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31. Progress Report Prepared for the National Security Council1

SUBJECT

  • Second Progress Report on NSC 107, “The Position of the United States with Respect to Iran”

NSC 107 was approved as Governmental policy on March 14, 1951. It is requested that this Progress Report, as of May 24, be circulated to the members of the Council for their information.

A—The General Situation

The situation in Iran has deteriorated further since the submission of the First Progress Report on April 24.2

On April 28 the Government of the moderate Prime Minister, Hosein Ala, was replaced by one headed by the extreme nationalist leader, Dr. Mohamad Mosadeq. Immediately upon his appointment, the Iranian Parliament unanimously voted for the immediate implementation of nationalization of the Anglo-Iranian Oil Company, and the Iranian Government has so far categorically rejected all attempts by the British and United States Governments to settle the matter by negotiation. The Iranian Government has made it clear that it regards nationalization of the company as a fait accompli.

While disturbances have to some extent abated during the period under review, the atmosphere in Iran remains explosive. The present Iranian Government not only has done nothing to restore calm but has shown every indication of desiring to keep the Iranian people at a high emotional pitch on the oil question lest wiser counsel prevail with a consequent settlement of the controversy and, in that event, the inevitable fall of the Government.

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The British Government has informed the United States that it is prepared to negotiate a settlement with the Iranians which, if other conditions are met, will involve some form of nationalization. The Department of State has been informed orally by British representatives that this willingness to accept the principle of nationalization was conveyed to the Iranian Foreign Minister by the British Ambassador in Tehran on May 19.

The British Government has also informed the United States that it does not contemplate the use of force in Iran, without prior consultation with the United States, except in the event that it becomes absolutely necessary in order to protect the lives of British subjects.

B—Action Taken by the United States

1. The British Government has now come to the conclusion that the Iranian desire for nationalization of its oil resources cannot successfully be denied, and is willing to negotiate. It therefore appears to be in the national interest of the United States to support the British by all appropriate means. It has accordingly:

a. Urged repeatedly on the Iranian Government both in Tehran and through its diplomatic representatives in Washington the need for negotiation and has pointed out the great difficulties Iran would face in trying to operate the oil fields and refinery if the British company were removed. It has also stressed its strong opposition to the unilateral cancellation of valid contracts and attempts by the Iranian Government to settle a serious international controversy unilaterally. The Iranian Government has been told that this position does not mean that the United States opposes Iran’s desire for control of its own resources.

b. Made its position in this matter public through a release to the press on May 18.3

c. Stressed to the British Government the need for proceeding with caution and moderation.

2. With respect to the general situation in Iran, the United States has:

a. Instructed the American Ambassador in Iran to make clear to the Shah American support for him. This support will be demonstrated by concrete assistance in the form of continued economic, military and technical aid, and the Ambassador was authorized to inform the Shah [Page 101]in strictest confidence on the inclusion of a proposed economic grant to Iran in the forthcoming Foreign Aid Bill for Fiscal Year 1952 under the clear understanding that its availability depends upon Congressional action.

b. Accelerated its Technical Assistance Program under Point Four with an expansion of the locust control program mentioned in the previous progress report, the preparation of a malaria control program and the arrangement for the early dispatch to Iran of teams of rural improvement experts.

c. Maintained a neutral position towards the present government of Prime Minister Mosadeq. It is believed advisable, in view of the present highly emotional state of the Iranian people, for the United States not to oppose him publicly and at the same time take no action which could be construed as support for him, his Government, or his program.

d. Reiterated its policy that the continued independence and territorial integrity of Iran are of deep concern to the United States.

James E. Webb 4
  1. Source: National Archives, RG 273, Records of the National Security Council, Official Minutes 1947–1961, Box 13, 93rd Meeting. Top Secret. The report was sent by memorandum from Webb to Lay.
  2. Document 21.
  3. In a statement released to the press on May 18, the U.S. Government commented on the Anglo-Iranian oil dispute. “The United States wants an amicable settlement to this dispute, which is serious not only to the parties directly concerned but also to the whole free world,” the U.S. emphasized its neutral, though engaged position. To that end, the U.S. advised the British to recognize “Iran’s expressed desire for greater control over and benefits from the development of its petroleum resources.” To the Iranian Government the U.S. “pointed out the serious effects of any unilateral cancellation of clear contractual relationships which the United States strongly opposes.” The statement also underscored that the United States had attempted to impress upon the Iranian Government the technical aspects of the oil situation. “In this connection, we have raised the question of whether or not the elimination of the established British oil company from Iran would in fact secure for Iran the greatest possible benefits. We have pointed out that the efficient production and refining of Iranian oil requires not only technical knowledge and capital but transport and marketing facilities such as those provided by the company.” For the complete text of this statement, see Department of State Bulletin, May 28, 1951, p. 851. See also Foreign Relations, 1952–1954, vol. X, Iran, 1951–1954, pp. 56–57 (Document 23).
  4. Printed from a copy that bears Webb’s typed signature with an indication that he signed the original.