Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X

888.2553/3–2054: Telegram

No. 443
The Secretary of State to the Embassy in the United Kingdom¹

secret
niact

Washington, March 22, 1954—7:23 p.m.

4885. Limited distribution. For Hoover. Although recognizing importance British ascribe to matter, Dept cannot agree to support figure 100 million pounds suggested by UK Govt as compensation by Iran to AIOC. Arguments put forward by Amb Henderson (Tehran tel 1977, sent London 604, being rptd Paris by Dept) and Hoover’s additional arguments (paras 5 and 6 London tel 4057, rptd Paris 546, rptd Tehran 180) seem to us overriding and almost incontrovertible. Insofar as principle of payment of compensation by Iran to AIOC is concerned, apart from internal arrangements within consortium for payment AIOC interests, Dept believes maximum which could be contemplated by Iranians would be compensation for such AIOC assets in Iran as are not recovered under consortium contract, along lines para 4 Tehran tel 1977.

British Embassy has presented memorandum here which states, inter alia, that compensation must be paid by Iran because otherwise total received by AIOC from consortium would place too low figure on value AIOC enterprise in Iran. Department unable concur that overall value of one billion dollars, as now agreed by companies on commercial basis, is too low in view of all circumstances.

Above position, expanded to include arguments used in pertinent London and Tehran tels, communicated British Embassy today with statement that Secretary and others in Cabinet held strong views on this subject. We now eagerly await report Aldrich and your meeting with Eden.

Re para 6 London tel 4057,² informal conversation with British Embassy representatives was held before receipt Henderson’s views and with understanding comments conditional upon Tehran’s reaction and high level study of question here.

Dulles

1. Repeated to Tehran and Paris. Drafted by Stutesman and Jernegan and approved by Byroade.
2. Paragraph 6 of telegram 4057, Mar. 21, reported that the British Government had conveyed the view that the Department of State supported the principle that some compensation to AIOC should be paid by Iran. (888.2553/3–2154)