890G.6363/10–2648
Memorandum of Conversation, by the Director of the Office of Near Eastern and African Affairs (Satterthwaite)1
| Participants: | Mr. Charles Harding, Socony-Vacuum Oil Company |
| Mr. Satterthwaite, NEA | |
| Mr. Robertson, NEA | |
| Mr. Barrow, NE |
Mr. Harding called on October 21, to say his farewells to Mr. Satterthwaite prior to his departure for London where he expects to arrive October 24.
The principal purpose of Mr. Harding’s trip is in connection with pending litigation over the so-called “red line” agreement2 which is [Page 56] scheduled for trial this month. Mr. Harding believed that despite the imminence of the hearing a settlement might be reached out of court. The sole stumbling block was Mr. Gulbenkian3 who continued to object to elimination of the restrictive provisions of the red line agreement and was making various other demands, including claims to payment for “flexibility oil”, payment of certain royalties in dollars (which the non-American partners of IPC would find difficult to meet), extension of the waiting period for reacquisition of withdrawn or cancelled concessions, etc. Mr. Harding said the other partners were in solid agreement and were making a new approach to Mr. Gulbenkian offering substantial compromises to most of his demands. He intimated, however, that the partners would stand firm on the matter of eliminating the restrictive provisions of the red line arrangement.
Mr. Harding felt they were very close to settlement with Mr. Gulbenkian and he sincerely hoped the case would not go to court, for should there be a great deal of publicity surrounding the trial, disturbing international repercussions might result. The case was being tried on the issue of whether the red line agreement has become invalid on the basis of the British Trading with the Enemy Act and would hinge partially on whether the French partner, CFP (Compagnie Française des Pétroles), had collaborated with the Axis. Certain high French officials, in particular, were bound to be involved and this, in turn, might cause some embarrassment between the French and the other partners.
During the course of the conversation the question of reopening the pipeline to Haifa was also touched upon, Mr. Harding stating he personally believed little could be accomplished in this direction until the UN acted on the Palestine question and made provision for the future operation of the Haifa refinery. The Iraqis were being very intransigent in the entire matter despite the fact that they were losing approximately one-half of their royalties from the shutdown. His company was planning, however, on the basis that the pipeline would be re-opened after the first of the year.
[Page 57]Mr. Satterthwaite reviewed for Mr. Harding’s benefit current efforts being made by the British and French to reopen the line and the United States position in the matter.
- Drafted by John R. Barrow of the Division of Near Eastern Affairs.↩
- Regarding the lied Line Agreement and the
Group Agreement of July 31, 1928, of which the former was a
part, see footnote 6,
Foreign Relations, 1947, vol. v, p. 630, and footnote 4,
ibid., p. 628.
The French Embassy, in January 1947, made formal representations to the Department of State alleging violations of the Group Agreement by the Standard Oil Company of New Jersey and the Socony-Vacuum Oil Company, the American partners in the Iraq Petroleum Company (see note 8 from the French Embassy and footnote 8, ibid., pp. 627 and 629); The French representations, in effect, protested the proposed purchase of a portion of the capital stock of Aramco by Jersey Standard and Socony (see Mr. McGhee’s memorandum of conversation of December 3, 1946, ibid., 1946, vol. vii, p. 40). The French, in effect, also objected to the agreement of the Anglo-Iranian Oil Company and the same two American oil companies, whereby the former would sell large quantities of oil to the latter (see telegram 13, January 8, 1947, to Tehran, ibid., p. 49).
Officers of the Department conversed with the French Ambassador on January 10, 1947, and stated 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.” (Mr. Eakens’ memorandum of conversation, ibid., p. 632.) Litigation to bar the alleged violations of the Group Agreement by the American companies was undertaken in the British courts by the Compagnie Française des Pétroles, the French partner in the IPC.
↩ - Calouste Sarkis Gulbenkian, owner of 5% of the capital stock of the IPC through Participations and Investments, Ltd.↩