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

888.2553/1–1153: Telegram

No. 274
The Ambassador in Iran (Henderson) to the Department of State¹

top secret
niact

Tehran, January 11, 1953—5 p.m.

2651. Eyes only Secretary and Jernegan.

1. Re paragraphs 3 and 5 Department’s 4599 to London, January 10 repeated Tehran 1684, I have already set forth my views re possible tie-in of monthly installments of commencement commercial negotiation in Embtel 2634 to Department, January 10, repeated London 852.² If Department and British not satisfied suggestion contained therein, our first alternative might be to include in package agreement a letter addressed by Dr. Mosadeq preferably to me stating substantially as follows:

“Following the entry into force of its contract with DMPA, the NIOC will be prepared to enter into negotiations with the International Export Company, in which the AIOC may be a participant, looking toward a contract of agreement for the NIOC to sell to the International Export Company a definite amount of crude oil and oil products annually over a fixed period of years. The NIOC will enter into these negotiations just as soon as the International Export Company is prepared to open them”.

As alternative to second sentence, following might be substituted:

“Such negotiations shall begin within 30 days after the NIOC agreement with DMPA has gone into effect. If for any reason International Export Company would not be ready to enter into negotiations within the 30 day period, the NIOC would be prepared to enter into such negotiations when the International Export Company is ready.” (See paragraph 2, Embtel 2608 to Department, January 8, repeated London 838.)³

2. If above suggestions are entirely unsatisfactory, Department might care to rephrase draft in paragraph 3 memo heads of agreement of DMPA contract outlined in Deptel 1588, December 31, to Tehran.⁴ That paragraph could read substantially as follows:

“It is understood that following the entry into force of this contract, the NIOC will be prepared to enter into negotiations with the International Export Company in which the NIOC may be participant, looking toward a contract of agreement for the NIOC to sell to the International Export Company a definite amount of crude oil and oil products annually over a fixed period of years, just as soon as the International Export Company is ready to enter into such negotiations.”

Alternative to this could be similar to alternative in number 1 above.

3. I have no comments to make with remainder of telegram except that Department might desire as suggested above to make certain changes in heading number 3 in text of memo heads agreement incorporated in Deptel 1588 to Tehran.

4. I hope that draft of terms of reference and other provisions of arbitration agreement will be simple and as free as possible from complicated legal language and follow wording Mosadeq so far as technically possible.

5. Query: Are we certain that we wish to charge as much as 4½ percent interest on loan to government-owner company? Would DMPA be violating regulations or setting undesirable precedents by charging 3½ percent? Is interest to be paid in dollars or additional oil?

Henderson

1. Also sent to London eyes only for the Ambassador and Byroade.
2. See footnote 5, Document 272.
3. See footnote 3, Document 272.
4. Not printed. (888.2553/12–3152)