786A.022/4–2053

No. 1514
Memorandum of Conversations, by the First Secretary of the Embassy in the United Kingdom (Palmer)1

secret

Subject:

  • Boundaries between Saudi Arabia and Persian Gulf Sheikhdoms

Participants:

  • Mr. Terry Duce, Vice President, Aramco
  • Mr. Archibald Ross, Head, Eastern Department,
  • Foreign Office
  • Mr. Paul Anderson—Jersey Director of IPC
  • Mr. A. Stebinger—Socony Director of IPC
  • Mr. Joseph Palmer 2nd, First Secretary, American Embassy

Mr. Paul Anderson arranged a luncheon on April 16, at which the above-mentioned guests were present, for the purpose of enabling Mr. Terry Duce to reassure the British Foreign Office of Aramco’s position in the Persian Gulf boundary dispute.

Mr. Duce introduced this phase of the conversation by stating that he would like to make clear to the British the position in which Aramco found itself. He said that Aramco had no particular interest in the disputed areas. The undisputed portions of its concession were already sufficiently large to provide for its requirements. ... [Page 2536]He particularly wanted to make it clear that Aramco was doing nothing whatsoever to stimulate the present difficulties. On the other hand, he felt it necessary to point out that the concessionary relationship between Aramco and the Saudi Government was such that, in the protection of Aramco’s own interest, it could not in certain matters do otherwise than accede to Saudi wishes. This, for example, had been the case with respect to the markers which Aramco had erected on behalf of the Saudi Government on the disputed islands in the Persian Gulf. A further example was the retention of Mr. Manley Hudson; although Aramco had obtained Mr. Hudson’s services for the Saudi Government, in response to a request by that Government, and although the Company paid his salary, it had no influence over him and was not responsible in any way for the advice which he gave the Saudi Government.

Mr. Duce went on to emphasize the need for an early solution to the border problem. He said quite frankly that he felt the Saudis . . . would continue to endeavor to exert and extend their authority in disputed territories. He was under the impression that the Saudis had no ambitions with respect to the Yemen, Aden Protectorate or much of Muscat, although there were areas in Dhofar, for example, where Saudi claims came very close to the sea. With these exceptions, however, he thought the Saudis hoped to extend their influence over the rest of the peninsula, although the King would probably be willing to leave considerable authority to the Sheikhs.

Mr. Duce thought the whole situation would continue to be fraught with danger until some means were found of settling the dispute. Meanwhile, petroleum exploration, etc. was being held up. The need for proper delineation of boundaries applied not only to the land areas, but to the territorial waters and the seabed as well. For example, Aramco had made a promising strike of off-shore oil south of the Kuwait Neutral Zone and one well had recently been drilled almost nine miles from the shore. The area currently being exploited is well within Saudi territorial waters, but it is possible that the field extends considerably north. The extent to which Aramco can move in this direction is dependent upon the delineation of the territorial waters at the southern boundary of the Kuwait Neutral Zone.

Mr. Duce recalled a conversation which he had had with Mr. Dennis Greenhill when the latter was assigned to the British Embassy in Washington. . . . He asked Mr. Ross whether he had any suggestions or any ideas as to how Aramco could be helpful with respect to this entire problem.

[Page 2537]

Mr. Ross said that he greatly appreciated Mr. Duce’s explanation of Aramco’s difficulties and good intentions which he, of course, accepted from Mr. Duce. . . . He suggested the Saudis intended to reduce the Sheikh’s domains to the coastal towns and emphasized that HMG could not abandon its responsibility towards the Rulers merely because they were weaker than the Saudis. HMG had made a very reasonable offer to submit this problem to arbitration. If the Saudis sincerely wanted a solution to the problem, this represented a fair way out of the difficulty. As for the question of what Aramco could do to help, Mr. Ross expressed the strong hope that the Company could use its influence on the Saudi Arabian Government to persuade it to accept arbitration. Arbitration might include some arrangement for some form of plebiscite, but HMG could not agree to the Saudi suggestion that the problem should be determined solely by a plebiscite which would be a mockery in the light of Turki’s activities.

Mr. Anderson and Mr. Stebinger, both speaking as representatives of the American partners in IPC, emphasized their hope that an early solution could be found. . . .

Mr. Palmer asked whether Mr. Duce had any personal thoughts as to what might be done to facilitate a solution of this dispute. Mr. Duce replied that as a purely personal idea, he had given considerable thought to the possibility of a federation arrangement between Saudi Arabia and the Sheikhdoms. He did not elaborate this thought, but gave the impression that he had in mind a federation in which the British would continue to exercise certain rights and privileges within the Sheikhdoms. He agreed with Mr. Palmer’s observation that so far as Saudi intentions were concerned, the situation seemed to have close analogies with the unification of Italy in the last century; what seemed to be uncertain was the number of “San Marinos” which the Saudis were willing to concede.

In a subsequent conversation between Mr. Duce and Mr. Palmer, Mr. Duce expressed the opinion that the British should make some large and unique gesture in order to solve their problems with Saudi Arabia. . . .

Mr. Palmer explained at some length the British problem as seen from here. He thought there were three major reasons for the British attitude towards this problem: (1) The desire to retain controls of these sources of sterling oil; (2) a genuine feeling of responsibility towards the interests of the Sheikhs; and (3), and probably most important, prestige considerations. He pointed out that there is widespread concern in this country, particularly among the Conservatives, about the loss of British prestige as a result of events in Iran and Egypt. The Conservatives had come to power partly on a policy of criticism of the “scuttle” from Abadan. Now the Sudan [Page 2538]agreement was being interpreted in some quarters as another “scuttle”. As unfair as these characterizations might be, they were symptomatic of a frame of mind. Under these circmstances, he was extremely doubtful that the present government, in any event, would, in the foreseeable future, be willing or even find it possible to make large-scale concessions to the Saudis in the Persian Gulf.

  1. This memorandum was transmitted to the Department of State as an enclosure to despatch 4998, Apr. 20. (786A.022/4–2053)