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

888.2553/5–2854: Telegram

No. 466
The Ambassador in Iran (Henderson) to the Department of State¹

secret
priority

Tehran, May 28, 1954—6 p.m.

2418. Limit distribution.

1. On evening May 25 Ala, Minister Court, suggested it might be useful for me request audience Shah. I agreed. Morning 26th he telephoned appointment May 27. At my suggestion, I saw Ala morning May 26.

2. During long conversation Ala told me Shah would probably ask my opinion re wisdom bringing another Prime Minister to conclude oil negotiations. Some Shah’s advisers had been telling him US and particularly UK did not like idea concluding agreement with Zahedi, and agreement would, therefore, be easier if Zahedi could be replaced by someone of national stature more acceptable to West. Impression being created that negotiations would continue drag so long as Zahedi Prime Minister.…

3. I told Ala I surprised Shah should heed advice this kind. I confident both US and UK quite prepared conclude oil agreement with Zahedi Government. Delay this far in reaching agreement due to factors primarily commercial character. US companies and Dutch Shell just as much responsible for any delay attributable to consortium as AIOC. I could not see how any intelligent Iranian could believe Zahedi persona non grata to US. Ala said US press during recent months had been hostile to Zahedi Government. Since last February practically only articles re Iran to be found in US newspapers and magazines were of slighting character. He showed me issue Life magazine (I believe of April 19) containing some posed pictures of so-called “brainless one”, and indicating that this gangster played dominating role in Iranian elections. Ala said it hard for Iranians believe US Government favored Zahedi Government while tone US press either hostile or contemptuous. I told him I agreed this article, as well as number other articles published in US press of late, likely create false impression. They were, in my opinion, product of prejudiced and irresponsible journalism. They in no way indicative US policy. Ala should know from his long residence in US that US journalists and press sometimes took pride in publishing articles which appeared run counter to US policies. I convinced that any successor to Zahedi would encounter just as great, if not greater, difficulty in effecting oil settlement as Zahedi. If these negotiations should break down, I did not believe any other Prime Minister could succeed where Zahedi had failed unless Shah would give new Prime Minister more support than he had given Zahedi. Shah rather than Prime Minister likely in long run be decisive factor in achieving settlement.

4. During my talk with Shah on May 27, he asked … whether in my opinion it would be easier for oil settlement to be effected if Zahedi would be replaced. I said Ala had already discussed this matter with me and that after giving it some thought I had not changed opinion which I had expressed to Ala. I confident that US and UK would welcome oil agreement with Zahedi Government. Present delays not due to any dislike of Zahedi. As I had told Ala, American and Dutch companies just as adamant in insisting on certain conditions for settlement as AIOC. I had good reason believe Zahedi persona grata with British. Shah remarked rather drily that judging from recent attitude British and US press, British public opinion better disposed to Zahedi than America. I said I assumed he referring to recent article in Life magazine. He said he receiving clippings from various American newspapers and magazines distinctly critical of and unfriendly to Zahedi Government and also to Iran.

He at loss to know how to remedy bad press which Iran receives in US. I said that unfortunate set of circumstances and poor selection of journalists responsible for certain articles, but I could assure him US public and press in general were favorable. Shah said he had not meant to intimate US and British Governments did not like Zahedi or did not wish deal with him. His thought was that in view fact Zahedi did not seem to be popular throughout country and that, therefore, his position in Senate and Majlis was not too strong, US and UK Governments might believe that it would be preferable for government headed by some other person in whom public would have more confidence to sponsor oil settlement before country and in Senate and Majlis. I must be aware of fact that Zahedi was under fire primarily because (a) his government had failed to take effective measures re high cost of living; (b) it was believed to be infiltrated with graft and corruption; (c) it had failed to live up to his promises to promote economic development in country; and (d) it had been inept in conduct elections and in dealing with Majlis and Senate. Although Shah personally convinced that Mosadeq primarily responsible for present high cost living, that charges of corruption were being grossly exaggerated by enemies of government, and that in absence of funds Zahedi could not be blamed for poor showing in economic development of country, nevertheless, campaign carried on against Zahedi had resulted in sharp deterioration his position.… Shah said he would like me understand that his present uncertainty re desirability keeping Zahedi in office had not arisen because of unsatisfactory relations between Zahedi and himself. Zahedi’s attitude towards him had considerably shifted of late. Zahedi at present was making special efforts to cooperate with Shah and was in general accepting Shah’s suggestions with good grace. He did not believe his relations with any Prime Minister could be better than those which he now had with Zahedi.

5. I told Shah my feeling at moment was that it would be preferable not change horses in mid-stream unless really necessary. I feared such change might lead to political confusion and uncertainty and to further delays in oil negotiations. New government would probably feel constrained review conversations which had already taken place and might well seek to make changes re certain points already agreed upon. It would be discouraging if representatives consortium would be compelled explain its problems and attitudes to new government just at time present negotiators beginning understand what situation was. Furthermore, I not convinced any new Prime Minister would enjoy more prestige, at least initially, in country and legislature than Zahedi. I could not think of any Iranian who in present difficult circumstances could discharge duties of Prime Minister and negotiate oil settlement more effectively than Zahedi. If Zahedi could be prevailed upon to stop insisting on immediate purchase large quantities of equipment, supplies, etc., from abroad which Iran not likely in foreseeable future be in financial position to pay for or even to use and if he could be persuaded to confine his activities to policy-making and issuance of directives and to allow appropriate Iranian officials to carry on detailed operations, his prestige might be enhanced between now and such time as oil agreement would be submitted to Majlis for ratification.

It seemed to me preferable try to help guide Zahedi along sound paths rather than to look for his replacement. Regardless who Prime Minister might be at time oil agreement should come up for ratification, legislative approval would not be obtained unless legislature and people of country convinced that agreement met with approval Shah himself. Shah as well as Prime Minister must therefore sponsor any agreement if it was to have chance ratification. If Shah would seek guide Zahedi, giving him at same time full support, and if he would give unequivocal support to such agreement as Zahedi might conclude, it seemed to me good chance agreement being ratified unless representatives consortium should unexpectedly assume unreasonable attitude. Although these my present feelings, I nevertheless would discuss matter immediately with my British colleague and would be prepared within four or five days to talk about it again with Shah.

. . . . . . .

7. Position Zahedi Government may not be as strong now as it has been in past. Number ambitious and intriguing politicians, disappointed aspirants for high office, and enemies Zahedi for moment intriguing more or less in concert to have him replaced. Some hope that in game musical chairs which would follow change, they might be able move to more influential or important positions. Furthermore, campaign against Zahedi on grounds corruption has been quite effective. Zahedi, by taking personal interest in matters involving expenditures or commitment of funds and by appointing persons tarnished reputation in positions where they can dispose of considerable funds, has rather stupidly made himself and his government vulnerable to these charges. If Shah would nod his head in that direction both legislative houses would undoubtedly give Zahedi vote of no confidence. Matter of selection of successor would, however, not be so easy. In my opinion disappointment and bitterness following selection of successor would be greater than they are now. I believe, therefore, when I see Shah again I should repeat in substance what I have already told him. I might add that I might be compelled change my opinion if in spite efforts Shah and more responsible members Cabinet guide him, Zahedi should persist in course which if followed might cause disaster to Iran in future years. I would be grateful for any advice or suggestions which Department might see fit give. I do not plan see Shah again before June 3.

Henderson

1. Transmitted in three sections; repeated to London.