Memorandum, State Department Summary of Telegrams

MLT(Maual Aide) 389 Patrick OFFICE OF DECLASSIFIED THE SECRETARY OF STATE E0.12065, Sec. 3-402 WASHINGTON State Dept. Guidelines, March 6, 1982 By DEB NLT, Date 9-10-0 September 4, 1952 TOP SECRET SECURITY INE LORMA TION SUMMARY OF TELEGRAMS Iran W. Alton Jones, President of the Cities Service Company, has reported to our Ambassador at Tehran his conversations with Mosadeq subsequent to his (Jones') return from south Persia. Jones informed Mosadeq that he had found the Abadan refinery in excellent condition and that in his opinion the Iranian staff was capable. However he thought that several hundred foreign engineers must be employed if the fields and plant were to be operated effectively. was He again emphasized it'extremely important, that if Iran hopes to obtain any revenues from oil in the near future, that it come to agreement with the AIOC; that no company or group of oil companies other thanAIOC would be able for some time to arrange for markets for Iranian oil prod- ucts. He thought it would be no great problem for Iran to find such foreign non-British technicians as might be necessary to insure rational operation of the oil fields and refinery. Mosadeq raised with Jones the Truman-Churchill mes- sage and insisted that if Iran should accept the proposals it would fall into a trap since acceptance of the message would in effect mean that the British claim for compensation would be based on the 1933 agreement and the British would be able to file claims of fantastic size by computing profits which AIOC might have been able to make between 1951 and 1993. After further discussions Mosadeq had told Jones he would be willing to accept agreement of the following type with the British: (1) The British would recognize the nationalization act, (2) the question of claims and counter claims would go to the International Court and (3) British claims would be limited to loss by AIOC of its plant and installations as a result of the nationalization law. AIOC could present no claims based on damages inflicted by loss of present and future profits. Iran could then claim (1) losses incurred as a result of damages inflicted by the British blockade against Iranian oil and as result of other British measures injuring Iran, (2) losses incurred as a result of failure of the AIOC to pay customs duties on various articles imported into Iran since 1933 and (3) losses incurred as a result of failure of AIOC to pay amounts shown on AIOC balance sheets to be due to Iran (approximately 50 million pounds). TOP SECRET SECURITY INF ORMA TION