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

886A.2553/10–2554: Telegram

No. 369
The Ambassador in Saudi Arabia (Wadsworth) to the Department of State

secret
priority

Jidda, October 25, 1954—1 p.m.

187. Supplementing mytel 180, October 24.¹

1. Onassis was received by King Saud late afternoon October 23. Embassy Arab consultant reports Commerce Minister Mohammed Alireza only other person present. It was apparently decided Onassis should meet following morning with Surur and Davies.

2. Before that meeting King received Davies and Ohliger. Audience was cordial throughout. King assured them he wished clear up all remaining questions at issue with Aramco, including Onassis agreement. He would approve any understanding they could reach with Onassis, in particular any modification of Article 4 of Onassis agreement, but agreement itself should not be cancelled—there his honor was at stake—and if no understanding could be reached he was not adverse to “letting matter go to higher court.”

Davies commented he had always felt “arbitration” was matter of last resort, company and SAG having always hitherto been able settle problems through friendly negotiation. He hoped that, should arbitration have to be resorted to in present instance, Aramco–SAG relations would not be adversely affected. King gave ready assurance this score, repeating he wished clear up all issues between them in interest fullest future cooperation.

3. Davies succeeding meeting with Surur and Onassis was short. Surur was supported by Royal Councilors Walid and Husseini whose primary objective was obviously to arrange that Davies and Onassis seek solution through direct negotiation. Appointment was made for same afternoon at Aramco offices. At afternoon meeting Onassis, accompanied by Cokkinis and Alireza, repeated his version of events leading up to signature of agreement, engaging in histrionics which only tended confirm Aramco thinking that to make any concession to his position would be to subject company to continuing future pressures. Although seemingly willing charge only competitive tanker rates, he insisted on need for guarantee that given number his tankers would be used to carry Saudi oil or that carriage of given tonnage or given percentage total tonnage would be assured his Saudi tanker company.

Meeting broke up inconclusively as Onassis had appointment call on Prince Faisal; but Onassis obviously jumped at Davies invitation that he call again “for tea.” They will pursue discussion today.

4. I am flying Dhahran to meet with Generals Glantzberg and Grover and will return with them to Jidda to present General Glantzberg to King morning October 28. At dinner last night King approved my going and said would send airplane to fetch me if he wished see me earlier. Davies will report his discussions to New York office which will keep Duce informed.

My feeling is we should let Davies carry ball for time being; but as I shall have excellent occasion speak with King on 28th, Department may wish instruct me re any special points I should make. I agree with Davies that main Aramco issue—whether Onassis agreement is violative of concession agreement—seems as things now stand headed for arbitration.

Wadsworth

1. Not printed. It reported that the agreement settling past Saudi Arabian claims against Aramco, reported in telegram 17 from Dhahran, not printed, was signed on Oct. 3. Beginning on Sept. 30 almost daily discussions were being held between Aramco and Saudi Arabian representatives to find a solution to the dispute on prices and a formula for future tax payments. (886A.2553/10–2454)