A Critical Stage

Talking Percentage and Compensation Re: Iran Oil

The Mossadegh Project | September 12, 2019                    

An excerpt from a British Cabinet meeting (March 17, 1954) pertaining to the Iran Oil Consortium.

British Foreign Office | IRAN 1951-1954
Anglo-Iranian Oil Company (AIOC) Archive
Iran Oil Consortium | Archive 1953-1954

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Printed for the Cabinet.      March 1954


20th Conclusions


CONCLUSIONS of a Meeting of the Cabinet held at 10 Downing Street, S.W. 1, on Wednesday, 17th March, 1954, at 11 30 a.m.

[Note: Those present included Winston Churchill, Anthony Eden, Harold MacMillan, and many others.]

Persia (Previous Reference: C.C. (54) 18th Conclusions, Minute 5.)

      7. The Foreign Secretary [Anthony Eden] reported that since the Cabinet’s discussion on 15th March he had had a personal interview with Sir William Fraser, the Chairman of the Anglo-Iranian Oil Company (A.I.O.C.). A critical stage had now been reached in the negotiations for the formation of a consortium of oil companies to market Persian oil. The issues which divided the various parties to the negotiations were extremely complex and were further complicated by differences of opinion about the probable financial results of various alternative bases for a settlement.

The first question in the negotiations was the amount which A.I.O.C. should receive from the other companies in return for surrendering 60 per cent. of their previous 100 per cent. interest in Persia’s oil. On this point he had told Sir William Fraser that, in his view, the gap between the figure suggested by the Company and that proposed by the American companies was not so large that it could not be bridged in further negotiation.

The second question was the amount of compensation which A.I.O.C. should receive from the Persian Government and the means by which it should be secured. On this the American companies considered that the amount for which A.I.O.C. were asking was excessive and they were strongly opposed in principle to the method proposed, under which the Persians would buy oil from the consortium at cost price and give it to A.I.O.C. On this point also he felt some sympathy with the point of view advanced by the Americans. Mr. Hoover, who was representing the United States Government in this matter, had expressed the view that A.I.O.C. could legitimately ask for a net sum of £100 millions from the Persian Government. [Herbert Hoover, Jr.] This seemed to him to be a not unreasonable figure, and he intended to ascertain how Mr. Hoover would propose that it should be secured if the project of selling oil at cost price to the Persians was rejected in principle by the other companies which would be joining the consortium.

The Foreign Secretary added that, from his personal talks with the United States Ambassador, Mr. Hoover and Sir William Fraser, he was satisfied that there was a real risk that, unless A.I.O.C. were prepared to make further concessions, the American companies would break off negotiations. This would have the effect of postponing indefinitely the possibility of securing a settlement of the Persian oil problem. He had represented most strongly to Sir William Fraser that he must consider, not only the commercial interests of A.I.O.C., but the wider interests of the United Kingdom in the Middle East. Sir William Fraser had said that A.I.O.C. would require a little time in which to consider and reply to the latest proposals put forward by the American companies and he (the Foreign Secretary) was doing all in his power to prevent the American companies from breaking off negotiations in the meantime.

He would continue to keep in the closest possible touch with the Chancellor of the Exchequer [Richard Austen Butler, aka Rab Butler] in the handling of this matter, but he would also value the direct assistance of one or two of his Cabinet colleagues in his further discussions with Sir William Fraser. He would circulate to his colleagues as soon as possible a memorandum explaining in greater detail the exact stage which the negotiations had reached.

           The Cabinet—

           (1) Took note of this statement by the Foreign Secretary.

           (2) Invited the Chancellor of the Duchy of Lancaster [Viscount Woolton] and the Minister of Housing [Harold MacMillan] to assist the Foreign Secretary in handling the present phase of the negotiations for a settlement of the Persian oil problem.

[Annotations by Arash Norouzi]

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Related links:

Anthony Eden: AIOC Deserves 44% Share of Iranian Oil (Feb. 22, 1954)

Entezam’s Contrived “Interview” With Reporter/Spy (March 1954)

Basis for the Settlement with Anglo-Iranian Oil Company (March 12, 1954)

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