887.2553/3–2151: Telegram

The Ambassador in the United Kingdom (Gifford) to the Department of State 1


5029. Ref: London despatch 4403 Mar 15, 1951.2

1. FonOff petroleum officer today confirms that Gibson IPC manager director planning visit Baghdad approx April 1 through 10. Anticipate Gibson will be prepared discuss steps for undertaking negots with Iraq Govt aimed at 50–50 profit sharing arrangements similar Aramco plan. IPC apparently prefers that Iraq Govt shld initiate request for royalty agreement along these lines, but FonOff suggested to Gibson it wld be more desirable for IPC make offer to negot on such plan first. Reported Gibson did not give assent immed this suggestion, but FonOff believes he may assume initiative in Baghdad and inform Iraq Govt that IPC is willing commence negots. FonOff rep mentioned Gibson had considered visiting Baghdad sooner, but Brit Amb there advised present situation not serious enough to require this.

2. FonOff rep mentioned that while IPC probably cld presumably adjust its corporate structure to permit operation under plan similar Aramco agreement this wld be difficult in view different nationalities of IPC partners. Mentioned US partners cld obtain full relief from US taxes for taxes paid Iraq under profit sharing plan; Brit companies eligible for 50 percent relief; but Fr wld evidently receive no exemption from Fr taxes. Appeared from conversation that IPC now examining various alternatives for complying with 50–50 plan but as yet have not progressed very far in working out actual procedure.3

  1. Repeated to Baghdad and Cairo.
  2. Not printed; it advised the Department that the Iraq Petroleum Company was considering the necessity of revising its royalty agreement but had no definite plans for negotiations with the Iraq Government and was under no pressure from it. The director of the company informed the Embassy there had been surprisingly little reaction in Iraq to the recent Aramco agreement in Saudi Arabia, but the company was watching the situation closely and its managing director planned to visit Iraq in April. (887.2553/3–1651)
  3. Telegram 5389 from London, April 12, reported the Iraq Petroleum Company board had heard Gibson’s report of his trip to Baghdad and had met that day to begin formulating its position for the forthcoming royalty negotiations with Iraq (887.2553/4–1251).