888.2553/5–3154: Telegram
No. 469
The Ambassador in Iran (Henderson) to the Department of State1
[Received 9:16 a.m.]
2439. 1. On evening May 29 British Ambassador called on me in depressed frame mind. He said compensation negotiations “had gone sour”. Amini had sent him word through Rouwani, legal adviser NIOC, who had been participating in conversations, to effect: (a) Iran could not agree UK suggestion that amount net compensation to be paid by Iran to AIOC should be decided upon without detailed examination by each side of claims and counterclaims. Necessary government be able explain to critics precisely how any amount compensation to be paid had been determined; (b) Iran Government in view strong Iran public opinion could not agree to consider AIOC claims for damages resulting from loss profits. In any event losses incurred by Iran during last three years as result of British blockade against Iran oil exports would exceed AIOC losses from failure receive Iranian oils; (c) Iran Government prepared examine with AIOC claims and counterclaims and if unable reach agreement it willing submit matter for arbitration. In opinion Iranian Government any fair tribunal would decide British owed Iran rather than Iran owed AIOC. (I made no note of statements made to me by British Ambassador and above may not be completely precise summary Amini’s message. British Ambassador, however, is sending detailed telegram on subject which undoubtedly will be discussed with Embassy London and Department.)
2. British Ambassador told me he regarded this set-back as extremely serious, and was telegraphing his government certain suggestions as to what next British move might be. One his suggestions was that I be instructed to support such representations as he might be requested by his government to make. He said he hoped I would have no objections. I told him I would have no hesitation take up matter with Entezam and Amini, or both, if US Government should so desire. I thought however, such representation as I might make should be of informal nature free from detail. Obviously neither US Government nor I would be in position to argue re how much Iran might owe to AIOC or AIOC to Iran. It seemed to me however, that I might well discuss principles and stress that [Page 1019] statesmanlike attitude on part Iran re this matter likely improve atmosphere negotiations.
3. I told Ambassador that during my conversation with Shah on May 27 latter had remarked that in his opinion Iranian Government could not agree to pay compensation except for loss assets and that probably best way to settle this particular problem was for it be submitted to ICJ; that I had replied to Shah that I feared submission this matter to international arbitration would result in bitterness and recriminations and keep alive animosities just at time when oil industry should start up again in atmosphere mutual good-will. I added that I had also told Shah that matter compensation for loss assets in area concession was being handled in another manner and could not therefore in my opinion be basis British claims for compensation.
- Repeated to London.↩