Telegram from Ambassador Henry Grady to Secretary of State Dean Acheson, Number 736

NLT(PSF.SUBJ.) 299 INCOMING TELEGRAM Department of State copy 1002 TELEGRAPH BRANCH 4-1-X TOP OBORDT 868 A Action Control: 11225 Rec'd: August 22, 1951 NEA FROM: Tehran 5:42 a.m TROMAN Info SS TO: Secretary of State ARCHIVES "NATIONAL AND DECLASSIFIED RECORDS G to SERVICE E. O. 11652, Sec. 3(E) and EUR NO: 736, August 22, 9 a.mo Dept. of State letter, 4-11-71 NLJ 7P-2 E By NL. NC , NARS 20.78 DCR PRIORITY SENT DEPT 736 , RPTD INFO LONDON 160 EYES ONLY AMBASSADOR. FROM HARRIMAN TO PRESIDENT AND SECRETARY. NO DISTRIBUTION EXCEPT BY DIRECTION OF SECRETARY OFFICE. This morning (Tuesday) in our talk with Mosadeq it appeared to Stokes and myself that there was little if any chance to come to a workable arrangement with him. He stated that he wanted the Brit staff to continue working in Iran for NIOC just as they had before for the AIOC and then completely re. fused to accept any arrangement which wld make it possible for them to work. Stokes offered to abandon the proposal for an operating agency and to develop a plan by which the staff wld continue under a general manager reporting to and under the direction of NIOC. Mosadeq also refused this idea, , repeating a suggestion he had made yesterday that some 20 section heads, all to be Brit, wld report directly to the Board of Directors. The Board of 12 members would consist of 4 Iranians and 8 6119 experts selected from continental European countries. Stokes and I tried our best to explaincthe chaos which wld result from such a scheme and to convince him that no (rpt no) respon sible person wld accept employment under such conditions His only answer was that the Iranian people wld not ( rpt not) agree. He said he wld call together the Majlis and put up to it Stoke's proposals. Stokes refused to permit such a move and withdrew his 8-point proposal. He explained that he was dealing with the PRIMIN and not the Majlis and that nothing cld go from him to the Ma jlis which had not been endorsed by Mosadeq and his TS Cabinet. Stokes has given Mosadeq until tomorrow (Wednesday) noon tosa e express his willingness to negotiate on practical basis or he will return to London. This he later confirmed by letter to Mosadeq gomu Mosadeq expects foreign staff to work on his terms, foreign oil companies to buy and distribute oil on his terms, and Iran to get all of the profits with compensation only to owners for property taken over. In his dream world the simple passage of legislation REPRODUCTION OF THIS TOE SECRET MESSAGE IS PROHIBITED