Memorandum, State Department Summary of Telegrams

NLT (Naval Aide 1405 OFFICE OF DECLASSIFIED THE SECRETARY OF STATE 12065, Sec. 3-402 6, 1982 WASHINGTON State Dept. DEB NLT, Date E.O. Guidelines, March 4-10-85 October 8, 1952 P By TOP SECRET SECURITY INFORMATION SUMMARY OF TELEGRAMS IRAN In an unexpected move, Prime Minister Mosadeq has replied promptly to recent messages from the US and UK suggesting the reopening of negotiations between Britain and Iran on the oil question. Mosadeq now proposes that within a week the AIOC pay Iran twenty million pounds, convertible into dollars, following which company representatives would come to Tehran to negotiate within the limits of the Iranian Government's counterproposals. The remainder of the twenty-nine million pounds out of the total of forty-nine million which Iran claims would be payable to the Iranian Government at the end of the negotiations, for which a period of three weeks is envisaged. In a telephone con- versation with Ambassador Henderson, Dr. Mosadeq also stated that should the AIOC representatives have another mutually advan- tageous proposal to advance, his government would be willing to consider it. While the AIOC would not be obliged to agree in advance to pay the twenty-nine million pound balance, negotiations would, however, break down if the remaining twenty-nine million pounds were not paid. The Prime Minister said he must have twenty million pounds by October 14, stressing that 'the crux of Iran's problem was the need for money.'` In his messages to the Secretary and to Mr. Eden, Dr. Mosadeq emphasized the Iranian Government's goodwill and desire to reach a solution in view of the impossibility of continuing the present state of affairs. Meanwhile, our Ambassador to Tehran and the Department have both independently suggested the possibility of solving the problem of compensation and claims and counterclaims by a simple and arbitrary agreement for lump sum payments. According to both analyses, such a settlement would be in terms of a certain amount of free oil to Britain over a period of years to wipe the slate clean, connected with some type of arrangement which would envisage the movement of Iranian oil through an international company in which British interests might indirectly be satisfied. Specifically, Ambassador Henderson suggests the AIOC and Iran agree that the Iranian Government owes AIOC 250 million pounds as compensation for its installations, structures and oil above ground and that AIOC owes sixty million in counterclaims. He is convinced the Iranian Government will never pay more than $500 million in compensation and argues that 250 million pounds minus sixty million pounds which the Company would have to pay almost TOP SECRET SECURITY INE ORMA TION