362. Telegram From the Embassy in Iran to the Department of State1

214. Unfortunately Deptel 241 August 82 was received too late for my audience with Shah this morning, although Shah expressed to me his hope Egypt in fact would attend conference.

First ten minutes of audience devoted to discussion recent floods from which area he just returned. Shah expressed much gratitude for US assistance.

Conversation naturally turned to Suez situation and I handed him summary President’s remarks thereon in his press conference yesterday. Shah was impressed with moderate tone, which he felt reflected statesmanlike attitude. I asked him if he had received Ardalan’s notes on proposed resolution for Suez conference August 16 and handed him paraphrase outline. After perusing them he replied he was not yet ready to take position on matter, which would require some study. He said that prior to conference Iranian Government would have to make some official statement. He believed Iranian policy was thoroughly in line with that of US, namely that while recognizing right of Egypt to “nationalize” a purely Egyptian company, some means must be found for guaranteeing free and secure use of Suez Canal as international waterway.

Shah recalled that on several occasions he had told me and other American representatives that in his opinion US was following wrong policy in giving in to Nasser, who was a “mad man”. He also cited warnings sounded recent Baghdad Pact conference Tehran by Nuri of Iraq and Menderes of Turkey, and his disappointment we had not acted sooner put Nasser in his place.

Shah hoped sincerely West would take strong stand in matter although he deprecated resort to force, as apparently threatened by UK and France, even though this might eventually be necessary as Indian Ambassador had told him yesterday. He could not understand why UK had given such publicity to military moves in Mediterranean. This had effect of stiffening Egyptian resistance. There would have been plenty of time for military mobilization after conference if necessary.

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He felt every effort should be made to prevent consolidation of “Arab imperialism”. To his mind most effective counterweight would be immediate strengthening of BP. While he did not raise question of immediate US adherence he felt it was to US interest to strengthen Turkey, Iran and Pakistan both militarily and economically.

In this connection he inquired whether it would not be feasible to obtain US assistance immediately on construction of oil pipeline from Iranian oil fields through Turkish territory. He said while alternative route might be more feasible in engineering sense and certainly cheaper, i.e., through Iraq to Turkey, one should always remember Iraq was still Arab state and there is no guarantee Iraq would not follow eventually other Arab states. He therefore strongly urged pipeline should be entirely within non-Arab states. In his opinion it was most essential for peace of ME that non-Arab Muslim states should be encouraged to feel distinct from Arabs and made to feel importance of their ties with West. Shah said if Nasser were permitted to get away with his “steal”, precedent would undoubtedly be followed by similar moves on part other Arab states and pressure would inevitably build up in Iran and even Pakistan and Turkey so as to force nationalistic reaction of Mossadegh variety against wishes governing groups.

I told him that if “nationalization” pattern should continue—and I informed him of Indonesian repudiation of Dutch debt—it would be impossible persuade foreign private capital to come into undeveloped countries as had been so fervently advocated by Iran and other ME countries. Shah agreed and at my suggestion said it might be useful for him to pass on the thought through his ambassadors to other Middle East governments.

Shah said of course if conference successful in imposing some kind international control over Suez Canal, difficult problems to which he referred would be postponed but if Egypt is successful, with or without Russian backing, in defying West, something drastic in way of realignment of ME would be necessary.

When I asked him specifically if he had any other thoughts with respect to forthcoming conference he replied he had none, other than the very tentative suggestion that conference might wish to consider possibility of making “international authority” a dependent organ of UN. He believes such formula more acceptable both to Egypt and Soviet Union, and if governing instrument were properly drawn up it would guarantee to maritime nations free and secure use of Suez.

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On my departure I again stressed hope that Iran might find it possible to agree with principles of proposed resolution, to which he replied matter would require study but he hoped very much conference would result in establishment of international body guaranteeing free and secure use this international waterway.

  1. Source: Department of State, Central Files, 974.7301/8–956. Secret; Priority. Repeated to London, Cairo, and Paris.
  2. Telegram 241 suggested it would be useful if the Shah were to use his influence to persuade Nasser to attend the London Conference on the Suez Canal, August 16–23. (Ibid., 974.7301/8–756) For documentation on the conference, see vol. XVI, pp. 212 ff.