Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X

888.2553/12–1652: Telegram

No. 250
The Ambassador in France (Dunn) to the Department of State¹

top secret

Paris, December 16, 1952—1 a.m.

3494. Eden and Dixon discussed Iran with Secretary and Nitze this afternoon. Eden had read memorandum handed Dixon yesterday and had had preliminary comments from London. Part one of memo seemed generally acceptable subject to working out details, particularly degree to which Kuwait bears major burden of any cutback. Part two generally acceptable except for implied suggestion that Henderson might urge Mosadeq come forward lump sum settlement. Eden said he had not cleared this type settlement with Cabinet and believed it much less satisfactory their standpoint than arbitration. Clear UK takes very seriously any suggestion of lump-sum settlement primarily because of domestic political consideration. Leathers and Churchill violently opposed.

Secretary finally agreed that: (a) Henderson, if not successful with arbitration approach, wld not solicit lump sum settlement offer from Mosadeq without having first checked back Washington; (b) we wld bear in mind UK desire to talk with us further and possibly attempt discourage us from making such a move but (c) made it clear we might well instruct Henderson explore lump sum settlement either without further checking with them or in spite of their objection.² After meeting Dixon and Nitze drafted following rewording of pertinent para in memo given Dixon previous day:

“If Henderson, after using all possible arguments, finds it impossible to persuade Mosadeq to accept the principle of arbitration without unacceptable conditions, Henderson will report his discussions to Washington before taking further actions. US Govt believes that in this contingency and depending on the nature of the position taken by Mosadeq, it may be advisable to instruct Henderson to explore with Mosadeq the possibility that he offer an adequate lump sum settlement which the US Govt cld then take up with HMG. US Govt understands that HMG have never agreed to consider a lump sum settlement and may wish to discourage US Govt from exploring such a solution with Mosadeq. US Govt, however, believes that if agreement on arbitration is impossible, a lump sum settlement may be the only solution possible and may offer less risks than continued failure to reach a settlement. US Govt may therefore wish to instruct Henderson to explore this possibility with Mosadeq, even though aware of contrary UK views.”

Dunn

1. Repeated to London for Palmer.
2. On Dec. 16, Ambassador Gifford expressed concern that the Department was considering instructing Henderson to explore a lump-sum settlement with Mosadeq without checking further with the British or in spite of British objections. In view of the fact that Mosadeq would probably reject such an approach to the compensation problem, Gifford did not think it was worth risking the resultant damage to Anglo-American relations. (Telegram 3351, repeated to Paris for Secretary Acheson; 888.2553/12–1652)