May 20, 1951

British Warn Iran of Serious Result if She Seizes Oil
By CLIFTON DANIEL
 LONDON, May 19 -- Britain warned Iran today that any attempt to take over British oil properties without negotiations would have "the most serious consequences."

For negotiations the British Government offered to send a mission to Teheran. A Minister of the Government probably would head the delegation.

[The only governmental comment in Teheran was voiced by the closest associate of the present Premier, who said, "It's the same old nonsense."]

Britain's offer was contained in a note delivered to the Iranian Government by Sir Francis Shepherd, British Ambassador in Teheran. While it warned the Iranians against applying their law for the nationalization of the British oil concession in Iran it did not specify the consequences or mention the possibility of sending military forces to safeguard British lives and property.

If the Iranians continue to refuse negotiations, Britain will file a complaint before the International Court at The Hague, the note indicated.

That was the third alternative offered for the settlement of the dispute over the ownership of the Anglo-Iranian Oil Company, the two others being negotiation and arbitration. The company itself has applied for arbitration as provided by the terms of its agreement with the Iranian Government.

The British note, approved by the British Cabinet and seen in advance by the United States Government, represented another effort to bring the Iranians to the conference table.

So far all action in the dispute has been unilateral. The Iranians have forged ahead with a law to nationalize the oil industry, rebuffing all protests, all challenges to their authority and all efforts to persuade them to negotiate.

The British hope that if the Iranians could only be persuaded to talk they might be convinced of the economic folly and grave political risks of trying to operate so vast and complex an industry without the aid of British technicians, managers and financiers, and British transport and sales facilities.

Britain's note began with an expression of regret that the Iranian Government had not responded to Britain's earlier proposals for negotiations. It was reinforced by a plea for a friendly settlement from the United States Government, which shares with Britain the gravest concern about the possibility that Iranian oil, the biggest supply now available in the Near East, might be lost to the Western powers.

The British Government said that it fully understood and sympathized with Iran's desire to strengthen her economic structure and provide for the welfare of her people, but did not believe that nationalization of the oil business would serve those ends.

The British Government did not question Iran's sovereign rights, but declared that nationalization was not "a legitimate exercise of those rights."

The note pointed out that the agreement under which the Anglo-Iranian company extracted oil from Iran was a contract concluded under the auspices of the League of Nations and ratified by the Iranian Parliament and contained two important provisions: that the agreement should not be altered by law and that any conflict between the parties should be referred to arbitration.

As the Labor Government of Britain itself has nationalized several industries, although none of them foreign owned, its reasons for opposing nationalization in Iran were of particular interest. The note said:

"The essential point is not the right of a sovereign power by its legislation to nationalize commercial enterprises carried on within its borders nor what is the measure of compensation it should pay for doing so; the essential point is that the Persian [Iranian] Government in effect undertook not to exercise this right and the real issue is therefore the wrong done if a sovereign state breaks a contract which it has deliberately made.

"If the Iranian Government had grievances it should have sought arbitration as the company has now done," the note added.

The British note, which was a reply to an Aide Memoire received the week before last from Iran, rejected the Iranian contention that the oil dispute was a matter solely between the oil company and the Iranian Government.

It said that the British Government as majority stockholder in the company had "the fullest right to protect its interests" and if the Iranian Government would not arbitrate "then the question must become an issue between the two governments."

The British Government would have "an unanswerable right" to appeal to The Hague court, the note continued. Aware that no government can be hailed before the court without its consent, the British expressed the hope that in such a contingency the Iranian Government would collaborate.

However, the note said Britain still hoped that Iran would negotiate and said Britain would send a mission "forthwith." This offer was a concession by Britain and an attempt to bring the dispute up to the level of a discussion between governments rather than leave it between a sovereign government and a commercial company.

There has been speculation here that a minister experienced in international negotiations would be sent from London. Sir Hartley Shawcross, president of the Board of Trade and a distinguished lawyer, Kenneth Younger, Minister of State in the Foreign Office, and John Edwards, Financial Secretary of the Treasury who recently concluded a trade agreement in Argentina, have been mentioned.

The British note concluded with the statement that "a refusal on the part of the Iranian Government to negotiate or any attempt on their part to proceed by unilateral action to the implementation of the recent [nationalization] legislation could not fail gravely to impair those friendly relations we both wish to exist and to have the most serious consequences."

TEHERAN, Iran, May 19 -- "It's just the same old nonsense. We've heard all that before."

Those were the only comments made in governmental circles today on the latest British note regarding the nationalization of the Anglo-Iranian Company's oil properties in Iran.

They were expressed by the closest associate of Premier Mohammed Mossadegh, who has sought sanctuary against assassination in the Parliament Building and who for the second day refused to receive Sir Francis Shepherd, British Ambassador to Iran.

As a result of the Premier's refusal to admit him, Sir Francis presented the British note to Hagher Kazemi, Iranian Foreign Minister.