Announcement that an American effort to mediate the Anglo-Iranian oil dispute has failed comes from the State Department even while Iran’s prime minister reveals he has appealed to President Truman [Harry S. Truman] for financial help. The collapse of mediation in the oil nationalization controversy is a disappointing development. Both sides have so much to lose by prolonging the deadlock that it would seem compromise should be welcomed. The Iranian appeal for financial aid, however, raises a question.

Can it be that Dr. Mossadegh is not anxious to get his country’s huge stores of oil to a hungry market because he counts on our dollars? It would seem so. Iran cannot afford to go on indefinitely without the revenues from oil sales unless an alternative source of government income is found. If Mossadegh schemes to use the United States Treasury as a prop to support his extreme stand our government should act promptly to block his move. For that matter the British, too, are turning to us for financial aid largely because the cost of substitute oil imposes a strain.

This country must not be placed in the position of footing the bill while two nations quarrel. The Iranian prime minister is a shrewd bargainer and realizes full well that the United States is anxious to ward off Communist capture of the oil-rich country. He appears to be using our fear of communism to pry dollars from us. Certainly the hope of a handout serves to stiffen stubbornness in both principals in this row. It might be well to make financial help contingent on settlement of the dispute.