888.2553/6–2251: Telegram

No. 30
The Secretary of State to the Embassy in the United Kingdom1

top secret

6049. For Holmes.2 Request you seek opportunity soonest discuss Iran situation on secret basis with Morrison. Fol is suggested outline for oral review of recent developments. Its tone is designed to avoid unnecessary irritation to Brit at time of serious crisis to them.

1) Brit offer in Dept’s opinion was excellent and cld provide good basis to Iran for negot satis agreement. We were deeply disappointed that Iran rejected offer and terminated negots in manner which indicates no desire to solve problem on any reasonable basis.

Decisions of Brit Cabinet on June 20 with respect to Iran, of which we have seen summary, appear to reflect a rational approach to the problem.3 The difficulty with which we are confronted, however, is that a rational situation does not prevail in Iran at the moment.

2) While there obviously is little hope that an acceptable solution can be reached under present circumstances in Iran, Dept does not believe that this situation will prevail indefinitely and it is earnestly hoped that developments there soon will bring about an atmosphere in which better opportunity for negot is afforded.

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3) Pending such a time the dangers of the situation in Iran are obvious. A complete breakdown of oil operations with its econ consequences including unemployment among thousands oil workers cld bring about immed threat to internal security and particularly to installations themselves. Shld this be precipitated by withdrawal Brit technicians and refusal to ship oil, blame undoubtedly wld be placed upon UK with possibility that, even if Iran saved from collapse, chances for successful negot with Brit firm in future wld be gravely diminished.

4) Although we are giving matter serious thought we are not prepared at this time to suggest long-range solution to dilemma. We do believe, however, that at least for time being it wld be highly advisable to find some way of maintaining oil production, refining and movement by tanker if this can be done without seriously endangering lives of Brit and other fon technicians in Iran. We are sure Brit will agree that keeping way open for negot wld be worth paying a rather high price. This shld be facilitated by leaving the present offer open and retaining in Iran at least one high-level negotiator.

5) We fully recognize great problem with which Brit Gov is confronted in Iran, and wish to do whatever we can to help them meet it. We, of course, do not have any clear idea of how Brit Gov thinks the AIOC may be extricated from its present situation. It wld be very helpful to us to know more of Brit thinking on how situation may be solved. If the Brit Gov wld like we are prepared immed to send a senior official to London to discuss complex issues involved or, if Brit wld prefer, we will outline our views in writing. In any event, however, because of our great mutual interest in a solution to this problem we hope that nothing precipitate will be done at this time which wld make a negotiated settlement impossible.

6) Dept does not wish offer gratuitous advice in matter of vital importance to Brit nor to give impression we are pressing for appeasement completely unjustified Iran conduct. It is hoped that future course can, however, be set after consultation between our two govts in view of far-reaching implications of any action which is taken.

  1. Drafted by Rountree, McGhee, and Ferguson (GTI); cleared by Perkins, Matthews, and Nitze; and signed by Secretary Acheson.
  2. Ambassador Gifford was in Washington for consultations until June 25 when he returned to London. During his absence Holmes was Chargé.
  3. According to an undated study prepared in the Department of State, entitled Account of the Iranian Oil Controversy, the British Embassy in Washington on June 21 gave the Department of State a copy of a summary of the British Cabinet decisions which were taken after consulting with the AIOC Delegation. Among the decisions summarized were the evacuation of dependents from the oil fields and Abadan, the use of force if necessary, the provision of military cover for the evacuation of British personnel, and the decision to allow the onus for the suspension of oil operations to fall on the Iranians. No copy of the summary has been found in Department of State files.

    The Account of the Iranian Oil Controversy consists of three volumes. The first volume of this top secret study was prepared by Foreign Service Officer Oliver S. Crosby on assignment to the Office of Greek, Turkish, and Iranian Affairs. It consists of a 179-page narrative history covering the years 1949–1952, a chronology, and three documentary appendixes. The citations in the text indicate that Crosby utilized files of the Department of State, and there are also frequent references to military attaché messages. Volumes II and III were prepared by Helen P. Gray of the Office of Greek, Turkish, and Iranian Affairs, and cover the periods 1952–1953 and 1953–1954 respectively. All citations to the study in this compilation are to volume I. A copy of the study is in file 888.2553/7–1452.