While not related to the oil dispute, the latest outbreak of violence in Persia is a reminder to Britain and the United States of the dangers inherent in the prolongation of economic and political crisis in that strategic ally important sector of the Middle East. It would be shortsighted to take consolation from the fact that in the rioting of the past few days Communists have been the victims rather than the instigators. Civil disorder of any kind in the present state of affairs in Persia in the long run must play into the hands of those who have never ceased to hope that out of the dispute with Britain some advantage would accrue to the Kremlin, even to the forceful establishment in Persia of a Communist regime. Fedayane Islam, the religious organisation that is credited with inspiring the demonstrations against the pro-Communist Tudeh Party, would rather see Persia destitute than subject to the influence of any foreign Power. [Feda’ian Islam] Their objection to links with Moscow is equalled by their determination to be rid of the last vestige of British exploitation of the oil resources of their country, and, moreover, to be rid of it on Persia’s terms. A worrying consideration for the Western Powers is that the longer Persia continues to be economically starved and depressed, and the greater the pressure exerted to prevent the flow of oil from Abadan, the stronger will be the recruiting power of the Tudeh with the mass of the people.

Britain has accepted the fact of nationalisation, but remains obdurate on the point of having compensation for the plant and concessions determined by the International Court. Once agreement on that is reached there will be no more restraint on the dispersal to foreign buyers of the oil waiting for tankers at Abadan. In addition, Persia will be given the assistance she must have in developing the technical skills needed to operate the industry and market its product, and the United States will provide dollars to tide the country over immediate difficulties. These appear to be reason able and helpful terms. But the Persian Prime Minister and virtual dictator, Dr. Mossadeq, is insistent that Britain should admit liability for huge sums in compensation to Persia—sums that would cancel a large part if not all of compensation that might be ultimately prescribed by the International Court or the Persian Court. That is the basis of the deadlock, which has resulted in Dr. Mossadeq’s breaking-off of diplomatic relations with Britain.

The problem has defied solution for more than 18 months. In view of the economic difficulties of Persia and the consequent inability of the Government to finance long-promised social reforms, it would appear that the prudent course for Dr. Mossadeq would be to make the best of the large portion of the loaf that is available to him and attempt to convince his people that their victory over the Anglo-Iranian Company is, in fact, complete. But Dr. Mossadeq knows that he could not gain acceptance of this view against the opposition of Fedayane Islam, which will not be satisfied with anything less than the terms that have been presented to Britain. Britain and the United States have special reasons for having the principle of compensation recognised. What is established as a precedent in Persia could become the pattern for other Middle East countries in which British and American interests now have oil concessions.

The working out of this problem in association with Britain is one of the delicate tasks the Eisenhower Administration will soon take over from Mr. Acheson. [outgoing Sec. of State Dean Acheson] It should not he beyond the capacity of the two Governments’ to work out a formula in which face could be saved and dangerous precedents avoided. Much is to be gained from the solving of the question, while much damage could result from continued failure to find a solution.