Foreign Relations of the United States, 1955–1957, Foreign Aid and Economic Defense Policy, Volume X

233. Memorandum of Discussion at the 304th Meeting of the National Security Council, Washington, November 15, 1956¹

Washington, November 15, 1956

[Here follows a paragraph listing the participants at the meeting.]

1. Significant World Developments Affecting U.S. Security

[Here follows discussion of unrelated subjects.]

At the conclusion of Secretary Hoover’s report, Mr. Jackson indicated that Dr. Flemming would report briefly on the oil situation in Europe.

Dr. Flemming said that after last week’s discussion of this problem in the National Security Council, he and Mr. Robert Anderson (former Deputy Secretary of Defense) had conferred at once with the presidents of the major oil companies. They had explained to these presidents our policies in this area, and the presidents had expressed themselves as in accord with our decisions. They favored at a later date pooling their shipping resources, which they regard as much more efficient than the individual action of each oil company, as was now the case.

Dr. Flemming added that in this discussion it had been agreed that the time had not yet come to put into operation the plans for supplying oil to Europe drawn up by the Middle East Emergency Committee. Nevertheless, Dr. Flemming recommended that the basic data on the oil situation available to the Committee should be brought up to date. There had been nothing new added in the last couple of weeks. This basic data, as to the problem of getting oil to Europe, could be obtained quietly and indirectly from the British and French through the agency of the Organization for European Economic Cooperation (OEEC). Once we have this additional basic data, Dr. Flemming indicated, we would be able to move very quickly when the time came to put the Middle East Emergency Committee plan into effect. It should also be possible to sound out the Saudi Arabians on their reaction to our effort to supply oil to Europe.

Secretary Hoover stated that it would be impossible for a few days to sound out the Saudi Arabian attitude, because King Saud was momentarily out of his country. Secretary Hoover then described a story printed in last night’s Washington Star, alleging that the United States Government was actually withholding oil supplies from Great Britain and France in order to force them to comply with the decisions of the United Nations. This erroneous story, said Secretary Hoover, would have the most unfortunate effect when it became known in Europe, as it certainly would. The European nations would all descend on us to blame us for their shortages. For this reason, if for no other, this Government, said Secretary Hoover, has got to move into the European oil situation in a short time, not later than a day or two.

The President said that he had thought we had already determined to let Venezuelan oil go to Europe. Secretary Hoover replied that while this was so, the problem was the availability of tankers to get the Venezuelan oil to Europe, and that, of course, if the companies attempted to pool their ships, they would run afoul of the antitrust law. The President made a jocular reference to his “stiff-necked” Attorney General, and after Secretary Hoover had insisted that we would have to organize the pooling of tankers along the lines suggested by the Middle East Emergency Committee plan, the President again offered to make a public statement which might help the oil companies by declaring that their pooling activities were the result of a serious emergency situation.

The Attorney General reassured the President that the Department of Justice already had a plan of action in this situation which could be put into effect as soon as the State Department told him to do so. Dr. Flemming confirmed this statement, and added that the Department of Justice was showing admirable cooperation. He explained that he was really not much worried about the legal angle. The President observed that we must certainly use every legal recourse to meet the situation. Above all, we want to increase the flow of oil from the Gulf Coast to our own East Coast, so that more Venezuelan oil can go directly to Europe. Dr. Flemming informed the President that this was already being done.

There then ensued a discussion of the problem of pooling tankers. Secretary Humphrey elucidated the dilemma. If the oil companies pooled their tankers and this fact became known, the Arabs could be expected to cut off further oil supplies. Accordingly, we might be worse off than as though there had been no pooling. Despite the gain in efficiency by pooling the tankers, Secretary Humphrey therefore opposed such a move at the present time. Dr. Flemming expressed the opinion that if the oil companies did pool their tankers, it would be impossible to disguise the fact that such a move had been suggested by the U.S. Government.

The President said it was his conclusion that it was best to go along with the recommendations made by Dr. Flemming earlier in the discussion, namely, to get the basic data available to the Middle East Emergency Committee up to date, and to find out what the Saudi Arabians would do if they were to learn that we proposed to ship oil to Europe under the terms of the Middle East Emergency Committee plan.

Admiral Radford pointed out that the Russians were already supplying oil to Egypt and were in general moving into the situation there. He warned that we may have to move ourselves very promptly, not only in Egypt but in Syria.

Dr. Flemming inquired whether the consensus of the Council could be summed up in the following terms: First, that we would proceed to bring our basic data for the Middle East Emergency Committee up to date; and second, ask the State Department to sound out the Saudi Arabians on their reaction to our plans, before any action is taken by us.

The discussion closed with a new expression of great anxiety over Britain’s financial and economic situation from Secretary Humphrey.

The National Security Council:²

a. Noted and discussed an oral briefing by the Director of Central Intelligence on the subject, with specific reference to developments concerning Hungary and Poland; the situation in the Near East; the impact upon Asia of the foregoing events; and the situation in Korea.

b. Noted and discussed an oral report by the Acting Secretary of State regarding UN action on the Hungarian situation, and conclusions to be drawn as a result of recent events in the Near East.

c. Noted and discussed an oral report by the Director, Office of Defense Mobilization, on developments affecting the European oil supply position.

d. Noted the President’s authorization to the Department of State:

(1) To attempt to obtain recent data on the European oil supply position through the Organization for European Economic Cooperation (OEEC).

(2) To explore discreetly probable reaction of Arab oil-producing states if the United States were to put into operation the plan of action of the Middle East Emergency Committee.

Note: The action in d above, as approved by the President, subsequently transmitted to the Secretary of State for appropriate implementation.

[Here follows discussion of the remaining agenda items.]

S. Everett Gleason

1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Prepared by Gleason on November 16.
2. Paragraphs a–d that follow constitute NSC Action No. 1632. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council, 1956)