The Secretary of State to the Department of State

Paris, November 10, 1951—7 p.m.

2808. Eyes only McGhee, Matthews, Nitze, from Secretary via Linder to McGhee. [George McGhee, H. Freeman Matthews, Paul Nitze, from Dean Acheson via Harold Linder] In the light of my talks with the British in Paris, on Iran, I think that the attitude of the present government in England toward Iran is different from or at any rate clearer than that of its predecessor. It is certainly different from the first assumption of the joint appraisal from Tehran, dated Nov 6,¹ and from some of the statements made in Washington’s 2837 of Nov 9.² This attitude extends all through the government from the Prime Minister to the civil servants. It starts from Churchill with the roar of a wounded lion, becomes more articulate with Eden, as he remembers twitting the Laborites for weakness during the campaign, and is fully rationalized by the civil servants, as follows:

Britain stands on the verge of bankruptcy, as the Chancellor last week told the House. Despite the ravages of wars and post-war periods, British still retained important overseas interests and the invisible items in her balance of payments are of overwhelming importance to her. Without them she cannot survive. Mosadeq’s seizure of the AIOC properties and concessions were a serious blow. But they were a loss which British can stand. Refining capacity can be built elsewhere. Iranian oil is not essential, and, with firm support from her friends, British can recover from this blow. [Dr. Mohammad Mossadegh, Iran’s Premier]

But British cannot recover from the course of action which would destroy the last vestige of confidence in British power and in the pound. If it should be believed abroad that British would acquiesce in the despoliation of Iran and even cooperate to make that despoliation profitable to the Iranians, she would have no properties left within a few months—and, indeed the same would happen to all Western investments.

Therefore, in my judgment, the cardinal purpose of British policy is not to prevent Iran from going Commie; the cardinal point is to preserve what they believe to be the last remaining bulwark of British solvency; that is, their overseas investment and property position. As one of the British said to me, “what these people believe is that, if your appraisal of the Iranian situation is correct, then the choice before you is whether Iran goes Commie, or British goes bankrupt. I hope you would agree that the former is the lesser evil”. Therefore, they will accept no settlement by which (a) it cannot be plainly shown to everyone that Mosadeq has not profited over rulers who abide by their contracts, or (b) by which Britain is humiliated and discriminated against. It is for this reason that it is impossible to induce the British to accept the exclusion of British companies and British citizens in favor of a Dutch operation. It would be like asking us to step aside in favor of Guatemala.

It is for this reason that they attach so much importance to the suggestion that American interests should participate in some solution. This, I am sure, is based upon two points: (1) That our participation in any settlement would raise the prestige of the settlement and the participants; and (2) that the introduction of an American company into the situation would prevent any action being taken except what our and the British oil companies would regard as in their interest. The British do not believe that Iran is close to disaster. They believe its standards are so low that it will take a long time dying. And, therefore, they are prepared to take risks which we think very reckless, partly because they do not believe that the risk is very great, and partly because they do not believe that the danger risked is as great as the danger invited by taking a conciliatory action now.

These attitudes are very firmly held, and, in my judgment, there is not the faintest possibility of getting the British by any sort of argument to change their attitude during the few days when Mosadeq remains in New York. Indeed, I believe that their main purpose now is to leave us without any bargaining material until Mosadeq gets away. Ambassador Gifford [Walter Gifford] was told by Mr. Eden [Anthony Eden] after our last conference that just before it “the old man” had telephoned him and told him not to yield an inch. [Prime Minister Winston Churchill]

For another reason, also, it is impossible to alter the British attitude quickly. The new ministers are depressingly out of touch with the world of 1951, and they are being advised by the same officials who have allowed the government to follow the AIOC meekly into disaster. Of course, these officials continue the same arguments and the same analyses. The ministers admit that they know nothing about the facts and must rely on the officials.

The circle is complete. The only thing which is added to the Labor party attitude is a certain truculent braggadocio. They have not been returned to office to complete the dissolution of the empire.

In one respect I think both the Department and Mosadeq misconceive the British attitude. It is not merely that they believe that by not dealing with Mosadeq and by allowing Iran to suffer the consequences of its actions, a new government may be installed which would give them a better agreement. It is that they would not, as presently advised, make the agreement as proposed with any government whether Mosadeq or his successor.

Therefore, I do not see any purpose in my attempting to get out of Eden some counter-proposals within the next three days. I know that they will not be forthcoming.

Harriman and I are to see Eden on Tuesday evening. [Nov. 13th, with Averell Harriman] He is speaking in the UN on Tuesday. We shall talk with him very frankly. We have already indicated to him that the inability to reach a settlement will raise the very questions which the Department now raises. We will tell him that we propose to recommend some supporting action. I propose to point out that he is putting responsible American officials in an impossible position... [redactions here] And I hope in due course we can make some impression, but we cannot do it in three days, and there is no use trying. It will only make matters worse and they are bad enough already. If, indeed, it is the last chance, then we must face that.

We believe, as a last extremity we should help the Government of Iran. It should, however, not be done now; and before it is done, it should be thought over thoroughly and freely with the British, and we should delay for a time sufficient to allow existing circumstances to operate to the detriment of Mosadeq provided such delay does not imperil too seriously Iran’s orientation to the West.

Acheson