890F.6363/1–2549

Memorandum of Conversation, by Mr. Richard H. Sanger of the Division of Near Eastern Affairs

secret

Subject: Further Proposal by Judge Hudson and ARAMCO Officials Regarding Offshore Oil

Participants: Judge Manley Hudson—Retained by ARAMCO for Legal Advice
Mr. Richard Young—Ass’t to Mr. Ray—Legal Counsel for ARAMCO
Mr. George W. Ray—Legal Counsel for ARAMCO
Mr. Terry Duce—Vice President ARAMCO
Mr. Philip Kidd—Ass’t to Mr. Duce
State Department
NEA—Mr. Hare
L/P—Mr. Furman
GTI—Mr. Dunn1
GTI—Mr. Kitchen
PED—Mr. Eakens2
OIR/GE—Mr. Boggs
NE—Mr. Mattison3
NE—Mr. Clark
NE—Mr. Sanger

Mr. Geo. Ray read a statement to the effect that he saw no objection, from the point of view of ARAMCO, to the declaration such as that drafted by Judge Manley Hudson. In his statement (a copy of which is attached)4 Mr. Ray indicated that ARAMCO could not evade the necessity of offering some suggestions to the Saudi Arabian Government. Furthermore, only “notoriety” regarding the action taken by the Saudi Arabian Government with reference to the submarine areas of the Persian Gulf would furnish the needed protection to ARAMCO. Mr. Ray went on to say that replies to the questions asked ARAMCO on December 6, 1948 by Ahmed Bey Taufiq, the Legal Advisor of SAG, had now been formulated and that unless the Department interposes positive objections ARAMCO wished to communicate these replies as soon as the Company had given final approval.

Judge Hudson then read over the pertinent passages of the replies to Ahmed Bay Taufiq’s questions. The Judge pointed out that in preparing these replies he had not wished to prejudice the position which it was understood the Government of the US would take in [Page 97]giving advice to the Saudi Arabian Government. In fact the proposed ARAMCO replies led up to a situation in which the proposals of the US Government to the Saudi Government would fall on hospitable ground.

Judge Hudson discussed Annex 1 “Draft Decree Concerning Certain Islands in the Persian Gulf”. Various questions were raised by Mr. Dunn concerning this Annex, including the use of the words “Noting” and “appertain to”. With reference to the islands off the Neutral Zone Judge Hudson said that Mr. Young did not reach any final conclusion regarding ownership and he believed the Government of Saudi Arabia was undecided in regard to that. Judge Hudson stated he felt that that there was little or no doubt about the ownership by Saudi Arabia of the 13 islands mentioned in this Draft Decree.

The Judge then discussed Annex 2, “Draft Decree on the Territorial Waters of Saudi Arabia”, a highly technical document which he said had been prepared after careful study of the Norwegian, Dutch and other comparatively recent Legislation on this subject.

Judge Hudson then referred to Annex 3,5 “Draft Decree Concerning the Policy of the Kingdom of Saudi Arabia with Respect to the Sub-Soil and Sea Bed of Areas in the Persian Gulf Contiguous to the Saudi Arabian Coast”. He explained to those present at the meeting the next to last paragraph of this Statement which reads:—

“The Sub-soil and sea bed of those areas of the Persian Gulf which, though outside the inland waters and the coastal sea along the shores of Saudi Arabian territory (including islands), are contiguous to the coasts of Saudi Arabia, are declared to appertain to the Kingdom of Saudi Arabia and to be under its jurisdiction and control. Where such areas extend to the shores of another State, or are shared with another State, boundaries: will be determined by Saudi Arabia in agreement with the State concerned in accordance with equitable principles. The character as high seas of the waters above such areas, the right to the free and unimpeded navigation of such waters, the traditional freedom of the pearl banks in the Persian Gulf and access to such banks by the peoples of the Gulf, are in no way affected.”

According to the Judge such an inclusive program as envisaged in these three Decrees would go a long way towards helping an orderly development of the Persian Gulf. It would allow parallel programs to be put into effect by other States, but it would leave the question of conflicting water boundaries open and did not prejudice the suggestions which the Department of State was expected to present soon to the Government of Saudi Arabia. He concluded by saying that if [Page 98]the Board of Directors of ARAMCO approved it was planned to make these replies to the four questions asked by Saudi Arabia and suggest that that country put out the three Decrees referred to above as Annexes 1, 2 and 3.

