888.2553/3–953: Telegram

No. 315
The Ambassador in Iran (Henderson) to the Department of State1

top secret
niact

3605. Eyes only Secretary and Byroade.

1.
At Prime Minister’s request I called on him 11 o’clock this morning (see Embtel 36042 stating Prime Minister has subsequently telephoned to say our whole conversation should be considered as not taking place pending submission matter to Cabinet of Ministers). He said he had asked see me primarily in order to discuss possibility that British might be willing to state immediately amount compensation they intended ask of Court so that he and people Iran would be able evaluate extent of risk Iran would be incurring if it should agree to submission question compensation to International Court of Justice. Iran would have been willing simultaneously to state amount it was claiming from AIOC. Subsequent to his request for me to call he had learned of State Department [Page 704]communiqué of March 73 containing statement Eden to effect that British Government had decided stand on its proposals of February 20. In view of Eden’s statement and of Department’s comments re those proposals it was now clear nothing could be gained by continuance conversations. Since Iran could not accept these proposals and British stood firmly on them, deadlock had developed and conversations should be regarded as terminated. He desired make proposals public as soon as convenient but wished publish with them certain queries addressed to United States Government which he would incorporate in note to me this afternoon together with United States’ reply.
2.
Prime Minister outlined his proposed note. After indicating that as result of Eden’s statement it had become clear conversations had broken down, he desired to obtain answers from United States Government to following questions. In absence agreement re compensation would United States Government in order assist Iran in overcoming its financial difficulties be prepared: (a) to buy Iranian oil over period years in substantial quantities at prices to be agreed upon; (b) to encourage private United States firms (1) to purchase Iranian oil and (2) otherwise assist Iran in production and export of its oil; (c) to extend to Iran immediately loan to be repaid subsequently in form of oil.
3.
Prime Minister said that he regretted being compelled ask such pointed questions but he and Iranian people must know what if any help could be expected from United States before deciding course action to be followed.
4.
Prime Minister originally suggested that proposals and exchange of notes be published on March 11 simultaneously in all three capitals. I told him it might be difficult to obtain reply to his inquiries sufficiently early enable publication on that day. He suggested therefore that time of publication be arranged after reply had been received.
5.
Prime Minister stated that he intended when making public proposals and exchange of notes to give his reasons for rejection of proposals. He would also state that he had suggested during course negotiations that attempt be made to reach settlement through agreement between Iran and United Kingdom according to which Iran would pay compensations by turning over to AIOC 25 percent of proceeds from exports of oil for period of years to be agreed upon by two Governments, and that British had never replied to this [Page 705]suggestion. I told Prime Minister that if he considered it necessary refer to his suggestion he should also state that I had told him when he made it that I not in position discuss any kind solution compensation problem other than one providing for submission that problem to International Court of Justice or some impartial arbitral board. Prime Minister said fact was he had made that suggestion and had received no reply from British and he would so state. He said he still willing to seek for solution compensation on this basis.
6.
During our two-hour conversation we touched on various matters which I shall not try report since much of what we said was rehash of previous conversations re oil already reported. At beginning our conversation Prime Minister was somewhat formal and exhibited certain amount resentment at issuance of communiqué. British and Americans should not have issued statement this kind without advance notice to him. I pointed out statement made by Department of State not by British and Americans; that statement merely outlined Eden’s position and views United States Government re proposals February 20. During last two weeks Prime Minister’s oil advisers had been systematically issuing statements to Iran press which seemed to be giving erroneous impression re substance proposals of February 20. Views United States Government as expressed in communiqué might in long run be helpful if they would assist Iranian public in understanding kind of proposals which in United States opinion would be fair and reasonable and would make it clear that proposals February 20 were of kind which United States could approve. Prime Minister said regardless form of communiqué it was nevertheless issued for purpose of exercising pressure on Government of Iran to accept proposal. United States Government should understand that present Government of Iran did not bow to pressure.
7.
When Prime Minister informed me that he considered conversations terminated I expressed regret. I said that in my opinion United Kingdom had made important concessions particularly during course these conversations. I hoped he recognized this fact. Prime Minister replied negative. Proposals no more advantageous to Iran than those advanced by British in 1951. Although British were not now demanding participation in management Iran oil industry or monopoly rights on purchasing and distribution Iran oil, they were insisting that Iran give International Court of Justice right to put Iran under bondage for at least twenty years. If Iranians should become slaves bound to turn over their oil products to AIOC they would be in no better position than they would be if British were back in country controlling Iran’s oil industry and [Page 706]interfering in Irans internal affairs. My efforts to persuade him that he was assuming extreme position had no apparent effect.
8.
Prime Minister at one point stated he regretted see new United States administration permit British to formulate United States policies re Iran. He maintained that British at no time desired oil settlement be effected with aid United States, that one of British objectives this area was “to get Americans out of Iran and whole Middle East”; that British were hoping ultimately to come to agreement with Soviet Union for division Middle East into spheres influence. I endeavored unsuccessfully to convince him that his ideas re United States and British policies in this area were mistaken; that United States policy was based on certain principles which it could not abandon for sake of expediency; and that British were not so stupid as to imagine that Soviet Union’s ambitions re Middle East and Iran could be curbed by policies of appeasement providing for spheres of influence.
9.
During latter portion our conversation Prime Minister assumed more friendly attitude and spent considerable time in pointing out why United States could not afford not to help Iran in present critical internal situation.
10.
Regardless whether after his talk with Cabinet this afternoon Prime Minister decides to put to US questions outlined in paragraph 2, these questions are likely to be raised in some form in near future and it might be convenient if answers to them could be prepared in advance.4
Henderson
  1. Transmitted in two sections; also sent to London eyes only for Ambassador Aldrich.
  2. Not printed. (888.2553/3–953)
  3. The Department cabled those portions of the communiqué pertinent to Iran to the Embassy in Tehran in telegram 2336. In summary, the communiqué stated that the United States considered the British proposals of Feb. 20 to be reasonable and fair, and that the United States agreed with the British position as expressed by Eden. (611.41/3–753)
  4. The Department informed Secretary Dulles of the gist of this telegram in Tedul 2, Mar. 9, sent to him at the U.S. Mission to the United Nations in New York, and told him that the Department was preparing answers to the questions Mosadeq asked during this meeting. (888.2553/3–953)