Foreign Relations of the United States, 1950, The Near East, South Asia, and Africa, Volume V

888.00/10–2550

The Secretary of State to the British Secretary of State for Foreign Affairs (Bevin)¹

secret

Washington, November 20, 1950.

I have received and read with great interest your message to me concerning the situation in Iran and I appreciate the careful attention you have given this very important matter.²

I think our two Governments are in basic agreement on the need for a positive program in Iran to convince the Government and people of that country that their future depends on their continuing their association with the free world and at the same time taking every step within their power to develop their country economically and socially in order that it may resist the threat of communism. Cooperation between the United States and the United Kingdom in trying to assist Iran is most desirable and for that reason I welcome the suggestions put forth in your note and the general position the British Government has taken on the need for a positive program in Iran. The views of our two Governments are, however, to some extent divergent on the exact means of carrying out our aims in Iran, and it is a matter of sincere regret that you have not found it possible to agree to the suggestion relating to conversion of sterling for debt service. Since representatives of both Governments have had exhaustive conversations on the subject, I will not pursue the matter here. However, we may wish to bring this subject up again as time goes on.

As I believe you may know, developments in Iran made it necessary, in our opinion, to take urgent and extraordinary action in agreeing with Iran to negotiate loan agreements without awaiting your reply. I am confident you will understand why the United States must proceed with the loan program. This will entail difficult negotiations with the Iranians but we shall make every effort to arrive at a satisfactory solution to the problem of servicing the loans.

While the United States is, as I have indicated above, proceeding with the Export-Import Bank loan and all of the alternate suggestions contained in your note may not therefore materialize, I realize that your Government’s suggestions are in the nature of a stop-gap until the Anglo-Iranian Oil Company and Export-Import Bank questions are settled. In that light, therefore, I would like to offer the following comments on them in view of the care and effort that has gone into their preparation and the obvious interest in the problem which they reflect.

1. Your suggestion of our two countries seeing the Iranian Seven Year Plan through its first three years or so is most welcome and we shall be most happy to discuss this suggestion with your experts at any time.

2. I welcome your action in offering a two to three million pound loan to the Iranian Government which I am sure could have a beneficial effect not only economically but would also increase the political stability of that country provided it forms part of a larger program.

3. I note that, if need be, you are ready to provide up to $6 million over the next two years to Iran for the purchase of agricultural and other machinery in the United States. I am not entirely clear as to what you have in mind on this point but presume you mean that if Iran is unable to find sterling for conversion under your regular arrangements you will provide these dollars through other means.

Regarding the note which your Ambassador in Tehran has delivered to Prime Minister Razmara,³ we are, of course, disappointed that your Government has not been able to take a different position on the question of the Anglo-Iranian Oil Company supplemental agreement. As our views on this matter have been discussed in detail with your officials, I need not go into them at this time, but I should greatly appreciate your giving further personal consideration to this problem, which we agree is an important one, with a view to seeing whether some compromise cannot be found.

In addition to the very serious current political aspects of this matter, may I mention in utmost confidence that the Saudi Arabian Government’s recent financial demands upon the Arabian-American Oil Company may, as your officials have been informed, require considerable concessions by the company which may, when they become known to the Iranian Government, make the position of AIOC in relation to financial terms of the proposed agreement far more difficult.

Sincerely yours,

Dean Acheson

1. The source text, which was drafted by C. Vaughan Ferguson, the Officer in Charge of Iranian Affairs, and Henry R. Labouisse, the Director of the Office of British Commonwealth and Northern European Affairs, was transmitted to Ambassador Franks on November 29 for delivery to Bevin. The source text also includes a brief introductory message to Ambassador Franks explaining that it was a reply to Bevin’s message of October 25.
2. Not printed; but see telegram 2349, October 24, from London, p. 609.
3. Presumably this is a reference to the message from Bevin to Razmara referred to in footnote 1, p. 609.