181. Telegram From the Department of State to the Embassy in Iraq1

117. Deptel 61 Baghdad 67 Tehran rptd London 607; Tehran’s 101.2 C.H. Murphy, Jr., President Murphy Oil Company, called on Under Secretary Ball August 19 to discuss Iran and Iraq. In previous discussion August 11 Murphy had advanced following proposals for Department consideration: (1) that USG promise special diplomatic support to Murphy [Page 327] and other four members of its group which endeavoring obtain Iran offshore concession; (2) that USG consider as precedent for action in 1964 its efforts in 1920’s supporting American companies then seeking participation in Mesopotamian oil resources (i.e. that USG be guided by this rather than continue to dissuade American companies from bidding in Iraq); (3) that USG consider idea of cordon sanitaire in Iraq (i.e. cordoning off certain IPC areas leaving territory outside these areas for concession bids by other companies without fear of USG or IPC objection).

On August 19 Ball pointed out difficulties of USG taking special action promote interests one group American oil independents in Iran when other U.S. independents and majors bidding also. Asked if Murphy felt he could assemble larger group of independents. If so, USG would go to Shah promoting advantages to Iran of having independent US companies as participants in its oil development. Murphy found this Department position reasonable and stated would discuss with present partners and seek enlarge group. He would report back in any event. Asked by Murphy to predict effectiveness of possible USG démarche to Shah promoting independents, Ball responded Department could not guarantee results but believed such approach would receive careful Iranian attention.

Murphy agreed with Ball and Talbot Iran probably looking for companies with substantial US oil import quotas as well as overall marketing ability.

Ball said Department had reviewed Mesopotamian experience of 1920s and concluded situation today quite different. Certain factors important then, such as our fear domestic oil resources would run out and total exclusion American companies from access Near Eastern oil, no longer existed. He reviewed for Murphy rationale present USG policy of dissuading American companies from making oil bids to Iraq, and added he would be discussing with Department colleagues possibility altering this policy in relatively near future if IPC failed to draw nearer agreement in present Iraqi negotiations.

Murphy volunteered that Sinclair Chairman Steiniger intended speak to Department soon regarding Sinclair activities Iraq. Was agreed Department would contact Steiniger.

Question of cordon sanitaire did not enter discussion.

Full memcon being pouched.3

  1. Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1964–66, PET 6 IRAN. Confidential. Drafted by W. Wolle (NEA); cleared by M. Tiger (GTI), J. Oliver (FSE), G. Alexander, T. Ehrlich (U), H. Symmes, Davies (S/S), and J. Grant (NEA). Also sent to Tehran and repeated to London.
  2. Neither printed. (Ibid.)
  3. Not found.