890F.6363/2–1948

Memorandum of Conversation, by the Chief of the Division of Near Eastern Affairs (Merriam)

secret
Participants: Mr. E. E. Jones, [Petroleum] Attaché, British Embassy
Mr. T. E. Bromley, First Secretary, British Embassy
Mr. Eakens, PED
Mr. Breakey, PED
Mr. Robertson, NEA
Mr. Sanger, NE
Mr. Merriam, NE

Mr. Merriam referred to Mr. Bromley’s letter of February 19 and the memorandum enclosed therewith (copies are attached hereto) on the subject of offshore oil in the Persian Gulf.1 These had been circulated to and discussed by interested officers of the Department who felt [Page 9]that the preliminary work done by the British side constituted a promising and helpful approach to the problem.

As we understood it the British discussion of the matter raised the following points:

1.
Do existing concessions include subsea rights outside territorial waters?
2.
Should the declarations of sovereignty include both seabed and subsoil rights, or only the latter?
3.
Would it be better not to have assertions of sovereignty but merely agreements to confine the granting of oil concessions within defined areas?
4.
Is the median line basis a good one? If so, how in working it out, would certain obvious difficulties such as the following be dealt with:
a.
Projection of frontier lines in cases of disputed frontiers?
b.
What should be the angle of intersection with the coast?
c.
Islands, especially those, such as Bahrein, constituting sovereign units?
d.
Possibility of Iranian cooperation and likelihood of Iran reasserting claims to Bahrein, et cetera.
5.
Procedure.
The U.S. side would like to add another item: secrecy of handling, particularly vis-à-vis oil companies.

The subject was then discussed under the above headings.

1.
It was the view of those present that existing concessions do not include rights to the seabed or subsoil in the Persian Gulf, in the absence of specific provisions to that effect. None of those present was aware of the existence of any such provisions. Mr. Bromley said the Foreign Office had pointed out that provisions do exist under which additions to the territory of a country would be included in existing concessions, and that conceivably such provisions could be held to apply to subsea areas. It was considered by those present, however, that the intent of such provisions was directed solely to possible extensions of the land area of a country as normally defined, and not to subsea areas, apart from land under territorial waters.
2.
The question of whether the declarations should include seabed and subsoil, or only subsoil, arose from the complication resulting from pearl fishery rights. Mr. Merriam said that in theory the matter could be handled in one of two ways. One way was to include both seabed and subsoil rights in the declarations but to make exception of existing fishery rights. The difficulty with this method would be in defining the pearling rights and establishing priority as between, say, pearling rights and oil rights. The pearling rights appeared to be largely a matter of custom and had not been reduced to writing. To endeavor to do so would be a difficult task leading to dispute, delay and, doubtless, acrimony. Therefore, since we were now interested primarily in oil, it would seem simpler to confine the declarations of sovereignty to the subsoil. When a conflict of rights resulted, as by contamination of fisheries by oil, damages would be paid.
3.
It was agreed that an assertion of sovereignty would be necessary, otherwise there would be no basis on which to grant concessions.
4.
The median line principle seems sound. Whatever the difficulties in applying it in practice, it was a simple, reasonable concept, easy to understand. Moreover it derived a certain sanction in that it might be considered an extension of the thalweg principle of international law, the difference being that in this case there is no channel, so the middle of the Gulf itself would be chosen.
a.
In the case of disputed frontier lines, it might be necessary and practicable to handle the corresponding subsea extensions as neutral zones, i.e. on the basis of joint and undivided sovereignty.
b.
The precise angle of intersection of frontiers with shoreline might, if projected, give unfair results. It would seem better to establish perpendiculars to the general trend of the shoreline. However, it was felt that it would be desirable to prepare a map showing how the various principles which could be applied would actually work out.
c.
Here again it would be desirable to see what a map would look like.
d.
The American side said that it had given the Iranian aspect of the matter a good deal of thought. It was very probable, as suggested by the British, that the Iranians would utilize the occasion to reassert their alleged claims to Bahrein, etc. On the other hand, if the Iranians were not approached on the matter at the same time as the countries on the west side of the Gulf, it would look to the Iranians very much like a conspiracy from the west side backed by U.S. and UK. This would give a handle to the Russian propaganda machine and to pro-Soviet elements in Iran. In consequence, for reasons of principle and also as the lesser of two evils, the American side felt that it would be better to approach the Iranians on the matter at the same time and on the same footing as the countries on the western side of the Gulf. We visualized that in the end the matter might shake down by the Iranians including in their declarations something to the effect that nothing therein derogated from their claims. The other parties might respond by inserting in or amending their declarations to the effect that nothing therein constituted in any way a recognition of Iranian claims. Since these would all be unilateral declarations, and not agreements, the matter might go at that, the important thing being that the Iranians agree to the median line for the purposes of oil concessions. The British side took note of these observations, but pointed out that London appeared to be anxious not to give rise to a renewal of Iranian claims to Bahrein, etc.
5.
Mr. Merriam said that we thought that, once US and UK had agreed on the essential aspects of the problem, the UK would make appropriate suggestions to the principalities with which UK had a protection relationship, and US and UK would make a concerted approach to the others: Iran, Iraq and Saudi Arabia.
Since both US and UK are more or less in the Arab doghouse on account of Palestine, it will be necessary to keep an eye cocked on [Page 11]that matter in deciding the timing of an approach. However, US and UK should continue to work in order to get their views lined up.
6.
The American side raised an additional point, that of secrecy in relation to oil companies. Once the new subsea areas were staked out they would be open to concession-hunting by any oil company. So far as US was concerned, we felt that our handling of the matter should not give any American company an advantage over any other American company. Thus far we had discouraged all American companies who had inquired, from seeking subsea oil concessions in the Gulf. In order to give all companies an even start, we felt that when US and UK made their approaches to the Persian Gulf governments, press releases should be issued simultaneously in Washington and London. Until then, we felt that strict secrecy vis-à-vis all oil companies should be preserved, otherwise companies on the ground and in close relations with the Persian Gulf governments would have an advantage over other companies. Mr. Jones said that maintenance of secrecy vis-à-vis British oil companies would be somewhat difficult owing to the relationships existing between the Government and some of the companies. Up to the present, however, the Government had put the companies off by saying that it was a complicated matter which was being studied.

In concluding, Mr. Merriam said that the foregoing represented informal reactions on the working level to Mr. Bromley’s letter and memorandum. The British had already let us have a map showing how the median line principle might be applied to the sea areas in the neighborhood of Bahrein. It would be most helpful if as the next step the British could let us have a map showing the application of the principle to the whole Persian Gulf, so that we could take such a concrete suggestion for applying the principle into account in working up a written reply to Mr. Bromley’s letter and enclosed memorandum.

G[ordon] P. M[erriam]
  1. Neither printed. The letter, addressed to Merriam, informed him that the British Embassy had received instructions from the Foreign Office to take up with him the subject of the development of offshore oil beyond the territorial waters of the Persian Gulf littoral. The memorandum dated February 4, enclosed in Bromley’s letter to Merriam, was a statement of Foreign Office views on the subject which had not yet received Ministerial approval in London but which was designed to help the British Embassy evolve a common approach with the Department of State which could then be considered by higher authorities on both sides. (890F.6363/2–1948)