890.6363/1–647: Telegram
Memorandum of Conversation, by the Assistant Chief of the Petroleum Division (Eakens)1
| Participants: | Ambassador Bonnet, French Embassy |
| Messrs. Clayton, McGhee, Henderson, Rayner, Loftus, Robertson, Wallner, and Eakens, Department of State |
Ambassador Bonnet opened the discussion by stating that he wished to inform the Department of his Government’s views concerning the recent actions of the American oil companies, Standard of New Jersey and Socony-Vacuum, the effect of which was a unilateral denunciation of certain provisions of the IPC Agreement of 1928. He then went on to express what was said in the note which he handed to Mr. Clayton on the matter,2 a copy of which is attached, and to mention that his colleague in London was taking action similar to that being taken by him.
In reply to Ambassador Bonnet’s opening statement, Mr. Clayton said that he was familiar in general with the matter. He stated that it was his understanding that the contract which the French Government considered to be abrogated by the actions of Jersey and Socony is between private parties, and that it would seem that unless they are able to come to some agreement there would be no other recourse but to the courts. He also stated that he understood that two or three leading English barristers had passed the opinion that the Agreement is not now legally enforceable.
Ambassador Bonnet stated that court action was being initiated in the British courts by Compagnie Française des Petroles against Standard and Socony, and that in taking such action Compagnie Française had the full support of the French Government. He emphasized that even though legally the Agreement might not be enforceable as to the provisions breached, there was a moral obligation of the American parties (and he implied also of the U.S. Government to see that the American parties do so) to live up to the contract, implying that the American interest in IPC resulted from a generous gesture on the part of the French and that the actions of the American parties hardly seemed just and morally right in the circumstances. He hinted, if not actually stated, that the Anglo-Iranian-Standard-Socony purchase contract was the consideration received by Anglo-Iranian for [Page 633] not objecting to the Aramco deal. In reply to this point, it was stated that the Department understood them to be entirely separate deals and that if there were any connection between the two the Department did not know it. Much emphasis was placed by Ambassador Bonnet on the retarding effect of the deals on the development of the IPC concessions, primarily in Iraq, on the willingness of the French to see the provisions of the 1928 Agreement modified for the purpose of better adapting it to present conditions, and of the importance to the French economy of increased supplies of Middle East oil on favorable terms. There was also evidence in his comments that the French attached considerable importance to their being considered and treated as an enemy in the reliance by Jersey and Socony upon the British Trading with the Enemy Act as the basis for their denunciation of the IPC Agreement.
It was pointed out that IPC already had concrete plans for increasing by two-or three-fold the capacity of its pipelines to the Mediterranean, thereby indicating a very substantial and rapid increase in IPC production is in prospect despite the two large Middle East deals in question. In the same connection it was mentioned that IPC had indicated intentions of drilling in the near future the undrilled concessions in Iraq, as well as the IPC concession in Qatar.
In closing the meeting, Mr. Clayton assured Ambassador Bonnet that very careful consideration would be given to the points the French Government considered important and that soon a reply would be made to the French note.