890b.6363 Gulf Oil Corporation/160

The Ambassador in Great Britain (Mellon) to the Secretary of State

No. 465

Sir: I have the honor to state that on November 1 I supplemented my representations made to the Foreign Office as reported in my telegram No. 298, October 18, 11 a.m., 1932, and pointed out to Sir Robert Vansittart that the delay in reaching a settlement in the matter of the Koweit oil concession was becoming “exasperating”. A memorandum of the conversation which I intended to have with Sir Robert Vansittart had been previously prepared and a copy was left with the Under Secretary of State for Foreign Affairs at the conclusion of my visit. The line of conversation followed very closely this memorandum, copies of which are enclosed herewith.

On leaving, I asked Sir Robert Vansittart to give the matter his personal attention in the hope that a speedy settlement might be worked out, to which he gave me his full assurance.

Respectfully yours,

(For the Ambassador)
Ray Atherton

Counselor of Embassy

The American Embassy to the British Foreign Office

Memorandum of Conversation

In a note from the British Foreign Secretary, dated April 9, 1932 (No. E 1733/121/91), regarding an application of the Eastern and General Syndicate, Limited, for an oil concession in Koweit, reference is made to the extended period of time that oil companies have been interested in oil lands in Koweit.

The Eastern and General Syndicate initiated and carried on negotiations with the Sheikh of Koweit for an oil concession in his Principality with the knowledge and approval of the British Government [Page 21] but it was not until after American interests became associated in the venture with the Syndicate in 1927 that the British Government required (in 1928) the inclusion in the concession agreement of a “nationality clause”, which clause would have the effect of excluding any but purely British interests from exploiting such a concession.

Thus the Syndicate for years prior to 1927 and in agreement with American interests since 1927 has continuously endeavored to obtain a concession in Koweit very similar in principle to a concession which, with the knowledge of the British Foreign Office, had been granted to the Syndicate in the Bahrein Islands.

Last December American interest in the Koweit concession formed the basis of representations by the American Ambassador to the British Secretary of State for Foreign Affairs. In referring to these representations, the Foreign Office note of April 9, mentioned above, stated that “His Majesty’s Government for their part are prepared to agree to the omission from any oil concession, which the Sheikh may be prepared to grant, of a clause confining it to British interests.…”

On September 6, 1932, however, the American Embassy, in a note to the Foreign Office urged that early appropriate steps might be taken, that this statement become effective, and that the American interests involved might be placed in as favorable a position as a British oil company in having its application considered by the Sheikh of Koweit. In acknowledging this note of September 6, a Foreign Office note in reply stated: “His Majesty’s Government decided they could not advise the Sheikh to give preferential treatment to the Eastern and General Syndicate”. In the opinion of the Department of State, some misunderstanding may exist in the mind of the British Government in this connection, since no preferential treatment has been asked for American interests, nor has any been granted.

It may be recalled that the American Ambassador, in discussing the Koweit oil concession with Sir John Simon last December, pointed out that the Eastern and General Syndicate had initiated and carried on its negotiations with the Sheikh with the knowledge and approval of the British Government; that the Syndicate had offered the Anglo-Persian Oil Company the opportunity, over six years ago, to interest itself in the Koweit oil concession which opportunity that company declined; that according to his information it was only after efforts to interest the Anglo-Persian Oil Company and other British groups in the said concession that the Syndicate sought to interest and, in November 1927, succeeded in interesting the American company since then associated with it in the venture; that it was after these American [Page 22] interests became associated with the Syndicate in 1927 that the British Government in 1928 insisted upon the inclusion of a “nationality clause” which for a period of several years from that date had prevented the Syndicate from consummating with the Sheikh the concession it sought. Since the withdrawal of the Anglo-Persian Oil Company in 1926, it is only, I understand, during this last year (1931-1932) of the Eastern and General Syndicate’s negotiations that the Anglo-Persian Oil Company (in October 1931) manifested further interest in Koweit. On the contrary, the Syndicate has been conducting its negotiations with unceasing activity for many years. It may also be recalled that it was not until April of this year that the British Government reached any decision to the urgent representations initiated by the American Ambassador in the latter part of last year.

In a most recent Foreign Office note it was stated that the Anglo-Persian Oil Company submitted a draft concession for consideration in August last, and study of this Anglo-Persian draft will necessitate further and considerable delay in His Majesty’s Government’s reaching any conclusion regarding the draft concession which subsequent to receipt of the Foreign Office note of April 9, 1932, the Eastern and General Syndicate submitted to the Sheikh on May 26, thus renewing its application for the Koweit oil concession which, as above indicated, it has been negotiating in association with American interests unremittingly for many years.

With reference to representations made by the American Ambassador to the Foreign Secretary in December, it may be well to draw attention to General Dawes’ letter to Sir John Simon of December 22, pointing out the Mining Lease Act of February 25, 1920, regarding lands under which British subjects are given the same treatment as American citizens. The text of this letter reads as follows:

[Here follows text printed on page 4.]

In conclusion, it may be realized from the above facts that for more than four years American interests, in agreement with the Syndicate, have been seeking to obtain an oil concession in Koweit, and for approximately the last year of that time representations have been made by the American Embassy, seeking for its nationals in this matter such opportunities as British subjects receive in the United States. In this connection, the American Embassy pointed out only recently that opportunity to American interests seems to be obstructed by the arbitrary decision of His Majesty’s Government, as set forth in the Foreign Office note to this Embassy of September 16, containing a refusal to inform the Eastern and General Syndicate at this time whether that portion of the draft concession submitted by it (namely [Page 23] Clause 8) was satisfactory from the point of view of safeguarding the interests of His Majesty’s Government, and, if not, to state wherein the said conditions failed to satisfy in safeguarding the interests of His Majesty’s Government.

The Department of State has therefore instructed the American Embassy to review the facts with the Foreign Office and to request that this matter, which has been delayed for over a period of four years, may be expedited by the British authorities to the end that such action may be taken as will permit the Sheikh now to come to a decision.