SUBJECT: Iran

PARTICIPANTS: The Secretary of State [Dean Acheson]
                                Sir Oliver Franks, British Ambassador
Mr. Matthews [H. Freeman Matthews, Deputy Under Secretary of State]
Mr. Hickerson, UNA [John D. Hickerson, Assistant Secretary of State for United Nations Affairs]
Mr. McGhee, NEA [George C. McGhee, Assistant Secretary of State for Near Eastern, South Asian, and African Affairs]


COPIES TO: S/S G- Mr. Matthews
UNA- Mr. Hickerson
GTI- Mr. Dorsz [Edmund J. Dorsz, Deputy Director, Office of Greek, Turkish, and Iranian Affairs, Department of State.]
Amembassy, London [U.S. Embassy]
Amembassy, Tehran [U.S. Embassy]

The British Ambassador [Oliver Franks] called at his own request on an urgent basis to discuss certain matters concerning the Iranian Oil Crisis which the Foreign Minister [Herbert Morrison] proposed to put before the Cabinet the following day in anticipation of an announcement to be made in the House of Commons. The British Ambassador presented an Aide Memoire, copy of which he did not leave, but which covered the following points: (a) that the British propose to commence a phased withdrawal of technicians from Iran beginning with the oil fields and ending with the Abadan refinery. This withdrawal would be reversed if at any time the Iranians showed willingness to be more cooperative; (b) the British Government assumed that Dr. Mosadeq’s letter to President Truman confirmed Iranian rejection of the ICJ recommendation; [International Court of Justice] and (c) that HMG [His Majesty’s Government] proposed to take to the Security Council the question of Iran’s refusal to comply with the Court’s findings and requested American support in advance for this position.

The question was raised with the Ambassador as to the basis upon which the question of non-compliance by Iran to the ICJ decision would be taken to the Security Council. The ambassador replied that he did not know, but that he assumed that the legal advisers for the Foreign Office felt that they had an adequate basis. In response to a query, Mr. Hickerson advised that the only possible basis he knew was in Article 94 of the United Nations Charter which reads as follows:

Mr. Hickerson added, however, that he questioned whether “recommendations” concerning a case in which the Court questioned its own jurisdiction would in fact constitute a “judgment” as stipulated in the Article in question. The Iranians could in all probability make a good defense of their position of non-recognition of the jurisdiction of the Court in light of the fact that a private company was involved and would in all probability also raise that provision of the Charter which precludes Security Council action in the case of purely internal affairs. The Iranians would probably succeed at least in creating doubt as to the legal issue.

I stated to the British Ambassador that we did not wish to be in a position of telling the British government what to do in this circumstance; however, since they had asked for our advice I would recommend the following:

The British Ambassador replied that he appreciated the force of the arguments which the Secretary had presented and that he would convey these to his government immediately. He assumed that the British Government felt itself under considerable pressure to take whatever course of action was open to it which might at least give the appearance of doing something to solve the oil question. He appeared somewhat surprised that a decision had been made to send Mr. Harriman despite the Iranian rejection of the International Court of Justice but raised no issue with respect to Mr. Harriman’s going.

NEA:GCMcGhee:nh

Text of message from Mr. Morrison to Mr. Acheson dated 7th July

H. M. Ambassador has reported to me your conversation with him on the 4th July about Persia, and your suggestion that President Truman might appoint a personal representative to discuss a settlement of the dispute with the Persians and us, to see whether any road to a solution could be found.

Let me say at once that I fully share your concern at the course of events which may develop from the present deadlock and that I greatly appreciate your wish to make some positive contribution towards a satisfactory solution. The concern which you feel, and the suggestion you have put forward, encourages me to give you a very frank reply.

Since I became Foreign Secretary you and I have been able to settle a number of difficult issues between us. In several of these a settlement has been reached by our going a considerable way to accept the American view. In dealing with this question of Persian oil, where we find ourselves in grave difficulties, we need your wholehearted support. I have greatly valued the help you have already given and I am most grateful to you for your present suggestion, which I appreciate is made with the sincere desire of reaching a settlement. But the suggestion which you made to Sir Oliver Franks of the lines which a settlement might follow seems in substance to differ little from the offer already made to the Persian Government by the Company during the visit of their delegation to Tehran. This offer, which accepted the Persian thesis of nationalisation, was rejected out of hand, and since then the Persian Government have refused to consider anything but the full implementation of their nationalisation laws.

There is, however, a more important thought in my mind in considering your main proposal. I must tell you that one of our main difficulties in dealing with this intractable problem has arisen from a belief persistently held by many Persians that there is a difference of opinion between the Americans and the British over the oil question and that America in order to prevent Persia being lost to Russia, will be ready to help Persia out of any difficulties which she may encounter as a result of the oil dispute. Influential and friendly Persians themselves have told us this, and stressed that it is an important factor in encouraging Dr. Mossadegh’s present intransigence. An approach by a representative of the President as you suggest would, I fear, merely encourage Dr. Mossadegh in this belief. The danger of this would be all the greater since the decision given by the Hague Court, which has introduced a new and most important factor in the situation. The Court has recommended that nothing should be done to hinder the continuation of the Company’s operations as carried on before the 1st May, and that these operations should be carried on under the Company’s management as constituted before that date. [Anglo-Iranian Oil Company] It has recommended the setting up of a Board of Supervision to ensure that the Company’s operations are carried on in accordance with the Court’s recomendations. We have declared our full acceptance of these recommendations. It is now up to the Persian Government to do the same and to put an end to the unwarranted interference by the temporary Board in the Company’s operations, which are now threatening to bring the operations to an end. I feel most strongly that what is wanted from you now is not an offer to mediate, but a firm and categorical statement that it is up to Persia to accept and follow the recommendations of the Hague Court. Such a statement, making it clear once and for all that the United States of America can give no sympathy or help for a country which flouts a decision of the world’s highest legal authority, would be of the utmost value at the present critical juncture.