The Ambassador in Iran (Henderson) to the Department of State1
480. 1. Regarding paragraph (a) Deptel 255, London 648, July 29,2 I have discussed with Middleton Embtel 460, London 166, July 30. [Page 426]Middleton tells me that conditions outlined in paragraph numbered 7 were almost precisely what he had understood Mosadeq to have in mind during their first conversation are possible basis for negotiations regarding oil dispute. It would seem that despite attitude displayed by him during second conversation he still has these conditions in mind. Difficulties are that:
- Neither British nor Mosadeq are willing to take initiative in suggesting basis for possible future negotiations.
- British may not be willing to discuss problem on basis of conditions outlined.
- Although Mosadeq during my conversation with him gave me impression that he would be willing begin negotiations on these conditions I cannot be sure that he would not retreat if conditions were advanced in more formal way.
2. Middleton and I have agreed that each of us telegraph our governments in order to ascertain (a) whether British Government would be willing accept conditions this character as basis for negotiations provided they would be acceptable to Mosadeq; (b) whether American Government would be willing for me to ask Mosadeq if he would be willing for US Government to inquire of British Government whether or not British Government would be prepared to accept these conditions as basis for negotiation; and (c) whether, if they should prove acceptable to British Government, Mosadeq would also be willing accept them.
3. In approaching Mosadeq I would make it clear that it would be understood that neither British nor Iranian Government had taken initiative in matter, and that if question as to initiative should be raised later it could be stated that conditions had been formulated by US Government after informal consultations with British and Iranian Governments.
4. This Embassy is convinced that British will not be able in foreseeable future come to agreement on conditions any more favorable than those under reference. If new Iranian Government should, by some surprise move, come into power we do not believe that it would be able, for indefinite period, offer better terms. So long as oil problem unsolved gulf between Iran and Western world sure to widen. We therefore earnestly hope that British Government will agree to these conditions as basis for negotiations.
5. Condition (h), reading as follows, should be added to conditions listed in paragraph 7 of Embtel 460 of July 30:
“Upon commencement of negotiations on basis conditions outlined above, Iran must be accorded from some source financial assistance of temporary character”.