The Secretary of State to the Embassy in Cairo 1
933. For McGhee. Dept believes you shld explore in London all possible action recommendations which cld favorably affect unstable ME oil situation and believes Amman 164 Mar 262 subject to fol reservations provides useful background for these discussions. Dept understands FonOff officials and Victor Butler still intending proceed [Page 292]Washington after your return at which time more definitive action regarding US–UK ME oil policy can be taken. Reservations are: (a) Dept doubts whether any meaningful US–UK Govt and industry agreement or declaration on basic ME oil policy can be reached, particularly in time to affect pressing situations Iran and Iraq. (b) In view your limited stay London and crowded agenda, Dept believes discussion and development all appropriate specific action recommendations re Iran and Iraq more urgent than action embracing whole ME oil area. (c) Dept fears joint US–UK declaration might convince Irans of united front against their nationalization with further jeopardy to continuing flow of oil and Western orientation of Iran. (d) Anglo-American declaration for ME consumption spotlights USUK control ME oil which fits Commie line, (e) Production allocation arrangements described in para 4 believed undesirable. (f) Re proposed creation of neutral commission, although Dept advocated this in principle, it was effectively opposed by Brit and US Govt and industry circles and is of questionable applicability at this time to immediate Iran and Iraq situation.
Dept views re specific problems Iran and Iraq subject separate telegram.3