888.2553/7–654: Telegram

No. 483
The Ambassador in Iran (Henderson) to the Department of State1


35. Noforn. Limited distribution. From Hoover.

Negotiating group continue hold formal meetings almost daily during period June 29 to July 5. Consortium and Iranians both appear feel constructive progress being made.
Appears that satisfactory agreement in principle reached on problems incidental to (a) management and (b) organization, nationality and functions of operating companies. It still necessary work out formula and wording satisfactory both sides setting forth mutual relationships involved in proposed purchase and sale-type contract. Iranians still proposing that consortium should operate exclusively on behalf of Iran/NIOC while consortium desires statement setting forth principle of operation “on behalf of and for mutual benefit of both parties”. It my impression satisfactory solution will be found shortly as Iranians frankly admit it primarily problem finding words not offensive to Majlis and public.
Some discussions undertaken on volume of offtake, price (i.e., discount), term of agreement and other related problems, and while considerable difficulties remain, it my impression compensations not too far apart.
British Ambassador reports, on basis recent compensation talks, delegations now examining into Iranian counterclaims and he hopeful Iranians agreeable to lump-sum payment in interest of satisfactory and rapid solution. So far, we have received no substantiation this attitude on part of Iranians. Suggest Department continue take no action this phase of negotiations for present.
If Embassy London can from time to time advise us re any information it obtains, without making pointed inquiry, concerning HMG intentions re compensations negotiations, it would be helpful in evaluation of situation locally.
  1. Repeated to London.