888.2553/1–1252: Telegram

No. 144
The Ambassador in Iran (Henderson) to the Department of State1


2598. Prud’homme and Rieber of IBRD plan leave Jan 13 for Paris where they hope meet Garner. In contrast to generally unfriendly tone of Iran press towards bank they reported cordial reception during entire visit and complete satisfaction with trip to oilfields and refinery.

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They have indicated briefly and confidentially to us in private conv that their report to IBRD will include fol:

Nationalization Iran oil industry is irrevocable.
Neither Mosadeq govt nor any govt likely to succeed in foreseeable future will permit AIOC in any guise or Brit techs return Iran.
Iran Govt prepared talk compensation but may present counter claims which will equal or exceed Brit claims.
Installations at Abadan and in oil fields being maintained in good condition and, with 500 skilled fon technicians under capable management, cld soon be operated at level equal to or greater than maximum production under AIOC. Iran Govt wld oppose any suggestion fon technicians shld be under fon management.
Iranians, with little or no fon assistance, capable producing up to 25 million tons annually crude and cld operate refineries, except for new catalytic cracker and lubricating oil plant, to extent permit refining up to 5 million tons year.

From convs with us we obtain impression their conclusions are:

IBRD wld find it difficult assist other than in org internatl purchasing company to buy oil for sale to world markets.
This wld be possible only if Brit Govt and AIOC wld agree, which agrmt likely only if ques compensation for AIOC property previously settled. Therefore first problem to be settled is compensation.
In interest of world peace every effort shld be made save Iran from econ and polit chaos. This calls for recommencing oil revenues thru revival of oil industry at least to extent Persians themselves able operate it.
Brit shld be urged not to boycott Iran oil or otherwise obstruct the revival industry.
It wld be to disadvantage world oil trade have Iran oil dumped on market. Therefore major oil companies, particularly AIOC, shld cooperate to absorb Iran exports.
There shld be no difficult tech problems construct pipelines from oilfields to Caspian.

We are not really surprised at way in which these experts are thinking. Except for ability of Iranians to operate industry with respect to which we have not had tech knowledge to judge their conclusions in gen are not too different from those held by this mission.

Since this info given to us informally in personal conv and as IBRD reps may not incorporate all views expressed in formal report we ask it not be given to bank or to Brits.

  1. Repeated to London.