57. Telegram From the Department of State to the Embassy in the United Kingdom1

2732. Dept disturbed at action suggested by Brit Emb Tehran (Tehran’s 1984 Nov 28 rpt London 414)2 and approves reply given by Henderson to Middleton. It seems to us requesting Shah at this particular moment to dismiss Mosadeq is doomed to failure; Mosadeq now at peak popularity and cld in test of strength probably overthrow Shah rather than vice-versa. Such an approach therefore, by virtue of position in which it wld place Shah, might turn him against Brit.

In view of joint appraisal recently recd from US and UK Embs Tehran,3 Dept surprised Brit still believe solution of their problem in Iran is simply to get rid of Mosadeq (urtel 2537 Nov 28).4 Even in unlikely event this shld succeed, Dept cannot rpt not see how any successor Govt cld adopt more moderate policy for some time to come. To stay in power or even to stay alive, new PriMin in our opinion cld not rpt not retreat substantially from Mosadeq’s nationalization policies.

Brit Emb approached Dept Nov 28 on instrs from FonOff and expressed great interest in IBRD proposals (Deptel 2713 Nov 28)5 although proposal as put to Brit apparently contains substantive variations from that conveyed to us, particularly as regards participation Brit in Iran oil industry. Brit asking US take no action with respect to US aid programs in Iran which might harden IranGov towards proposals now being refined by Bank. Tehran’s 1985 Nov 28 reports Mosadeq also [Page 164] very interested in IBRD proposal.6 While obstacles pointed out in Deptel 2713 still appear great to us, we are encouraged by attitude shown by both parties. Shld Mosadeq learn as is inevitable of any Brit attempt to have Shah dismiss him, he certainly will not rpt not be amenable to any suggestions for solution put forward by Bank or anyone else, and will see to it that any successor govt cld not rpt not accept any overtures of this nature.

Accordingly we believe you shld discuss matter frankly with FonOff pointing out while we sympathize with Brit position, our analysis is that contemplated Brit course of action not only unlikely to produce any basic improvement in USUK position in Iran but in present atmosphere prevailing there, it contains serious dangers. We firmly believe Mosadeq’s fall and replacement by suitable alternative must come about primarily as result internal polit and econ forces. Iran crisis has arisen in large part out of years of bitter resentment on part Irans against exactly sort of tactics Middleton is proposing.

While we agree change of govt or change attitude present govt essential if long-range solution is to be found, we cannot escape conclusion Iran people are solidly behind Mosadeq and any attempt by Brit to have him dismissed wld in all probability result in further removal Brit from Iran picture. It might also precipitate situation in Iran leading to assumption of power by Commies or by extremists of MakiKashani type who will not hesitate make deal with Communists.

If, despite above, Brit feel they must proceed with this course of action, we will of course not rpt [not] stand in their way. If asked by Shah for statement US position following Brit representations, we wld take line suggested by Henderson and tell Shah while we felt Mosadeq leading his country to disaster and change seems necessary, it is decision he himself must make and US wld not feel we cld press him one way or the other. You shld urge Brit not to press Shah take any action which he in his own judgment thinks inadvisable.

In view Tehran injunction not discuss with Brit Tehran’s 1984, wld apprec Henderson indicating to London Dept and Rome his views re Gifford informing FonOff source our info. If London Emb representations wld involve serious breach confidence, Henderson shld take above line with Middleton and request him convey our views London FonOff.

Webb 7
  1. Source: National Archives, RG 59, Central Files 1950–1954, 788.00/11–2851. Top Secret; Security Information; Priority. Drafted by Ferguson, cleared in EUR, and approved by McGhee. Repeated Priority to Rome for Secretary Acheson and to Tehran.
  2. Document 56.
  3. See Document 55.
  4. Not found.
  5. Telegram 2713 to London, November 28, was also sent as telegram 1102 to Tehran, printed in Foreign Relations, 1952–1954, vol. X, Iran, 1951–1954, pp. 287–288 (Document 134). The telegram describes the proposal of the IBRD for participation in a solution to the oil dispute. IBRD Vice President Robert L. Garner told Department officials that the proposal contained three basic points: (1) The Bank would arrange for an American or Dutch group to operate the oil fields and refineries. (2) The petroleum would be sold “free on board”, i.e. at the cost of the commodity and not the cost of insurance or freight, internationally through established British channels. (3) The oil would be sold at a 33.5% discount with the Bank and the Iranian Government splitting the remaining revenues on a 50–50 basis. The Bank would then use its portion of the revenues to pay the operating costs of the Abadan fields and refineries. The Department reacted to the proposal with skepticism because it was felt Mosadeq would not wish to accept any British participation in the plan, a 33.5% discount would still make Iranian oil too expensive, and Mosadeq would not likely accept a 50–50 revenue sharing plan.
  6. See ibid., pp. 288–291 (Document 135).
  7. Deputy Under Secretary Matthews initialed for Under Secretary Webb, who was Acting Secretary.