THE COMING OF THE BRITISH CONSERVATIVE PARTY TO OFFICE IN 1951 AND THE NATIONALISATION OF THE ANGLO-IRANIAN OIL COMPANY’S CRISIS.

The American Ambassador, Loy Henderson, was also active. On 27^th August, the British Charge d’Affaires in Teheran, G.H. Middleton, and the American Ambassador, L. Henderson, held talks with the Iranian Prime Minister, Dr. Musaddiq, to make a further attempt to solve the crisis of the Anglo-Iranian Oil Company. The British Foreign Secretary, Anthony Eden, said that:

If we decline to make any fresh overtures to the Persian Government basing ourselves on the view that no satisfactory agreement could ever be made with Dr. Musaddiq, there was a real danger that the United States Government would make an independent offer of financial assistance to Persia with the object of preventing the establishment of a ‘Communist regime’.⁵⁰

On 30^th August, Winston Churchill and President Truman sent a joint note to Iran, which outlined a broad formula for the settlement of the dispute. The new Anglo-American proposals were that the whole question of the Anglo-Iranian Oil Company’s compensation should be submitted to arbitration. The British Foreign Secretary said that, ‘we were in principle prepared to see the oil dispute referred to arbitration.’⁵¹

To state with, Iran had to

agree to the submission of the compensation question to the International Court of Justice, having regard to the legal position of the parties existing immediately prior to nationalisation and to all claims and counter-claims of both parties.⁵²

Secondly, ‘suitable representatives shall be appointed to represent the Iranian Government and the AIOC in negotiations for making arrangements for the flow of oil from Iran to world markets’.⁵³ If Iran agreed to the two conditions, firstly, the British Government would make arrangements for the movement of oil already stored in Iran, and appropriate payments would be made. Finally, the United States would give a grant of $10,000,000. Later, in September, the Iranian Prime Minister sent his formal rejection of the Anglo-American proposal. In his reply, Musaddiq offered a number of points.

1. that the Hague Court has clearly shown the   dispute to  be an internal matter. The appropriate forum therefore to discuss Persian compensation is the Persian courts. However, he is prepared to agree arbitration on compensation by the Hague Court as a concession, but only on certain conditions, viz:
   1. that the arbitration is confined to compensation for loss of assets and of the oil in storage at the time of nationalisation:
   2. that there is prior agreement between the parties clearly defining and limiting the questions for arbitration, which must contain no reference to the 1933 Concession or to the Company’s legal position prior to nationalisation, but which will include substantive and detailed Persian counterclaims:
2. an immediate demand for £50 million allegedly owed by the company, which he now wants in dollars from the A.I.O.C., but would also accept as a grant, gift or advance against oil. In effect he is making this a condition for agreeing to any negotiations. He said he would not accept American aid.⁵⁴

The joint Anglo-American reply to Musaddiq’s points, which was made in early October of 1952, provoked the Iranian Prime Minister. It made no reference to Musaddiq’s points. Britain and America in their response simply complained, ‘that the previous proposals had been misunderstood, and that they did not mean what Dr. Musaddiq thought they had said.’⁵⁵

50. PRO, London, CAB 128/25, CC (52) 74^th Conclusions, Minute 6, p. 81.
51. Ibid.
52. L.P. ELWELL-SUTTON, op. cit., p. 282.
53. Ibid.
54. PRO, London, CAB 129/54, C (52) 295, Memorandum of Anthony Eden, the Foreign Secretary, on Musaddiq’s reply to the Anglo-American proposal to solve AIOC’s dispute, Secret, 10^th September 1952, p. 1.
55. L. P. ELWELL-SUTTON, op. cit., pp. 284-285.

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