888.10/8–2751: Telegram
No. 77
The Ambassador in Iran (Grady) to the Department
of State
814. Eyes only McGhee. Distribution only as directed by McGhee. Please note carefully Embtel 807, August 27.1 What we do on Exim Bank loan is tied in with everything we have been trying to do and are trying to do in Iran, including solution oil problem. From beginning, certainly ever since I arrived, British policy and our policy have been basically different. We have reached the point now where we must decide to maintain our own policy or accept that of British. It is my strong conviction that British policy has been and is one that may well lead to disaster in this country. They are using economic sanctions to get Mosadeq out and want us to do the same. They want us to endorse completely their proposals for oil settlement which is neither necessary nor desirable from standpoint of our policy here. The latest British proposals are good and shld not have been rejected. This is true also of Jackson proposals which I, in a letter to PriMin and which was published, suggested should be given most careful study and would in my opinion, meet the PriMin’s principles regarding nationalization. I carefully saw and approved various statements which Harriman put out and I strongly believe we should not go further than this. The question of further statements with regard to oil by President or Secretary of State is tied in with matter of British opposition to Exim Bank loan. The British definitely want us to join with them in economic sanctions. If we decide to let them call all the plays, we will absorb a large part of present deep antagonism toward British. The Irans either rightly or wrongly considered that Harriman was very much on British side. This was inevitable due to fact that he and Levy urged in their private discussions acceptance of fundamentals of British offer and continued negotiation with regard to details. The American position is good here. It wld, in my opinion, be grave mistake to allow our govt to be pressured by British into changing our policy. I believe there is still a fair chance of our getting Mosadeq Govt to come to terms with British. Processes of oriental bargaining are slow. We must keep that in mind.
I make this personal appeal to you and through you to Secretary in hopes that we keep in mind overall problem of Iran, remembering [Page 150] that altho oil question is basic, it is not everything. We must make every possible effort to keep this country from slipping behind Iron Curtain. To do this at least one of the great western democracies must maintain a position of basic friendliness for Iran. Otherwise, it will have no place to look for friendship and assistance except to Russia.
- Telegram 807 reported that Iran was taking measures to expedite the formalities of the Export-Import Bank loan and to facilitate its implementation. (888.00 TA/8–2751)↩