121. Memorandum From the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Byroade) to Secretary of State Acheson1
- Recommended Change in United States Policy Towards Iran
To determine the policy to be followed by the United States in the light of recent developments in the Iranian situation.
On August 30, 1952 there was formally delivered to Dr. Mosadeq a joint message from President Truman and Prime Minister Churchill containing proposals for action by all three governments to bring about an “early and equitable solution” of the oil dispute (Enclosure No. 1).2 These proposals were based upon British and American reappraisals of the situation in Iran and represented certain basic changes in British and American attitudes towards solving the oil dispute which is the prime factor for instability in Iran.
British policy had previously been based on assumptions that economic and political pressures on Iran, following the nationalization of the AIOC concession, would bring to power a conservative government which would then reverse the policies of Dr. Mosadeq. After nearly a year and a half of waiting, the first of these assumptions was proved to be correct. The Mosadeq government fell and the conservative Ahmad Qavam was appointed Prime Minister. The second assumption, however, proved to be less sound. Qavam’s first and only public declaration expressed hostility to previous nationalist policies in [Page 338] Iran and assured the world that the oil dispute would soon be ended on reasonable terms. There was an immediate public reaction to this announcement which approximated a revolt in Tehran. The Shah’s indecisiveness and communist agitators contributed measurably to the violent outbreak of July 21 against Qavam but reflective reports from the Embassy ascribe to nationalist, predominantly middle-class, organizations the main force in the anti-Qavam demonstrations. The utter failure of the Qavam government has been taken as evidence that no Iranian politician can hope in present circumstances successfully to moderate extreme nationalist demands. Apparently the British Government, observing the rise and fall of the Qavam government, realized that its policy should no longer be based upon the expectation that a “more reasonable” government would arise to settle the oil dispute.
American policy toward Iran was also reviewed following the restoration of Dr. Mosadeq and his nationalist colleagues to unquestioned dominance in Iranian affairs. It had been generally assumed that Dr. Mosadeq would welcome settlement of the oil dispute if certain legitimate Iranian national aspirations were taken into consideration. The United States had maintained, since nationalization of the British oil concession in Iran, a position as moderator, constantly seeking to bring both disputants forward to some middle ground. After the events of July 21, it was recognized that the Iranians could not realistically be expected to move far forward from their rigid adherence to the terms of the Iranian nationalization law. The U.S. Government, therefore, felt it advisable to join the British who were willing to make substantial concessions in the dispute to present proposals which appeared to meet the outstanding objections of the other side.
On July 31, an Aide-Mémoire3 was handed by the Secretary of State to the British Ambassador suggesting that the United States Government would be willing to join in a joint approach to settle the oil dispute along the following lines:
1. The United States will make an immediate grant of $10 million to the Iranian Government.
2. The AIOC or some other agency designated by the British Government will purchase from Iran all of the oil products presently held in storage by the NIOC at commercial Persian Gulf prices less an appropriate discount.
3. On the basis of the proposal discussed between Dr. Mosadeq and the British Chargé in Tehran on July 25, it would be agreed that an arbitral commission consisting of three persons should be set up immediately to consider the question of compensation. Neither the American [Page 339] grant of $10 million nor the start of British oil purchases would be held up pending the commencement of the arbitral procedure.
4. Negotiations looking toward a more permanent arrangement for the distribution of Iranian oil should be undertaken promptly.
Before a British reply could be received to this Aide-Mémoire another element was injected into the situation by the publication of an Iranian Government Note to the British Government, dated August 7. In this provocatively phrased document the Iranians demanded immediate payment of certain funds which they claimed were owed them by the British Government and the AIOC and declared a readiness “to enter into discussions with the representatives of the former AIOC . . . to look into the legitimate claims of the company within the nationalization law and also to look into the claims of the Iranian Government.” The note added that if direct discussions were not satisfactory to the AIOC, the company could “present its case in the competent Iranian courts.”
The British reaction to our Aide-Mémoire was, at first, not very encouraging and revealed a continuing unwillingness to face what we considered to be the realities of the Iranian situation. A message from the Secretary to Mr. Eden on August 12 reviewed in some detail the United States understanding of the Iranian situation, emphasizing the necessity for meeting the psychological and political issues of the dispute.
