888.2553/11–1051: Telegram

No. 129
The Secretary of State to the Department of State1

top secret

2808. Eyes only McGhee, Matthews, Nitze, from Secretary via Linder to McGhee. In the light of my talks with the Brit in Paris, on Iran, I think that the attitude of the present govt in England toward Iran is different from or at any rate clearer than that of its predecessor. It is certainly different from the first assumption of the joint appraisal from Tehran, dated Nov 6,2 and from some of the statements made in Wash’s 2837 of Nov 9.3 This attitude extends all through the govt from the Prime Minister to the civil servants. It starts from Churchill with the roar of a wounded lion, [Page 279] becomes more articulate with Eden, as he remembers twitting the Laborites for weakness during the campaign, and is fully rationalized by the civil servants, as fols:

Brit stands on the verge of bankruptcy, as the Chancellor last week told the House. Despite the ravages of wars and post-war periods, Brit still retained important overseas interests and the invisible items in her balance of payments are of overwhelming importance to her. Without them she cannot survive. Mosadeq’s seizure of the AIOC properties and concessions were a serious blow. But they were a loss which Brit can stand. Refining capacity can be built elsewhere. Iranian oil is not essential, and, with firm support from her friends, Brit can recover from this blow.

But Brit cannot recover from the course of action which wld destroy the last vestige of confidence in Brit power and in the pound. If it shld be believed abroad that Brit wld acquiesce in the despoliation of Iran and even cooperate to make that despoliation profitable to the Iranians, she wld have no properties left within a few months—and, indeed the same wld happen to all Western investments.

Therefore, in my judgment, the cardinal purpose of Brit policy is not to prevent Iran from going Commie; the cardinal point is to preserve what they believe to be the last remaining bulwark of Brit solvency; that is, their overseas investment and property position. As one of the Brit said to me, “what these people believe is that, if your appraisal of the Iranian situation is correct, then the choice before you is whether Iran goes Commie, or Brit goes bankrupt. I hope you wld agree that the former is the lesser evil”. Therefore, they will accept no settlement by which (a) it cannot be plainly shown to everyone that Mosadeq has not profited over rulers who abide by their contracts, or (b) by which Britain is humiliated and discriminated against. It is for this reason that it is impossible to induce the Brit to accept the exclusion of Brit companies and Brit citizens in favor of a Dutch operation. It wld be like asking us to step aside in favor of Guatemala.

It is for this reason that they attach so much importance to the suggestion that Amer interests shld participate in some solution. This, I am sure, is based upon two points: (1) That our participation in any settlement wld raise the prestige of the settlement and the participants; and (2) that the introduction of an Amer company into the situation wld prevent any action being taken except what our and the Brit oil companies wld regard as in their interest. The Brit do not believe that Iran is close to disaster. They believe its standards are so low that it will take a long time dying. And, therefore, they are prepared to take risks which we think very reckless, partly because they do not believe that the risk is very [Page 280] great, and partly because they do not believe that the danger risked is as great as the danger invited by taking a conciliatory action now.

These attitudes are very firmly held, and, in my judgment, there is not the faintest possibility of getting the Brit by any sort of argument to change their attitude during the few days when Mosadeq remains in New York. Indeed, I believe that their main purpose now is to leave us without any bargaining material until Mosadeq gets away. Amb Gifford was told by Mr. Eden after our last conference that just before it “the old man” had telephoned him and told him not to yield an inch.

For another reason, also, it is impossible to alter the Brit attitude quickly. The new ministers are depressingly out of touch with the world of 1951, and they are being advised by the same officials who have allowed the govt to follow the AIOC meekly into disaster. Of course, these officials continue the same arguments and the same analyses. The ministers admit that they know nothing about the facts and must rely on the officials.

The circle is complete. The only thing which is added to the Labor party attitude is a certain truculent braggadocio. They have not been returned to office to complete the dissolution of the empire.

In one respect I think both the Dept and Mosadeq misconceive the Brit attitude. It is not merely that they believe that by not dealing with Mosadeq and by allowing Iran to suffer the consequences of its actions, a new govt may be installed which wld give them a better agreement. It is that they wld not, as presently advised, make the agreement as proposed with any govt whether Mosadeq or his successor.

Therefore, I do not see any purpose in my attempting to get out of Eden some counter-proposals within the next three days. I know that they will not be forthcoming.

Harriman and I are to see Eden on Tuesday evening.4 He is speaking in the UN on Tuesday. We shall talk with him very frankly. We have already indicated to him that the inability to reach a settlement will raise the very questions which the Dept now raises. We will tell him that we propose to recommend some supporting action. I propose to point out that he is putting responsible Amer officials in an impossible position.… And I hope in due course we can make some impression, but we cannot do it in three days, and there is no use trying. It will only make matters worse and they are bad enough already. If, indeed, it is the last chance, then we must face that.

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We believe, as a last extremity we shld help the Govt of Iran. It shld, however, not be done now; and before it is done, it shld be thought over thoroughly and freely with the Brit, and we shld delay for a time sufficient to allow existing circumstances to operate to the detriment of Mosadeq provided such delay does not imperil too seriously Iran’s orientation to the West.

  1. Repeated to London.
  2. Transmitted in Document 122.
  3. Supra.
  4. Nov. 13.