NE Files: Lot 58 D 332: “Saudi Arabia—Boundaries”

Memorandum of Conversation, by the Officer in Charge, Arabian Peninsula Affairs ( Awalt )

Participants: Mr. Harley Stevens, Aminoil
NE—Mr. Jones
NE—Mr. Funkhouser
NE—Mr. Awalt


Mr. Stevens made reference to the letter of March 15, 1951 addressed to the Sheikh of Kuwait by Mr. Ralph K. Davies, President of Aminoil, a copy of which was sent to the Department,2 regarding arbitration of Aminoil’s concession covering the three islands of Qaru, Kubbar and Umm al Maradim. He said that he wished no action on the part of the Department but wanted only to keep us informed of the company’s position. He gave a brief resume of the background to the dispute and suggested that the principal difficulty in the matter was the fact that the Sheikh who had been well acquainted with this problem had died in January 1950 and that the new Sheikh had not been sufficiently briefed on the matter. He said that KOC had waived its right of arbitration under Article 18 of its 1934 agreement in favor of making a different approach directly to the Sheikh for adjudication of their claim. This claim was submitted in June 1949 and was rejected by Sheikh Ahmed in July. Having elected to seek a ruling on their claim through that procedure instead of through recourse to Article 18, Aminoil felt that KOC had no right to revert to the said Article simply because the procedure first directed resulted unfavorably for them. Mr. Stevens also said that the present Sheikh Abdullah had [Page 302] agreed to arbitration only because he thought that Article 22 of the Aminol concession made it obligatory. He also said that it was Aminoil’s belief that the Sheikh could not abdicate his responsibilities for Sharia’ law; … and that the acts of his predecessor were binding upon the present Sheikh. Despite the legality of their position, however, Mr. Stevens said that he did not believe that the Sheikh of Kuwait would request KOC to withdraw its request for arbitration.

Mr. Stevens said that he had heard from two unofficial sources that his company was seeking to obtain from the Iranian Government the managership of the AIOC interests recently nationalized by that Government. He said that he had also heard that the Department had suggested that these interests should have American management. Both Mr. Jones and Mr. Funkhouser disabused him of any idea that this Government endorsed such a development. On the contrary, he was told that to do so would lend substance to Soviet propaganda and would expose this Government to bitter criticism from the British. He said that he had been sure that such would be the case but he was glad to have confirmation. He said, however, that if future events should indicate that the Iranian Government would be receptive to bids from American companies, his company would be interested in making a bid for the managership.

The third subject of conversation Mr. Stevens asked to be completely off the record. During a recent conversation with PWOC representatives in California the subject of delimitation of the submerged area attributing to the Kuwait neutral zone was discussed and it was decided that a joint approach should be made to the Department. He accordingly wished that a meeting with Mr. McGhee could be arranged for representatives of both Aminoil and PWOC jointly. He said that it was the hope of the two firms that the Department would undertake to persuade Aramco to be generous in agreeing with the two firms to a division of the sea bed between their respective areas that would be advantageous to the latter. It was pointed out to Mr. Stevens that a problem of this kind was not one which oil companies could settle between themselves but was a more fundamental problem which could only be settled by an agreement between the sovereign governments concerned on the basis of principles of international law. It was also pointed out to him that settlement of this problem in the Kuwait area was only a part of the picture of the same problem which existed in other parts of the Persian Gulf, all of which would be decided on the basis of common principles and as a part of the same pattern. It was explained, moreover, that Mr. McGhee was very heavily occupied since his return from abroad and that it would be better if the group would settle for a meeting with interested officers of the Department under the chairmanship of [Page 303] Mr. Berry. Mr. Stevens thought that would be agreeable and hoped the meeting could be arranged for Thursday or Friday of this week.3

A final suggestion mentioned by Mr. Stevens was in connection with the DLG program. No details were discussed and it was suggested that Aminoil should communicate on this subject with the political agent in Kuwait who undoubtedly was sufficiently informed on the subject by Sir Rupert Hay.

  1. This memorandum of conversation was drafted on April 10.
  2. Copy not found in Department of State files.
  3. Stevens met with Barnabas Hadfield of Pacific Western Oil Company, Berry, and other members of the Department of State on April 12 to ask for the Department’s help in persuading Aramco to accept their division of the seabed. Berry said the question of national boundaries was a matter which had to remain with the governments concerned, and he did not believe the Department could properly intercede in the problem. He suggested, however, that the companies might discuss the matter in hope of reaching an agreement which they might present to the respective governments. (Memorandum of conversation; 886D.-2553/4–1251)