886A.2553/12–2950: Telegram

The Ambassador in Saudi Arabia (Hare) to the Secretary of State


409. Owen, Aramco, informs company–SAG negotiations now proceeding satisfactorily. Following developments reported Embtel 392, December 13,1 Shaikh Abdullah accompanied by Feisal proceeded Riyadh where they remained about week to discuss matter with King. As result discussions with Aramco officials following their return December 19 it appeared parties were on threshold agreement but at last moment, negotiations were suddenly stalled by Feisal’s insistence following extreme SAG position: (1) 50 percent profits not enough; (2) SAG wanted receive all US tax credit; (3) SAG unwilling reverse official exchange rate (1 sovereign equal $8.25). Early December 26, however, Finance Minister again flew Riyadh, returning December 28 apparently with instructions conclude agreement, since SAG today published tax decree dated December 27 in form agreeable Aramco (although not applicable Aramco until agreement concluded). In last 36 hours company officials have had five meetings with Salha and Suroor, who doing spade-work for SAG, and Salha informs us negotiations should be concluded in day or two.

Owen states chief SAG obstructionists in past days have been Feisal and Najib with Suroor remaining very friendly. Believes Finance Minister, Salha and Suroor now have agreed Aramco proposals are acceptable SAG. In this theory hurried visit Finance Minister Riyadh represents going over head chief SA delegation to get approval King which it assumed Finance Minister now has, view tax decree publication.

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Since least obdurate Saudi has been Suroor, and relatively moderate councils appear to have prevailed, it likely he again in inner councils Finance Ministry. Recent designation Suroor acting Minister Agriculture and Chief Mecca offices Ministry Finance lend credence foregoing.

  1. Not printed, but see footnote 2, supra.