888.2553/10–953: Telegram
No. 373
The Secretary of
State to the Embassy in
Iran1
priority
973. Foreign Office views on Hoover’s trip and interim settlement presented Department this morning. In brief, Foreign Office much prefers long-term settlement and feels interim settlement:
- 1)
- would set pattern any final solution;
- 2)
- might last indefinitely or at least reduce pressures on Iranians come to final settlement.
Furthermore, British believe present attitudes Iranian Govt offer best chance effecting some final settlement and they hope if Hoover finds any reasonable opportunity, he will press for final solution.
Recognizing, however, that it may be necessary for Hoover discuss at least in general preliminary terms interim settlement, British listed certain points which they feel must be considered in any interim arrangement.
- 1.
- Foreign Office attaches “greatest importance” to IBRD operating on behalf both parties;
- 2.
- While AIOC would give waiver its legal claims to IBRD oil sales, this would not apply any other Iranian oil sales;
- 3.
- HMG considers it “essential” some part of proceeds be set aside towards compensation. British feel this necessary protect AIOC and prevent undesirable effect on Iran’s neighbors;
- 4.
- HMG would expect British Engineering firms to be associated with any US or international companies hired by IBRD to operate oil industry;
- 5.
- Since costs Iranian oil industry, particularly with present labor position Abadan are uncertain HMG doubts whether Iran could be given return per barrel comparable with what neighboring countries receive (say 80 cents) without giving Iranians more than 50 percent net profits likely to be realized;
- 6.
- Political and economic effects from the size of AIOC participation would have to be considered. HMG had always assumed AIOC would “handle 50 percent production”. This does not mean AIOC would be unwilling consider other agreements but this point would have to be taken into account in any settlement.
British had hoped Hoover would stop at London in order demonstrate to Persians joint US–UK approach on oil problem. However, they agreed Hoover should go directly Tehran.2 In regard publicity, they hoped US spokesmen would state British had been consulted on Hoover’s trip and they proposed to volunteer this information themselves.
In brief conversation following presentation British views, Hoover made point that question AIOC participation would naturally lead to question AIOC willingness cut back crude oil production other areas. Hoover also pointed out in regard Point 5 above, that it would be difficult from practical standpoint put Abadan refinery back into any substantial operation under interim settlement.