888.2553 AIOC/6–1451: Telegram

No. 28
The Ambassador in Iran (Grady) to the Department of State1

secret
priority

3283. Embtel 3266 June 14.2 In view recent developments I called on Pri Min 11 a.m. this morning at his home. He looked very ill and said that doctors had insisted he leave Parliament bldg and remain home several days and that last night he had been given a blood transfusion. He was weaker than I have seen him before, altho during conversation he became spirited as ever.

I explained that I had hoped and had even been optimistic in the past that the Iranians were sincerely desirous conduct discussions with oil company delegates within principle nationalization and that I have been under distinct impression and, in fact, was informed by Senator Shafaq that Iranians would refrain from action implementing Nationalization Law until discussion with Brit had opened. I referred with concern to developments Abadan and made a personal plea to Pri Min that he hold off such action.3 Pri Min replied that this afternoon five govt delegates Tehran wld propose to oil company delegates that all oil revenues be immed assigned over Iranian Govt and bank be designated receive 25 percent against future company claims after costs production deducted. If company delegates do not accept this proposition, there would seem to be no basis for further discussions.

I pointed out danger this course action and impossibility having proper atmosphere sincere discussions with Brit if such ultima made. Pri Min said he had accepted Premiership on condition Parliament pass Nationalization Law and that since that time he had only one duty—implementation law. He said “I never contemplated discussions with Brit except within framework law.”

I again pointed out that I am acting as informal mediator in dispute and do not speak for Brit side and the US interest is only to help Iran avoid disaster which wld fol any unilateral action to dissolve oil company and again begged him reconsider present course [Page 65]action, halt provocative acts govt reps Abadan and attempt enter discussions with Brit in friendly atmosphere seeking agreement within framework principle nationalization. He complained that statements made by Brit Amb to press contained threats4 and did not add to atmosphere of amity for discussions. I am hopeful that my strong but friendly statements may have some favorable effect on manner in which Iranian delegation handles today’s meeting. I have just seen Jackson and given him report on my conversation with Mosadeq.5

Grady
  1. Repeated to London.
  2. Telegram 3266 reported that the first meeting between the AIOC representatives and Iranian officials was scheduled for that afternoon and that usually well-informed press sources were saying that the AIOC Delegation would be asked if it recognized the principle of nationalization and the “9-Point Law.” Only if the delegation replied affirmatively would the conversations proceed. (888.2553 AIOC/6–1451)
  3. On June 11 the Iranian Provisional Board of Directors visited Abadan and Khorramshahr, and called upon the AIOC to deposit 25 percent of the oil revenues in a bank against future claims, give the other 75 percent to the Board, and regard all oil workers as employees of the National Iranian Oil Company.
  4. At the end of telegram 3266, Grady indicated that Shepherd’s “tough attitude” and his criticism of Mosadeq were not helpful and that the British Ambassador “indicates, if he does not actually say so, that no settlement can be made with Mosadeq Gov and any change wld be for the better.”
  5. Jackson paid a courtesy call on Grady on June 12 and saw Mosadeq briefly on the following day. The British Embassy told the U.S. Embassy that the meeting with the Prime Minister was not unfriendly but that Mosadeq did most of the talking, reiterating the Iranian view which followed closely the position taken in his message to President Truman. (Telegrams 3247 and 3255 from Tehran, June 13; 888.2553 AIOC/6–1351)