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

888.2553/2–554: Telegram

No. 420
The Ambassador in the United Kingdom (Aldrich) to the Department of State¹

top secret
priority

London, February 5, 1954—4 p.m.

3351. Limit distribution. From Hoover.

1. Re Berlin’s Secto 75 to Department, repeated London 115.²

2. Conversation between Secretary and Eden re difficulties encountered in Iranian oil situation appears most timely and gives hope that HMG and AIOC will not prove inflexible re matter 50% interest for AIOC.

3. If opportunities arise Secretary may wish assure Eden that US does not desire reduce AIOC interest for purpose increasing share of US companies, and that US does not believe US companies should have larger share than AIOC.

4. This presents possibility of AIOC and US companies having equal shares and that Shell, which is generally regarded as British concern and in which there is large private British investments, could become a substantial third partner. Such a solution should be acceptable to British public opinion, inasmuch as AIOC and Shell combined would have more than a majority interest.

5. Such a solution would be more defensible before Iranian public opinion than domination by AIOC alone, due to large Dutch interest in Shell.

6. From long term viewpoint we also believe such a solution advantageous because combined judgments of at least two groups would be required for the formulation of policy.

Aldrich

1. Sent priority to Berlin for Merchant as telegram 82 and repeated to the Department and Tehran.

2. Secretary Dulles informed the Department in this telegram dated Feb. 3 that he had a conversation with Foreign Secretary Eden, during which Eden made the observation that the situation in Iran was much improved. Dulles agreed, but went on to say that there were still great difficulties to overcome, that an early settlement of the oil issue was vital, and that he did not think it certain that the AIOC would be able to maintain its position that it had to have a 50 percent interest in the new consortium. He urged that AIOC accept less than 50 percent. Eden had replied that it would be very difficult for AIOC to accept less than 50 percent participation, as the United Kingdom would be left open to the charge that the oil companies were taking over the AIOC position in Iran. Dulles replied that this was absurd in view of the fact that the American oil companies were reluctant to participate in a consortium in the first place. Eden agreed but said that public opinion was difficult. (Conference files, lot 60 D 627, CF 210)

   Secretary Dulles was in Berlin as head of the U.S. Delegation to the Four-Power Conference.