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

888.2553/11–753: Telegram

No. 382
The Ambassador in the United Kingdom (Aldrich) to the Department of State¹

secret
priority

London, November 7, 1953—9 p.m.

2002. In meeting with working group including Armstrong of Treasury, Frye of Foreign Office, Butler of Ministry Fuel and Power this morning,²Hoover and Embassy representatives encountered very reasonable attitude. While views of British group not authoritative they no doubt influential in formulation of UK government views.

Above group, [garble] maintaining that [garble] AIOC should go back to operate oil industry in Iran, thus virtually disposing of compensation problem, admitted this possibility remote, and therefore consortium only practicable solution. Moreover consortium would have advantage as regards sharing both capital risk and production cutbacks elsewhere. Undoubtedly this thinking considerably in advance of that of AIOC directors but British group thought AIOC might be brought around to this view, especially after diplomatic relations established permitting direct British appraisal of situation Iran.

British advanced idea that company would attach considerable importance to regaining title to properties in Iran prior to selling participation to consortium. We queried whether this was matter of form or substance and British replied while principle obviously at stake they did not want us to think they were inflexible on this point.

Detailed discussion role IBRD ensued with general agreement on both sides that Bank participation would be desirable for political reasons and would facilitate oil settlement, operation of oil industry and other possible economic development Iran. Some doubts expressed whether introduction of Bank might involve too many members in consortium. In this discussion and at other points British stressed their belief small number in consortium desirable.

During talk Hoover conveyed to group gist Tehran’s 316 to London³ and stressed that US appraisal of situation in Iran was that major AIOC participation was unacceptable. British group did not appear take issue although their views may not be wholly representative. At same time their views and attitude impressed us as being realistic.

Hoover also gave British paraphrase Tehran’s 314 to London⁴ which they appeared to find encouraging, although we agreed with them that detailed discussion this point should await receipt Henderson’s reaction to message contained our telegram 56⁵ to Tehran.

At afternoon meeting⁶ presided by Dixon of Foreign Office and attended by Maud and Butler of Ministry Fuel and Power, Armstrong of Treasury, Gass and Snow of AIOC, and representatives from Foreign Office and Embassy, Hoover (acting on suggestion put forward by British working group at morning meeting with view to assisting their relations with AIOC) expressed belief return AIOC would have been desirable solution but in actual fact was no longer possible because of present situation Iran.

Group then discussed handling of Iranian memorandum (Tehran’s 305⁷) in light Tehran’s 313.⁸ It was decided to submit to Ambassador Henderson, for his comments, a redraft of proposed statement to Entezam contained in paragraph 2 of Tehran’s 313, with understanding final decision in this regard would not be taken until receipt Henderson’s comments on this draft and on earlier British draft transmitted our telegram 56 to Tehran.

Subsequently Foreign Office supplied Embassy with following which has been seen and approved by Eden:

“Mr. Hoover told Mr. Eden that he had been authorized by the Persian Government to inform him of certain preliminary views reached by the Persians on the principles of an oil settlement and contained in a memorandum.

“Mr. Eden said he was very glad to hear that the Persians had taken an initiative in this matter. But on hearing from Mr. Hoover the substance of their memorandum, Mr. Eden said at once that there was much in it which it would not be possible to accept. It seemed to him that discussion of this complicated problem was bound to take much time. The establishment of mutually acceptable principles, as preliminary to discussions on details, was frequently the most difficult part of any negotiation. Mr. Eden was sure that, with goodwill, a satisfactory solution could be found. But he felt that for this to be done, direct contact was required, and this was why he was more convinced than ever it was essential to restore diplomatic relations as soon as possible.”

In discussion of foregoing, Hoover stressed urgency some word being passed to Iranians regarding their memo, particularly in view reports that will undoubtedly be appearing Tehran press now he was leaving London for Washington.

Meeting agreed Hoover would explore informally with IBRD question its participation, on understanding such talks should be highly confidential.

Re press, it was agreed neither Foreign Office nor Embassy would issue statement but in reply to questions would say Hoover has come to London in continuation his mission, has been exploring problem here, and is now going back to report to Secretary State. In answering queries point will be made that problem so complicated that he will undoubtedly be going back and forth very freely between Washington–London and Tehran in coming months. No reference to fact-finding nature his mission or to resumption diplomatic relations will be made.

After meeting Hoover called briefly on Eden and expressed appreciation for understanding with which British had approached problem notwithstanding difficult period they had been through. Eden, like British representatives with whom Hoover has been conferring, declared they most grateful for Hoover’s assistance and in fact this very evident from cordial atmosphere prevailing throughout talks.

Aldrich

1. Repeated to Tehran.
2. The record copy of the minutes of this morning meeting is in a folder entitled “Minutes of Meetings at Foreign Office on Iranian Oil”. (888.2553/4–554)
3. On Nov. 6 Ambassador Henderson warned that the British demand for 51 percent AIOC participation in an oil consortium would be totally unacceptable to the Iranians. Henderson thought no Iranian Government could survive if it agreed to such a demand, and he was depressed at the thought that the British were hoping to gain American support for their position. (Telegram 316 to London; 888.2553/11–653)
4. In telegram 314, Nov. 6, Ambassador Henderson suggested, after further study of London telegram 1965 (Document 380), that if the British were contemplating proposals for the resumption of relations prior to negotiations they might incorporate concrete suggestions in the text of a joint communiqué announcing the resumption of relations. Henderson then proceeded to suggest a possible text which could be used to announce the resumption of relations. (Telegram 314 to London, repeated to the Department as 1050; 888.2553/11–653)
5. Printed as telegram 1969, to London, Nov. 6, supra.
6. No record of this meeting has been found in Department of State files.
7. Printed as telegram 1022, Document 378.

8. In telegram 313 Ambassador Henderson reported that the Iranian Government would be extremely discouraged if it were informed that its memorandum, transmitted in Document 378, was so unacceptable to the British that they had handed it back to Hoover, or had displayed such an attitude during the preliminary conversations that Hoover had decided it was preferable not to submit it to the British. Henderson went on to say that if the British insisted upon refusing to consider the Iranian memorandum as the opening move in the direction of negotiations, he suggested that he be authorized to inform the Foreign Minister as follows:

   “During conversation with Eden, Hoover showed him memo. After examining it Eden handed it back to Hoover with remark that he preferred it not be placed in files Foreign Office since in his opinion it would not serve as suitable basis for discussions between British and Iranian Governments. Eden pointed out that if British Government would undertake discuss memo of this kind it would be compelled to take exception to number passages contained therein, particularly those critical AIOC. Eden said that his perusal of memo had, however, served one useful purpose, namely, it confirmed his conviction that resumption of diplomatic relations must precede discussions re oil. Only after resumption of relations in his opinion would it be possible for two governments to have opportunity frankly and directly to explore possibilities of method and content of settlement.” (Telegram 313 to London; 888.2553/11–653)