781.13/5–251: Telegram

No. 17
The Ambassador in Iran (Grady) to the Department of State1


2650. Mosadeq, whom I saw this morning, most cordial and eager for Amer goodwill and assistance.2 He expressed appreciation of our non-interference in oil question. He expressed confidence in our disinterestedness and fine intentions re Iran, but with warmth criticized Brit interference in Iranian affairs which he is dedicated to put stop to.

I stated our position with regard to nationalization and stressed that it is absolutely necessary that there be no confiscation or partial confiscation of the oil company’s property. In this connection, I emphasized that negotiation with the Brit was necessary. He said there was nothing to negotiate as the Majlis had acted. This, I said, was unilateral action and if there was no negotiation, very bad impression wld be made in our govt and in Amer public opinion. I avoided discussing the particulars of the oil resolution. I pressed the importance of approach and procedure rather than program which is matter for the Brit.

On our program of mil and econ aid, he put all stress on econ. He rather depreciated what we have done up to now and said if he had had his way our Point IV wld have been rejected as quite inadequate. I stated emphatically that Iran was under no obligation to accept any aid either mil or econ. I called his attention to fact Export-Import Bank loan has been available for four months, that had it been accepted promptly agric equipment provided by the loan wld already be in Iran stimulating its econ recovery. He wished shortly to have full discussion with me re the loan and ended by saying if the Iranians up to now had had their just dues [Page 46] from oil, they wld need no foreign loans or foreign assistance of any kind.

  1. Repeated to London.
  2. On Apr. 27 Prime Minister Ala suddenly resigned and the Department of State cabled Grady asking whether the British had been responsible. (Telegram 1976 to Tehran, Apr. 28; 788.13/4–2851) Ambassador Grady replied that there was no evidence to suggest British responsibility and that in an interview on Apr. 30 Ala indicated that he had resigned because Mosadeq and the Special Oil Commission were consistently ignoring his government and going directly to the Majlis. (Telegrams 2603 and 2633 from Tehran, Apr. 29 and May 1; 788.13/4–2951 and 888.2553/5–151) Two days after Ala’s resignation, the Shah approved Dr. Mohammad Mosadeq as Prime Minister.