Telegram from Ambassador Walter Gifford to Secretary of State Dean Acheson, Number 543

NLT (PSF.5465)342 INCOMING TELEGRAM Department of State copy 10F2 TELEGRAPH BRANCH Upop SECRED D-X A Action Control: 14145 NEA Rec'd: July 26, 1951 FROM: London 7:35 p.m. 987 Info SS TO: Secretary of State G EUR NO: 543, July 26,1 9 p.m. E DCR NIACT SENT NIACT TEHRAN 29, NIACT DEPT 543. Ko FOR HARRIMAN EYES ONLY GRADY AND HARRIMAN. EYES ONLY SECRETARY- I am just informed of cabinet action. It is disappointing but perhans not hopeless. Instructions have gone to Shepherd which he is to discuss with you before making any approach to Iran Govt. The instructions include a note for Iran Govt which in its opening conforms to sub - stance of draft quoted first paragraph my 28 (rptd Dept 501) yesterday. However, Morrison feared, Cabinet in- sisted on some action on interference with British personnel before sending minister; moreover, it seems to me Cabinet went dangerously further in also saying sending minister cld not (rpt not) be done while company's operations being interfered with. Also, Shepherd is instructed to make clear that UK cannot accept position under which the whole of the company's operations have been brought to a standstill and I understand that Brit note wld say that UK wld expect Iran Govt to send instructions to their authorities in the sense that interference with company's operations and restrictions with staff both be discontinued. I protested vigorously that this sounded like the ICJ decision allowing company resume operations as before and thought it might well be disastrous. I was told that it is deliberate that no (rpt no) criteria were set forth as to what was meant or what would be needed to meet British wishes in this matter of company's operations. (Shepherd's instructions do not (rptinot) in fact make any mention of ICJ ruling) On the whole, I concluded that the British wld like to see some concrete action in Khudistan that would show Iran is sincere in trying to work out deal with them Shepherd will explain that earnest of Iranian good will wld be with drawal of Makki and other trouble makers. It is important in showing that British hope negotiations will take place that Shepherd and Brit Consul General Khorramshahr have been REPRODUCTION OF THIS UNGA MESSAGE IS PROHIBITED