Memorandum, State Department Summary of Telegrams

NCT/NAVAL AIDE) 447 OFFICE OF THE SECRETARY OF STATE DECLASSIFIED WASHINGTON E.O. 12065, Guidelines, Sec. March 3-402 6, 1982 State DEB Dept. NLT, Date 9-11-8 December 19, 1952 By TOP SECRET SECURITY INF ORMATION SUMMARY OF TELEGRAMS IRAN The Belgian financial expert, Camille Gutt, has given us a further exposition of his ideas for settling the Iranian oil question, following a second discussion with Prime Minister Mosadeq. Gutt's thought is to do away with the legalistic positions publicly taken from which neither the British nor Iranians can recede. He believes we should make a fresh start and try to agree on a fair figure of compensation, translated into a substantial rebate on the oil price for a long- term contract. Mr. Gutt thinks he has persuaded Dr. Mosadeq to accept this idea. In any event, Mosadeq wants Gutt to return to the US to discuss the idea. Gutt has requested that no initiative be taken vis-a-vis the Iranian Government until he sees the Secretary and Mr. Dulles. At the same time, however, the repre- sentative of a group of US independent oil companies who has been attempting to negotiate a deal with the Iranians belièves Mosadeq's advisers have persuaded him not to conclude any long-ter con- tract, even subject to price renegotiation, as they apparently be- lieve the National Iranian Oil Company should develop its own distribution facilities and only want immediate financial returns from the oil in order to begin the purchase of tankers for the company's account. Following the Secretary's talk with Mr. Eden in Paris on Iran, the UK Foreign Office is considering whether it can draft a statement to guide an arbitral tribunal relating the determination of the amount of compensation to Iran's capacity to pay, which Ambassador Henderson could use in his efforts to persuade Mosadeq to accept arbitration. The British had felt this point should be most effective in persuading Mosadeq to accept arbitration, but were reluctant to use it because of the possible effect in other areas. Meanwhile, we have informed the UK of our decision to recommend favorable consideration by the Export-Import Bank of Iran's request for a $25 million economic development loan. The loan would not relieve Iran's current TOP SECRET SECURITY INFORMATION