888.2553/8–1852: Telegram

No. 202
The Acting Secretary of State to the Embassy in the United Kingdom 1

secret

1159. Eyes only for Holmes, no distribution whatever. Fol exchange msgs between Churchill and Pres transmitted FYI only:

“In Anthony’s absence, I am taking charge of FonOff corres.

I am concerned about Alton Jones’ visit to Musaddiq after his personal interview with you.2 If it came about that Amer oil interests [Page 446] were working to take our place in Persian oil fields after we have been treated so ill there, this might well raise serious controversy in this country. We are doing our utmost to bear the heavy load, and do not possess the bi-partisan support of Opposition which we gave late Govt in fon and defence affairs. We are also helping all we can in Korea. No country is running voluntarily risks which we are, shld atomic warfare be started by Sov Russia.

I hope you will do ur best to prevent Amer help for Musaddiq, either Governmental or commercial, from becoming powerful argument in mouths of those who care little for great forward steps towards Anglo-Amer unity in common cause which you and I have worked for so long.”

Pres’s reply handed Brit Emb this evening fol:

“Secret and personal for PriMin Churchill from Pres Truman.

I have ur msg of Aug 16 and understand ur concern over Jones visit to Iran. However, Jones impressed me favorably and was emphatic about his desire to be helpful in facilitating Brit-Iran oil settlement. He seems to be sincere in his belief that resumption of large-scale oil operations in Iran is impossible without coop of AIOC and said he wld emphasize this to Mosadeq. As we told Sir Oliver Franks, Jones plans talk to AIOC people after seeing Mosadeq.

As we see it, there are two problems: (1) An agreement must be reached with Irans on amt of compensation due AIOC, and (2) means must be found to enable Iran to pay this sum out of oil revenues. I think there is good chance Jones can be helpful on second problem. First of all, he will again explain to Mosadeq facts of life in oil industry and need of dealing with AIOC. Secondly, if latest Iran proposals lead to an agreement with Co for sale and distribution of Iran oil, Jones may be able to help IranGov resume production and refining processes so that there will be oil for AIOC to buy and market.

If Jones can work out something it might be useful, since with polit temper in Iran as it is, I think there is no possibility that Brit management as such wld be allowed to return and take charge of oil fields or refinery. By same token, no other fon interests cld take place in Iran which AIOC formerly held, and I am certain the Amer oil Cos understand this.

[Page 447]

I need not tell you that we have not slightest wish profit by ur present difficulties. We will do everything possible to avoid even appearance of this.

On the wider issues, I am hopeful that you will be able to take up Mosadeq’s most recent proposals in broad and conciliatory spirit. Our reports make me think there is not chance that this or any other IranGov can come forward with anything better, and danger which wld be involved in missing this opportunity seems to me too great to be risked. It looks to me as if time is running out for us.

In particular, I hope you will be willing to accept Iran nationalization law. I see no possibility of any agreement if you include in Court’s terms of reference any question of validity of that law, which seems to have become as sacred in Iran eyes as Koran. This need not of course prevent you, during arbitral proceedings, from maintaining validity of 1933 concession and claiming damages for its unilateral abrogation. Dean Acheson sent a msg to Eden along this line on Aug. 12.3

If Iran goes down communist drain, it will be little satisfaction to any of us that legal positions were defended to last. The strategic consequences of loss of Iran to West and possibility therein of gradually losing great bulk of ME with its oil resources to Sovs are too obvious to mention. Such disaster to free world wld undoubtedly also place a strain on gen Anglo-Amer relationships not pleasant to contemplate.

It is my earnest hope that we can avoid these misfortunes and move forward together in common cause. I think you know how much Anglo-Amer unity means to me.”

Bruce
  1. Also sent to Tehran eyes only for Henderson.
  2. Alton Jones, President of Cities Service Corporation, was invited by Prime Minister Mosadeq to advise the Iranian Government on the operation of the Iranian oil industry. On Aug. 13 and 14, respectively, Jones had confidential interviews with President Truman and Acting Secretary of State Bruce and informed them of his interest in facilitating the resumption of oil operations in Iran for the overall benefit of relations between the Western powers and Iran. Jones stated that he intended to make it clear to Mosadeq that it was virtually impossible to resume the marketing of substantial amounts of Iranian oil without the full cooperation of the Anglo-Iranian Oil Company. If his talks with Mosadeq were encouraging, he planned to consult officials of the AIOC to make arrangements whereby the AIOC would market Iranian oil if the Iranian Government, with Cities Service help, could reestablish production and refining operations.

    Acting Secretary Bruce emphatically informed Jones that his activities could not be sponsored by the U.S. Government because there was a possibility that negotiations would be resumed by the British and Iranians. Bruce hoped Jones would do nothing to impede the progress of these negotiations. Jones expressed understanding and said he was going only because he thought he could be helpful in effecting an Anglo-Iranian settlement. Documentation regarding the Jones trip is in Secretary’s Memoranda of Conversation, lot 65 D 238, and file 888.2553.

  3. Transmitted in Document 199.