Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X

888.2553/8–3153: Telegram

No. 360
The Ambassador in Iran (Henderson) to the Department of State ¹

secret
priority

Tehran , August 31, 1953—7 p.m.

535. During my private talk today with Zahedi (Embtel 533, August 31 repeated London 156)² I said I doubted such assistance as US might be able on emergency basis extend Iran would be sufficient in quantity to carry Iran further than about April 1, if indeed it could carry Iran that long. No time should be lost therefore, in giving consideration to some kind oil settlement with UK so that Iran would have certain amount income from oil to use in rehabilitation programs. I said I was without instructions in this regard and had no specific suggestions to make. Nevertheless it seemed to me it would be helpful, both to British and Iranians, if some secret explorations could take place for purpose of ascertaining whether agreement in principle at least could be found re manner in which the oil problem might be settled. It would be difficult for US Government to continue to defend to US Congress and people extension financial and economic aid to Iran except on emergency basis unless Iran Government would show itself prepared to come to agreement with British re oil in accord with accepted principles international intercourse.

2. Prime Minister said he understood this. He hoped be able find settlement oil problem on basis which would be fair to both UK and Iran. It would be suicidal, however, for him to move too fast in this matter. He thought if proper secrecy was maintained it might be useful for each side learn something about views of other re settlement. He understood British had innate sense of fairness. If they were willing to accept solution of kind which in their hearts they knew would be fair to Iran and which could not place undue burden on Iranian people, they would find him receptive. If they took attitude of driving hard bargain, it would not be so easy for him. He hoped both US and UK would understand that his government would be overthrown immediately by resentful Iranian public if he should enter into agreement which Iranian public would consider betrayal of Iranian interests. Even if his government should manage to survive for a time after concluding such agreement some future government would undoubtedly disavow it.

3. I told Prime Minister that I thought attempt should be made to reach agreement just as soon as Iranian public opinion could be prepared, even though there might not be Majlis in session to ratify it for several months. Early conclusion of agreement might result in relaxation of tension between UK and Iran and might even render possible taking of steps to prepare refinery for immediate production. Every month oil industry idle represented further drain on Iran. In this connection I expressed hope he would take immediate necessary measures to stop anti-British propaganda in Iranian press and over radio. Propaganda this kind merely served make settlement more difficult. Its continuance also embarrassing to US Government. US public would not be enthusiastic re rendering aid to government which was countenancing propaganda against US ally.

4. Prime Minister said he had already issued orders forbidding insulting propaganda against any foreign government, including even that of Soviet Union. Iran needed friends in world and it was stupid for Iranian press and radio to follow line which would make enemies. He hoped I would understand he personally not anti-British. He had worked against British in early part Second World War and had been imprisoned by them. He had however no hard feelings. He had worked against British, not because they were British, but because they were associates and allies of Soviet Union, Iran’s most dangerous and implacable enemy. He considered ally of Soviet Union to be ipso facto enemy of Iran, and foe of Soviet Union friend of Iran. When UK ceased to be ally of Soviet Union he ceased to regard British as enemies. He would like to see UK and Iran on friendly terms and was prepared in due course to do his part to bring this about.³

Henderson

1. Repeated to London.
2. Not printed. (788.21/8–3153)
3. Ambassador Henderson reported on Sept. 3 that during a conversation with the Shah on Sept. 1 regarding the oil problem, the Shah said he and Zahedi had been discussing whether it would be better to try to settle the problem in the relatively near future or postpone it, what would be the best substantive approach, and what channels should be used. The Shah believed that it was preferable not to postpone a settlement too long and asked Henderson’s opinion. Henderson thought it would probably be unwise to postpone a settlement for too long, as he doubted the U.S. Government would be able to extend economic or financial aid to Iran except on the present emergency basis if Iran failed to make a conscientious effort to find a reasonable and fair solution to the oil problem. Henderson asked the Shah if he had any plans to reestablish diplomatic relations with the British. The Shah thought it might be unwise to do so until after the signing of an oil agreement. Henderson observed that it might be difficult to negotiate an oil settlement in the absence of diplomatic relations. The Shah reiterated the thought that it might be better to postpone reestablishing relations until after the negotiation of an oil settlement. (Telegram 567; 788.00/9–353)