888.2553/5–751: Telegram

No. 19
The Ambassador in Iran (Grady) to the Department of State1

secret

2694. Fol is Emb’s appraisal strategy and prospects of Mosadeq Cabinet in light developments reported Embtels 2661, May 3 and 2689, May 7:2

(1)
Mosadeq will concentrate attention his govt on solution oil issue to exclusion almost every other consideration. Electoral reform, while apparently also being pushed, will be dropped if serious Majlis opposition develops. Similarly, request that Majlis approve entire budget current fiscal year instead of usual series of monthly authorizations may be brought forward, but will not be pushed.
(2)
Selection members Joint Oil Comm will probably be made promptly. Although National Front member has privately denied efforts being made to influence selection, it appears highly probable Mosadeq will largely control choice. Intrigue of pro-Brit elements is, of course, possibility, but given present temper of Parl and public, successful packing of Comm or blocking of appointments not believed probable.
(3)
Once Comm formed, Mosadeq will move cautiously. He has already intimated to Brit desire to take over control with minimum of dislocation and to avoid breakdown of production. Emb inclined to believe nominal taking-over by Joint Comm (necessary for domestic publicity purposes) while substantive settlement is discussed, might be acceptable to him. He will, however, press discussions to reach definitive settlement within three months, if possible. Emb has as yet no info concerning his reaction to Shepherd proposals to Ala, nor (except for vague ideas re evaluation company claims reported Embtel 2100 Mar 17 and 2113 Mar 193) concerning Mosadeq’s ideas on fair settlement. Emb shares Brit’s impression concerning his lack of concrete factual info on oil operations and doubts any concrete plan or change-over of management and settlement with AIOC has yet been formulated.
(4)
Aside from foregoing, Mosadeq’s present strategy believed designed to avoid friction with Majlis. His cabinet, composed largely [Page 49]of well-known political time-servers from previous administrations, unlikely do anything antagonize Deputies. Long-range projects likely arouse opposition will be shelved. Administrative reforms begun by Ala will be held in abeyance. Loan agreement unlikely receive early consideration. Majlis will be left as much as possible to own devices. Mosadeq’s method of working is to concentrate on one thing at time.
(5)
From standpoint Mosadeq tenure office, Emb believes this strategy likely to be successful at least for three months specified in Oil Comm resolution. Obviously critical test will come when Joint Oil Comm submits its settlement proposals to Majlis. Mosadeq will have to assume responsibility these proposals. In view his leadership nationalization drive and his present popular following, he appears in especially favorable position to secure acceptance of reasonable settlement if he can be persuaded to make one. Factors which might produce earlier upset include:
(1)
Mosadeq’s own health, which is precarious.
(2)
Popular impatience, possibly Tudeh-stimulated, shld present expectation early oil settlement be disappointed (obviously the longer settlement is delayed, the more difficult this position will become).
(3)
Popular administration with do-nothing policy except on oil issue. (In view comparatively satisfactory econ situation this spring last possibility considered improbable.)
(6)
Despite unfavorable implications of foregoing analysis for early attainment our own programs in Iran, Emb perceives no feasible alternative for the present but to continue to extend to Mosadeq same measure of cooperation accorded Ala and Razmara. He has indicated desire for such cooperation (Embtel 2650 May 24) and unless instructed to contrary, I intend to fol this policy. On the positive side, continued demonstration of our goodwill may afford us the opportunity to influence favorable settlement of oil issue.

Grady
  1. Repeated to London.
  2. Telegram 2661 transmitted the text of Mosadeq’s statement to the Majlis at the time he presented his Cabinet. (788.00/5–351) Telegram 2689 reported that the Majlis had given Mosadeq a vote of confidence with 99 in favor and 3 abstaining. (788.00/5–751)
  3. Neither printed.