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

888.2553/11–951

No. 126
Memorandum of Conversation, by Colonel Vernon Walters¹

secret

Washington, November 9, 1951.

Present:

• Prime Minister Mossadegh
• Assistant Secretary McGhee
• Mr. Paul Nitze
• Lt. Col. Walters

Mr. McGhee opened the conversation by stating that he understood Dr. Mossadegh had been very busy. He had seen Col. Walters 4 times that day.² Mr. McGhee then asked whether Dr. Mossadegh had talked to Mr. Gaston of the Export-Import Bank.³ Dr. Mossadegh said that he had and indicated that the interview had been a satisfactory one. He said that he was having the competent persons from his group contact Mr. Gaston on Tuesday.

Mr. McGhee then indicated that we had been sounding out the British simultaneous with the Iranians to see whether we could arrive at a basis for making concrete proposals. These soundings had indicated that the positions of the two parties were so far apart that we did not think that, in the limited time the Prime Minister could stay in Washington, it would be possible to close the gap between them. Mr. McGhee said that we regretted our inability to close this gap, but that it arose from his position on several points. The British regarded his refusal to accept British technicians now as a retrograde step from his previous position of willingness to accept them. On the question of price, there were also difficulties. We did not feel that we could recommend a price which we knew would not make the oil competitive. Likewise, on administrative arrangements and British participation, there was a great deal of difference between his position and that of the British. The matter of compensation to be worked out properly, likewise would require a great deal of negotiation. We were sorry to lose the opportunity of being able to talk to him personally here, but we felt that, at the present juncture with his position being what it was, we did not feel it was sufficient to bridge the gap to the British position.

Dr. Mossadegh replied that he had thought that other matters might be worked out, leaving price for the end, because agreement without price was not an agreement. Likewise, if no agreement were reached on the other matters, there would equally be no agreement. He said that the Iranians had been willing to keep the British technicians until the British had compelled them to expel British technicians. No one in Iran would be willing to have them back. He said that he had tried to be reasonable but that the British did to want to negotiate with him. They wanted time for economic pressures to make themselves felt. This was a grave error on their part. His Government would not be succeeded by a government more amenable to British desires but by a government more amenable to the Soviet Union. Dr. Mossadegh indicated that as far as he was concerned, the breakdown at this point ended possiblity of further negotiations with the British. The people supported him and would never yield to British economic pressures. He said that pressure on his government would never persuade it to change its position. The probabilities were that we would have to do in Iran what we had already done in Korea. Mr. Nitze said that while we were fighting in Korea in defense of freedom, there had been applied to us the pressure of the cutoff of Iranian oil. Dr. Mossadegh said that all we had to do was to come and get the oil, and there would be no cutoff of it. All the Iranians asked was for us to come in and help them run the oil business. Mr. Nitze pointed out that the oil was not needed in the United States, but by the former consumers. The Prime Minister said he had always been willing to furnish the former consumers. He said that he had tried not to be unreasonable, that the petroleum had been nationalized in order to prevent the Russians from getting a foothold in the North.

Mr. McGhee indicated that he did not see any advantage in hashing the thing over and trying to fix blame. Perhaps in the future, Dr. Mossadegh might think of something that would permit re-opening negotiations. After all, the primary responsibility for this lay with the British and the Iranians, as the dispute was between them, but we would always be glad to offer our good offices. The Prime Minister replied that if an agreement had not been reached here, it was because the British did not want one, and there could never be a settlement directly between the British and the Iranians. That is why they had hoped for United States intervention in the matter. He said that the United States Government did not want to irritate the British. This, he could understand, but nevertheless, he felt that world peace should take priority over this feeling, and world peace was endangered by the situation in Iran.

