Foreign Relations of the United States, 1952–1954, The Near and Middle East, Volume IX, Part 1

886A.2553/4–1654

No. 339
The Secretary of Defense (Wilson) to the Secretary of State¹

secret

Washington, April 16, 1954.

Dear Mr. Secretary: I should like to call your attention to the prospective conclusion of an agreement between the Saudi Arabian Government and the A. S. Onassis Company with respect to transportation of Saudi Arabian produced oil, as reported in American Embassy Jidda cable number 333 of 6 February 54.² The Secretary of the Navy has analyzed the possible effects of this agreement on U.S. security interests and has reported to me the results of this analysis in a letter of 18 March 54, a copy of which I inclose. You will note that he considers the agreement, the full details of which are not available, could operate to limit the number of U.S. Government tankers which could lift oil from Saudi Arabian fields, could prevent the replacement of any of these tankers, prevent the use of additional tankers in an emergency and as a result place virtual control of this source of oil for the Armed Services in the hands of a foreign shipping enterprise. You will further note that he recommends that the Secretary of State obtain the assurance of the Saudi Arabian Government that any agreement it may make will not affect the transportation of oil by vessels operated by or under the control of the Military Sea Transportation Service (MSTS). The Joint Chiefs of Staff have expressed a similar concern and have likewise recommended that the Saudi Arabian Government be asked for suitable assurances.

I share fully the concern of the Secretary of the Navy and the Joint Chiefs of Staff as to the unacceptability of such limitations placed upon transportation of Saudi Arabian oil in U.S. Government vessels, and I therefore request that you approach the Saudi Arabian Government with a view to obtaining binding assurances that the agreements reported will not operate to place any restrictions upon present or future arrangements for lifting of oil for the U.S. Armed Forces in ships controlled or owned by the U.S. Government.

Your early attention to this matter is requested.

Sincerely yours,

C. E. Wilson

[Enclosure]

[Washington,] March 18, 1954.

My Dear Mr. Secretary: I refer to a recent State Department telegram (American Embassy Jidda No. 333) which reported the prospective conclusion of an agreement between the Saudi Arabian government and the A. S. Onassis Company concerning the transportation of Saudi Arabian produced oil. This agreement if consummated and put into effect might seriously interfere with the transportation of vitally needed Saudi Arabian produced oil for the U.S. Armed Services and thus is of serious concern to the Navy.

Although the full text of the new agreement is not presently available, the basic terms provide that transportation of Saudi Arabian oil (produced by the American Arabian Oil Company (Aramco) and the Pacific Western Oil Company) would be limited to (a) tankers now owned by the companies or by concession companies and employed in transport of oil prior to December 31, 1953, and (b) in tankers of the Saudi Arabian Maritime Company which is presumably a newly formed joint Onassis-Saudi Arabian government company controlling the Onassis owned tankers. That portion of the agreement available does not refer to U.S. government owned tankers.

At the present time the Military Sea Transportation Service (MSTS) each month lifts from 27 to 30 tanker loads of Saudi Arabian produced oil products from the Persian Gulf ports of Bahrein and Ras Tanura. The tankers employed in this lift are MSTS owned and contract operated. All but one are of the T–2 type (capacity 118,000 barrels), built in World War II. While the application of the agreement is not clearly defined, it could be interpreted to affect the current employment of MSTS tankers in any one of several possible ways: (a) To bar all MSTS tankers from lifting Saudi Arabian oil; (b) to place MSTS tankers on the same basis as oil company tankers and thereby prevent the replacement of obsolete vessels as they are withdrawn from service or to prevent the addition of other tankers for the lift in case of an emergency; or (c) as having no effect on MSTS operations, as the agreement could be construed to pertain only to vessels controlled by private oil companies or shipping companies. Interpretations (a) or (b) above would seriously affect the transportation of oil for the Armed Services both in peace or war and could result in the placing of virtual control of this source of Armed Services oil at the will of a foreign shipping enterprise.

I therefore recommend that you bring this matter to the attention of the Secretary of State, noting the concern with which the Department of Defense views any agreement which could interfere with the existing arrangements for transporting vitally needed Saudi Arabian oil products for the use of the U.S. Armed Services. It is my view that the Department of State should obtain the assurance of the Saudi Arabian government that any agreement it may make in the premises will not affect the transportation of oil by vessels operated by or under the control of the Military Sea Transportation Service.

Sincerely,

R. B. Anderson

1. The source text was attached to a memorandum by Cottman to Hadsel, dated Apr. 20, not printed. The memorandum stated that the letter from the Secretary of Defense was transmitted for the preparation of an appropriate reply for Murphy’s signature and requested a copy of the reply by close of business on Apr. 23. (886A.2553/4–1654)
2. Document 329.