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

888.2553/3–554: Telegram

No. 433
The Acting Secretary of State to the Embassy in the United Kingdom¹

top secret

Washington, March 5, 1954—4:40 p.m.

4547. Limited distribution. Following aide-mémoire handed British Embassy representative March 5:

“Department State appreciative of British Embassy aide-mémoire of March 3 handed to Assistant Secretary Byroade by Mr. Beeley,² by which it informed that British Government accepts principle of equal participation by AIOC and American companies at level of 40% each. US Government believes this division should contribute markedly toward reaching solution with Iranian authorities which will prove durable. US Government is therefore in full agreement that shares in consortium should be 40% each to AIOC and to US companies with remaining 20% to be divided between French and Shell interests.

2. As to division of 20% portion between those interests, US Government remains of opinion expressed in its aide-mémoire given to Sir Roger Makins on February 25 to effect that percentage over 5% for French interests would be excessive, although this Government has always felt that French should be given realistic participation. Reasons for US position as to size of French participation, which are held strongly by US companies and subscribed to by Government, were elaborated orally in some detail yesterday.

3. US Government also continues to feel that settlement of question of Shell and French participation should be reached at Government level prior to further inter-company negotiations in London. Nevertheless, US Government prepared urge principals of American companies go to London at their earliest convenience. In taking this step US Government largely influenced by assurances of cooperation of British Government, which implied in British Embassy’s aide-mémoire of March 3 and in conversations both in Washington and London, toward working out realistic participation between these two groups. Hoover will also be prepared go London same time.

4. US Government has noted assumption of British Government that US Government will support position that composition of consortium, formed on basis of 40% participation for each of AIOC and American companies, is not matter for negotiation with Persian Government. US Government has held, as indicated in paragraph 2b of its aide-mémoire of February 19 that percentages of participation should be agreed before definitive negotiations begin with Iranian Government and, therefore, confirms correctness of this assumption.”

Reurtel 3813³ British Embassy representative made following points: (1) agreed composition of consortium, including participation Shell and French, must be determined prior conversations with Iranians, (2) British Government “will cooperate as necessary to steer toward” suitable composition of consortium, and (3) expressed satisfaction US company principals and Hoover proceeding London.⁴

Smith

1. Repeated to Tehran. Drafted and signed by Richards and approved in draft by Hoover.
2. The text of this aide-mémoire was transmitted to London in telegram 4507, Mar. 3. (888.2553/3–354)
3. See footnote 4, supra.
4. On Mar. 9 the Embassy in London informed the Department that the American company principals had held a preliminary meeting with British working-level officials prior to the first conference meeting scheduled that afternoon. The attitude of all concerned, Hoover reported, was constructive and cooperative. (Telegram 3878; 888.2553/3–954)