888.2553/11–1451: Telegram

No. 130
The Secretary of State to the Department of State

top secret

2862. Eyes only for Acting Secretary Webb for such distribution as directed by him from Acheson.

Conversation re Iranian oil dispute.

Participants: Secretary Acheson, Ambassador Bruce, Ambassador Harriman, Mr. Eden, Sir Pierson Dixon, Mr. Shuckburgh.

The fol is a full summary rather than a detailed report of a long and frank talk last night between the above persons.

The US quandary was first stated in this way:

Neither Eden nor Churchill had, nor cld be expected to have, personal knowledge of all technical and intricate business and political factors leading to final judgment. For that matter, neither did Harriman and Acheson, though they had been perhaps involved longer in the matter. Therefore, reliance necessarily was placed on advisors. From the US point of view, this meant that British judgments were formed by advice of the very men who had led British policy into the present trouble. When we were asked to support the British, we were asked to do exactly what these men recommended. It was impossible for us to accept such a position.

Thus, one important, if not essential, element was to get a fresh point of view on the British side, against which to test our political and economic judgments. It was suggested that Eden might find it useful to ask Lord Brand and Dennis Maris, or persons of comparable standing and experience who had worked with us, to review the sitn both in London and Washington as quickly as possible. Mr. Eden asked whether Lord Leathers shld do this, adding that he was largely responsible for present British governmental position. We said that it was up to Mr. Eden whom to select, but that we were stalemated going around the present circle.

[Page 282]

The second aspect of the talks related to substance of policies. Here we had the familiar debate.

The British claimed that, if we had supported them, events wld have been different and their policy wld have been shown to be right; whereas, now we claimed that they were proved wrong because our lack of support created the very sitn which we pointed to as proof. We thought that the history of the AIOC troubles in Iran, compared to the relatively happy sitn of all other companies in all other countries, was answer to this view.

We then asked whether the British had any specific policy, except to boycott Mosadeq, hoping for his fall. What specific proposals wld they expect a successor govt to accept? For instance, we were absolutely convinced that AIOC cld not return; were they? Eden was not so convinced and believed contrary possible, but did not give the impression that policy wld be fixed upon this point.

We then said that our present belief was that in a period of between one and two months, if nothing happened, disintegration in Iran wld reach a point where, without financial help, the govt wld collapse. We could not accept responsibility of denying financial help and bringing this about. At some point we wld have to act and we cld foresee the consequences of our act might be to create great bitterness in Anglo-American relations. Were we all warranted in taking these terrible risks, and for what purpose?

It was quite possible, indeed probable, that no deal could be made with Mosadeq, but that had to be demonstrated and not assumed. Negots were essential in order to show in Iran that acceptable alternatives to Mosadeq’s position were available. This was not being done. The British argued that their advices were that negots with Mosadeq strengthened him, while our advice was that it wld weaken him. We agreed to this conflict of views, pointing out that the fundamental purpose was to strengthen the Shah and that the Shah and his advisers, who had everything at stake, believed our view the sounder one.

Eden then mentioned the message regarding talk which Garner of the World Bank had with Mosadeq, reported in a separate telegram.1

At this point a long telegram was brought to Eden containing a proposed statement at question time in the House of Commons today. While he did not read the statement to us, Eden told us [Page 283] enough of it, including the fact that it contained the four principles read to us last week2 and with which Linder is familiar, to make us realize that it was very bad indeed. Eden thought so himself and said that he wld try to sTop the statement and wld advise that nothing be said unless something was required as a result of Mosadeq’s speech.

The up-shot of the whole matter is about as fols:

Eden, I believe, understands how impossible it is to look for our “support” in the way he had been demanding.
He understands that in a matter of weeks we may determine unilaterally to give financial aid to Iran, and he sees the difficulties that this will produce.
I think that he is beginning to see, although I wld not bet much on this, that the British position must move, and move in the direction of specific proposals. He may refuse to make these to Mosadeq, but understands that he must make them at once to any successor.
I believe he has much interest in the World Bank suggestion, as a means both for tiding over the great predicaments of the present and furnishing a bridge into a future settlement.

  1. Telegram 2853 from Paris, Nov. 14, reported that Garner had suggested interim operation of Iranian oil properties by an agency established by the World Bank with the Bank acting as trustee and dividing the proceeds of its operation between the British and Iranians and holding a third share in trust pending settlement of the dispute. Eden had expressed interest in this proposal and said he would discuss it with his government. (888.2553/11–1451)
  2. See Document 127.