Foreign Relations of the United States, 1955–1957, Near East Region; Iran; Iraq, Volume XII

300. Memorandum From the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Allen) to the Acting Secretary of State¹

Washington, March 3, 1955.

SUBJECT

• Five Percent Participation in the Iranian Oil Consortium

I have talked with Mr. Phleger on this subject. Two questions are involved at the moment:

1. Should American Independent Oil Company be ruled out at this stage?

2. Should State call a meeting to hand out the documents to the eleven companies which have been certified and accepted by Iran?²

Mr. Phleger sees no legal question involved and feels that the problem is therefore not his direct concern. However, from a policy point of view he does not think State should take any responsibility for ruling out American Independent and he doubts the advisability of State’s calling a meeting unless we have undertaken a commitment we cannot avoid.

I have a good deal of sympathy for Mr. Phleger’s point of view and have looked at the question from every angle I can think of to find some way of adopting it, but I cannot find a way out. Mr. Waugh feels as I do.

We have not and are not ruling out American Independent. The five majors have done so, even after you telephoned Mr. Koegler suggesting informally that American Independent should be allowed to take part in present negotiations. Price Waterhouse has completed its task and the case seems to be closed. Hence the attached draft telegram to Ickes. I suggest that it go out in Mr. Jernegan’s name since the incoming letter was addressed to Jernegan and a reply by Jernegan would be somewhat less “institutionalized” although at the same time official.

As regards the meeting, I would much prefer that the five majors get the independents together. However, I understand that the majors flatly refuse to do so. Mr. Koegler has sent us 67 pounds of documents, which arrived today, to hand or send out to the independents. Moreover, I’m told that the Department has already agreed to assume the responsibility for getting the independents together and I’m afraid it is too late to change the procedure now.

Instead of calling a meeting, we could simply mail the documents to the eleven independents. However, I’m not certain what would happen next. No one would assume the initiative for getting them together. We would be deluged by inquiries from each of them separately. I view the meeting primarily as a procedural convenience. Time is pressing. I hope you will approve the meeting and will indicate who should assume responsibility for it. I am not anxious for the job. It lies more in Sam Waugh’s field. However, NEA has perhaps a greater continuing interest in seeing the matter through. If NEA is tagged to do it, I shall of course lean heavily on Mr. Waugh and his Petroleum Division.

Recommendations:

1) That you approve the attached telegram (Tab A) to the American Independent Oil Company stating that the Department is not in a position to intervene to change the Price Waterhouse decision.³

2) That you approve the convening of a meeting of representatives of the eleven approved companies by the Department⁴ as soon as feasible in order that they may be given the documents provided by the companies.

1. Source: Department of State, Central Files, 888.2553/3–355. Official Use Only. Drafted by Allen and concurred in by Willis C. Armstrong and Eakens.
2. The 11 independent oil companies were Anderson–Prichard Oil Corporation, The Atlantic Refining Company, Cities Service Company, Hancock Oil Company, Pacific Western Oil Corporation, Richfield Oil Corporation, San Jacinto Petroleum Corporation, Signal Oil & Gas Company, Sinclair Oil Corporation, Standard Oil Company (Ohio), and Tide Water Associated Oil Company. According to a February 28 letter from Iran’s Minister of Finance Amini, text of which was transmitted to the Department in telegram 1803 from Tehran, February 28, the Government of Iran had no objection in principle to the 11 companies joining the Consortium. (Ibid., 888.2553/2–2855)
3. A telegram to this effect was sent to Raymond Ickes, Vice President of American Independent Oil Company, on March 4. (Ibid., 888.2553/3–455)
4. The minutes of a meeting between Department of State officials and representatives of the 11 independent oil companies, March 8, is ibid., 888.2553/3–855.