Dr. Mossadegh said that it was his duty to take every step he could and make every effort in the critical situation in which his country found itself. On the following day, he would write the President a letter asking for help. He recalled the President’s expressed desire to see Iran’s independence maintained. This could be done in one of two ways, either by achieving a settlement, or by helping Iran temporarily. In his letter, he would ask the President to help Iran by an advance—not a gift—to meet current operating expenses of the government. Mr. McGhee pointed out that this was rather difficult as Congress was not in session at the present time. Dr. Mossadegh said he would not want to go into the procedure of this matter. The President had certain flexibility in foreign aid funds. He could either accept the Iranian request or refuse it, but for the record and for history and his conscience, he must make this appeal, because only in this way could the President’s expressed desire for the preservation of Iran’s independence be achieved. Mr. McGhee asked whether the Prime Minister had any idea of the amount or wished to discuss the question. The Prime Minister said that he was thinking in terms of $10 million a month, or $120 million for one year. He was not asking for a grant; it was a loan which he intended to repay and he would guarantee the first revenue from oil in payment of this loan.

Mr. McGhee asked whether this could be done through conversation instead of by letter. The Prime Minister said he must write the letter. He would transmit it through Mr. McGhee. Mr. McGhee then asked if he could see Dr. Mossadegh on the following day. The Prime Minister said he could. He would write the letter and show it to Mr. McGhee on the following day at 5:30 p.m.⁴

The Prime Minister then spoke of the question of lubricants on which he had made a request. He then asked for Mr. McGhee’s help in this matter. Mr. McGhee said he would talk to the proper people on the following day.

The Prime Minister then spoke of his intention to draw $8 million from the International Monetary Fund. They had accepted the application and all he wanted was help in speeding the availability of the funds. Mr. McGhee indicated that he was sorry to see Iran withdraw this amount as it was a cushion and symbol of Iran’s actual participation in the IMF. He then told the Prime Minister that the new Administrator of the Point IV program in Iran had been sworn in that day. The Prime Minister said he was seeing him the following morning at 10:00 a.m.⁵

Mr. McGhee expressed our earnest regret that we would not be able to help in solving this problem. Dr. Mossadegh said he too regretted it, but that if we could help him over the present difficulties, perhaps in two or three months the British would repent and the Iranians would repent and then they might be able to work out something. He said that he was most grateful to the United States and to Mr. McGhee for all they had done to try and help in attaining a solution. The United States had acted in a completely disinterested fashion with its only interest being preservation of peace and security. This he would say publicly and he would likewise say it in writing. He would also tell this to the people in Iran when he returned. He reiterated his gratitude to the United States several times. The Prime Minister then indicated that he would make his speech before the National Press Club on the 13th and leave for Iran on the 15th of November. He hoped that he would have some answer to his letter to the President by then.⁶

1. The meeting took place at 6:30 p.m. on Nov. 8 at the Shoreham Hotel.
2. Mosadeq saw Walters alone at 9 and 11:30 a.m., at the meeting with Gaston referred to in footnote 3 below, and at the meeting with McGhee described in this memorandum. Records of the first two meetings with Walters are in file 888.2553/11–851.
3. Gaston and Mosadeq met on Nov. 9, presumably between the meeting with Walters at 11:30 a.m. and the one with McGhee at 6:30 p.m., and discussed the Export-Import Bank loan to Iran. Gaston told Mosadeq that the Bank wanted an official indication that Iran accepted the loan. (Memorandum of conversation, Nov. 8; 888.2553/11–851)
4. The record of Mosadeq’s conversation with McGhee on Nov. 9 does not indicate anything further about this letter being shown to McGhee. A copy of the letter, dated Nov. 9, in which Mosadeq reviewed the Iranian position on the oil dispute since the nationalization law, accused the British of procrastinating on a settlement, and asked President Truman for immediate financial assistance to ease the economic crisis in Iran, is in file 888.2553/11–951. A memorandum of Mosadeq’s conversation with McGhee on Nov. 9, which records the details of the Prime Minister’s preparations for leaving Washington, is in file 888.2553/11–951.
5. William E. Warne, Point IV Administrator for Iran, talked with Mosadeq on Nov. 9 and indicated that $23 million was available for projects in Iran. Mosadeq showed considerable interest in this and asked that Warne write him a letter informing him that this appropriation had been voted and that the funds were available. (Memorandum of conversation, Nov. 9; 888.2553/11–951)
6. The substance of this memorandum of conversation was transmitted to Secretary Acheson in Paris in Telac 21, Nov. 9, 7:22 p.m. (888.2553/11–951)