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


Subject: Departmental Reaction of ARAMCO Proposals Regarding Advice to be given SAG on Offshore Oil

Participants: Aramco
Judge Manley Hudson (retained for legal advice)
Mr. Richard Young—Ass’t to Hudson
Mr. George W. Ray—Legal Counsel
Mr. Philip Kidd—Washington Representative
NEA—Mr. Hare
GTI—Mr. Dunn
GTI—Mr. Kitchen
L/P—Mr. Furman
PED—Mr. Eakens
NE—Mr. Mattison
NE—Mr. Sanger
NE—Mr. Clark

Mr. Hare pointed out that the Department had given careful study to the draft of replies to the questions put to ARAMCO by Ahmed Bey Taufiq at the conference in Jidda on December 6, 1948 and that he wished to discuss the three Annexes separately.

In regard to Annex 1 entitled, “Draft Decree Concerning Certain Islands in the Persian Gulf”, Mr. Hare pointed out that this did not fall within the scope of previous discussions. He said the Department was not in a position to determine the ownership of islands in the Persian Gulf and was therefore worried by the prospect of ARAMCO presenting to the Saudi Arabian Government the recommendation of a proclamation covering sovereignty to islands outside territorial waters. There were various reasons for this anxiety on the part of the US including the following:—

Such a proclamation would undoubtedly raise the problem of Iranian claims to various islands.
If, as ARAMCO contends, this is a conservative list then it might well be that such conservative claims by Saudi Arabia to certain islands in the Gulf would be followed by extreme claims to the same or other islands in the Gulf on the part of other countries.

These and other possible problems which might be raised by the proposed Decree were such that, although the Department could not ask ARAMCO to refrain from presenting the Decree, it felt obliged to record its positive objection on political grounds.

Judge Hudson replied that ARAMCO was putting up a great deal of money in connection with the development of Persian Gulf oil and [Page 101]would like a clear legal foundation on which to do its offshore drilling. He reminded those present at the meeting that the list of islands mentioned in Annex 1 was very conservative and did not include any controversial islands.

Mr. Ray said that, although the list was conservative, he did not think the ownership of any island in the Gulf was clear cut. When drilling starts off shore, various operations such as storage must be done on these islands which make them important from a practical point of view. He felt that for SAG to say nothing about its ownership of islands in the Gulf was merely postponing the day of conflict, if any conflicts are to arise, SAG insists on knowing what it owns in the Gulf and he felt this list was the limit of ARAMCO’s knowledge on that subject.

When Mr. Dunn suggested that the result of putting out this conservative list might well be to encourage other littoral states to lay claims to islands off the shore of Saudi Arabia not included in the list, Judge Hudson replied that in the opinion of ARAMCO some advice must be given to SAG on the subject of islands, and this seemed the safest course to follow.

When Mr. Eakens pointed out that he thought a conservative list might not help but might actually hurt SAG’s position in the Gulf because it was an invitation for other Gulf states to push in and make claims, Judge Hudson replied that the matter would have to be worked out on the basis of facts as they developed.

Mr. Ray stated that as a Company ARAMCO felt that when its advice was sought it had to give the best information that it could on all phases of whatever problem was under discussion. In this case, he felt that it was possible that SAG might wish to change the list.

Mr. Hare asked if it was true that the islands listed were not contestable because of their proximity to Saudi Arabia. Mr. Ray replied that already a conflict has developed over some of the islands of the Neutral Zone in spite of their being close to the mainland and that in his opinion there was no such thing as an island in the Persian Gulf whose ownership might not be contested.

When Mr. Dunn asked him what reaction he expected from the British, Mr. Ray said that the Department of State looks at this from a political point of view, whereas ARAMCO looks at it simply from the point of view of giving advice to SAG that has been requested. Mr. Hare said that the Department had to consider both the general interests of the US in the Persian Gulf area as well as the specific interests of ARAMCO.

Mr. Young said that all but three of the islands mentioned in Annex 1 were uninhabited and that the government of Saudi Arabia had [Page 102]asked help from the Oil Company as to how it could prove ownership of these islands in spite of this fact.

