886A.2553/6–150: Airgram

The Secretary of State to the Embassy in Saudi Arabia 1


A–46. Terry Duce called at the Department May 24 and among other things mentioned the intent of the SAG to obtain a larger share in Aramco’s profits. He subsequently sent a copy of a cable from Dhahran dated May 212 giving the substance of comments on that subject by Shaikh Abdullah Suleiman. In essence, the Minister of Finance stated that the SAG knew what Aramco’s profits were since it was aware from reports that it paid 38% of its profits to the US in income tax and it also knew how much the taxes were. He appreciated that Aramco was guided by an enlightened policy of benefit to Saudi Arabia and that much of the profit was turned back into increased operations. He insisted, however, that higher payments to the SAG could be made without seriously harming the Company’s beneficial activities. Moreover, he added, the SAG has waited more than a year for a favorable answer from Aramco on this subject and it was now becoming impatient. He therefore warned that there should be no delaying tactics and asked that a yes or no answer should be given in two weeks. If a favorable answer is not forthcoming in that time, he expressed his belief that he would be removed as negotiator with the company and the latter would have to deal with less sympathetic parties.

The reporting official (presumably Colonel Eddy)3 commented that the Minister of Finance was quite dispassionate in his remarks. The SAG was convinced it should have a larger share and was determined to get it. The official added that there was a chance that Shaikh Abdullah had issued the warning in anticipation of Emir Faisal’s return.

Mr. Duce expressed no thoughts on how Aramco planned to meet the SAG demand.

  1. Repeated to Dhahran.
  2. The cable was attached to a letter from Duce to Wilkins, dated May 25, not printed. The cable read, in part: “Aside from passing reference to size U.S. Government’s take via taxes which he wished were coming to SAG instead, Minister Finance did not specify nature increased payments.… There is some chance Minister Finance called for session so he could report to Faisal who arrived that afternoon, that he had such talk and that he delivered warning.” (886A.2553/5–2550)
  3. William A. Eddy, political adviser to Aramco and former United States Minister to Saudi Arabia.