No. 375
Memorandum of Conversation, by the Ambassador in Saudi Arabia (Wadsworth)1



  • Between Deputy Foreign Minister Yusuf Yassin and Ambassador Wadsworth.


  • Representations re Onassis Dispute as Directed by Department’s Telegram 223, November 27, 19542
Deputy Foreign Minister, Shaikh Yusuf Yassin, and his nephew, Tahir Bey Ridwan, Head of the Foreign Office, dined this evening with me and the Embassy’s Arab Consultant, Mohammad Effendi. Before I found opportunity to raise the Onassis matter Shaikh Yusuf did so, substantially as follows:

He had, he said, been absent in Europe during the recent Onassis–zAramcoSAG discussions in Jidda. He recalled we had earlier shared the view that it would be unfortunate if, rather than finding, as partners, a mutually agreeable solution, SAG and Aramco should have to take their differences over the Onassis Agreement to arbitration. The basic question, as he had seen it, had been “Could not Aramco assure SAG that the Saudi Tanker Co. set up under the Agreement would carry a small percentage of total Aramco oil shipments at a reasonable rate?”

The recent discussions, as he understood it, had proceeded on this basis; and, with their failure, SAG had had no recourse but to insist on arbitration. To him the fault for their failure seemed to lie with the Aramco negotiators. He could not understand why, on so simple an issue, they had found no solution.…

He still felt solution without arbitration was possible. Could not a guarantee be given that a small amount, say 5,000,000 tons be carried by these Saudi tankers?

This gave me opening to say I could answer him on the basis of a very recent telegram from the Department giving me its latest information and current views on the subject. Consequently, I made the following points:

It had been over this very point of guaranteed preferential treatment, as well as on the question of rates, that the recent negotiations here had failed. It was a basic practice of the world-wide oil industry that tanker companies must compete in the oil carrying trade; it followed that oil companies would conclude charters only at competitive rates.

[Page 868]

This basic position had been reiterated in subsequent discussions held with Onassis in the United States. He was told that the oil companies could not do business with him so long as the preferential provisions of his Agreement with SAG were maintained. Mr. Davies had already, following these last discussions, left New York for Dhahran. And our information was that Onassis planned to return to Saudi Arabia soon; it seemed possible he might intend himself to propose to SAG elimination of those provisions.

As for arbitration, this would at best settle only one of the three principle points made in my note of last August to Prince Faisal, i.e. whether the Onassis Agreement violated the Aramco Concession Agreement. Mr. Davies had left Jidda with the assurance that arbitration would be a friendly test as to which partner was right; he would return, I felt sure, still ready to cooperate fully with SAG in that same spirit.

The other two points stressed in my note were that the preferential provisions of the Onassis Agreement were inconsistent with the international trade practices of all leading maritime nations and were, as well, contrary to the established practice of the worldwide petroleum industry. In my note I had said that, as a friend, my Government felt it should put these considerations frankly before SAG.

It was, therefore, in friendliest possible spirit that my Government wished me to reiterate them at this time. Surely Shaikh Yusuf could see even more clearly now than last August how strongly all the leading maritime nations and the great oil companies felt; and this quite irrespective of how arbitration of the first point might go.

Finally, I would ask that he convey this exposition of my Government’s views to Prince Faisal. If what I had written him last August was important then, surely subsequent developments showed it to be the more so today.

Shaikh Yusuf thanked me for my information and exposition and agreed that the two points I had made as to the practices of maritime nations and oil companies were more important and clearer today. Then, with customary acid touch, he added: “It was, of course, Aramco which, by its campaign against us, made these two points more important.” He continued (according to running notes which I took as he spoke) substantially as follows:

When arbitration is ended and Aramco loses, the whole monopolistic oil industry will find out it has no proof (sic), because there will be no international agreement against which SAG has acted.

. . . . . . .

As for Aramco, I say with great regret it has never understood this country or this people. Had it done so, it could have settled this case in one day with His Majesty. Instead, it has built up this international front against Saudi Arabia.…

. . . . . . .

To me it seems incredible the Company’s managers can have its interests at heart and act as they do. In fact, they are acting against its interests. It is important that they know what I have [Page 869] said and that the Company’s shareholders also know it. We had thought that, if others acted against Saudi Arabia, Aramco as our partner would support us.

I answered, that I must zdiffer with his views on Aramco. In my view it was incorrect to say the Company had worked to build up an international front against Saudi Arabia. I would say, however, only what I had said before, that the King and Mr. Davies had agreed as friends that this difference between partners would be settled amicably by arbitration. I felt sure this was still true; and I was still more than ready to be of any possible help in seeking a mutually agreeable solution.

Shaikh Yusuf answered that he did not doubt I believed what I had said. It was not pleasant for him to have to talk as he had done. He had found the information I had given him helpful, and he would inform Prince Faisal of what I had said were my Government’s views.

We then passed on to another subject.

(Note: I should add that, before opening this question of the Onassis Agreement, Shaikh Yusuf had said there were three matters he wished to discuss with me—Onassis, economic aid and army planning—not as Deputy Foreign Minister but as Yusuf Yassin. He had, he said, been with His Majesty the King in Riyadh most of the time since his recent return from Europe and would be rejoining His Majesty in Dammam tomorrow or the next day.)

  1. Transmitted in despatch 95 from Jidda, Dec. 2. (886A.2553/12–254)
  2. Supra.