888.2553/12–352: Telegram
No. 244
The Secretary of
State to the Embassy in
Iran1
top
secret
priority
Washington, December 3, 1952—5:47
p.m.
1338. Eyes only Mattison personal from
Henderson. In ur discretion, pls
deliver in utmost confidence fol personal msg from me to Mosadeq:
- “1. As I expected I found on my arrival here that the US Govt
is deeply concerned at the situation in Iran and responsible
members and officials of Govt are of opinion that it is
extremely important for Iran’s future prosperity that oil
dispute be settled as soon as possible. They have, therefore,
been carefully exploring every avenue which might possibly lead
to settlement. They face, however, a basic problem in disposal
of the matter of compensation in a manner which would be
acceptable to the Govt of Iran and to the British. A number of
suggestions have been made as to formulae which might possibly
be agreed to by Iran and the Brit for governing arbitral
proceedings instituted for the purpose of determining the amount
of compensation due. Among those suggestions is a formula which
wld take into consideration ur note of Sept 24 to PriMin
Churchill2 in which the fol statement
was made:
- 2. ‘Determination of the amount of compensation to be paid for
property belonging to the former oil company at the time of the
nationalization of the oil industry in Iran and arrangements for
paying this by installments based on any law carried out by any
country for nationalizing its industries in similar instances
which may be agreed to by the former oil company.’
- 3. With this statement of yours in mind, US officials who have
been studying the question of compensation have asked for my
opinion whether you wld consider a formula somewhat as
follows:
- 4. There shall be submitted to some Board of Arbitration
agreed to by both disputants, possibly appointed by the
Internatl 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. This Board shall not question
the validity of Iran’s Nationalization Law and shall in setting
the amount of compensation consider those standards which the
Brit Govt used in determining the amount of compensation to be
paid to any of the enterprises which it nationalized during the
past ten years which in their opinion may be appropriate.
- 5. The problem which I wish frankly to place before you is
that it is apparently the view of the Brit Govt, a view widely
shared by the whole internatl business world, that any formula
for determination
[Page 541]
of
the value of property nationalized shld not specifically deny
the Board of Arbitration the privilege of considering the
earning value of property. It is thought that any appraisal of
property which fails to take into account, as one of many
factors, its earning power wld strike directly at the whole
fabric of investment both national and internatl. I am wondering
if there is not room within your formula quoted above to
accommodate this pt of view.
- 6. The US has not consulted with the Brit on this matter nor
are the Brit aware of this confidential msg from me to you. No
one can know in advance which nationalization law might be
chosen by the arbitrators as basis for determination of
compensation. There are many such laws and the Board of
Arbitration would be free to choose the most appropriate one.
Nevertheless, since it is my sincere desire that you be fully
informed before making any reply on this important matter, I
must point out to you that the British Coal Industry
Nationalization Law of Dec 1945 has the fol provision for
determination of compensation:
- 7. ‘The Tribunal shall determine the global sum required to
provide a fair compensation to the owners of the assets
described in Annex I hereto for the transfer of those assets to
public ownership, and for that purpose shall ascertain the
amount which the assets might be expected to realize if sold as
one unit in the open market as assets of a going concern by a
willing seller to a willing buyer on the basis of (a) the net
annual maintainable revenue, that is to say the net annual
revenue which the assets as a whole might reasonably be expected
to earn in the future, if they were not transferred to public
ownership, and (b) the number of years purchase to be applied
thereto.’
- 8. I wld be grateful if you cld let me know through Mr.
Mattison in
confidence whether you wld be willing to agree that some board
of arbitration determine the amount of compensation to be paid
to the Anglo-Iranian Oil Company on the basis of your formula
quoted in para 2 if carried out according to para 4. Of course,
I would also appreciate any other comments which might be
helpful in connection with this matter and I can assure you that
anything which you might tell me will be treated with such
degree of confidence as you might specify. Kindest
regards.”
In communication foregoing to Mosadeq
you shld make its personal unofficial character absolutely clear. Pls also
inform Mosadeq that it wld be
personally most embarrassing to me were substance this msg to become public.
Translation of msg may be handed Mosadeq in interests accuracy and understanding, but any
translation shld be informal and unofficial and on plain paper. Reply shld
be through you only.
