888.2553/10–551: Telegram

No. 105
The Ambassador in Iran (Henderson) to the Department of State 1

top secret

1295. 1. I have just returned from discouraging two-hour conv with Mosadeq. My visit was at his request. In early part of our conv he was outspokenly critical of US for support Brit position against Iran by voting to place oil dispute on agenda SC.2 He did not seem much impressed by my arguments that US by so voting had not taken sides, but had merely taken position both parties shld have opportunity explain their respective points of view.

2. Essence what Mosadeq had to say to me was as fols:

It was his intention when he appeared before SC to state nationalization of Iran oil industry internal affair Iran and not one for consideration by SC; Iran prepared to compensate AIOC for amount damages minus Iranian counterclaims; Iran willing pay cash so far as possible from its various foreign currency assets for damages and if insufficient cash available to pay balance when able to do so; Iran, however, wld not permit any foreigners to operate Iranian oil industry in order to produce profits to pay compensation.
Iran wld never again permit any foreign company or any foreigners to operate or work in Iran oil industry on profit basis; Iran had learned its lesson that when foreigners work on profit basis there is irresistible temptation for them to interfere in internal affairs for purpose making sure their profits wld continue or to obtain larger profits.
Further Iran wld not permit any Brit org to operate Iranian oil industry or to work in Iran in connection with oil on a payment-for-service basis. Iran of opinion that in view all that had passed it wld be extremely difficult for Brits, even though employed with fixed remuneration, to keep out of Iran politics. Brits wld be sure endeavor prevent Iran Govt from exercising its auth over Brit org employees.
Iran Govt preferred that foreign technicians, Brit or otherwise, who might be employed in Iran oil industry work for Iran company under individual contracts. It might, however, in certain circumstances and for certain purposes, consider employment on basis contract of org not of Brit nationality nor under control Brit nationals.

3. Mosadeq spoke with so much determination that I now have little hope left that it will be possible for an arrangement to be effected [Page 204] between him and Brits which wld permit Brit company to operate again in Iranian oil industry. Stutesman, who was with me during conv and who had sat in during various previous convs between Mosadeq and Grady, tells me that it seemed to him Mosadeq was more frank in disclosing his uncompromising attitude than hitherto. In light this intransigent attitude, I believe Shah’s remarks to me yesterday (Embtel 1283 Oct 43) shld be discounted; I fear Shah as well as Ala have indulged in wishful thinking.

4. I shall not burden Dept this tel with account my efforts persuade Mosadeq of advantages to Iran and to world peace of his taking position which wld render it possible for agreement to be reached with Brit. I stressed internal and external pol and econ factors; I endeavored point out dangers involved and security to be gained. I regret what I said seemed have little effect on him. He merely tried to impress upon me up to the end our conv that if the US shld continue appear to support UK position while Russians supported that of Iran, Russian popularity and influence wld increase at expense of West. He said, “I know mentality of my people, and whether we like it or not, Russian popularity is rising in Iran”.

5. At one point Mosadeq referred to rivalry between US and Russia in Iran. I interrupted to tell him US did not consider itself rival of Russia in Iran and indicated that if there were any rivalry it was between govt and people of Iran and those of Russia as to who wld hold sovereignty over Iran and that US was merely trying to give support to govt and people of Iran in this contest. His answer was that Iran wld just as soon lose its independence to the Russians as to the Brit. He said that during one of his convs with Harriman, the latter had stressed that acceptance of Stokes proposal wld make it possible for Iran to receive large income from its oil. His answer to that has been that Iranian liberty was not for sale.

6. He said he wld appreciate it if I wld present his views as precisely as possible to my govt. This I promised to do.

  1. Repeated to London and the U.S. Mission at the United Nations.
  2. On Oct. 1 the Security Council voted 9–2 (Yugoslavia and the Soviet Union opposing) to take up the Iranian question as requested by the British, and decided to postpone its discussion until Oct. 11.
  3. In telegram 1283 Henderson reported that he had lunch with the Shah who, inter alia, stated that he was convinced Mosadeq was not only willing to resume negotiations with the British but also to come to some understanding with them. (888.2553/10–451)