888.2553/3–1353: Telegram

No. 319
The Secretary of State to the Embassy in Iran 1

top secret
priority

2387. It appearing increasingly likely that latest proposals for solution of oil dispute will be rejected, Department has been giving serious consideration to our future policy as regards Iran. Following represents coordinated US Government position as of this date in event proposals rejected:

1.
In absence of agreement for settlement of compensation question US Government would not purchase Iranian oil.
2.
US Government would continue informally to discourage dispatch of American technicians to assist in reactivation Iranian oil industry, although it is recognized that it might be difficult if not impossible prevent employment of certain number American technicians through private contracts.
3.
US would continue to give TCA and military assistance as long as Iran remains eligible for such assistance, appears to benefit from it, and desires that it be continued.
4.
US Government would not extend large-scale direct financial assistance to Iranian Government. This Government may however be prepared in appropriate circumstances to consider relatively small amounts of financial aid for budgetary assistance and for economic development as evidence of our continued interest in welfare of Iran. This question would be kept under constant review to see whether aid of this nature could be used effectively to diminish possibility of gradual loss of Iran to free world.
5.
US would continue view Iranian situation with concern and sympathy and would be prepared at any time to take any appropriate measures to assist Iran and UK to come to reasonable agreement which would not, in our opinion, prejudice other international concessionary or contractual arrangements. It does not however have any present plans for future negotiations.

[Page 715]

While it does not seem at present Mosadeq will address to you three questions anticipated in your 3605,2 it will be seen from the foregoing that if such an eventuality should occur the answers would be negative. In future dealings with Iranians you are authorized in your discretion make use of above policy positions in manner you consider most wise in view of local situation.

Dulles
  1. Repeated to London. Drafted by Richards; cleared in draft with the Under Secretary of State, Deputy Under Secretary of State, Belton O. Bryan of S/MSA, Nitze, Linder, Bonbright, Byroade, and Jernegan; and approved by the Secretary of State.
  2. Document 315.