here for gradual Iranianization of staff of company located in Iran.

    (b) The advance of funds that would be due under old rates (about 7½ million pounds) plus an advance in form of loan (with or without interest) sufficient meet present pressing needs national budget. Alternatively a loan for whole amount needed without any advance royalties. The Ambassador has up to now, however, been unable get from Prime Minister any budget figures indicating what present financial needs Government are. He cannot press his proposal on London until he had such data.

    (c) AIOC to form subsidiary exclusively for its Iranian operation and add Iranian director to management of subsidiary company. This is variation Shah’s proposal for audit of company books by Iranian Government.”

    Points a through c represent Grady’s summary of a memorandum which Ambassador Shepherd had sent to his Government on July 10.

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