Dr. Musaddiq in his private negotiations with the Lord Privy Seal showed interest in further discussion in order to formulate a purchasing organisation, however, he insisted that the British and Persian staff in the industry should be employed under a direct contract with the National Iranian Oil Company, and that there was, thus, no room for the operating organisation. Musaddiq had held to his principle saying that the British proposal would mean that ‘the servant would be bigger than the master’.21 Despite Harriman’s support for Stokes’ plan it became clear that Musaddiq was not going to accept any of these and Lord Privy Seal as a result decided to suspend negotiations and left for London on 23rd August 1951. Harriman, President Truman’s envoy, left two days later.

The British Government, as a result of Richard Stokes’ withdrawal, regarded the negotiations as suspended. Musaddiq, in his speech in the Senate on 5th September, stated that if the British Government did not return a satisfactory answer within two weeks to his proposals that have been explained, the residence permits of the Anglo-Iranian Oil Company staff in Iran would be cancelled. The British Government, therefore, in the face of his ultimatum, decided to demonstrate to the Iranian deputies and people that it had abandoned hope of being able to reach a settlement with Musaddiq. This in effect was intended to undermine Musaddiq’s government. In other words, if the Iranians wanted a settlement it was for them to withdraw their confidence in Musaddiq and ensure his resignation. On 5th September the British Government announced that they regarded the negotiations between themselves and the Iranian Government as definitely broken off. The following measures had been contemplated should the talks fail:

(i) A sterling control order, the effect of which would be to deny Persia the special facilities she at present receives in regard to sterling transferability and convertibility into dollars.
(ii) A ban on export from the UK to Persia of certain scarce commodities, e.g. steel and sugar.22
On 10th September 1951 it was decided to
Withdraw certain special benefits which had previously been
given to Persia in view of the advantages to the United Kingdom economy drawing from Persian oil supplies. These measures, which were designed to protect the United Kingdom economy and were not retaliatory, limited Persia’s facilities in the use of sterling and the purchase of certain scarce goods. As a corollary cargoes of scarce goods en route to Persia, amounting to 3,000 tons of railway track equipment and 3,000 tons of sugar, were requisitioned.23

The British Government, believing that only the Shah could replace Dr. Musaddiq with someone more reasonable, instructed the British Ambassador in Teheran to have an audience with the Shah as soon as possible. The Ambassador had instructions to emphasise to the Shah that nothing could be achieved as long as Musaddiq’s government was in office. The Shah was urged to take steps to replace the government of Dr. Musaddiq with a government better fitted to safeguard Iran’s real interests.

Later on President Truman’s envoy, Harriman, received a note from Dr. Musaddiq. On 12th September Harriman was sent new proposals by Musaddiq, for the settlement of the oil dispute. The proposals included a repetition of the ultimatum in regard to the British staff, that their residence permits in Iran would be cancelled. The American representative refused to discuss Musaddiq’s proposals with the British Government and in a firm reply, wrote to Musaddiq that

so-called proposals were in some respects a retrogression from the attitude which Dr. Musaddiq had previously taken up, and that the issue of the ‘ultimatum’ in regard to the British staff could only aggravate the situation.24

Later, in a discussion with the British Ambassador to Teheran, the Shah urged Sir Francis Shepherd to have further talks with Musaddiq. This was because the Shah was more afraid of making a change of government than actually having Musaddiq in office. The British Ambassador, however, declined the Shah’s request. Consequently, the Minister of Court on 19th September brought the British Ambassador a letter unsigned and without any date, apparently from Dr. Musaddiq, making further suggestions for a settlement. The proposals in this letter represented some advancement on Musaddiq’s previous offers, but were wholly unsatisfactory in regard to the all-important question of the position of the British staff. The British Government wasted no time in announcing that the proposals were unacceptable as a basis for negotiations, as it seemed that the principal objective of Musaddiq in putting forward these suggestions was to say in the Majlis that he was in negotiation with the British government.

  1. M.A. HEISS, op. cit., p. 136.
  2. PRO, London, 1236/3657, Treasury Records, Cabinet, Persian Oil, Action consequent upon the withdrawal of the Stokes’ mission, Secret, 22nd August 1951, p. 4.
  3. PRO, London, CAB 129/47 CP (51) 257, Memorandum, by Herbert Morrison on the dispute with Persia, Secret, 26th September 1951, p. 10.
  4. Ibid, p. 11.

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