888.2553/10–1352: Telegram

No. 226
The Ambassador in the United Kingdom (Gifford) to the Department of State1

top secret

2160. Eyes only Bruce and Byroade. When I saw Eden today, I stressed the advantages of and importance we attach to our new proposals, indicating at same time dangers we see in a static policy. (Deptel 2593, Oct 12). I found Eden anxious about the situation and he repeatedly reiterated his desire to reach a solution. He did not, however, think our new proposals would be any more likely to commend themselves to Mosadeq than past proposals had been. Moreover, he saw difficulties in abandoning the principle of impartial determination of compensation by an international body, as proposed in the joint TrumanChurchill communication. I supported our proposals to the best of my ability, but at the end of the conversation I felt that some of his doubts still remained.

Soon after I left Eden, he went into conference with Churchill and other responsible ministers to consider nature of reply which should be sent to the Secretary. Strang has just conveyed to us result this meeting which in general terms is to effect that while Brit do not feel themselves able at this stage to agree even in principle to our suggestions, they do not want to reject them out of hand and are anxious to continue to explore them with us. Strang explained that a major difficulty which Brit see is method of determining compensation. Brit are not prepared at this point to abandon principle that compensation be determined by impartial international body in favor of lump sum determination. Strang also said there are number of points about scheme itself which are not clear to Brit, e.g. method of repayment of loan, priority which would be given to oil produced for compensation, etc. To help clarify these and other points and in order to assure more perfect understanding our proposals, Brit welcome suggestion that somebody should come [Page 494] over from Wash. Asked for his ideas on timing of the visit, Strang said “the sooner the better”.2

Strang said that meanwhile Middleton must deliver the Brit reply to Mosadeq’s latest note. A few changes have been made in the version which the Dept saw over the weekend and a few new points have been added. The general tenor of the note, however, remains substantially the same.

When I saw Eden, he told me that the “suitable person” mentioned in his message reported Deptel 2592, Oct 12 is Camille Gutt.3 He had not felt free at that time to mention his name since he had not cleared matter with Churchill. Strang reverted to this question later, stating that Brit have sent FonOff official to Tehran explain their attitude on oil problem in general. They hope Gutt might be able while in Tehran to influence Mosadeq to some extent. Strang stressed that Brit do not regard Gutt as mediator, that they have no schemes which they hope he will advance, nor does Gutt himself have any in mind. Strang asked we regard Gutt appointment complete confidence.

In talking to Eden, I suggested that if one of his main objections to our scheme was a feeling that Mosadeq would not accept it perhaps some means could be found of quietly persuading Mosadeq through an intermediary to make the proposals as his own. I did not specifically mention Gutt to Eden in this connection, but it occurs to me that such a possibility might have merit if Gutt felt he could undertake such a job.

  1. Repeated to Tehran eyes only for Henderson and to the U.S. Mission at the United Nations in New York for the Secretary of State. (888.2553/10–1352)
  2. The Department informed the Embassy in London on Oct. 14 that Nitze and several others tentatively were planning to arrive in London on Oct. 16. (888.2553/10–1352) The Department further informed the Embassy that same day in telegram 2651 that Nitze and his party were delaying their arrival for 1, possibly 2 days. (888.2553/10–1452)
  3. With the prospect of an oil-less economy facing Iran, a U.N. financial advisory mission headed by Camille Gutt visited Iran at the request of Dr. Mosadeq during November and December 1952, to study and make recommendations regarding banking, currency, and other fiscal problems.