Foreign Relations of the United States, 1952–1954, The Near and Middle East, Volume IX, Part 1

887.2553/11–152: Telegram

No. 269
The Acting Secretary of State to the Embassy in Lebanon¹

secret

Washington, November 13, 1952—7:05 p.m.

914. Ref Embtels 889² and 901³ Dept has little info which wld allow it judge whether two and half Mil annual payments by both pipelines to Leb Gov constitutes legitimate source of complaint. Therefore, Dept desires continue uninvolved in all aspects of negots which are essentially commercial. Emb action shld be guided by this principle but Emb may wish reemphasize to Leb officials apparent disadvantages renegotiation as given urtel so shortly after previous negots completed. Emb shld continue review facts and equities in situation and advise Dept. USG may then wish take substantive position particularly in case deadlock. In this connection additional info available from company sources Wash fols:

1. Hakim may be protagonist in seeking renegotiation pipeline contracts. He apparently has made personal econ study worldwide pipeline conventions and reportedly was impressed by 1950 Oil Forum article suggesting yet uncompleted Tapline wld save company estimated sixty million dollars per year. Tapline officials indicate article highly speculative and inaccurate.

2. Tactically Tapline and IPC can be expected stand pat and refuse any renegotiation.⁴

3. Strategy however may take into consideration full company knowledge when pipelines originally proposed that negots with states transitted wld be never-ending and that constant state of “guerrilla warfare” wld exist between two parties. This approach, while not most desirable, is perhaps the most realistic and best palliative available is for all foreign interests including pipeline companies and govt agencies to develop best possible atmosphere of mutual respect so that heat from repetitive crises can be kept at minimum”.

4. IPC also has had some reservations re desirability ratification May 15 heads of agreement.

Bruce

1. Drafted by Funkhouser and cleared by PED and OMP. Repeated to Amman, Baghdad, Damascus, Jidda, Dhahran, Tel Aviv, and London.
2. Dated Oct. 31, not printed. It reported several members of the finance committee of the Lebanese Chamber of Deputies had said they could not recommend ratification of the agreement signed on May 15 with IPC, since they felt no agreement negotiated by the old government could possibly be the best agreement Lebanon could obtain. The Embassy’s economic officer had pointed out to Hakim, the Minister of Finance, the many arguments against renegotiation, but Hakim said the government was not willing to face a parliamentary dispute over the IPC agreement, which it was sure could not be ratified. He assured the Embassy Lebanon would not be unreasonable, but both he and President Chamoun felt the pipeline companies could easily afford a higher transit fee. (887.2553/103152)
3. Dated Nov. 1, not printed. It reported a discussion with a Tapline official of the possible renegotiation of the pipeline company agreements. (887.2553/11–152)
4. Telegram 1480 from Beirut, Feb. 10, reported IPC intended to inform President Chamoun it was unwilling to consider upward revision of the payments proposed under the May 1952 pipeline agreement, and the company had no objection to submitting the agreement to Parliament for debate. (887.2553/2–1053) Telegram 1495, Feb. 11, reported that, at the request of the British Embassy, the IPC representative would not present President Chamoun with a categorical refusal. IPC officials planned to confer in London on a possible new approach to pipeline agreements with Syria and Lebanon. The local IPC representative hoped to return with advice to the President that IPC was willing to negotiate a new agreement which would incorporate some basic terms from the original convention and the May 1952 agreement. (887.2553/2–1153)