Telegram from Ambassador Henry Grady to Secretary of State Dean Acheson, Number 276

NLT(PSF-5UBS.) 361 INCOMING TELEGRAM Department of State COPY 1 0F2 186 TELEGRAPH BRANCH 25-21-X nor A Action II Control: 9980 NEA Rec'd: July 19, 1951 FROM: Tehran 12:55 p.m. Info pe SS TO: Secretary of State po G T EUR NO: 276, July 19, Noon DCR and PRIORITY FROM HARRIMAN FOR THE PRESIDENT AND SECRETARY. NO (RPT NO) DISTRIBUTION EXCEPT AS DIRECTED BY SECRETARY' OFFICE. Grady had five friendly Iran political figures to dinner Tuesday night which gave me an informal opportunity to ex- plain the economic consequences of oil shut-down and necessity of working out arrangements in some form with British. They appeared to agree that a solution with British should be reached. They also said that the opportunity provided by my presence must not (rpt not) be lost. On other hand, they pointed out that they had little influence on Mosadeq at moment and that he had captured popular emotion and wide-spread sup port. Wednesday morning Ala, Minister of Court, present Tuesday night, called on me. We had a long and frank discussion. He explained the Shah's position, saying that he realized the issues at stake and yet could not (rpt not) safely take any direct action. The country is so strongly behind Mosadeq that no (rpt no) other individual could now obtain popular approval of a deal with British. He believes every effort and the TRUBAN must be made to persuade Mosadeq to be reasonable. Ala said Commission that even Mosadeq could not (rpt not) repudiate the nine point Nationalization Law but could interpretate the points C.s. liberally and make additions. In any event British political influence in Iran affairs must be stopped both by oil officials and British Govt. He referred to shooting trips" by Mili- tary Attache which in fact were for purpose of contacting tri- bal leaders. LGS I told him I had come to conclusion that only way to break impasse was through govt to govt (British-Iran discussions and suggested the advisability of a member of British Cabinet coming to Tehran while I was still here gurg bogges orre I said I was sure his govt could attain its political objectives Br a Sec and any as above at State 5-31-74 wir 73.3 mor SEGRIT REPRODUCTION OF THIS Ex NLT. HC NARS e 10-2-2 MESSAGE IS PROHIBITED