Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

307. Memorandum of Discussion at the 444th Meeting of the National Security Council⁰

May 9, 1960.

[Here follow a paragraph listing the participants at the meeting and agenda items 1 and 2.]

3. National Security Implications Involved in the International Oil Cartel Case (NSC 138/1;¹ NSC Actions Nos. 692, 697, 766–a, 868, 875, 891–d, 947, 1015 and 1021–e;² Memos for NSC from Executive Secretary, same subject, dated March 18³ and May 2⁴ and 6,⁵ 1960)

Mr. Gray presented this subject to the Council. (A copy of Mr. Gray’s Briefing Note is filed in the Minutes of the Meeting and another copy is attached to this Memorandum.)⁶ After explaining the background of the Attorney General’s request for advice from the Council and reading point by point the draft Record of Action submitted for Council consideration by the NSC Planning Board, Mr. Gray said he believed the draft Action was responsive to the Attorney General’s request.

Attorney General Rogers said that a criminal, anti-trust action against certain oil companies had been undertaken in 1952. The last act of the Truman Administration had been to substitute a civil suit for a criminal prosecution in this case. President Eisenhower’s Administration had approved President Truman’s decision and consequently the Department of Justice had started the civil suit. The purpose of the Department of Justice inquiry now was to determine whether a decree against the defendant companies limited to marketing only would be in accordance with the wishes of the Council. Mr. Rogers thought that the views expressed by the Department of State (Reference Memorandum of May 2) and the Joint Chiefs of Staff (Reference Memorandum of May 5) were valid. He wished to express his concurrence with the State and JCS views and to indicate that the draft Record of Action prepared by the NSC Planning Board was satisfactory to him.

The President recalled that in 1953 the U.S. had become involved in the Mossedegh affair and the Iranian consortium. He thought the Attorney General had been directed at that time to avoid prosecuting the oil companies. The Attorney General said the President’s recollection was correct but that the present case was different from the Iranian consortium case. At present the Department of Justice was endeavoring to settle a law suit against certain companies. He believed all the petroleum companies concerned would accept a settlement along the lines agreed upon by the first company with which a settlement was reached.

Mr. Merchant, while concurring in general in the draft Action prepared by the Planning Board, suggested that sub-paragraph d of that draft be amended by deleting the words “U.S. foreign relations and” so that the Attorney General would be requested to conduct proceedings in the oil cartel case with due regard to the effect on national security interests. He also believed that the provision in subparagraph d for consultation by the Attorney General with the Department of State should be extended to include the Attorney General’s consultation with the Department of Defense. The Attorney General agreed with Mr. Merchant’s proposed amendments.

Mr. Merchant noted that the Attorney General in his request for the advice of the Council had referred to joint production refining, transportation and storage companies, with no mention of joint marketing arrangements. The State comments on the oil cartel case had similarly been addressed to joint production refining, transportation and storage companies, not to marketing. Sub-paragraph e of the draft Record of Action asserts that it is not inconsistent with sub-paragraph d to proceed with the negotiation of consent judgments respecting joint marketing. Mr. Merchant felt sub-paragraph e would be improved if it began “Further agreed to recommend to the President that the Attorney General be advised that it would not be inconsistent with d above” etc.

The Attorney General said adoption of the draft Record of Action would enable the Department to move ahead. The Department would, of course, consult with the Department of State and would return to the Council for further advice in case of need. He felt it might perhaps be advisable to insert in the draft Record of Action a reference to seeking additional advice from the Council if necessary. Mr. Merchant agreed that language providing for further consultation might well be added to the draft Record of Action.

The National Security Council:⁷

a. Noted and discussed the Attorney General’s request for the advice of the National Security Council concerning the national security implications of possible relief directed at joint production, refining, transportation and storage companies participated in by the defendants in the international oil cartel anti-trust case presently being litigated and whether national security considerations suggest that the Department of Justice not secure, either by negotiation, the divestiture or substantial alteration of defendants’ interest in such joint companies as well as prohibition against defendants entering into similar joint companies in the future.

b. Noted that the Department of State considers that U.S. interests from the standpoint of national security would be adversely affected in the following respects:

(1) There might result a reduction in the U.S. control over the supply of oil for U.S. and Free World needs.

(2) There might be withdrawal of U.S. companies from some particularly important and sensitive country.

(3) Soviet penetration into oil areas not heretofore occupied by them might take place in certain situations.

(4) The movement to nationalization might be encouraged in several ways.

(5) It is very probable that concessions would have to be renegotiated and that certain countries would attempt to secure better terms.

(6) The relative position of oil exporting countries in the total pattern of world trade might be strained or indeed altered.

(7) The proposed relief would provide propaganda ammunition to leftists, nationalists and the Soviet Union for undermining and discrediting the prestige of the United States Government as well as its companies.

c. Noted the views of the Joint Chiefs of Staff that:

(1) Any action which could tend to reduce, and thus weaken, the U.S. position vis-à-vis the USSR or reduce the capability of the United States to continue its progress in developing oil resources, in conjunction with its allies, which will provide an adequate supply of petroleum products to meet their combined requirements in a future war, is contrary to the interests of national security.

(2) The conclusion and implications listed in the Department of State memorandum are valid, and are consistent with the view expressed above.

d. Agreed, with the concurrence of the Attorney General, to recommend to the President that in the interests of national security, the Attorney General be requested to conduct proceedings in the international oil cartel case with due regard to their effect on U.S. national security interests, as noted in b and c above, consulting as appropriate, with the Departments of State and Defense.

e. Further agreed to recommend to the President that the Attorney General be advised that it would not be inconsistent with d above if the Attorney General should, as he deems appropriate in accordance with law, consulting as appropriate with the Departments of State and Defense, proceed with the negotiation of consent judgments with the defendants on the basis of an injunction against cartel activities abroad substantially affecting U.S. commerce, an injunction against joint marketing abroad with any of the other defendants or co-conspirators, and an agreement providing for separation between various defendant partners of the marketing assets which they presently control.

f. Agreed that, after the Attorney General consults with the Departments of State and Defense as provided in d and e above, either of the latter departments may refer back to the National Security Council any questions regarding the conduct of the proceedings or the proposed consent judgments which appear to involve possible adverse effects on U.S. national security interests.

Note: The above actions, as approved by the President, specifically including the approval of the recommendations in d and e above, subsequently transmitted to the Attorney General and the Secretaries of State and Defense.

[Here follows agenda item 4.]

Marion W. Boggs

0. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Drafted by Boggs on May 13.
1. NSC 138/1, “National Security Problems Concerning Free World Petroleum Demands and Potential Supplies,” January 6, 1953, is printed in Foreign Relations, 1952–1954, vol. IX, pp. 637–655.
2. All these NSC Actions are in Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council.
3. In this memorandum, the Attorney General requested that the NSC provide advice on the national security ramifications of the oil cartel case. (Ibid., S/P Files: Lot 62 D 1, International Oil Cartel Case, National Security Implications in)
4. In this memorandum, Lay transmitted to the NSC the report of the Department of State on the over-all ramifications of the oil cartel case. (Ibid.)
5. In this memorandum, Lay transmitted to the NSC the comments of the Joint Chiefs of Staff, May 5. (Ibid.)
6. Not printed.
7. Paragraphs a–f and the note that follows constitute NSC Action No. 2233, approved by the President on May 13. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)