Paid In Sterling
Text of Aide-Mémoire, Joint Statement (Aug. 1954)

The Mossadegh Project | October 22, 2018                    


8.2553/8–554: Telegram

No. 489

The Ambassador in Iran (Henderson) to the Department of State [Loy W. Henderson to State Dept.]

Tehran, August 5, 1954—1 p.m.


secret

Ambassador Loy W. Henderson 307. [A] Copy [of the] aide-mémoire on [the] compensation settlement [was] received this morning from [the] British Embassy. It has been initialled by [the] British Ambassador [Roger Stevens] and [the] Iranian Minister [of] Finance. [Ali Amini] It remains secret pending [the] drafting [of the] formal compensation agreement.1 Text [as] follows:

“Whereas the conclusion of arrangements with the Consortium necessitates an agreement on the question of compensation the two delegations have given careful consideration to the financial matters outstanding between the Iranian Government and the Anglo–Iranian Oil Company, Ltd.

They have had regard to the arrangements made between the Iranian Government and the Consortium which include provisions in respect of the use of the Southern assets, in consideration of which the Anglo-Iranian Oil Company, Ltd., relinquishes all claims in respect of the said assets.

They have made a meticulous examination of all the claims and counterclaims of both sides.

They have taken into account the value of the internal distribution assets, the Kermanshah Refinery, and the Naft-I–Shah oilfield, and the disruption of the enterprise of the Anglo-Iranian Oil Company, Ltd., on the one hand, and the disruption of Iran’s economy arising out of the failure of the two parties to reach a settlement following upon the nationalization of the Iranian oil industry in 1951 on the other hand.

They have also taken into account the Iranian government’s views that in equity they should receive upon ratification of the new agreement with the Consortium additional sums which would have accrued to them under the Supplemental Agreement of 1949 if it had come into force.

Having regard to the foregoing it has been agreed that the Anglo-Iranian Oil Company, Ltd., shall pay to the Iranian Government the additional sums referred to in the preceding paragraph, and such sums totalling pounds 51 million will in turn be set off against the amount payable by the Iranian Government to the Company representing the balance struck after the examination of other claims and counterclaims. In the result, a net amount is payable by the Iranian Government to the Anglo-Iranian Oil Company, Ltd., of pounds 25 million free of interest. This sum shall be paid by Iran in ten equal annual installments beginning on January 1, 1957. Settlement may be effected by the relevant installments being set off against the tax payments of the Trading Company to be established by the Anglo-Iranian Oil Company, Ltd., under the Consortium Agreement.

This payment is in full and final settlement of all claims and counterclaims by the Iranian Government and NIOC [National Iranian Oil Company] on the one hand, and by the Anglo-Iranian Oil Company, Ltd. on the other, in respect of any matter prior to the effective date of the Consortium Agreement. The Anglo-Iranian Oil Company, Ltd. gives in favour of the Iranian Government and NIOC a formal release from all claims and demands of the Company in respect of any such matter. The Iranian Government and NIOC in their turn give the following formal releases and indemnities in favour of the Anglo-Iranian Oil Company, Ltd.:

(a) A release from all claims and demands of the Iranian Government and the NIOC in respect of any matter prior to the effective date of the Consortium Agreement.

(b) An indemnity against any liability in respect of any claims and demands that may be made against the Anglo-Iranian Oil Company, Ltd. by third parties arising out of the oil operations in Iran of the said Company.

The wording of this Aide-Mémoire is not intended to represent necessarily the wording to be used in the Compensation Agreement, which is to be satisfactory to the lawyers for both sides, and which will come into force together with, and form an integral part of, the Consortium Agreement. August 4, 1954”


Henderson


• Bracketed text added for better readability. [Annotations by Arash Norouzi]

• Source: Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X (1989)

• “Transmitted in two sections; repeated to London.” — U.S. State Department Office of the Historian

1 “On Aug. 5, a joint Iranian-British statement on compensation was also released in Tehran. For text, see telegram 309, Aug. 5...” (refers to No. 490 below) — U.S. State Department Office of the Historian



888.2553/8–554: Telegram

No. 490

The Ambassador in Iran (Henderson) to the Department of State [Loy W. Henderson to State Dept.]

Tehran, August 5, 1954.


PRIORITY

309. Following is text joint Iranian-British statement being released Tehran August 5 on compensation.

“In course frank and friendly discussions on subject compensation, there has been meticulous examination of all claims and counterclaims of both sides. As part of general settlement of oil problem Iranian Government have agreed pay AIOC net amount of compensation totalling pounds 25 million payable over ten years and free of interest. Payments will not begin until January 1, 1957. Settlement takes into account value of internal distribution assets, Kermanshah refinery and Naft-I–Shah oil field, disruption of enterprise of AIOC and disruption of Iran’s economy arising out of failure of parties reach settlement following upon nationalization of industry in 1951.

This agreement in conjunction with agreement to be concluded with consortium to settle long-standing dispute and it is hoped will inaugurate new era in Anglo-Iranian relations.”


Henderson


• Source: Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X (1989)



888.2553/8–554: Telegram

No. 491

The Ambassador in Iran (Henderson) to the Department of State [Loy W. Henderson to State Dept.]

Tehran, August 5, 1954.


PRIORITY

311. Following is text [of the] joint Iranian-British statement being released [in] Tehran [on] August 5 on payments:

“Her Majesty’s Government and [the] Iranian Government have reached general agreement in principle1 on arrangements which will govern payments relations between Iran and [the] sterling area, and which will come into force on ratification [of the] oil agreement with [the] consortium.

2. Under payments arrangements, all transactions, including those of consortium with Iran and NIOC [National Iranian Oil Company] shall normally be settled in sterling and Her Majesty’s Government will take necessary steps to give Iran full ‘transferable account’ facilities. Her Majesty’s Government have also undertaken [to] provide Iran with facilities for converting sterling into dollars.

3. While these arrangements will have [to] await ratification [of the] oil agreement, Her Majesty’s Government have undertaken as [a] special measure to remove, with immediate effect, certain restrictions existing on sterling payments between Iran and [the] non-dollar world”.


HENDERSON


• Note: bracketed text added for better readability. [Annotations by Arash Norouzi]

• Source: Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X (1989).

1 “The agreement in principle was spelled out and formalized in an exchange of notes on Oct. 25, 1954, between the British and Iranian Governments.” — U.S. State Department Office of the Historian


Divvying Up the Loot: The Iran Oil Consortium Agreement of 1954
Divvying Up the Loot: The Iran Oil Consortium Agreement of 1954

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Related links:

Sec. Dulles and British Foreign Sec. Anthony Eden’s Messages on Iran Oil Deal (Aug. 5, 1954)

Statement by Amb. Loy Henderson on Iran Oil Deal (Aug. 5, 1954)

Sec. of State John Foster Dulles Advises British on AIOC Legalities (Jan. 26, 1953)



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