395. Telegram From the Embassy in Iran to the Department of State1
1461. Reference: Rome’s 3702 to Department.2 While agreeing that conclusion NIOC–AGIP agreement would create unfortunate precedent believe USG should proceed with caution in attempting prevent it. Shah will be certain resent interference in what he considers strictly Italian-Iranian matter and might become more unreasonable with respect proposed oil legislation. If he becomes aware of US pressure on Italian Government to modify or withdraw from agreement effect on US-Iranian relations and particularly upcoming visit Richards Mission would be detrimental and prospects for participation by American companies in Iranian oil development would be worsened. Suggest Batzell may be in best position influence Shah if his services as consultant obtained.
[Page 922]Our understanding is that agreement has been initialed by contracting parties but that to become effective it requires ratification by Iranian Parliament which now recessed for spring holidays and will only reconvene in early April.