Foreign Relations of the United States, 1969–1976, Volume XXIV, Middle East Region and Arabian Peninsula, 1969–1972; Jordan, September 1970

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

Tehran, November 15, 1971, 0803Z.

6452. Subject: Gulf Islands. Ref: State 207380.²

1. Sir William Luce (accompanied by Amb Ramsbotham and British DCM Murray) briefed me November 13 much along lines of reftel, on status of his meeting with Shah at Caspian November 12. Luce confirmed Shah had demonstrated considerable flexibility and said two sides were very close on all points except for oil concession arrangements in Abu Musa area.

2. Luce said he left session with impression Shah was no longer as preoccupied as he had been over question of sovereignty and was now more interested in security aspects of island arrangements.

3. Virtual agreement reached on:

(A) Area of Abu Musa to be occupied by Iranians and Sharjah (during meeting Shah drew new and more generous line across map giving Sharjah well, Khalid’s grandfather’s grave and deep water needed for oil facility).

(B) Public statement by Khalid.

(C) Khalid’s request for agreement in writing. (Shah was opposed to signing agreement with Sharjah but accepted Luce’s suggestion that agreement be in form of exchange of letters between Iran and UK followed by exchange between UK and Sharjah. Luce believes he can sell this to Khalid.)

(D) Territorial waters, with both sides recognizing each other’s 12-mile limit.

(E) Right of Abu Musa inhabitants to fish around islands.

4. Shah also accepted exploitation of oil resources off Abu Musa to be conducted by company designated by Sharjah (earlier in day Ely told us this would be Buttes).³ Agreement also reached on 50/50 split of oil revenues. However question of oil concession terms still unresolved. Shah rejected phraseology that oil operations conform to OPEC standards and said operations must be carried out in conformity with relevant laws and regulations of Iran. Luce said Iranian insistence on this point was last remaining hurdle and it was proving to be a difficult one because Sharjah decrees and Iranian laws on mineral resources are basically incompatible and negotiators are having trouble finding formula under which company can operate in manner acceptable to both Sharjah and Iranian laws.

5. Luce is clearly troubled by difficulties he has encountered on this point. Matter is now being discussed with Ambassador Afshar, who Luce says is legalistic, and with NIOC lawyers. Frustrating point is that there is agreement in principle on oil concession but language has not yet been worked out to reflect this agreement and Luce fears this aspect of negotiation will be bogged down in legalistic fine print unacceptable to Sharjah which could threaten entire agreement. Ely is now hard at work on language but if lawyers cannot agree Luce believes he will have to go back to Shah for decision based on political rather than legal considerations.

6. Basic agreement has no time limit although separate agreement on financial assistance specifies that Iran will provide aid for period of nine years. During meeting Shah said he wanted to append statement to basic agreement reserving right to intervene if security of Iranian forces in Abu Musa threatened or if stability of Gulf endangered. Luce said touchy point for Sharjah but he thought Khalid letter of last March accepting principle of stationing troops on Abu Musa in interest of security of Gulf might provide loop-hole to get around this problem. Luce added that, during private moment with Shah, he again stressed overall agreement as now envisaged gave Iran everything it needed from security viewpoint. He urged Shah not to be precipitous in exercising right of intervention and let matters develop gradually.

7. Assuming question of oil concession can be worked out, Luce said remaining problems are:

(A) Arranging for adequate provision for Umm al-Qaiwain and Ajman from Iran’s half of oil revenue. Shah has agreed in principle to paying these sheiks but amounts and methods of payment have yet to be worked out. Shah is reluctant to pay sheiks directly because their dispute is with Sharjah and Iran is not a party thereto.

(B) Language of Sharjah’s public announcement re basic agreement, as well as public statements which Iran and UK will have to make to their pariaments. Luce had assumed agreement will have to go to Majlis but Shah seemed undecided whether this would be necessary. In any event Luce foresees problems if language of these announcements does not follow same general lines. There is also problem that agreement in form of exchange of letters between Iran and Sharjah through UK is planned to be confidential. Luce said much more homework need to be done on this point.

(C) Timing of arrangements. Luce has stressed to Iranians that he has roughly two weeks to reach final settlement and time is rapidly running out. He said sheikhdoms plan declare establishment of federation on December 4 in time to apply for UN membership at this session of UNGA. Working backwards from that date, agreement re islands must be ready for signature; Sharjah, UK and GOI must have public statements in symmetry and Iranian forces should be in place on islands. Luce visualizes stationing of Iranian forces on islands should take place day or so before public announcement, most likely period being between November 30 and December 3. This is a complicated and tricky scenario hence Luce’s itchiness to get all details worked out in Tehran in next day or so so he can proceed immediately to Sharjah for final settlement.

