886D.2553/6–651: Telegram

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

secret

6402. Gulf reps told us last night that when they went around to see AIOC yesterday to sign agreement on principles of plan to increase Kuwait’s oil revenues (Embtel 6374, June 5),2 Jackson told them that he was sorry that he was unable to sign. He vaguely mentioned necessity [Page 318]putting draft agreement to company’s fin comite on July 14, but Gulf reps were unable to get any clear explanation as to why Jackson unable sign agreement then and there. Jackson did, however, state that he regarded document as agreed but just was not able sign it then.

Moreover, mtg with FonOff, which Victor Butler was arranging, did not take place yesterday and Gulf has not yet been able ascertain reasons therefor or determine whether mtg will be arranged later.

Until inland revenue has formulated its position (which shld be in next few days) and we know its precise nature, it is difficult for us to take further steps.3 We have, however, spoken to Gaitskell, who has promised to look into matter, and are keeping in close touch with FonOff and Min Fuel and Power.

Gifford
  1. Repeated to Basra.
  2. Not printed.
  3. Telegram 6568 from London, June 14, reported the British Department of Inland Revenue might not insist on knowing the position of the U.S. Treasury regarding the eligibility of an Aramco-type tax for credit against U.S. taxes before it decided on the Kuwait case. The Ambassador, however, thought it would help to expedite the British decision if the Department of State could obtain a Treasury ruling or inform the British that it was not possible to obtain a Treasury ruling prior to an audit of the tax returns. (886D.2553/6–1451)