Memorandum, State Department Summary of Telegrams

OFFICE OF THE SECRETARY OF STATE WASHINGTON May 10, 1951 SECRE T SUMMARY OF TELEGRAMS IRAN AIOC informed Iranian Government Tuesday of its demand for arbitration under the 1933 concession. Prime Minister Mossadeq refused to see the AIOC repre - sentative, but authorized Panshi, his executive assistant, to accept the communication. According to the British Embassy the AIOC demand was made at this time as a result of a message transmitted to the British Embassy by the Shah through an intermediary, which message indicated that Mossadeq would welcome such a demand because it would enable him to stall on the Oil Commission for a while. Later, however, Mossadeq is understood to have expressed astonishment at the demand for arbitration. Embassy London has warned against the pos. - sibility of American oil companies rushing into the gap left by the AIOC nationalization and attempting to get oil exploitation contracts from the Iranians. The Embassy fears that intervention by American interests or individuals to take advantage of the AIOC's predicament would lend substance to the Soviet line that the US is attempting to gain mastery over Iran and that American oil companies are seeking to supplant Great Britain in Iran. The Embassy emphasizes the extensive frustration and anger which have grown up in England as a result of the growing Near East practice of "twisting the lion's tail" under world circumstances in which the decreased British power position makes it impossible or impracticable to take effective preventive or retaliatory action. This situation strikes at the foundation of British pride and efforts to reestablish themselves as an equal partner with the US, says the Embassy, and it concludes that in these circumstances any action which gave the appearance that the US was enriching itself at the expense of its weakened partner would result in widespread resentment and would inevitably undermine the effectiveness of US-UK partnership. DECLASSIFIED E.O. 12065, Sec. 3-402 SECREI State Dept. Guidelines, March 6, 1982 By DEB NTT, Date 9-5-65