Foreign Relations of the United States, 1964–1968, Volume XXXIV, Energy Diplomacy and Global Issues

205. Memorandum of Conversation¹

Washington, March 22, 1967.

SUBJECT

• Response to British Ambassador’s Representation to the Secretary Regarding the Performance of U.S. Members of the Iranian Consortium in 1967

PARTICIPANTS

• Sir Michael Stewart, Minister, British Embassy
• Mr. Christopher Everett, First Secretary, British Embassy
• Assistant Secretary Anthony Solomon—E
• Mr. John G. Oliver—E/OR/FSE
• Mr. J.P. Mulligan—NEA/IRN

Mr. Solomon stated that the Department had looked carefully into the questions which had been raised recently with the Secretary by Sir Patrick Dean and said that according to every indication we had the Consortium would meet its target in 1967 exports. No significant areas of dissatisfaction arose in the recent talks which the Consortium representatives had with the Iranians in Tehran and it did not seem to us, therefore, that there was any need for the U.S. Government to intercede with the American companies and bring political considerations to their attention at this time while things are going well.

With regard to the Ambassador’s second point on the overlifting arrangement, we understand that the member companies of the Consortium are discussing this question at the present time, including possible ways of modifying this arrangement. Mr. Solomon added that he wished to mention in confidence to Sir Michael that he himself had taken the opportunity of mentioning this subject with one or more U.S. members and had indicated that we thought it would probably be advisable to modify this arrangement if the companies could see their way clear to do so. He added that while we do not attach the same importance to this matter as some others (for example, Walter Levy), at the same time we recognize it is conceivable that this arrangement could serve as a pretext for dissatisfaction which the Iranians might feel with regard to the Consortium’s overall performance. Since the situation is reasonably satisfactory, however, we would not wish to intercede with the U.S. companies now on political grounds even though we would, of course, wish to stay in touch with the British Government and continue our exchange of views on these matters. This, therefore, was our official answer to Sir Patrick Dean’s approach to the Secretary.

Mr. Solomon added that he would like to raise a question personally, that is, he would like to know why the British Government was as concerned as it seemed to be about this situation at the present time. He would like to know why there was so much emphasis on the question of exports from Iran, particularly now that matters had been settled between the Consortium and the Iranians, when at the same time there is room for concern over the situation in Kuwait and Iraq, where the British also had extensive interests. Was it because the British Government considered the oil issue in Iran so politically explosive? Sir Michael replied yes, this was the answer. It was a matter of the importance of Iran to his Government as well as the fact they believed Iran was also significant for the U.S., although they recognized there were some differences in our viewpoint. He added that the purpose of Sir Patrick Dean’s conversations with the Secretary was really to draw attention to the risk of a certain political unawareness on the part of some members of the Consortium. His Government wanted to make certain that this factor was taken into account well before a crisis arises again, if this should happen.

Mr. Solomon replied that as a matter of tactics it was certainly important that we all be aware of these political factors. It was equally important that we not give any impression to the Iranians that we and the British view things differently. Nonetheless, it is our belief that the Consortium’s promises will be kept and that there is no reason for stirring things up at this time. Sir Michael declared that his Government of course had no desire to add any element of instability to the situation and he wished to give absolute assurances that our talks were not meant to lead at any time to a three-party conversation. It was the Foreign Secretary’s feeling however that the political factors should be taken into account at this time. Sir Michael said he would, of course, report the U.S. Government’s full views on the situation and added that although they had no evidence which we did not also have, it was his personal judgment that in taking note of the U.S. Government’s viewpoint, the Foreign Secretary might nonetheless reopen the question if in his judgment this was necessary.

In conclusion, Sir Michael re-emphasized that the U.S. Government need have no fear that the Shah would get any encouragement from his Government to raise a problem which we both hope to avoid.

1. Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967–69, PET 6 IRAN. Confidential; Exdis. Drafted by Mulligan on April 4, cleared in draft by Solomon, cleared by Oliver, and approved by Walsh (S/S) on April 27.