On August 20 a message was received by the President directly from Prime Minister Churchill, then acting as Foreign Secretary in the temporary absence of Mr. Eden.4 Mr. Churchill proposed that a joint message from him and President Truman be sent to Prime Minister Mosadeq suggesting that “If you Musaddiq will do (A), (B), and (C), we two will do (X), (Y), and (Z).” The subsequent conditions for settlement which the British Government put forward were carefully studied and were found to meet generally the United States view that Dr. Mosadeq might find it possible to accept a simple but rather vague basis for negotiations to settle the oil dispute. In their essence, the proposals provided for international arbitration of all claims and counter-claims and required the AIOC to open discussions on a purely commercial basis for the purchase and marketing of Iranian oil. Furthermore, immediate sums were to be made available to the Iranian Government to cover its budgetary expenses for the interim period until Iranian oil began to flow again to world markets. It was believed that the three fundamental Iranian demands were met (a) through the imposition of no conditions for the return of foreign technicians to Iran or foreign man[Page 340]agement, of the oil industry, (b) by the recognition of the fact of nationalization, and (c) providing that AIOC should not be the sole purchaser of Iranian oil.
The reaction of the Iranian Government has not yet been finally and officially determined. Prime Minister Mosadeq in his private conversation with United States Ambassador Henderson and British Chargé d’Affaires Middleton declared the proposals flatly unacceptable. During the week which followed delivery of this message, Dr. Mosadeq became more moderate in his view of these proposals. It is believed that the public clarification of certain aspects of the proposals by the Secretary and Mr. Harriman helped to create growing feeling among Iranian leaders that the proposals should be given more careful consideration. In face of this weight of opinion, Dr. Mosadeq issued a press statement (Attachment No. 2)5 which attempted again to cloud the issues in the dispute and placed him in his usual position so that he could assert his sponsorship of almost any resolution which Parliament passes in response to the joint US–UK proposals.
In attempting to understand the reasons for Dr. Mosadeq’s immediate emotional revulsion when presented with the joint message it is useful to keep the following points in mind:
1. Dr. Mosadeq has long enjoyed the advantages of confidential bedroom diplomacy. During his Premiership he has on numerous occasions privately given vague assurance of a willingness to settle the oil dispute on reasonable terms but, when confronted with British willingness to attempt to meet his demands as understood, he has either flatly denied his previous assurances or has asserted that he could make no commitment without Parliamentary approval. Publication of the joint US–UK proposals forced Dr. Mosadeq into the open. In rejecting the proposals he must publicly describe his reasons and his true position.
2. Dr. Mosadeq and most Iranians believe that the United States and the United Kingdom are at odds in Iran and that Americans have even encouraged, secretly of course, Dr. Mosadeq’s policies of driving out the British from Iran. There are numerous indications that Dr. Mosadeq has long had the belief that whether he settles the oil dispute with the British or not, the United States Government, for strategic considerations, will break with the British rather than allow Iran to fall into communist hands. The fact that President Truman joined with Prime Minister Churchill in public support of the proposals of August 30 must have disabused Dr. Mosadeq of his belief that the US and UK were on the point of splitting on the Iranian issue.[Page 341]
3. Dr. Mosadeq has continually declared to the world that the only factor preventing an early settlement of the oil dispute was British insistence on forcing Iran to accept a British oil concession in contravention of Iran’s legitimate national rights. By keeping secret most of the previous negotiations to achieve settlement of the oil dispute, Dr. Mosadeq has been able to maintain a position in Iran and before much of world opinion that he is a sort of George Washington fighting in the cause of independence to keep the British imperialists out of Iran. The proposals of August 30 clearly contain nothing which would reflect on Iran’s independence or limit its freedom of action. The oil dispute, therefore, has been removed from the fanciful realm of a “war of independence” to the status of a commercial squabble. It has now become publicly apparent that Iranian bargaining for the maximum benefit to be gained from nationalization of the oil industry has been a major element in preventing settlement of the oil dispute.
4. The search for “middle ground” in the oil controversy was based on an assumption that both sides ultimately would welcome settlement of the dispute on equitable terms. There is now real doubt whether Dr. Mosadeq has any real intention of settling this dispute with the British. The political advantages to be derived from the anti-British emotions inflamed by the dispute and Mosadeq’s personal satisfaction of thwarting the British may keep him from ever settling on any terms with the AIOC.
- Source: National Archives, RG 59, GTI Files, Lot 57 D 155, Box 44. Secret; Security Information. Drafted by Stutesman and sent through Matthews. Printed from an uninitialed copy.↩
- See Foreign Relations, 1952–1954, vol. X, Iran, 1951–1954, pp. 455–458, 461–469 (Documents 207 and 209–214).↩
- Ibid., p. 429–430 (Document 194).↩
- See ibid., pp. 447–449 (Document 203).↩
- Attached but not printed.↩
- Drafted September 10 by Stutesman.↩
- Although there is no indication in the source text, the portion of the document from this point, until “Conclusions,” appears to be an earlier draft of the preceding three paragraphs.↩
- Underscore and query in the original.↩
- See footnote 2 above.↩
- This word is struck through in the original.↩