Editorial Note
Despatch 77 from Baghdad, July 23, advised the Department of State of developments in the Iraq Petroleum Company negotiations since the return of the company representatives to Baghdad on July 9. [Page 325] A final agreement was being reduced to writing and the Embassy expected it to be signed as soon as the Prime Minister returned from Amman, where he was attending the funeral of the assassinated King Abdullah of Jordan. Enclosures to the despatch included an undated proposal submitted to the company by the Iraq Government, a copy of the proposals submitted by the company in return, dated July 19, and draft copies of the letters to be exchanged by the Prime Minister and the Managing Director of the company. (887.2553/7–2351) Telegram 69 from Baghdad, July 23, informed the Department the IPC negotiators had left Baghdad that day for London. The Ambassador expected the proposed oil agreement to be approved by the Iraq Council of Ministers the following day, and he reported the terms of the agreement were believed to be the most favorable in the world. (887.2553/7–2351)
Despatch 155 from Baghdad, August 14, reported the Iraq Council of Ministers had approved an agreement with the Iraq Petroleum Company and enclosed the text of an official government communiqué announcing that fact. The agreement, which would become effective after ratification by the Iraq Parliament, was to be retroactive to January 1, 1951. (887.2553/8–1451) Telegram 159 from Baghdad, however, advised the Department that the Prime Minister had not actually signed the letters covering the agreed proposals, and on August 23 he had made one major and three minor demands for the company to satisfy before he would sign. (887.2553/8–2451)
On September 17 the Prime Minister departed for London to reopen negotiations, and on September 20 the Minister of Economics and Director General of Economics joined him (despatch 288 from Baghdad, September 24, 887.2553/9–2451). Telegram 1535 from London, September 26, advised the Department that the Prime Minister and the company had come to an agreement on minimum payments and production, but the Prime Minister wanted assurances from the British Government that Iraq’s sterling revenues would not be blocked. The British Foreign Office assured him the Government had no intention of blocking the sterling in question under normal circumstances, but he questioned the phrase “normal circumstances,” and planned to consult his Council of Ministers on the matter. (887.2553/9–2651)
Telegram 1578 from London, October 1, advised Washington that the Iraq Minister of Economics had signed an exchange of letters covering the new agreement with the Iraq Petroleum Company on behalf of his government, without raising the question of sterling use (887.2553/10–151). Despatch 357 from Baghdad, October 15, enclosed a translation of a press conference held by the Prime Minister on October 9, in which he reported to the press on the signing of the new agreement. The despatch read, in part, “It would thus appear [Page 326] that the discussions concerning the proposed IPC agreement are now at last concluded, pending final drafting of the text of the agreement and its submission to Parliament for ratification.” (887.2553/10–1551)
Despatch 561 from Baghdad, December 15, reported that the proposed oil agreement had not been sent to the Parliament and therefore could not be ratified until after the Parliament reconvened on January 10, 1952. The Embassy at that time anticipated ratification of the agreement when it was presented to the Parliament. (887.2553/12–1551) A number of previous communications from the Embassy had speculated that, although the agreement contained a clause giving Iraq the right to renegotiate the agreement if any neighboring country received a better contract for its oil, the Prime Minister was delaying ratification until he could see the end result of the negotiations between the Government of Iran and the Anglo-Iranian Oil Company. Despatch 589 from Baghdad, December 31, reported the Prime Minister had informed the local Iraq Petroleum Company representative that he would put the agreement before the Parliament on January 12. (887.2553/12–3151)