It looks as though the Anglo-Iranian Oil Company and the legendary British “know-how” in dealing with “the natives” had laid an egg in the recent Teheran riots.

I may be doing the company a monstrous justice but I have a strong suspicion that the natives of Persia do not rise in wild and violent protest, on religious grounds, unless somebody has encouraged them to do so. In the present case, Premier Mossadegh got rid of the Shah in an apparent political struggle against the latter attempt to influence Persian policy on the oil issue. The riots were in protest against the Shah’s enforced departure and had a spectacular course. [The No’he Esfand episode had nothing to do with the oil matter]

At present, however, it looks as though Mossadegh had won his case, both against the Shah and against the Communist-led Tudeh party. The wells and the great refinery at Abadan are still in Persian hands and the nationalization of the Persian oil industry still remains effective within the somewhat frayed limits of Persian sovereignty.

It seems a pity that Americans should be the target of the mob’s hostility, since there is not a dollar of American capital invested in the Anglo-Iranian Oil Company or in Persian oil. We have tried to mediate, with complete lack of success, between the Persian nationalists and a corporation which is controlled by the British government in a dispute in which we have no part and in the settlement of which we have only political interest.

As matters now stand, Persia has the oil but cannot sell it in the world markets, due not only to legal doubt as to Persia’s title but also to British readiness to intercept and condemn tankers that seek to carry it. The United States government also has warned Persia that our “Point Four” aid will be withdrawn if any of the oil is sold to Soviet countries. Without the royalties from the oil, the Persian government is short of funds with which to pay the Army and the police.

In the meantime, the Soviet Foreign Office is breathing sweetness and light over Persian cancellation of the old Russian caviar concession in the Caspian Sea. London has long suspected that American oil companies would like to move in and get some of the Persian oil for themselves, so we are in the middle.

It is hard to see how anybody can afford to give in on this issue. Mossadegh will fall if he recedes from his nationalization of the oil. The British economy needs the oil, both to fuel the Royal Navy at a rock-bottom price and to earn the exchange which has supported the “Sterling Area” in Pakistan, East Africa, India, Malaya and the East indies. We fear that a collapse in Persia will pave the way for a Soviet advance to the Persian Gulf. London does not believe that the Soviets could do anything much with the oil if they did get to the Persian Gulf. The whole thing is an economic and political rat race.

Persia is what the learned strategists call a “power vacuum,” but it is the kind of vacuum into which angels would not rush and where the State Department must walk softly. Perhaps the best solution would be to let the matter go to the World Court, not on the legality of the nationalization but on the manner and amount of the compensation due the company for the loss or its property. [That would have made it the third time the dispute came before the World Court]