887.2553/3–1751: Telegram

The Ambassador in Iraq (Crocker) to the Department of State


541. Embassy concerned recent oil developments Iran and Iraq which seriously threaten stability whole ME area and [garble] logical consequences policy British directed AIOC, IPC, and KOC groups. While foregoing was emphasized Istanbul conference,1 action [garble] is producing situation which may have lamentable results. With nationalization in balance in both countries and with high powered representatives of Ryan group attempting stampede IG into action re Basra concession here (Embtel 512, Mar 9)2 Emb believes highest level consultation between Wash and London shld take place without delay and we feel if nationalization effected at Teheran, it wld strengthen hand of elements here clamoring for similar action. Brit Emb here has recommended IPC send high-ranking IPC representative to Baghdad, so far without result. It wld appear to this Emb that IPC shld take such action without being urged. No evidence that IPC group yet sufficiently aware explosive potentialities situation. Suggest US partners be fully and urgently briefed by Dept.

Was any action taken on telegram from Istanbul conference that Amb London be instructed approach FonOff on AIOC policy?3

Brit Emb fully aware situation in Iraq and we are fully and frankly consulting together.

Emb believes further inaction by US and UK Govts in pressing oil companies to correct inequity situation existing between IPC and [Page 286] IG which may be legally unassailable will have results fatal to stability.

  1. For a report of the Istanbul Conference, see “Agreed Conclusions and Recommendations of the Conference of Middle East Chiefs of Mission, Istanbul, February 14–21, 1951,” p. 50. In particular see Section X for an appraisal of the policies of foreign oil companies in the Middle East in relation to U.S. policies and interests, p. 70.
  2. Not printed; the Ambassador had informed the Department of State the Ryan Company’s legal adviser presented the argument that a sovereign government could invalidate or nationalize the Basra concession for failure to produce oil and that the British Government had set a precedent by nationalizing industries in its own country, therefore it could not logically object. (887.2553/3–951)
  3. Telegram 410 from Washington, March 20, reported that consultations with the British had been scheduled (887.2553/3–1751).