Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X

888.2553/8–2452: Telegram

No. 207
The Acting Secretary of State to the Embassy in the United Kingdom¹

top secret

Washington, August 24, 1952—3:34 p.m.

1310. For Chief of Mission only. Fol msgs rptd for ur info only.

1. From Prime Minister Churchill to President dated Aug 22, received Aug 23:

“All that I have ventured to suggest to you about Musaddiq was on the basis of a joint approach. I thought that it might do good if we had a gallop together such as I often had with F.D.R. There is little doubt that a brief cogent, joint telegram would be far more effective than a continuance of the futile parlaying which has got us no further in all these months.

• “2. Our ‘physical separation’ did not prevent such methods in the war. However, there was often a fear of our being accused of ‘ganging up’ and this hampered necessary action, for instance about the Warsaw massacre in Aug 1944. I do not myself see why two good men asking only what is right and just should not gang up against a third who is doing wrong. In fact I thought and think that this is the way things ought to be done.
• “3. I see that your Govt on July 31st actually proposed a joint approach with us to Musaddiq. This was a fine idea which might prevent him or anything else that turns up in Persia from thinking they can play one of us off against the other.

• “4. From the United States point of view I should have thought it would be a most unprofitable course to pay Persia indefinite sums of money in order that she should not become communist. It does not follow that even far larger sums than the 10 million dollars you have mentioned would avert these dangers. Also the fact that blackmail pays and that those who behave the worse make the largest profits will not have a good effect over all the vast area of your own oil interests in the Persian Gulf and Iraq. I therefore hoped that a strong note could be sounded now by both of us together. It was on this basis that I proposed and could defend further concessions on our part. It is not that I fear criticism here, though that would be troublesome, but it is because I believe that your name and mine at the foot of a joint telegram would be an effective assertion of right over wrong.

  “Please see what you can do.

• “5. All my personal regards and many thanks for your consideration and courtesy.”

2. Message from Minister of State to Brit Amb dated Aug 23, received Dept Aug 23:

“It may be useful to you to have my views on the six points which the President raised in his last msg.

• “(1) We agree that the representation of the AIOC will be of great importance. We do not, however, think it would be wise to send a Govt rep. This might look like political pressure from us, or again it might encourage the Persians to give the negotiations a political aspect. We are, however, considering most carefully the possibility of the Company appointing a negotiator from outside both the Govt and the Company.
• “(2) HMG would find it quite impossible to provide funds from the Exchequer. We have had to refuse many other countries who have asked us for aid, and we could not make an exception for Persia. We do, however, contemplate that as and when it proves practicable to lift the oil in the tanks, the Company would make some appropriate payment. But before movement of the oil could actually start, the quantity, quality and price would have to be assured, and the physical conditions at Abadan relating to the loading would have to be verified. The Company would be ready to discuss these matters with the Persians immediately agreement had been reached to go to arbitration, and would, for their part try to settle them as quickly as possible. On a rough estimate, certain products might be lifted after one month from the beginning of these discussions and Persia might receive, say 5 million pounds by the end of this year.
• “(3) The expression ‘arrangements for the flow of oil’ refers to distribution and not to the AIOC producing oil or operating the refinery, but of course, as chief customer, the AIOC would remain deeply interested in both these questions.

• “(4) We like the draft suggested for the terms of reference, subject to one small alteration. I think they should read: ‘The question of the compensation to be paid in respect of the nationalisation of the enterprise of the AIOC in Iran, having regard to the legal position of the parties existing “immediately prior to” nationalisation and to all claims and counter claims of both parties.’

  “I have little doubt that all of us here would agree to this.

• “(5) We agree entirely.
• “(6) We entirely understand the U.S. Government’s view and agree that participation in a joint message shall not limit the freedom of action of either Government in the future.”

3. Msg from President to Churchill delivered Brit Amb Aug 24:

“Like you I want very much to see our two Governments reach full agreement on the Iranian problem and see us put, at the earliest practicable date, an offer before Mosadeq in an effort to settle the present dispute.

“In view of your strong feelings on the matter, and the fact that we are in agreement that this approach limits neither you nor me nor our governments to particular courses of action in the future, I agree to join with you in a common message to the Prime Minister of Iran.

“I have restudied our messages to each other and your Government’s latest views on my six points, which Sir Oliver Franks has given us. While I am disappointed that action by your Government cannot be more immediate on the question of financial assistance to the Iranian Government, I am prepared to proceed in the hope that the course of action upon which we are in concert may succeed. Since days are slipping away which we can ill afford to lose, I suggest a draft which I would be willing to sign.

“I propose a very short cover message jointly from you and me which would have attached to it the substantive points of the proposal. For the covering message I suggest the following:

“‘We have reviewed the messages from our two embassies in Iran regarding recent talks with you, as well as your communication of Aug 8 [7] 1952 to HMG.² It seems clear to us that to bring about a satisfactory solution to the oil problem will require prompt action by all three of our Governments. We are attaching proposals for action which our two Governments are prepared to take and which we sincerely hope will meet with your approval and result in a satisfactory solution. We are motivated by sincere and traditional feeling of friendship for the Iranian nation and people and it is our earnest desire to make possible an early and equitable solution of the present dispute.’

“In view of the comments of your Government, it seems to me that the following could well be used for the text of the attached annex.

• “‘(1) There shall be submitted to the International Court of Justice the question of compensation to be paid in respect of the nationalization of the enterprise of the Anglo-Iranian Oil Company in Iran, having regard to the legal position of the parties existing immediately prior to nationalization and to all claims and counter-claims of both parties.
• “‘(2) Suitable representatives shall be appointed to represent the Iranian Government and the Anglo-Iranian Oil Company in negotiations for making arrangements for the distribution of Iranian Oil to world markets.
• “‘(3) If the Iranian Government agrees to the proposals in the foregoing two paragraphs, it is understood that (a) representatives of the AIOC will seek arrangements for the movement of oil already stored in Iran, and as agreements are reached upon price, and as physical conditions of loading permit, appropriate payment will be made for such quantities of oil as can be moved; (b) HMG will relax restrictions on exports to Iran and on Iran’s use of sterling; and (c) the United States Government will make an immediate grant of $10,000,000 to the Iranian Government to assist in their budgetary problem.’

“I believe you and I are substantially in accord on the offer that should be transmitted to Mosadeq and I am extremely eager to have it made without further delay. If you have other ideas as to drafting, I suggest you notify me immediately as to exact wording of the changes you would desire so that we may promptly produce an agreed text.

“With warm regards.”

Bruce

1. Also sent to Tehran.
2. See footnote 2, Document 197.