Foreign Relations of the United States, 1964–1968, Volume XXXIV, Energy Diplomacy and Global Issues

201. Telegram From the Department of State to the Embassy in the Syrian Arab Republic¹

Washington, January 25, 1967, 3:05 p.m.

124921. Ref: Baghdad’s 1304.²

1. Dept. endorses line you took with Talib³ and your recommendations para 8 reftel.⁴ Also agrees per your 1306⁵ you should advise Talib to think twice about taking any action against IPC which would be irrevocable.

2. As response to specific suggestion by Talib that USG pressure IPC to accept Syrian demands you should say that USG has maintained close communication with US shareholders with intent on part of USG to be as helpful as possible in situation. Dept knows from those discussions that IPC for its part sincerely desires to mitigate effects of Syrian action on GOI, as well as to secure re-opening of pipeline. We believe IPC has made constructive proposals this regard. There are however limits in each situation to actions IPC can reasonably be expected to take to reach those objectives. What IPC shareholders can do in either situation is matter of managerial judgment in light of worldwide commitments of each company, precedents which might be set, economics of marketing Iraqi oil, and financial situation of shareholders.

3. GOI must know that USG does not have an ownership interest in any US oil company and consequently does not have power to compel private companies to agree to any specific formula for resolution of disputes between them and foreign governments with which they have contractual relationships. Since USG does not have an ownership interest, as matter of policy USG does not attempt to substitute its judgment for that of company management as to degree to which companies can accede to foreign government demands which alter contractual arrangements negotiated in good faith with governments.

4. While USG cannot be helpful in way suggested by Minister Talib in conversation of Jan 23rd, USG sincerely desires to offer such assistance to GOI and IPC as may be appropriate and feasible. USG would therefore give serious consideration to other suggestions GOI may make as to means of resolving dispute involving the IPC pipeline, and particularly desires maintain dialogue with GOI on subject.

5. At your discretion you may say that USG of opinion that GOI’s efforts to break impasse between IPC-SARG should be directed at SARG.⁶ Syrians closed line and have rejected every effort by IPC to reestablish negotiating situation. GOI may want to remain aloof but realism must indicate to GOI that it cannot. It is Iraqi oil which is affected and it is GOI’s concessionaire company which being prevented from using line it owns. Partnership with IPC is of major importance and economic benefit to Iraq. USG would think that GOI would find it to be in latter’s national interest to support its concessionaire company against government doing injury to company and GOI.

Rusk

1. Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967–69, PET 6 IRAQ. Confidential; Limdis. Drafted by Oliver (E/FSE) and L. Kinsolving (NEA/ARN), cleared in draft by R. Houghton (NEA/ARN), and cleared by R. Davies (NEA). Repeated to London and Damascus.
2. Dated January 23. (Ibid.)
3. According to telegram 1304 from Baghdad, when Talib asked the Ambassador for his assessment of the situation, Armstrong said: “Seemed clear SARG desired to [do]something to consolidate own shaky position, make Syria leader in Arab causes, deal serious blow to West (but IPC replacing lost oil from other sources), force Iraq install radical regime which would cooperate with Syria, and only incidentally obtain more money. Aims mainly political and Iraq principal target; SARG thus unlikely reach agreement even if IPC agreed pay more, which IPC cannot do without opening self to blackmail everywhere; nor could Iraqi Government accept such blackmail.” Talib agreed, but said that Iraq must take a middle path; that it “could not be at odds with those Arab states promoting Arab causes, could not create situation in which Syrian supporters and other extremists able create internal trouble on increasing scale. Soon he [Talib] will be unable to pay full salary to hordes of officials and army officers, financial situation was desperate even before pipeline closure.”
4. Strong wrote in paragraph 8: “See little point in encouraging Talib in any way.” He recommended that the United States adopt its traditional position that this was a commercial dispute and that Iraq should “consult closely” with IPC. “USG questions wisdom of putting entire onus on IPC and regarding IPC as devil rather than as partner of Iraq.”
5. Dated January 24. (National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967–69, PET 6 IRAQ)
6. Telegram 1306 commented on the attitude of the Iraqi Government on the impasse: “From other sources we have heard that in debating Iraqi posture Cabinet exhibited great fear of opposing Syria [garble] fear of UAR reprisal even to point of assassination.” The telegram continued: “Problem for Sunni Arab minority ruling Iraq (with help of a few ambitious denatured Shias) is very deep. As minority they feel very insecure particularly in terms of Kurds, and need assurance of backing of UAR. They have a guilt complex at failure of Iraq under both Nuri and Qasim to play a proper role in Arab causes in conjunction with other good Arabs and they have sworn this must not happen again; in this context Egypt is key, but Syria also important.”