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

888.2553/2–2454: Telegram

No. 429
The Secretary of State to the Embassy in the United Kingdom¹

top secret
priority

Washington, February 24, 1954—7:01 p.m.

4365. Limited distribution. Department considering making following points re Iran oil to British Ambassador 11 AM February 25:

• “1. US Government, considering situation in Iran, and bearing in mind particularly importance of reaching oil settlement that will be durable, feels that its original proposal in its Aide-Mémoire of February 19 is sound.
• 2. In effort to meet views of HMG, however, US Government prepared support participation by AIOC to extent of 40 percent. In view of political situation in Iran as previously outlined, US Government would find it difficult justify asking American companies to enter into arrangement under which AIOC would have more than 40 percent participation.
• 3. US Government is agreeable to suggestion in British Aide-Mémoire of February 23 that American companies participate to extent of total of 40 percent.
• 4. As to remaining 20 percent, US would hope that most of this could be taken by Shell, thus increasing British share. US Government has been led to believe that French not interested in appreciable position. US Government would like to know proposed participation by French and Shell interests before urging that American companies participate.
• 5. If agreement can be reached as indicated above, principals of US companies will be ready at once proceed London to go into other questions, such as compensation, sterling-dollar oil, arrangements for operating in Iran, etc.
• 6. Mr. Hoover would also be available to go London for discussions if his presence should be desired.”

Your immediate comments welcome.²

Dulles

1. Also sent to Tehran. Drafted by Hoover and Raynor and signed by Richards after being cleared in substance by Byroade.

2. On Feb. 23 the Embassies in London and Tehran concurred in the proposed reply to the British Ambassador. (Telegrams 3654 from London and 1830 from Tehran; both 888.2553/2–2554)

   The Department informed the Embassy in London on Feb. 25 that Under Secretary Smith saw British Ambassador Makins on that day and made all the points contained in telegram 4365. Smith stressed that the United States wanted the overall initial allocation of 40 percent to American companies to be a general proposition rather than a direct allocation in equal amounts to the consortium participants, as it was unclear whether or not the American companies wished to participate equally. The Under Secretary, among other things, also stressed that the U.S. position regarding 40 percent participation in the consortium was firm. (Telegram 4378 to London, repeated to Tehran as 1775; 888.2553/2–2554)