890g.6363 T 84/233

Memorandum by the Chief of the Division of Near Eastern Affairs (Dulles)

The French Ambassador called to see the Secretary on December 18 and left with him a memorandum, of which a copy is attached,73 expressing, on behalf of the French Government, the hope that this Government would intervene to prevent a break between the Turkish Petroleum Company and the American Group.

The Secretary asked me to outline to the French Ambassador the present status of these negotiations, which I did, somewhat as follows:

I pointed out that the negotiations between the American Group and the Turkish Petroleum Company were negotiations of a business character and that in principle the Department did not intervene in such negotiations; that we were of course interested in maintaining the principle of the Open Door in Mesopotamia and the right of American companies to obtain a fair share of participation, if they so desired, in the development of the natural resources of Mesopotamia. This policy the Department had consistently maintained in correspondence with the British Government, of which the Ambassador was possibly aware.

I told the Ambassador that the American Group had been negotiating for the past two or three years with the Turkish Petroleum Company and that an agreement had been practically reached when serious difficulty was encountered in view of the attitude assumed by a minority shareholder in the Turkish Petroleum Company, Mr. Gulbenkian. The latter had apparently insisted that the various partners in the Turkish Petroleum Company should have a stock interest only in the Company, as he himself only desired such an interest. The American Group, on the other hand, informed the Department that they were interested in securing their pro rata share of the crude oil produced by the Company and were not interested in mere stock participation.

With respect to the suggestion contained in the French Ambassador’s note that the American Group consent to the arbitration of [Page 243] the outstanding difficulties, and not resort to separate action, I said that I understood from the American Group that they considered that the questions at issue were solely between Gulbenkian and the Turkish Petroleum Company and that they could neither be a party to nor would they desire to block arbitration between the Turkish Petroleum Company and Gulbenkian. I added that I further understood that, in the event that the agreement which might ultimately be reached between the Turkish Petroleum Company and Gulbenkian was not of a character to permit the participation of the various groups in the actual crude oil produced, or if this agreement imposed onerous charges upon the prospective participants in the Turkish Petroleum Company, I could give no assurance that the American Group would not withdraw. On this point they would have to consult, and would probably consult, their own business interests.

I gathered that the French Ambassador himself did not have any data on the situation or any knowledge of the background which had led his Government to make the request contained in his note.

Later in the day, I read over the telephone to Mr. Swain, of the Standard Oil Company of New Jersey, the pertinent sections of the French Ambassador’s note. Mr. Swain replied that he could only confirm what he had already stated, that the American Group did not see that they could properly be a party to the proposed arbitration; that the questions involved were questions between the European partners and Gulbenkian. If those parties desired to refer their difficulties to arbitration that was their concern.

A. W. Dulles
  1. Printed supra.