Conference files, lot 59 D 95, CF 96

No. 120
Memorandum of Conversation, by the Secretary of State1

secret

Subject:

  • Iranian Oil Situation

Participants:

  • Mr. Eden
  • British Ambassador to France, Sir Oliver Harvey
  • Secretary Acheson
  • Ambassador Bruce

At this point, I raised the question of the proposed solution of the Iranian oil problem.

Mr. Eden’s view was that the proposal2 was totally unacceptable to the British Government, that the matter was being considered today in a Cabinet meeting, and that probably we were going to be told that they were not going to accept it.

At the outset of the discussion on Iran, I said the fundamental trouble between the US and UK Governments came from different appraisals of the facts from different reporting. I had tried to establish with Mr. Morrison the principle that our Ambassadors would exchange views, if possible, coordinate their views, and, if they could not coordinate their views, copies of their reports would be available to the two foreign offices. I said that, although Mr. Morrison had appeared to agree with this, it had never occurred. I asked Mr. Eden if he would issue instructions that it would now occur. Mr. Eden said that he would do so at once. On my expressing some skepticism about this, he said that it would occur. I think it is most important, therefore, that Ambassador Henderson should be requested to confer with Mr. Middleton and be prepared to repeat his reporting telegrams to us to Ambassador Gifford for transmission to the British Foreign Office.

At the conclusion of our discussion of this subject, the question of the time factor arose. I said that I thought this should be divided into two aspects.

The first one was the importance of our being informed at the earliest opportunity—I thought that meant during the current week—as to whether the British Government would or would not [Page 257]enter into discussions along lines that we were proposing. If their attitude should be adamant against any such proposal, we should know it immediately. Otherwise, our position with Mossadeq would be impossible. Mr. Eden said that this was a very fair statement, and I believe that he will carry this out.

The second aspect of time was that within which an agreement with Mossadeq might be reached on the supposition that the British were prepared to negotiate. I said that I thought this meant that, provided we were told that we could encourage Mr. Mossadeq during the current week, we might have another ten days or two weeks to work out the troublesome problems.

On the merits of the question, it was clear that the final judgment depended upon different evaluations of the situation.

Mr. Eden stated that our view was that the only alternative to Mossadeq was Communism, which he did not believe to be the fact. He thought that things took a long time to happen in Persia and that, if Mossadeq fell, there was a real possibility that a more amenable Government might follow.

I said that I thought that the analysis had to be much more specific. If we assumed that all negotiations were halted, that the US supported the British completely, gave no support to Iran; that together we prevented any sale of Iranian oil, the resulting situation might be a collapse of the army and the gendarmérie, general assassinations by the Moslem brotherhood, and a rapid movement toward the Tudeh Party’s taking over.

Second, I thought the US Government would find it very difficult to take this position. If we gave some support to the Government and if the Government was able to sell some oil, it was quite possible that disintegration could be prevented. Great friction could then arise between the British and ourselves and very great trouble could arise to our whole oil position in the Middle East. I did not believe that Mr. Eden could rely upon our sitting tight, laying off the Iranians unless the Iranians themselves rejected a proposal which was in our judgment eminently reasonable.

When we discussed the details of the proposal, Mr. Eden centered on two points—the elimination of the British company and technicians and price, which he thought would upset all foreign oil concessions in the Middle East.

On the first point, I told him that I thought it was fundamental to any settlement that the Anglo-Iranian Company or any British company could not be permitted in Iran. So far as individuals were concerned, I thought that was capable of negotiation. On his point that this was an impossible position for him to present to Parliament, I thought this might be dealt with in such a way that it was not an exclusion of the British, but a change of legal ownership [Page 258]and a retention by Great Britain of the major elements of British interest; i.e., control, distribution, etc., of the oil.

On price, he thought that we were destroying the 50–50 arrangements. It soon developed that he had no knowledge of this situation.

The only alternative which Mr. Eden proposed at any time in our discussions was that Mossadeq should be allowed to go back to Iran with no agreement and that this might have a healthy effect upon producing a more favorable offer from him or some other government. I said that such a view filled us with the greatest apprehension and urged that we have further talks before the British came to such a conclusion. Our conclusion was that he would ask Lord Leathers and the Chancellor of the Exchequer to come to Paris to go into this whole matter with Mr. Linder and me before the British Cabinet reached a final conclusion. I said that I would be glad to meet with them at their convenience.

At one point in the discussion, I said that if we were authorized by the British to make a proposal on a fair price, which was rejected by the Iranians, we then agreed with the British that we should break off and let Mr. Mossadeq go home.3

Dean Acheson
  1. This conversation took place on the night of Nov. 4. For another account of this and the following discussions on Iran in Paris, see Anthony Eden, The Memoirs of Anthony Eden: Full Circle (Boston, 1960), pp. 217–225. Regarding the activities of Secretary Acheson in Paris and Rome during November, see the editorial note in Foreign Relations, 1951, vol. iii, Part 1, p. 1312, concerning the meetings of the three Western Foreign Ministers.
  2. Transmitted in telegram 2256, supra .
  3. Secretary Acheson reported on this conversation in Actel 4 from Paris, Nov. 4. (888.2553/11–551) The same day Webb took a copy of Actel 4 to President Truman, who expressed concern that the British did not appear ready to take the action which the United States believed was necessary. (Memorandum of a meeting with the President, Nov. 5; 888.2553/11–551) According to Eden’s report to the Foreign Office, Secretary Acheson told the British Foreign Secretary about the U.S. concern that Iranian oil might fall into Soviet hands, repeated that the United States could not let Iran collapse, and stated that it would have to lend Iran money if no agreement were reached on oil. (British telegram 457 from Paris, Nov. 5; Tehran Embassy files, lot 59 F 17, 350 Iran)