Memorandum, State Department Summary of Telegrams

OFFICE OF THE SECRETARY OF STATE WASHINGTON DECLASSIFIED E.O. 12065, Sec. 3-402 October 8, 1951 State Dept. Guidelines, March 6, 1982 By DCB NLT, Date 9-5-85 T E SUMMARY OF TELEGRAMS IRAN Although Ambassador Henderson has had re - cent assurances from the Shah that Mosadeq is coming to New York with a desire to negotiate with the British, his latest conversation with Mosadeq leads him to believe that the Prime Minister is clearly determined not to permit any British company to oper- ate in the Iranian oil industry. Mosadeq stated that Iran would never again permit any foreign company to operate in Iran on a profit basis and, except for special purposes, foreign employees could work in Iran only on the basis of individual contracts. The Shah was to see Mosadeq prior to his departure and to prevail on him to be more reasonable. Ambassador Henderson is urging the US view that a resumption of ne- - gotiations in New York between the British and the Iranians is the most likely means of finding a solution to the dispute. Meanwhile, Foreign Secretary Morrison has taken a strong stand to the effect that Britain will not negotiate with Iran "prior to a respectably firm resolution" of the Security Council. Morrison stated that in light of Mosadeg's most recent stand he would want clear evidence that the Iranians were in fact willing to negotiate on a reason- able basis as the British Government, having tried twice in good faith, with Mosadeq, "did not wish to be made fools of once more. " The British wish to secure a resolution upholding the International Court decision and appointing a representative to act as a mediator of the dispute and at the same time are directing attention to new proposals for operating the Iran- ian oil industry by an international consortium of oil interests. PALESTINE The Israeli Minister to the US has indicated that his Government is on the point of reaching a decision to release, over a two to three year period, Arab blocked ac- counts amounting to approximately fifteen million dollars. The money would be deposited in a New York bank for distribution to Arab claimants through a UN agency. This offer by Israel is not to be dependent on any quid pro quo of any sort from the Arabs and Israel considers it a sacri- fice on its part made possible only through US economic assistance. Israel