Mr. Ray thereupon said that Mr. Spurlock the ARAMCO senior legal representative in Saudi Arabia was now in the US. Mr. Ray planned to go over these four replies and three proposed Decrees with him so that he would be completely familiar with them when he returned to Saudi Arabia next month.

Mr. Hare replied that the program as suggested by Judge Hudson covered not only a proposed decree concerning Persian Gulf subsoil and sea bed but also decrees concerning islands in the Gulf and the territorial waters of Saudi Arabia. He pointed out that these last two points had not been studied by the Department up until now and that the Department might have to remain silent in regard to them.

Mr. Ray explained that the Government of Saudi Arabia had asked ARAMCO for advice on all pertinent subjects relative to offshore waters and that it therefore seemed best to present a complete line of action which SAG might follow including positions regarding islands and territorial waters.

Mr. Hare said that the draft decree concerning subsoil and sea bed of the Persian Gulf, Annex 3, appealed to him personally.

Mr. Dunn suggested that the phrase “by competent experts” be omitted from paragraph 2 of Annex 3 and this was agreed to. He also suggested that the term “and are hereby placed under its jurisdiction and control” (line 5 and 6 page 19) be changed to read “and to be under its jurisdiction and control”.

It was noted with approval that no mention of Bahrein Island was contained in any of these documents and Judge Hudson pointed out that if any question was raised regarding Bahrein it would, under the terms of Annex 3, be settled “in agreement with the state concerned in accordance with equitable principles”, (page 19)

Judge Hudson repeatedly referred to the fact that the Saudi Arabian Government had a high regard for the Truman Proclamation regarding the American continental shelf6 and that he had therefore relied heavily upon that document in drawing up these Decrees.

Mr. Ray said that the actual result of Saudi Arabia proclaiming these three Decrees would be to bring the Saudi Arabian Legislation up to a point where Iranian Legislation was.

[Page 99]

On being asked by Mr. Clark if the three draft decrees should follow each other in timing Mr. Ray said that he felt the safest and best thing was to settle all these problems at the same time.

Mr. Duce discussed the geology of the Persian Gulf briefly and said he did not expect ARAMCO’s explorations to go as far east as the center of the Persian Gulf for a long time to come.

Judge Hudson agreed with Mr. Hare’s statement that the subject matter of the decree on islands and the decree on territorial waters had not been specifically studied by the Department of State and said that he and Mr. Young would be glad to review these drafts with interested officers of the Department. He said that he felt that Annexes 1 and 2 were outside the area of advice to be given Saudi Arabia by the Government of the US. He hoped that the Department would not object to these, ARAMCO’s, suggestions in the field of islands and territorial waters. He said that ARAMCO did not ask Departmental approval of Annexes 1 and 2, but hoped that we would shortly be able to say that we had no objections in regard to them.

Mr. Hare told the ARAMCO representatives present that we are now disengaging ourselves from our previous close working arrangement with the British in regard to this matter, and that the Department hopes to be able to go ahead alone and give the Saudi Arabian Government the advice which it has requested. He pointed out, however, that the Department and ARAMCO should not submit competing drafts.

Judge Hudson reminded everyone present that ARAMCO felt it must submit one or more proposed proclamations to SAG soon in order to forestall unwise action by SAG and to retain the good will of that country.

Mr. Hare replied that he felt it would be desirable if there could be a similarity in the proclamations suggested to Saudi Arabia by the Government of the US and by ARAMCO.

When Mr. Eakens suggested that they should be identical Mr. Ray agreed, providing Saudi Arabia knew of the talks which had been going on between ARAMCO and the Department of State on this subject.

It was agreed that the ARAMCO officials would confer with Mr. Boggs that afternoon, January 25th, that the interested officials of the Department after talking with Mr. Bromley at 10:30 a. m. on January 26th, would confer among themselves regarding the ARAMCO proposals, and that the present group would reconvene in Mr. Hare’s office on Thursday, January 27th at 3:00 p. m.

  1. W. Clyde Dunn, Assistant Chief of the Division of Greek, Turkish, and Iranian Affairs.
  2. Robert H. Eakens, Chief of the Petroleum Division.
  3. Gordon H. Mattison, Chief of the Division of Near Eastern Affairs.
  4. Not found attached.
  5. None of the annexes found in Department of State files.
  6. President Truman issued two proclamations on September 28, 1945, concerning United States jurisdiction over natural resources in coastal areas and the high seas; see the press release of the same date issued by the White House, Foreign Relations, 1945, vol. ii, p. 1528.