There are transmitted for your attention a copy of the letter from Prime
Minister Mosadeq of Iran to you dated
September 24, 1952, a summary of Dr. Mosadeq’s views, and the complete text, as received from the
U.S. Embassy in Tehran, of the Iranian Government’s reply to the joint
message put forward by Prime Minister Churchill and you to Dr. Mosadeq.1
The Department’s comments will follow later.
Attachment Number Two
Summary Of The Iranian Government Note
Of September 24
The joint US–UK proposal cannot be accepted nor approved by the Iranian
nation. Before proceeding with the transmission of a counter proposal,
it is necessary to explain briefly the position of the Iranian
Government in regard to the message.
- 1.
- The proposals are inconsistent with Iran’s oil nationalization
law.
- 2.
- Iran desires to strengthen friendly relations with the British
people.
- 3.
- Iran has always been prepared to negotiate within the limits of
legal principles for the settlement of the oil dispute.
- 4.
- Failure to achieve any results up to this time is “due to the fact
that the British Government has desired to retain the influence of
the former AIOC under other titles
in the same shape and form as before in violation of the law and of
the rights and desires of the Iranian nation”.
- 5.
- The proposals are “not only inequitable but far more inequitable
than previous proposals”.
- 6.
- The British Government seeks to convert the oil dispute from an
internal affair in Iran into a dispute between two
Governments.
- 7.
- It is feared that Article 1 of the proposals is designed to
legalize the “invalid 1933 agreement which has never been acceptable
to the Iranian people”.
- 8.
- If Article 2 of the proposals means that “a purchase monopoly be
given to a specific company …2 this will never be approved by the
Iranian nation”.
- 9.
- Article 3 of the proposals admits “that the British Government’s
motive in its previous measures to bring economic pressure on the
Iranian nation” were designed to force Iran to submit to “unfair
terms”.
- 10.
- In order for the Iranian Government “to make a definite decision”
about paragraph (a) of Article 3 “views about the price (of oil
stored at Abadan)” should have been specified.
- 11.
- “It is neither friendly nor equitable to make the removal of
illegal restrictions contingent upon the acceptance of certain
terms” as suggested in paragraph (b) of Article 3.
- 12.
- Iran nationalized the oil industry for two reasons: (a) “to
eradicate foreign influence”, and (b) “to improve economic
conditions”.
- 13.
- “In the present circumstances, Iran may follow one of two roads:
(a) ‘It should endeavor to improve social conditions and ameliorate
a situation of the deprived classes, something that would be
impossible without oil income’; and (b) ‘If this road should remain
blocked, Iran should surrender itself to probable future events
which would be to the detriment of world peace’.”
counter proposals
“Iranian courts are the only competent channel for investigating the
former company’s claims and are prepared to adjudicate them, but should
the company not wish to refer its claims to the above-mentioned
competent authorities, and should the International Court of Justice at
The Hague be able to deal with the dispute between the Iranian
Government and the former AIOC on the
basis of an agreement between the two parties, and should there be no
illusion that such action recognizes the existence of the dispute
between the two Governments, my Government, in order to show its good
will, after agreement on the four articles below, is prepared to agree
to the judgment of the International Court.” In this case, the court
will be requested to issue its final verdict as soon as possible and
within six months.
[Page 478]
Article 1—Compensation
“Determination of compensation to be paid for property belonging to the
former AIOC at the time of
nationalization of the oil industry in Iran” and arrangements for paying
this by installments will be based on any law selected by the former
AIOC which has been used by any
country for nationalizing its industries in similar instances. This is
the only compensation which the Iranian Government will pay, and the
company will have no right to make any further claims whatsoever.
Article 2—Basis of Examination of
Claims
The ICJ shall use as a basis for judgment
one of the following: (a) Claims of the two parties up to the date of
nationalization to be on the basis of the D’Arcy
Agreement3 with due regard to calculation of income tax which
the Iranian Government should have received. The
D’Arcy Agreement cannot be applied beyond the
date of nationalization. (b) Claims from 1933 to the end of 1947 and
from the beginning of 1948 to April 30, 1951 to be on the basis of the
abovementioned invalid agreement and the Gass–Golshayan Supplementary Draft
Agreement4 which was signed by the
former AIOC but not by the Iranian
Government. These agreements cannot be applied beyond the date of
nationalization. (c) The claims of both parties to be examined on the
basis of the fairest concession agreements of other oil producing
countries in the world where the cost of producing oil according to that
concession is not less than producing Iranian oil during a corresponding
period.
Article 3—Determination of
Damages
In determining damages due the Iranian Government there shall be taken
into consideration the obstruction of sales of Iranian oil by the AIOC as well as losses resulting from the
delay in payment of debts owed by the company.
Article 4—Payment in Advance
The AIOC shall pay 49 million pounds in
sterling convertible into dollars. If the court does not consider Iran
entitled to this amount, restitution shall be made in oil.
The foregoing proposals must be accepted in their entirety and are valid
for ten days.
[Page 479]
“The Iranian Government will take up through the International Court of
Justice as a case between two governments the question of losses caused”
by the British Government through its support of the “former company”,
as well as losses resulting from restrictions imposed on exports to Iran
and on the use of sterling.