(D) Tunbs Islands. Luce confirmed Ras al-Khaimah would not agree to voluntary cession of islands and refused to take Iranian money for them. He so informed Shah who said Iran would nevertheless be “generous” in financial settlement once Iran had islands unless Ras al-Khaimah created major fuss. British solution to this apparent impasse appears to be simple one, i.e. acquiescence in Iranian take-over to be implemented during November 30–December 3 time-frame. Luce said he believes Ras al-Khaimah would cave when faced with fait accompli. In any event in reply to inevitable questions in Commons on Tunbs, HMG proposed to state that Iranian take-over of Tunbs Islands was consistent with arrangements for security of Gulf as envisaged in overall settlement of island dispute—or words to that effect.

8. It was during discussion with Shah over timing of Iranian takeover of Tunbs Islands that Luce raised question of British participation in MIDLINK, noting this would overlap with Iranian garrisoning of forces on islands. Shah for obvious reasons made immediate decision to postpone MIDLINK exercise (ref Tehran 6441).⁴

Comment: In spite of several nagging details both sides appear to be very close to agreement and Luce is now more cautiously optimistic than after previous visits here this year. Given package that Luce brought with him from Sharjah, British acquiescence on Tunbs Islands and Shah’s flexibility and desire to reach settlement quickly, we agree with Luce’s cautious optimism. However, even if agreement signed we are not entirely out of woods and some contingency planning will be necessary on:

(A) What comment USG makes in answer to questions at time agreement is announced and Iranians have their forces on the islands. Luce expressed hope that we would take generally same line as British. However matter is not simple one because, according to Luce, once agreement reached and implemented, HMG apparently plans pull back and adopt position that agreement is between Iran and Sharjah, and not between Iran and UK on behalf of Sharjah.

(B) Position USG should take if issue goes to Security Council. Luce seems to be of impression Iraqis may well take matter to UN.

(C) Luce asked we not raise these two points with HMG in London or Washington until he has had opportunity to go over them with his own government back on London after which HMG will be in touch with us. End Comment.

9. Luce concluded with expression of appreciation for our continuing offer of assistance. He still did not think this necessary but if there is a final “crunch” in next few days over last minute impasse on such items as oil concessions he may recommend that we weigh in with Shah. He asked that we be ready for such eventuality because if we agreed to support British we would have to move quickly.

10. Ely also gave us briefing Nov 13 along same lines as Luce and left with us copies of documents on which State 203594⁵ based. He asked us not divulge to British that we in possession these papers.

Heck

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 602, Country Files, Middle East, Iran, Vol. IV. Secret; Priority; Exdis. It was repeated to Brussels (Priority) for Ambassador MacArthur, London (Priority), Dhahran, Jidda, and Kuwait.
2. Telegram 207380 to Tehran, November 12. (Ibid., RG 59, Central Files 1970–73, POL 33 PERSIAN GULF)
3. Northcutt Ely, an American lawyer, was hired by Shaikh Khalid to represent Sharjah in its offshore concession boundary disputes and to protect the entirety of its interests in regards to Abu Musa. Ely also represented Buttes Oil Company. (Telegram 2806 from London, April 14, 1970; ibid.) Sharjah had granted Buttes Oil Company drilling concession rights in Abu Musa territorial water, an offshore area contested by Umm al-Qaiwain, and, as MacArthur reported in telegram 1420 from Tehran, April 13, 1970, by Iran, which claimed Abu Musa itself. MacArthur thought Khalid’s actions might have been a bid to get the United States involved in the dispute. (Ibid.)
4. Telegram 6441 from Tehran, November 13, reported that Shah and Luce had discussed the question of British participation in MIDLINK; the Shah decided to postpone the exercise. (Ibid., DEF 6–2 CENTO) MIDLINK, the annual CENTO naval exercises in the Indian Ocean operations area, was to be held November 27 through December 7. In a November 10 memorandum, Saunders informed Haig that there was some question as to whether the British would participate given the “delicacy” of their final negotiations in the Persian Gulf. (Ibid., Nixon Presidential Materials, NSC Files, Box 1276, Saunders Files, Persian Gulf)
5. In telegram 203594 to Tehran, November 8, the Department noted that Ely had provided a “virtually identical rundown” of the final Iran–Sharjah deal that resulted from recent Luce talks. He did add “refinements,” the main one being that neither Iran nor Sharjah would give up its claim to Abu Musa nor recognize the other’s claim. (Ibid., Box 602, Country Files, Middle East, Iran, Vol. IV)