The Anglo-Persian oil negotiations have again reached a deadlock. The British Ministerial mission led by the Lord Privy Seal (Mr. Stokes) has returned to London after the Persian rejection of its new proposals, and in conformity with Mr. Stokes’s insistence that he did not go to Teheran to engage in any protracted bargaining. [Richard Stokes] The latest British offer is claimed to have been in line with the formula, patiently evolved in a mediatory capacity by President Truman’s special envoy (Mr. Harriman). [Averell Harriman] But although the negotiations have lapsed once more nobody, either in London or Teheran, seems to know whether they have in fact finally broken down.

There is a strong presumption that it may be possible to resume the talks in the future but that the initiative will have to come from the Persian side. Since that must call for some abatement of the present Persian intransigence, it may ultimately require the replacement of Dr. Mossadeq as Prime Minister if there is to be any genuine advance towards a settlement. Dr. Mossadeq is deeply committed on the oil nationalisation issue and, while he has encouraged the extremists, his Government has offered very little else by way of a policy to the Persian Parliament and people. If he fails to make good his terms for oil nationalisation he will be assailed by the extremists of several sections. If he fails to get an agreement with Britain he will be in trouble with the resurgent moderates, as the recent proceedings in the Persian Parliament have shown. Politically, he is between the devil and the deep sea and British opinion is inclined to doubt the possibility of making any satisfactory agreement so long as he retains the Premiership.

In the meantime the situation remains confused. No oil — refined or crude — is coming out of Persia. That is a serious matter for Britain and her associates (including Australia) who have been relying in part on this source of supply, but it is a far more serious matter for the Persians, who have deliberately deprived themselves of their main source of national revenue. Before very long they are certain to find themselves in serious financial difficulties since (so far as is known) they have been unable to find alternative means either to produce, sell or transport their oil. The latest British proposals, as put forward by Mr. Stokes, would seem to have made full concession to the principle of Persian ownership of the oil and to have made a reasonable offer for division of the oil revenues.

The negotiations failed on the issue of British management of the oilfields and refineries and British terms of service for the British staffs. It is now for the Persian authorities to devise a means of breaking the deadlock. In the meantime, all British employees are being withdrawn from the oilfields but an adequate staff is being retained at the great Abadan refinery to keep a watch over the abstruse technical requirements in the event of a settlement which would justify a reopening of the plant. Naval and military precautions are being taken to assure the safety of this staff in an emergency. For the time being that must also involve a guard over the property of the Anglo-Iranian Oil Company’s refinery.