888.2553/3–1452: Telegram

No. 168
The Ambassador in Iran (Henderson) to the Department of State1


3516. For Rountree for Garner IBRD from Prud’homme. Bank 12.

Yesterday’s mtg with subcomite was probably last one this mission. Discussed export duties and income taxes for few minutes while sitting for over two hours indulging in tea and friendly persiflage in extraordinarily cheerful atmosphere. Looks like everybody has got the word (ref Ambassador’s conversation with Mosadeq Mar 13 about which assume you have been informed). Also drafted joint communiqué to be submitted Mosadeq and hence subject to change, as fols:

“The members of International Bank mission have discussed with mixed oil commission, and with subcomite appointed by it, many of the outstanding problems connected with oil question. Among these were questions of methods of operation, personnel, price, amount of oil to be sold and terms of sale. As result of these discussions it is necessary for bank mission obtain views of bank management, concerning some of these questions. The Noruz holidays provide an opportune occasion for them go to Washington for that purpose. After they have obtained further instructions and views of bank management, they are expected return Iran to resume work”.

Have talked over with Henderson and Middleton alternative communiqué which they wld prefer as being more realistic and frank, although Henderson believes Dept wld prefer first.
Alternative communiqué fols: [Page 370]

“Discussions have taken place between Iranian Govt and reps of International Bank regarding possibility of resuming operations in oil industry on large scale. Conversations have been frank and friendly but unfortunately it has proved impossible reach agreement. In circumstances Prud’homme and his advisers are returning Washington to report to their principals. Mr. Prud’homme has made it clear that International Bank wld be prepared resume negotiations in case it shld later appear that present difficulties in way of agreement might be overcome”.2

In accord your instructions have kept negotiations open but as you know my personal judgement was that we shld have taken more positive position immediately upon my return from London.
Have asked see Mosadeq Saturday and will call on Busheri, Kazemi and others before leaving. Tentative departure plans which will confirm are Clarke by KLM Mar 19 arrive New York noon 20th, Lipkowitz BOAC Mar 18 spending several days Carne per instructions Rosen. I also plan leave March 18 spend one day Rome two days Nice en route Washington.
Under circumstances hardly seems we need further replies from you our previous questions. See you soon.
  1. Repeated to London.
  2. Neither of these proposed communiqués was issued. Rather, Henderson informed the Department in telegram 3540, Mar. 16, that the following version would be used:

    “Members of Internatl Bank have held discussions about oil problem with PriMin and his advisers in several mtgs from Feb to March. Discussions, which have been frank and friendly covered principal problems involved in operation of industry. A measure has been achieved on some points but unfortunately, it has not been possible reach agrmt on several important issues.

    “Members of Bank mission will avail themselves of Noruz and Easter holidays to go Wash and report result of these discussions to Bank management. Mission will be ready return here later, if it appears that further progress can be made.” (888.2553/3–1652)