691.119/6–1948: Telegram

The Secretary of State to the Legation in Saudi Arabia

confidential

240. We supported decisions outlined Commerce press release June 191 transmitted separately for reasons described. Pipeline in Iran would provide essential transportation making badly needed additional oil supplies available to meet demand of U.S. and other friendly nations. Additionally project would permit ME oil development outside disordered area with maximum yield from minimum investment critically short steel.

Faced with alternatives we chose recommend postponement main line pipe export2 rather than risk outright rejection entire project because mounting sentiment Executive and Congressional quarters against shipping large tonnages critically short steel to disordered area with no assurances that project could be completed based on (1) inability Aramco obtain Syrian concession3 and (2) danger of exposure to constant attack.

In case you are approached you may assure SAG that it will be difficult obtain approval for export large quantities steel involved unless it can be clearly shown that this critically short supply commodity can be productively utilized. Conditions which must be met [Page 24]to provide this assurance, include (1) restoration of order in the area and (2) conclusion of Syrian pipeline concession permitting transit.

In following postponement course Dept managed obtain, necessary renewal by Commerce of special project license which otherwise would have expired Jun 2, 1948 and would have required complete abandonment project. Also we obtained assurance that postponement would not prejudice Aramco’s applications for export licenses covering material other than heavy pipe needed for continued construction Tapline on reduced basis utilizing heavy pipe on hand. In event satisfactory assurances forthcoming re productive utilization. Dept can request further consideration heavy pipe export prior to stipulated Sept date.

Continued refusal Syrian Govt grant convention necessary pipeline deprives ME countries benefits estimated equivalent of $24 million during construction period plus $4 million annually after operations commenced.

Sent Jidda as 240; rptd Cairo as 834; London as 2312; Tehran as 569; Damascus as 238; Beirut as 357.

Marshall
  1. See supra. The Department’s support was formally conveyed to the Department of Commerce in a letter of June 9 (691.119/6–948).
  2. In a letter of June 11 to the Department of Commerce, not printed (690F.119/6–1148).
  3. The intended reference was to Syrian ratification of the pipeline concession. The convention granting the concession had been signed by the Syrian authorities and Tapline on September 1, 1947; see editorial note and Mr. Sanger’s memorandum of conversation of December 26, 1947, Foreign Relations, 1947, vol. v. pp. 664, 668.