(THIS DOCUMENT IS THE PROPERTY OF HER BRITTANIC MAJESTY’S GOVERNMENT)
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C.(54) 260
28th July, 1954

The Consortium is nearing agreement with the Persians on the future operation of the Persian oil industry. The Anglo-Iranian Oil Company (A.I.O.C.) will, of course, have a 40 per cent share in the Consortium, and the other members will be paying them a sum of £214 millions over twenty years for the remaining 60 per cent share (this figure cannot at present be revealed).

2.      On compensation for such of A.I.O.C.’s losses as will not be covered by the above, the Persians have offered a net payment of £25 millions after A.I.O.C.’s claims and Persian counter-claims have been taken into account. The Board of A.I.O.C. have not yet considered this offer, but will be influenced by Her Majesty’s Government’s view of it.

3.      A.I.O.C. have asked whether, if they accept this offer or something near it, Her Majesty’s Government would agree that there should be included in the agreement an undertaking by A.I.O.C. to pay to Persia a sum of just under £50 millions, which Persia would have received if she had ratified the 1949 Agreement with A.I.O.C. This would be offset against A.I.O.C.’s claims and would not affect the net payment, but A.I.O.C. would thus avoid payment of United Kingdom income tax on this sum, worth approximately £25 millions.

4.      I ask my colleagues to agree that:

A. E. [Anthony Eden]

Foreign Office, S.W.1.
        27th July, 1954.