886A.2553/7–2553
No. 302
Memorandum of Conversation, by the
Deputy Assistant Secretary of State for Near Eastern, South Asian,
and African Affairs (Jernegan)1
Subject:
- British Interest in Aramco-Saudi Price Negotiations
Participants:
- Mr. Harold Beeley, British Embassy
- NEA: Mr. Jernegan
Mr. Beeley said the British Government had received information that the Aramco Board of Directors was divided regarding the position it should adopt toward Saudi demands in the present dispute [Page 694] over the prices on the basis of which tax payments to the Saudi Government should be calculated. It seemed that one group on the Board was disposed to make substantial concessions.
The British Government was concerned lest undue concessions by Aramco should lead to new demands by the Iraqi Government against IPC and by Kuwait against the companies there. This concern was accentuated by the fact that Iraqi representatives had recently visited Saudi Arabia to advise the Saudis on their attitude toward Aramco and it could, therefore, be assumed that the Iraqis would be fully aware of any concessions the company might make. It was hoped that the Department would advise Aramco not to go too far. The Foreign Office expressly asked that its interest in this matter be brought to the personal attention of the Secretary of State.
I told Mr. Beeley that I did not know exactly where matters stood at the moment between the Company and the Saudis, nor was I sure how well the Company kept us informed of its intentions in these matters. I pointed out that Aramco had consistently attempted to maintain a position independent of the United States Government and that this had probably been an advantage to it in its relations with the Saudis. However, without making any commitment I said that I would look further into the situation and try to let Mr. Beeley know our views or any information we might have next Monday. I asked Mr. Beeley whether IPC and the Kuwait Company had arrangements with the respective local governments of the same sort as those now in effect between Aramco and Saudi Arabia. He said he understood this was the case and that therefore any concessions regarding price made by Aramco could be directly related to the existing price arrangements in the other countries. He said that IPC was especially worried about the Saudi claims for retroactive price adjustments. I pointed out that at the most, these claims went back only to the date of signing of the present so-called fifty-fifty understanding in Saudi Arabia and that that arose because there had been no agreement as to prices at the time that understanding went into effect. Consequently, if IPC had a firm price understanding, it would not necessarily be affected by Aramco’s action in now, for the first time, coming to agreement with the Saudis on this subject. Mr. Beeley replied that he was not entirely clear as to the basis of IPC fears, but he was sure that that Company was afraid of being hit with demands for retroactive payments.
- This memorandum of conversation was attached to a memorandum by Jernegan to O’Connor, dated July 25, informing him the British Embassy, following instructions from the Foreign Office, requested that the information be brought to the personal attention of the Secretary of State. A handwritten note by O’Connor on the bottom of the memorandum noted that the Secretary had seen the memorandum of conversation on July 29.↩