888.2553/8–1751: Telegram

No. 71
The Special Assistant to the President (Harriman) to the Department of State1

top secret

675. From Harriman for President and Secretary. No distribution except as directed by Secretary’s office. Mosadeq called on me today (Thursday)2 and I took occasion to emphasize essentiality of British and Iranian representatives engaging in discussions on completely frank basis without stenographic records. I mentioned success of this method in our own discussions. Mosadeq fully agreed desirability of this, but commented it would be difficult to work with British on same basis of frankness as Iranian had with us.

I said that British proposal3 seemed to me to provide good basis for discussions, and that I felt arrangements could be worked out under it entirely consistent with formula under which British were invited to come to Iran.4 To this Mosadeq disagreed and said that while he was prepared to accept concept of British purchasing organization which would sell to other countries he could under no circumstances agree to British-controlled agency operating within Iran. British proposal was in fact for a concession in disguise. He said moreover he could never sell this to Iranian people. I stated efficient operation of oil industry required foreign agency which could operate as instrument of NIOC, and felt sure that he could get Iranian people to accept a proper arrangement. I pointed out that foreign technicians could not be induced to accept employment directly with Iran Govt Corporation and reviewed some of the reasons for this. As Mosadeq remained adamant in his position and was complacent about disastrous effects of losing oil income, I said that before I left Iran I thought he should permit Levy to explain to his technicians why any agency is essential and that arrangements might be made by Iran Govt to control it and assure that it [Page 140] operates in fact in interest of Iran. Mosadeq accepted this but said that he would like Levy to talk with him directly. He asked that Levy call on him Friday afternoon to spend “two or three hours” discussing matter.

While Mosadeq’s present position regarding purchasing organization is an advance, question of operating agency is major issue with him and may lead to an impasse.

I have informed Stokes personally and confidentially of Levy’s proposed talk with Mosadeq. However, I suggest that this not be discussed with British either London or Washington.5

  1. Repeated to London eyes only for the Ambassador.
  2. Aug. 16.
  3. Regarding the Stokes proposal, see Document 67.
  4. Regarding the “Harriman formula,” see Document 52.
  5. On Aug. 18 Harriman reported as follows on Levy’s meeting with Mosadeq:

    “In his meeting with Mosadeq Friday afternoon Levy outlined technical reasons why foreign organization was needed to conduct oil operations in Iran as agent NIOC, and reviewed arrangements in other countries which assured that operating agencies carry out their work in conformity agreements with govts. Talk was most friendly, and Mosadeq showed real interest in presentation and asked number of questions. Although he did not deny validity arguments presented, Mosadeq repeated that he cld not accept agency arrangement. Levy stated Brit proposal provided basis for negotiation of agreement which wld be fully within formula under which Brit mission came to Iran. The only basis upon which Mosadeq disputed this was that Iran cld not control agency, since ‘the servant (meaning Brit) wld be bigger than the master’. Mosadeq again showed complacency at possible results loss of oil revenues.” (Telegram 604 from Tehran; 888.2553/8–1851)