888.2553/8–1951: Telegram

No. 73
The Special Assistant to the President (Harriman) to the Department of State

top secret

709. From Harriman to President and Secretary. No distribution except by direction of Secy’s office. Fol is substance of remarks which I made at mtg between Brit mission and Iran negot comite this morning, as reported in my earlier tel today:1

“Prior arrival Brit del I repeatedly stated, and Levy explained in detail, that:

Iran oil industry in order to be able to sell its oil in world markets, must make arrangements with large organization [Page 143] that cld make avail transport and distr for marketing Iran oil on world-wide basis. Iran cannot obtain higher income from its oil operation than other producing countries in comparable circumstances. Otherwise, company wld [not?] make such arrangements but wld buy or develop oil in other producing countries. Brit interests are only ones that are in position to market large quantities Iran oil.
Iran Govt, as it has stated itself, depends on fon technical assistance for operation its oil industry within Iran, and must have continuous access to ever advancing oil technology of world. I have constantly stated this technical assistance cannot be obtained thru employment individual technicians but that competent management org is required, working under contract for and on behalf of NIOC. This arrangement well known and accepted throughout world not only in oil industry but in other business relationships. Aside from Iran’s need for management, technicians themselves wld not come to Iran or any other country except under arrangements satis to them. They are free men.

Brit proposals provide good basis for negot for fair settlement. They conform to formula, submitted thru me, under which Brit were asked to come to negot. Iran Govt in its reply has read into proposals concepts which were not intended. Brit proposals contemplated negots to work out specific arrangements under principles stated. Iran Govt has not so far undertaken such negots as was agreed in formula but rather has read into proposals certain conclusion re operations within Iran which were not contemplated by proposals and against which safeguards cld be worked out thru discussion and negot. Iran Govt has now submitted reply which ignores my previous statements and is contrary well known commercial methods of internatl supply and distr of oil.

US believes seizure by any govt of fon owned properties without either paying prompt adequate and eff compensation or working out new arrangements mutually satis to former owner and govt, is not nationalization, but confiscation. Iran Govt has made it clear it does not intend to confiscate, and I believe arrangements possible on basis Brit proposals which will permit Iran to realize its aspirations. Under such arrangement Iran wld control its oil industry within Iran and wld obtain very large income, as large as it’s possible to receive, which has been est by Brit Min to be about 50 million pounds on basis 1950 operations. Income this magnitude wld make it possible for Iran promptly to carry out extensive development vast econ potential of country and thus improve health and welfare Iran people. US anxious assist in any way to these ends. Whole principle of US assistance however is to help other countries to help themselves.

Collapse these negots will lead to further misery to Iran people and leave them no hope of getting their conditions which they so justly expect and deserve. Pres Truman asked me come Iran to help work out fair arrangement and I have earnestly tried with all frankness to give impartial advice thru which controversy cld be settled in fair and equitable manner and thru which Iran cld obtain max possible income.

[Page 144]

Publication of statement handed last night Brit del wld further confuse already much confused Iran public as to facts interntl oil business and real intent of Brit proposals. Earnestly hope publication this doc will be withheld and that it will be withdrawn or amended in such way as to permit negots on realistic basis. Its release wld compel me make public statement along lines of what I have said”.2

If I am compelled to make public statement it will of course be more moderate in tone, leaving essentially intact substance remarks re commercial facts, confiscation and nationalization, and Brit proposals.

  1. Supra.
  2. In his next telegram Harriman reported that the Iranian Government had decided to postpone the release of its reply to the press and that arrangements had been made to resume negotiations on Aug. 20 among Mosadeq, Stokes, and Harriman in lieu of discussions with the Iranian negotiating committee. (Telegram 710 from Tehran, Aug. 19, 7 p.m.; 888.2553/8–1951)