The Ambassador in the United Kingdom (Douglas) to the Secretary of State
762. According Williams,1 foreign affairs, IPC and Iraqi negotiators have now agreed that Kirkuk royalty as of January 1, 1950 will be paid at six shillings gold (i.e., maximum possible under present IPC concession based on official London rate). Agreement is “without prejudice” to other provisions of IPC concession and is also subject to understanding that arrangements in Article 10 IPC concession for rescaling royalty in 1954 and every 10 years thereafter are henceforth inoperative.[Page 70]
Agreement expected to be formalized by exchange of letters today and will probably be subject to ratification by Iraqi parliament. Williams believes company will insist on ratification. Two groups will issue largely non-committal press release stating merely that agreement has been reached “on a major issue of royalties” and that other important issues will be subject to later discussion. Williams says present negotiations have been terminated and Nun2 will return Baghdad tomorrow. Other outstanding matters have apparently been shelved for discussion later in year.
New rate will give Iraqis approximately 18 current sterling shillings (based on bank of England buying rate for gold bullion). Idea of referring “gold clause” to English courts has apparently been dropped, at least for present. Williams thinks Iraqis are well satisfied with present payments and may hope that someday London rate will be freed.
Sent Department 762, repeated information Baghdad 5, Cairo 13, Jidda 7, Tehran 13.