888.2553/2–1752: Telegram

No. 159
The Ambassador in Iran (Henderson) to the Department of State 1


3137. Fol is text aide-mémoire handed Mosadeq by Garner as informal basis for discussion (Embtel 3123, Feb 16, rptd London 680):2

“This is confidential aide-mémoire which will not be made public.

“The Iran Govt reserves its position with respect to employment of Brit natls in oil operations in Iran. View of this reservation, Internatl Bank must reserve its position as to possibility of being able work out any arrangement in respect of such operations.

“Fol points are noted, subject to above reservations as representing an informal summary of understanding between Iran and Bank mission as possible basis for an interim arrangement for resumption large-scale oil operations in south Iran.

It is understood that Bank wld act as neutral intermediary and only at request and with authorization of interested parties.
Arrangement wld be without prejudice to legal rights of anyone.
The Bank wld on an interim nonprofit basis, manage and operate south Iran oil properties and sell oil produced therefrom.
Sale and distribution of oil within Iran wld be Iran’s responsibility.
Bank wld, as part of interim arrangement, contract with buyer for sale of all export oil, on terms approved by Iran.
Oil operations wld be conducted by Bank thru management headed by Top exec grp, to be selected by Bank, from countries not party to dispute, and to be responsible to Bank. Iran wld give Bank full and independent authority to carry on oil operations and employ necessary personnel.
Number of non-Irans employed wld be kept to minimum consistent with efficient operations. Bank wld not be expected to employ any personnel, in excess of those needed for efficient operations.
Bank wld limit activities to production, refining, and delivery of oil and necessary supporting services, such as power and water. Other associated services, formerly administered at expense of oil operations, wld be carried on by Iran and their cost, up to an agreed limit, wld be charged to oil operations.
It wld be understood that Bank’s assets wld not be subject to risk in carrying on oil operations, and appropriate provisions wld be made therefore.
Bank wld undertake to see that necessary funds are provided for resumption of oil operations, including working capital.
Proceeds from sale of oil wld be used first to pay cost of operations (including interest and amortization payments on acct of funds provided) and of remainder, a previously agreed part wld be paid Iran and rest wld be held by Bank until settlement of differences between parties.
Arrangement wld be for period about two years (in absence of an earlier final settlement) but provision wld be made for its continuance thereafter subject termination by any party. Bank wld have right terminate arrangement at any time.”
  1. Repeated to London.
  2. Ambassador Henderson reported on Feb. 16 that Garner and his delegation had had several meetings with various Iranian officials, including Mosadeq, and that the Bank representatives had prepared an aide-mémoire setting forth, in general terms, the Bank’s proposals for Iranian consideration. Henderson also informed the Department that at the session that morning, Feb. 16, with Mosadeq, several members of the Iranian Senate became involved in the discussion and had emphasized their desire to the IBRD representatives that perhaps they could assist in achieving a solution to the oil controversy. Garner had agreed and was therefore intending to remain in Tehran until Feb. 19 in the hope that he could make more progress in the negotiations. Thereafter, he planned to fly to London to report his progress to the British. (Telegram 3123; 888.2553/2–1652)