It will be recalled that on August 3 the Foreign Office published the texts of the messages exchanged between the Persian Government and His Majesty’s Government which formed the basis on which the Lord Privy Seal’s mission was dispatched to Tehran. At the same time it was announced that the Persian Government had agreed that the basis for His Majesty’s Government’s acceptance of the “principle of nationalisation” was the Persian law of March 20, 1951 (which merely stated this principle): that they had recognised that they would have to negotiate with His Majesty’s Government the manner in which this law would be carried out in so far as it affected British interests; and had confirmed to Mr Harriman that they recognised the necessity of relieving the atmosphere which then obtained, particularly in the oil areas.

At that time, in the light of Mr Harriman’s conversations with the Persian Government, His Majesty’s Government had every reason to suppose that the Persian Government would not insist on negotiating on the basis of the nine-point law of May 1, 1951. This law, which attempted to provide for the practical implementation of the principle of nationalisation, had been hastily drafted without the necessary reflection or consultation with qualified technicians, and was, in the view of His Majesty’s Government, not only entirely unworkable in practice but represented a clear breach of the Persian Government’s contractual obligations

During the Lord Privy Seal’s negotiations he put forward an eight-point proposal which has been widely recognised as providing a fair, and indeed generous solution to the oil dispute. Under it the Persian people would have realised nationalisation and control of their principal industry, and would have had at their disposal the technical knowledge and experience of British personnel, and the company’s fleet of tankers and world-wide marketing organisation. The Persian Government could, moreover, have expected to receive an annual revenue of some £50,000,000 under the equal sharing of profits proposed. They could thus have pursued the urgently needed economic development of their country and improved the lot of their people.

In the course of negotiations, however, it became increasingly clear that the Persian Government had no intention of negotiating on the basis agreed by Mr Harriman with both Governments. Instead, the Persian Government were in effect insisting on the full implementation of the nine-point law of May 1, 1951. Furthermore, they took no steps to mitigate the campaign of interference with the company’s personnel in Southern Persia in their work, and the harassing of them in their daily lives. Finally, the Persian Government refused to agree to any arrangement which would have allowed the British staff to work under proper management and in acceptable working conditions.

Today the great industry remains at a standstill, to the advantage of no one and at heavy cost to Persia.

His Majesty’s Government must now take their stand on the interim decision given by the International Court of Justice at The Hague on July 5. This decision, as it will be recalled, indicates, inter alia, that both the Persian and the United Kingdom Governments should ensure that no measure of any kind is taken designed to hinder the operations from being carried on as they were carried on before May 1, 1951, and that the company’s operations in Persia should continue under the direction of its management as it was constituted before May 1, 1951.

As a result of the stoppage of its operations in the oilfields consequent on the action of the Persian Government, the Anglo-Iranian Oil Company has been compelled to withdraw its personnel from these fields; it has, however, instructed a nucleus of its personnel to remain in Abadan, in order to be ready to carry on the Company’s operations, in accordance with the Hague Court’s decision, whenever the Persian Government make it possible for them to do so.

The Persian Government are, of course, under an obligation in international law to ensure the safety and protection of these personnel, as of all foreigners. As has been stated before, His Majesty’s Government would be obliged to take the necessary measures to protect them should the Persian Government fail in their obligations in this respect.

His Majesty’s Government are deeply grateful to Mr Harriman for the untiring efforts which he has made to create and maintain a basis for negotiation. They cannot but express their extreme regret that the departure of the Persian Government from this basis, and their failure to appreciate the conditions essential for the carrying on of the industry should have resulted in a suspension of the negotiations and in the continued stoppage of the company’s operations.

They remain prepared at any time to reopen negotiations on the basis of Mr Harriman’s formula whenever any disposition is shown on the Persian side to discuss the questions in dispute in a spirit of goodwill and reason, and in the light of the inescapable facts which confront Persia in this matter. They will continue to pursue their application to the Hague Court for a definitive judgment in this dispute.

[Included for reference in the FO statement was this text of the Majles (Iranian Parliament) minute, handed to Harriman on July 24, 1951. Negotiations were contingent on British acceptance of this formula.]

The Council of Ministers and the Mixed Oil Commission in their meeting of 31st Tirmah (July 23, 1951), held at the residence of His Excellency Dr Musaddiq, the Prime Minister, approved the following formula:—

1. In case the British Government on behalf of the former Anglo-Iranian Oil Company recognises the principle of nationalisation of the oil industry in Persia, the Persian Government would be prepared to enter into negotiation with representatives of the British Government on behalf of the former company;

2. Before sending representatives to Tehran, the British Government should make a formal statement of its consent to the principle of nationalisation of the oil industry on behalf of the former company;

3. By the principle of nationalisation of the oil industry is meant the proposal which was approved by the Special Oil Committee of the Majlis and was confirmed by the law of Esfand 29 1329 (March 20, 1951) the text of which proposal is quoted hereunder:—