886A.2553/7–3153
No. 304
Memorandum of Conversation, by the
Deputy Assistant Secretary of State for Near Eastern, South Asian,
and African Affairs (Jernegan)
Subject:
- British Interest in Aramco-Saudi Price Negotiations
Participants:
- Mr. Harold Beeley, British Embassy
- NEA: Mr. Jernegan
Mr. Beeley said a telegram just received from the Foreign Office expressed disappointment at the attitude of the State Department, which I had conveyed to him in our previous conversations on this [Page 700] subject. The Foreign Office felt that repercussions of unwise action by Aramco could be very serious. Mr. Beeley did not go into details of the Foreign Office cmmunication but it was obvious from his remarks that the British Government felt we should take a more positive attitude vis-à-vis Aramco in advising against concessions.
I said I was not surprised that the Foreign Office was disappointed. I did not see, however, how we could change our general position of not giving advice on matters affecting price. Our general philosophy, as I understood it, was that the oil companies should fight their own battles and make concessions where they had to. If they did not give ground from time to time, they would in the long run wind up in a still worse position. In the present instance, the question at issue was how much the companies would have to pay for their stock in trade, which was exactly the kind of question that confronted any private business anywhere. It was difficult for me to become greatly excited over the predicament of a company, and merely a subsidiary company at that, which was making a net profit in the order of $150,000,000 a year.
The matter would be quite different, I said, if the companies were threatened with losing their properties or if they were being squeezed to the point where their operations would be no longer profitable.
Mr. Beeley did not directly answer my observations but said what the British Government wanted was some collaboration among the different companies in the area so that they could present a united front to Arab demands. He realized that the American companies were reluctant to do this because of our antitrust laws but wondered whether the same end could not be accomplished through governmental channels.
I pointed out that in the present case Aramco was now informed of the attitude of the British Government and IPC and that furthermore the President of Aramco, Mr. Davies, was to have talked with the Managing Director of IPC, Mr. Gibson, in London this week. So far as the information was concerned, I felt all that was really necessary had been done.1 If Aramco wished to take a stand with the other companies it was in a position to do so. I thought governmental agencies could be used to a certain limited extent, as in this case, for the transmission of information. We could, at least, advise the American companies of the views of the British Government [Page 701] and we could add our own observations if we felt it proper.…
Mr. Beeley observed in passing that the Iraqi Government had given notice to IPC that it wished to reopen negotiations on prices. As a sidelight, he mentioned that the note given the Company in this connection had had typed on the bottom “copy to Saudi Arabian Legation”.
I remarked that if the Iraqis were already opening this question with IPC, it would seem to be less important that Aramco was involved in the same kind of discussion with Saudi Arabia. Mr. Beeley said IPC intended to refuse to reopen the price question; if Aramco made substantial concessions the IPC position would be greatly weakened.
- In telegram 489 from London, July 31, the Embassy reported the Foreign Office was concerned about developments in the Aramco-Saudi Arabian negotiations and requested some information on the matter from the Department of State. Telegram 597 to London, Aug. 3, informed the Embassy of conversations held in the Department with officers of the British Embassy and Aramco officials. (886.2553/7–3153)↩