Mr. Dunn pointed out that these ends could be achieved by the raising of a flag, setting up of markers, or even by initiating prescriptive action in the form of actual drilling operations. To this Mr. Ray replied that ARAMCO had been asked for a decree and the company felt it must put its reply into decree form as far as Annexes 2 and 3 were concerned.

Mr. Hudson said that he did not see any reason why the Department of State should object to ARAMCO presenting the decree in Annex 1 to the Saudi Government. The presenting of advice in that form would not conflict with past or future actions of the Department or with policies of the USG. He said that it was not enough merely to suggest that the Government of Saudi Arabia apply the Truman Proclamation of September 28, 1945 to the waters around Saudi Arabia; that country must be given a complete program it could follow in the development of its offshore oil.

Mr. Ray added to this that Saudi Arabia should be given certain basic principles it could follow; and that the safest way to start applying these principles would be to proclaim ownership of what they, SAG, believed belonged to them.

In regard to Annex 2, “Draft Decree on the Territorial Waters of Saudi Arabia”, Mr. Hare felt that this Annex is essentially different from Annex 1. It was, so to speak, not in the Department’s terms of reference and there was no question of going over it substantively. He pointed out that the principles enunciated by ARAMCO in Annex 2 regarding territorial waters did not coincide with the principles generally followed by the USG. If SAG requested our views we would have to point out this fact.

Judge Hudson questioned whether or not the US had a policy in regard to high sea areas and said he knew of eleven different kinds of rulings on this matter running out as far as 50 miles, which made any 3 mile limit an anachronism.

Mr. Furman agreed that there were many interpretations out but that the US Government’s basic position was the one reaffirmed in 1930 based on a 3 mile limit.

Mr. Ray said that in view of the history of the Persian Gulf, with various claims of six and more miles having been made there in the past, he did not see how ARAMCO could advise SAG to hold fast to a 3 mile limit.

Judge Hudson asked whether the US had protested the six mile claim of Iran some years ago and it was agreed that the US had not done so.

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Mr. Hare summed up the Department’s position regarding Annex 2 by saying the Department did not have any objection to ARAMCO presenting this Annex to SAG but it should be understood that this position did not preclude any future comments on this subject which might be made by the Department.

Proceeding to the subject of Annex 3, “Draft Decree Concerning the Policy of the Kingdom of Saudi Arabia with regard to the subsoil and sea bed of areas in the Persian Gulf contiguous to the Saudi Arabian Coast”, Mr. Hare said that careful consideration had been given to this document by the Department during the last two days. Although we were in general agreement, we had reservations as to some points. Various changes in the wording of Annex 3 were then discussed and the Department’s suggestions noted by the ARAMCO lawyers.

On being asked for the plans of the Department, Mr. Hare said that we planned to proceed with a proposal on this subject to SAG not involving simultaneous action by other states of the Persian Gulf.

Mr. Ray said that he felt the only divergence of views remaining between the Department and ARAMCO, other than minor matters of wording in Annex 3, concerned the Saudi Arabian islands covered in Annex 1. Although ARAMCO preferred the issuance of a decree on the subject of islands, he thought that the ARAMCO recommendations to SAG might be put in the form of a memorandum setting forth a program for marking these islands. At the same time, ARAMCO would suggest that SAG issue a decree on territorial waters. Because it was undesirable to have a difference of views between an American company and the Department of State, the ARAMCO lawyers said they would give careful study to the Department’s suggestion concerning establishing sovereignty over any islands.

Judge Hudson agreed and said that he would try to improve on the ARAMCO draft of the papers submitted, after which they would like to have a further talk with the State Department before instructing the Company’s lawyer, who would shortly go to Saudi Arabia, Mr. Spurlock.

Mr. Hare brought up the fact that we had worked closely with the British on this subject and that we would like to be as frank as possible with them about the action we planned to take.

To this Mr. Ray replied that he saw no objection if the British were informed regarding the contemplated US action, but that ARAMCO’s advice to SAG should not be revealed to the British at least until after ARAMCO had submitted it to SAG.

It was decided that ARAMCO officials would review the three documents under discussion and return to the Department for a meeting with the same group of Departmental officials at 10:30 Monday morning.