Office of the Historian

394. Telegram From the Embassy in Italy to the Department of State1

Rome, March 18, 1957—6 p.m.

3702. Re Embtel 3701.2 Conclusion of petroleum agreement calling for 75–25 division benefits between Iran Government agency NIOC and Italian Government agency AGIP would not only:

(a)
Adversely affect relations all international oil companies with oil producing countries, especially in Middle East;
(b)
Increase difficulties US Government and UN in present efforts ameliorate Middle East problems;
(c)
Give undesirable impetus to nationalization trends in Middle East; but would also:
(d)
Have unfavorable impact US-Italian relations, as in American public eye, at least, Italian Government would be cast in role of irresponsible opportunist unmindful of international responsibilities.3

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In conversation with Ferrari Aggradi (present at informal lunch where I met Mattei) he inquired whether I had heard rumors about a Mattel Iran deal. I replied I knew all about it and after he indicated lack of information, I offered to give him full particulars.

I urge Department move to kill this agreement at least in present form and suggest as part of operation that I be authorized make representations along foregoing lines.4 Department may wish encourage similar approaches Italian Government British and Netherlands Governments.

Zellerbach
  1. Source: Department of State, Central Files, 888.2553/3–1857. Secret; Priority. Repeated to Tehran, London, and The Hague.↩
  2. Telegram 3701 from Rome, March 18, reported information from American oil company officials that AGIP and NIOC had completed negotiations for an oil agreement, and AGIP’s share was “a little better than the 75/25 gossip.” Also, according to the telegram, AGIP’s representative claimed to have excellent relations with political figures in the Middle East, and threatened, if the major oil companies refused to cooperate with ENI, to “upset whole applecart in Middle East.” (Ibid.)↩
  3. This matter came up at the Secretary’s Staff Meeting on March 26. During the discussion, Dillon stated that he “felt that the Italians were possibly trying to blackmail their way into the Iranian consortium. Mr. Rountree, however, felt that the Italians were seeking concessions in new Iranian areas and that this situation could develop into a new and fundamental problem with regard to the relationship between the private oil companies and the various Middle East governments. He believed it would be difficult to square any new arrangements which might be reached with the present fifty–fifty setup and thought that this was a very serious development. The Secretary asked whether ARAMCO exhibited the same concern and Mr. Dillon said that they did not seem to be as concerned as Mr. Rountree because they subscribe to the blackmail theory, as did the British.” (Notes of the meeting; ibid., Secretary’s Staff Meetings: Lot 63 D 75)↩
  4. 4 The Department authorized such action in telegram 3779 to Rome, March 19. (Ibid., Central Files, 888.2553/3–1857)↩