888.2553/10–252: Telegram

No. 218
The Secretary of State to the Embassy in Iran1


805. Eyes only Ambs Gifford and Henderson. Fol personal msg from Pres to Churchill was handed to Brit Amb late last night and is rptd FYI:

“I do not believe that joint reply to Mosadeq’s note wld be wise. I had hoped that our reasonable and fair joint offer which seemed to meet Mosadeq’s principal points of difficulty wld break log jam. I am now convinced that Mosadeq will not and believes he cannot (if he is to survive) accept this solution. Situation in Iran has deteriorated so far that he is threatened by extremists who will not have it. To lock ourselves into this offer by joint reply reasserting it seems to me to so constrict our future relations with Iran as to preclude any influence or action which might help to save country. I believe that pressure will not save it by bringing Mosadeq to reason but will hasten its disintegration and loss.

[Page 481]

We both want accomplish same results in Iran—prevent Commie take-over and preserve moral and legal rule of just compensation for property taken.

There seems very little that any reply as such can accomplish except keep record straight. I can understand, too, ur belief that you must answer accusations made against Brit action in Iran.

So I think that if this Govt replies at all it shld do so separately. We are thinking of something along lines which Acheson will show to Sir Oliver.

With warm regards, Harry.”

Fol is proposed msg to Mosadeq from Acheson referred to in foregoing msg:

“I have been in touch with Pres since he recd ur msg of Sept 24, 1952, and, since he is away from Capital at this time, he has authorized me to acknowledge ur ltr. He is disappointed to learn from it that you have found unacceptable proposals which were put forward on Aug 30, 1952.

It had been our understanding that IranGov’s position was that negot for settlement of oil dispute must take into account: (a) fact of nationalization, (b) complete independence of Iran in operation of its oil industry, and (c) freedom of Iran to sell its oil on other than monopoly basis.

It was and is our sincere belief that proposals which were put forward on Aug 30 met these points. These proposals clearly recognized fact of nationalization and did not seek to revive 1933 Concession, or any concession. Neither fon management of industry nor employment of technicians was put forward as condition, or even suggested. There was no intent to propose monopoly of purchase of Iran oil.

Other questions existed as well, involving claim for compensation by Co and counter claims by Iran. We suggested method of settlement of all claims by impartial adjudication. There are doubtless other equitable methods. In regard to question of price to be paid for Iran oil, we suggested that this shld be worked out between purchaser and seller rather than by Govts.

Regardless of acceptability of proposals of Aug 30, it is matter of regret to us that their meaning shld have been misunderstood. We have tried to correct this because of real importance which attaches to our words being understood by you as they were meant by us.”

Secy informed Franks we wld await Brit comments before presenting msg to Mosadeq.

  1. Also sent to London.