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

880.2553/12–2352: Telegram

No. 276
The Ambassador in the United Kingdom (Gifford) to the Department of State¹

secret

London, December 23, 1952–5 p.m.

3488. Re: A–869.² Gibson IPC said today Herridge has returned having made no progress. Discussions have been amicable. Date for renewal talks not yet set. Gibson professes believe IPC can settle on tap line basis provided tap line holds firmly to pipeline agreements. One other important factor in negotiations is that Iraq will not tolerate stoppage in flow it soil by Syria.

Change in concession terms after relatively short period is inevitable in all Middle East concessions according Gibson as long as present Middle East and international tension exists. It must be acknowledged but as little and as slowly as possible and with care that ill will is not created or intensified and that ultimate position is not compromised.

Others in IPC state fixed fee settlement will not be possible. Gibson would probably agree it may not be. Therefore company studying alternative tariff approach. Insists no basis for considering profit split on pipelines which are transport media and should be considered on basis applicable railroads, ships, other pipelines namely tariff per ton and non-discriminatory tax. In this connection would appreciate receiving details of charges for moving oil through six representative lines including Portland, Montreal, inter-provincial and some domestic lines crossing state boundaries. Also details of basis for setting rates on these lines, their initial cost, mileage, return on investment and how division made between states.

Embassy comments on alternatives of fixed fee, 50–50 or pipe line tariff are in despatch 2872.³

Gifford

1. Repeated to Beirut and Damascus.
2. Document 272.
3. Document 273.