888.2553/11–2552: Telegram

No. 242
The Acting Secretary of State to the Embassy in the United Kingdom1


3556. Eyes only Gifford. Last portion of memo reporting Secy’s statement to Mr. Eden (ref Deptel 3510 to Lon,2 rptd Tehran 1256) has been revised as below. First five paras ending with phrase “in order to effect a solution” remain unchanged. This revision was passed to Brit here Tues evening. Revision was suggested by Secy for purpose of clarity as Brit seemed to have some doubts as to meaning of previous text.

“As it appears that AIOC may find itself unable to move but a portion of the Iranian oil which clearly must be moved, it may be that arrangements will have to be made by US Govt to meet the remainder of the problem. We are working urgently to determine what type of arrangements cld be made by US companies and wld like to discuss these arrangements with Brit at earliest possible date.

“The US also cannot believe that there isn’t some other method of moving forward on the question of compensation. We have not given up the possibility that Mosadeq might be induced to put forward a satisfactory lumpsum settlement offer. There may even be variations of this idea. An example might be found among practices of US Govt during the two world wars. The US in obtaining private property for Govt use set what is believed to be a fair value on the property taken. The owner was notified of this amount and informed that he cld collect the full amount in full settlement of his claim at his option. If the owner did not agree that the amt specified by the US Govt was a fair value, he cld challenge that [Page 538] evaluation and carry his case through legal proceedings. In such a case, the US Govt notified the previous owner that he cld collect at will ¾ of the total amt, leaving the remainder to be settled at the final determination of the property value. At any time the owner cld exercise the option of claiming the remainder of the x amt originally specified by the US Govt or continue to debate the matter through negot or legal proceedings.

“We believe that a new and more vigorous effort is required on the part of both Govts, and we will be quite prepared to send reps to Lon, or to receive their reps here, if this wld facilitate matters. For its part, the US now has approval at the highest level to make available the sum discussed by Mr. Nitze in Lon.

“The feeling that some move on the part of the West is necessary in the Iranian situation is growing steadily within all interested departments within our Govt. We feel it of utmost importance that some move be made with the Iranians prior to or at the time of Loy Henderson’s return to Tehran which shld take place within two or three weeks. For our part, it remains our firm hope that a solution can be found by the Brit or certainly that one can be found that will be fully acceptable to the Brit. In the event that this proves to be impossible, it is not believed that the US Govt can afford to remain idle while the Iranian problem drifts into a steadily worse situation. We wld in any event always consult with the Brit and strive for the solution which wld be most acceptable to them. In the last analysis, however, the US Govt may have no alternative but to move forward in a manner best designed in its opinion to save Iran.”

  1. Repeated to Tehran eyes only for Mattison. Drafted and signed by Byroade.
  2. Supra.