Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X

888.2553/10–1051

No. 112
Memorandum of Conversation, by the Special Assistant to the Secretary of State (Battle)

secret

[Washington,] October 10, 1951.

Memorandum of Secretary’s Conversation With the President

Following his return from the NSC meeting,¹ the Secretary met with several people in the Department and reported on his conversation with the President following the NSC. Mr. Lovett, Mr. Bohlen and General Smith were also present.

The Secretary told the President that we had concluded that the resolution to be submitted to the Security Council was one which we could support.² He said that he thought we were obligated to go along with the British on it, to vote for it, and to help in getting votes for it. He said that we thought we should let the British “call the shots” as to how they proceed, etc., although we might make suggestions to them. He pointed out that a defeat on the resolution might have serious effects on the British, and that similarly a victory might have serious effects as far as making it difficult for Mossadegh, but that we had decided we should support it and plan to do so. The President agreed that this was the proper course.

Apparently, information was given at the meeting at the White House to the effect that Mossadegh was most anxious to get a settlement of the oil problem and did not want a Security Council meeting to take place. The Secretary said that this information was authentic. He did not indicate the source of this information. He did say that he was inclined to think that the British should be told this.

The Secretary went on to say to the President that the entire Iranian matter was extremely complicated and serious, and that while we did not understand all of it, he thought there were two great points necessary in order to get a settlement:

1. The first question is whether the British have a chance of going back into Iran as an operator. The Secretary said he was convinced that Mossadegh would not yield on this point. He said he thought that the British were about reconciled to this, but that we must know from the British that this is true and that they do accept the situation.

2. The second question is who gets what from whom in regard to the financial aspects.

These questions lead into those of (a) compensation and (b) discount in the purchase of oil. These two questions ((a) and (b)) overlap somewhat. The Iranians should not result in doing better than Saudi Arabia has in its deal. Probably about a 50% split in profits is a reasonable result. One possibility is to simply split 50–50. Another way is to do it through discount so as to result in the British getting the equivalent of 50% of profits through purchase with discount. If the British are receptive, we could go ahead and try to move Mossadegh toward a 50–50 split.

Our plan is to go to the British and say we will support them in the Security Council on their resolution. We should point out that we think it better to keep the threat over Mossadegh rather than to force a vote when either a victory or defeat might do damage to the possibility of negotiating the problems. We should try to get the British to let us be “brokers” and try to get Mossadegh moving toward a 50–50 arrangement.

The President agreed to this. He could not see anything else that we could do. He thought it well to tell the British, as proposed, because he did not think it fair to operate without their knowledge.

Mr. Acheson said that during the meeting Mr. Lovett made certain suggestions which I did not entirely understand. The proposals were rejected on the ground that they resulted in several things which we did not want to happen, such as building up refinery capacity in Iran, etc.³

1. The 104th meeting of the National Security Council on Oct. 10, presided over by President Truman. At this meeting the Council discussed the Iranian situation after an oral report by Secretary Acheson. (NSC Action No. 500; S/P–NSC files, lot 62 D 1, “NSC Actions”) No record of Secretary Acheson’s report has been found in Department of State files; however, on Oct. 10, Rountree and Kitchen prepared a summary of the events since the last briefing of the Council on Aug. 22, and transmitted it to Secretary Acheson under cover of a memorandum from McGhee for use in his briefing of the Council on that day. (Memorandum by McGhee, Oct. 10; 888.2553/10–1051)
2. See Document 110.

3. On Oct. 11, McGhee transmitted to Holmes, who was in Washington for consultations, a memorandum summarizing this memorandum of conversation and instructing Holmes as follows:

   “In connection with your discussion of this matter with the British in London, it should be made clear that the talks which we have had with Dr. Mosadeq up to this time were motivated by Dr. Mosadeq himself, following my courtesy call on him. It should also be made clear that we have no commitment from him, and any reference to what he has told us is on a completely Secret basis. The most encouraging aspect of these talks is the fact that he appears sincerely to want a settlement. He also indicated that he believes that the chances for a settlement will be seriously impaired if the Security Council acts on the resolution; that he is anxious to obtain a delay in Council action pending efforts to find a settlement; that he prefers discussions with US representatives at this juncture rather than direct negotiations with the British; that, if the resolution is tabled, he would be willing to defer negotiations until after the British elections, recognizing the difficulties which would be involved in direct talks before then.

   “You will recall that in the discussions at the Secretary’s residence last evening Ambassador Franks outlined what he considered to be the primary British interests in the matter. These were (a) that Iran have a stable government, (b) that the British have access to the oil in large quantities; (c) that provisions be made for the efficient operation of the industry, (d) that the pricing arrangements be satisfactory, and (e) that satisfactory arrangements be made for compensation.” (Memorandum, Oct. 11; 888.2553/10–1151)