888.2553/2–2353: Telegram

No. 302
The Ambassador in Iran (Henderson) to the Department of State1

top secret

3355. Noforn. Eyes only Secretary and Byroade.


During my conversation with Mosadeq this evening he stated that (Embtel 3354, repeated London 1089, February 23)2 British were intriguing in numerous ways to bring about overthrow of his government and at same time were pretending to United States Government that they desired settlement oil problem. British did not really want to come to agreement with him re oil. This was clear from terms of their last proposal to him. If they really wanted agreement they would not have incorporated in compensation agreement draft terms reference provision for determination of compensation in accordance with principles of British coal national law after he had made it clear that he could not accept terms reference so worded. I told him I had reason believe that British proposals were in good faith and that they regarded them with utmost seriousness. I had already pointed out in our last conversation [Page 678] that he had been first to suggest basing of compensation on provisions of some British national law. Prime Minister extracted alternate compensation agreement from his papers. He asked if in my opinion British would accept terms reference reading as follows: “To determine the sum required to provide compensation to the company as result of the Iranian oil nationalization laws of March and May 1951”.

I said my instructions were to effect that no substantive change could be accepted in text as proposed. He stated that nevertheless he would like to have my personal opinion as to whether British would accept compensation agreement of type proposed by them with this one change. I repeated I unable to answer that question; my instructions were that there could be no substantive changes. He said that he did not know as yet what his advisers might recommend but it might be useful for him have answer to this question. I asked if I was to understand that two documents which I handed him would be agreeable to him if terms reference would be altered along lines of his inquiry. He said he could make no commitments but he would like have answer to question which he had just proposed. He did not want to suggest to his advisers that Iran accept these two documents subject to change this kind because British after turning down such counterproposal could say that he had practically agreed to their proposals and would use this argument to prevail on successor government to accept their wording of terms reference. I told him that it was difficult for me on purely hypothetical basis to obtain answer to question this kind particularly in view of my instructions.

I leave to Department’s discretion whether query which Mosadeq has put to me should be passed on to British. It seems to me rather doubtful that acceptance or rejection of proposal should hinge on answer; nevertheless, if it should so transpire that Mosadeq should tell me later that he would accept proposals in case I could assure him that British would be agreeable to such change it might be helpful to me to know what to say. Mosadeq does not know I informing Department re his inquiry which he stressed was of personal nature.
I obtained impression from my talk that in spite of Mosadeq’s inquiry there is really little likelihood that answer to our proposals will furnish basis for continuance conversations.
  1. Also sent to London eyes only for the Ambassador.
  2. In telegram 3354 Ambassador Henderson reported on a conversation with Mosadeq, during which Mosadeq said he had no intention of resigning. Mosadeq did not wish to discuss his dispute with the Shah and said that he was unable to give proper consideration to the oil proposals. (788.00/2–2353)