Office of the Historian

888.2553/2–2354: Telegram

No. 428
The Secretary of State to the Embassy in the United Kingdom1

top secret
priority
Washington, February 23, 1954—6:03 p.m.

4334. Limited distribution. Following aide-mémoire handed to Secretary of State by British Ambassador February 23:

“It was proposed, in aide-mémoire handed to Sir Roger Makins by General Bedell Smith on February 19, that the shares to be held [Page 931] by oil companies concerned in Persian consortium should be settled by negotiation between US and UK Governments.

2.
HMG have hitherto taken view that companies should be left to settle percentages of their participation on commercial rather than national basis. Since however they share view of US Government that there should be as little delay as possible before negotiations are opened with Persian Government, they are ready to accept procedure suggested in aide-mémoire of February 19, namely that question of percentages should first be agreed between US and UK Governments.
3.
It is understood that agreement would be subject to subsequent acceptance by companies, other than AIOC who have already been consulted.
4.
HMG are willing to agree that share of AIOC should be less than 50 percent, provided that arrangements to be made for compensation are satisfactory and provided that US companies in aggregate do not hold larger share than AIOC.
5.
HMG consider that it is necessary, at outset, to offer equal shares to all other participating companies.
6.
As means of putting these principles into effect, HMG suggest that AIOC should hold a 44 percent share in consortium and each of other seven companies share of 8 percent. Should any of companies not wish to take up full share offered to it, remainder could be allocated to other companies subject to maintenance of principle stated in paragraph 4 above.
7.
If proposal is acceptable to US Government, UK Government hope that principals of US companies will leave for London as soon as possible in order that negotiations between members of consortium may be completed.”

Dulles
  1. Repeated to Tehran.↩