888.2553/1–1253: Telegram
No. 276
The Secretary of
State to the Embassy in the United
Kingdom1
niact
4607. London for Byroade from Secretary. I sugg you show foll message to Brit.
“I have been following discussions on Iranian oil problem between Henderson and Mosadeq and your discussions with Brit officials in Lon with greatest attention. I believe we are close to far-reaching and helpful developments. I am appreciative of Eden’s constructive and statesman-like attitude without which no progress wld have been possible.
“In reviewing the status of the matter today I have come to the belief that the Brit formula for the terms of reference of arbitration, as handed to you by Sir Pierson Dixon and Sir John Maud on Sunday (Lon’s 3790)2 wld produce grave public relations difficulties for Dr. Mosadeq. The crux of the matter is the inclusion of the words ‘property, rights and interests’ which clearly imply to the Iran public that loss of future profits will be considered. It seems to me that if these words were omitted and the wording of the first portion of the formula appropriately changed to conform, the Brit wld have an even broader and more comprehensive formula which wld enable the Anglo-Iranian Oil Company to put forward every possible claim and wld at the same time avoid creating advance [Page 606] public relations difficulties for Dr. Mosadeq. It is my suggestion that the first part of the formula shld read as follows: To determine the sum expressed in sterling required to provide fair compensation for the loss by the Anglo-Iranian Oil Company as the result of the Iranian Oil Nationalization Laws of March and May 1951.’
“If the British agree to this rewording, I believe the last difficulty in reaching agreement will be removed and we can go forward confidently. If the British still feel obliged to stick to their wording, I shall ask Henderson to put it forward to Mosadeq as persuasively as possible. However, if this wording shld turn out to be the breaking point, I wld consider that Henderson shld be authorized to put forward the formula I have suggested, making it clear to Mosadeq that this is his personal suggestion made without any commitment to accept it on the part of the British and that if he agreed to it, it wld have to be referred to the Brit Govt for its consideration.
“I feel strongly that insistence on inclusion of words ‘property, rights and interests’ shld not be allowed on our side to be the difference between success and failure. If, of course, Mosadeq shld raise other difficulties, then Henderson would not put forward our alternative language and the Brit position in this regard wld therefore not be compromised.
“In view of Henderson’s cables I consider time of greatest importance. Current political situ Tehran indicates clearly that Mosadeq can hold his present secretive position regarding oil discussions only a very few days. Premature publicity cld easily force him reverse himself on concessions he has made. He is under heavy attack and may be forced to say something at any moment, apart from fact that every day of delay increases possibility damaging leaks. For our part, we are prepared when agreement on arbitration reached, to proceed immediately on DMPA purchase contract. I therefore earnestly hope that the Brit will continue to treat this as a matter of great urgency and that we can conclude it this week.”
Shld you find that the situation at this time warrants such action, you are authorized to deliver the foregoing to Eden as a personal message from me. In this case it wld, of course, be necessary for you to change persons throughout.
We are working urgently on round-up telegram to you and Tehran covering all points as we see them now.3