888.2553/3–1854: Telegram
No. 438
The Ambassador in the United Kingdom
(Aldrich) to the
Department of State1
top
secret
priority
priority
London, March 18, 1954—4
p.m.
4015. Limited distribution. From Hoover.
- 1.
- Butterworth and I attended meeting afternoon March 17 requested by Caccia, Armstrong and Maud (Foreign Office, Treasury and Fuel and Power respectively).
- 2.
- They stated Eden had long interview with Fraser that morning but vouchsafed little specific information on outcome except that Fraser (a) agreed to have company principals attend meeting primarily for appearances sake later in day and (b) stated he would require day or two further to analyze and answer American group’s memorandum delivered to him that morning (summary sent Department Embtel 39922). (Understand later in evening March 17 Eden advised Ambassador that Fraser had been told negotiations must not be broken off without consent of HMG.)
- 3.
- Caccia and Maud stated that HMG were in accord with principles outlined in American group memorandum, namely (a) that if consortium able obtain type of operating agreement referred to, then AIOC should have no claim to compensation for future profits from Iran, (b) compensation for past damages sustained by AIOC, less justifiable counterclaims by Iran, should be held to some realistic level, and (c) negotiations within consortium should proceed on basis of a commercial deal. They felt that limits within which consortium should negotiate would be figure of 1270 million dollars proposed by AIOC (stated on 100 percent basis) on high side and 800 million proposed by American group on low side. They stated Fraser probably unprepared negotiate on such basis that afternoon meeting, but indicated he would do so later.
- 4.
- We stated that this was encouraging development, and felt sure other groups ready to talk whenever AIOC requested them do so.
- 5.
- We pointed out further that negotiation of satisfactory contract with Iran would be determining factor in whether or not Iran would have to pay compensation for future profits and therefore negotiations for such contract should precede any discussions re compensation. In other words, Iranians should be advised that amount of compensation largely dependent upon nature of deal that could be worked out. They agreed, and again we feel this to be constructive step forward, as we concerned possibility AIOC might jeopardize entire negotiations by first presenting unrealistic claims for compensation.
- 6.
- In re French participation matter, Armstrong advised that HMG had again told French that operations must be in sterling, otherwise all other participants would request same relative advantage of discharging obligations in other currencies. He assured us HMG would adhere strongly to this position and believed French problem would probably straighten itself out if not pressed too hard at this time.
- 7.
- One of most difficult problems in these negotiations is that Fraser’s accounts of his actions to HMG seem often at variance with what actually takes place in inter-company meetings. HMG obviously under great difficulties in dealing with him and apparently becoming increasingly more restive as delay increases. We endeavoring maintain cooperative and understanding attitude with HMG to avoid at all costs pushing HMG and AIOC back into same corner together again, yet at same time keep up maximum pressure for action on realistic basis.
- 8.
- Informal meeting scheduled for morning March 18 between Harden representing American and Shell group, and Fraser of AIOC, while full meeting planned between company principals and AIOC in afternoon. Butterworth and I will continue discussions with Caccia and Maud.
Aldrich