Memorandum, State Department Summary of Telegrams

NLT(Naval A.de) 203 OFFICE OF THE SECRETARY OF STATE WASHINGTON May 17, 1951 SUMMARY OF TELEGRAMS IRAN The British Embassy has informed the Department that the British Government is sending additional instructions to Ambassador Shepherd in Tehran concerning his approach to Prime Minister Mossadeq. Shepherd is to suggest to Mossadeq that the British are willing to cooperate in Iran's national aspirations in re- gard to their oil, but that Mossadeq must realize that his own program will fail if he makes it impossible for the company to continue to operate effectively; Britain is willing to help Persia, including giving it economic assistance, but the UK cannot accept Persia's right to repudiate contracts; it objects strongly to the wording of the Majlis resolutions but it is prepared to negotiate a settlement which, provided it were satisfactory in other re- spects (a qualification ot which the UK attaches importance), involved some form of nationalization. We have informed Ambassador Grady that the Depart- ment is contemplating a public statement here in the immediate future on the Iranian situation in view of the necessity of: 1) supporting the British, now that they have accepted the principle of nationalization; 2) taking a definite and clear-cut position on the general principle of the validity of contractual relationships which is essential if US concessions are to be maintained throughout the world; and 3) driving home to the Iranians the difficulties they face if the AIOC is expelled. We have also informed Ambassador Grady that the Depart- ment has discussed the Iranian question with representatives of the major US oil companies with Middle East interests. These representatives were un- animous in stating that no responsible company would under present circum- - stances attempt to secure managerial concessions from the Iranian Govern- ment, since 1) "concession jumping" jeopardizes concessions elsewhere; and 2) the Iranian Government's action on the AIOC is such that no successor company could have confidence in the government's honoring the contract. These representatives, however, could not speak for independent operators and contractors. DECLASSIFIED E.O. 12065, Sec. 3-402 S T State Dept. Guidelines, March 6, 1982 By DEB NLT, Date 9-5-85