76. Telegram From the Under Secretary of State (Irwin) to the Department of State1

71/UNSTO 16. Department Pass: London, Tehran, Dhahran, Jidda, Tripoli, Paris. OECD for Trezise. For President and Secretary.2 Subject: Oil Situation. Ref: Kuwait 69.3

My discussions in Riyadh suggest further review of question company wished to negotiate with all OPEC countries as bloc reason given by McCloy, Moses and Hedlund at January 15 meeting4 was primarily to protect companies from ratchet tactics. Saudis now join Iranians in assurance to effect that Gulf countries would be willing to enter firm 5–year agreement expressly negating any renegotiation based on intervening increases other areas. If ratchet problem is solved in this way, and both Iranians and Saudis, on one hand, and Libyans on other, insisting on separate negotiations, we believe companies should now be urged to negotiate with Persian Gulf group separately unless they have good reasons to the contrary of which we are ignorant.
We would be interested if companies have any such reasons. Both Saudis and Iranians believe that companies hope that insistence on OPEC-wide negotiations will cause dissolution of OPEC in disagreement over extremist demands. Saudis join Iranians in stating this will not happen and that OPEC will stay firmly together even to point of cutting off production. Irony is that company insistence on OPEC-wide negotiations seems to be only strong cement uniting Iranians and Saudis with Libya and Algeria. Alternatively, a principal company purpose in treating OPEC as a whole may have been hope that moderate countries would be able to curb extremists, notably Libya, during present confrontation. We think such a hope is futile. Our view is that neither Saudis nor Iranians will be willing or perhaps able to play moderating role in OPEC-wide negotiations and that there is probable truth to their assertions that such negotiations would result in moderates being forced to back extremist demands. At same time, prompt reasonable settlement with Gulf group might act as restraining influence on Libyans who seem now to be hesitating in face of company determination. Would appreciate Department’s exploring with McCloy and [Page 193] companies their present position on OPEC-wide negotiations in light of above considerations.
Assuming reasonable settlement with Gulf group there would remain real possibility of no agreement with Libyans and consequent production cut-off. Assume we are continuing with contingency plans for such an emergency.
Received letter in Arabic from King to President just prior departure. Unofficial translation sent septel.5
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 1271, Saunders Files, Middle East Oil, 1/1/71–2/1/71. Secret; Immediate; Nodis.
  2. A note at the end of the telegram indicates that it was passed to the White House but not to London, Tehran, Dhahran, Jidda, Tripoli, or Paris.
  3. Document 75.
  4. See footnote 4, Document 70.
  5. The official translation of Faisal’s January 19 letter to Nixon was transmitted by Irwin to Nixon on January 25. Faisal thanked Nixon for his concern, adding “it is incumbent on the United States for its part to take steps to convince the oil producing companies in the region to be realistic in their discussions and thereby facilitate reaching a just solution of this vital matter.” (National Archives, Nixon Presidential Materials, NSC Files, Box 1277, Saunders Files, Saudi Arabia)