890.6363/1–647

The French Ambassador (Bonnet) to the Secretary of State 2

No. 8

The Ambassador of France presents his compliments to His Excellency the Secretary of State and has the honor to call his attention to certain aspects of the action undertaken by American petroleum companies in the Middle East.

The French Government sees only advantages in the development of oil operations in that part of the world and it can but approve of the concern of American companies to make arrangements of such nature as to facilitate the increase of production in a region which, if it is desired to economize the resources of the American continent, must be the normal source of supply for Europe. However, the French authorities could not fair to raise the strongest protest against any action contrary to previous commitments relating to the said region and guaranteeing the rights of the Compagnie Française des Petroles, as well as against any unilateral denunciation of the Agreements of 1928.

The French Government deems, in fact, that those Agreements which were prepared and approved by the Governments after long negotiations and which the said Governments have morally obligated themselves to cause to be respected, do not, under any circumstances, stand in the way of the arrangements which a policy of increase of production would require, especially in Saudi Arabia. It is fully cognizant of the fact that these developments are in the general interest; but it deems that they should be effected with due respect for the agreements which have been concluded. If it has always approved the [Page 628] efforts made by the Compagnie Française des Petroles at London with a view to obtaining a contractual modification of the said Agreements, intended to take into account the new elements of the situation, it could not permit such changes to be made at the expense of acquired rights and signed contracts.

It is convinced that the American Government can but share this point of view, given its prior declarations, particularly during the course of the negotiations which resulted in the Anglo-American Petroleum Agreement.3

The French Government also refuses to believe that the American companies can have the support of their Government when they violate the Group Agreement of 1928.4 For its part, it gives its entire support to the Compagnie Française des Petroles in the lawsuit which it is bringing before the British courts against an erroneous and politically inadmissible interpretation of the English legislation on commerce with the enemy.5

The Department of State is certainly not unaware of the importance which the French Government attaches to the participation of the Compagnie Française des Petroles in the Iraq Petroleum Company and the hopes which it continues to found on the development of the imports of that Company, which would assure its new facilities for obtaining its petroleum supplies and a substantial saving in foreign exchange. Now, the policy inaugurated by the American companies in Saudi Arabia, as well as the arrangements concluded by them with the British companies in Iran,6 would result in retarding the development [Page 629] of the production of the Iraq Petroleum Company and would place it in an unfavorable position in relation to the new group.

On the other hand, the denunciation of the Group Agreement would deprive the Compagnie Française des Petroles of the right it possesses to participate in the new exploitations contemplated. Most serious disadvantages to the French economy could not fail to result therefrom.

The intentions which the American authorities have shown in regard to the needs of the French economy, particularly during the course of the negotiations conducted last spring in Washington by Mr. Leon Blum,7 permit the French Government to think that they will fully recognize the justice of the serious concern which it feels concerning the rights of the Compagnie Française des Petroles in the Middle East.

Mr. Henri Bonnet is happy to avail himself of this occasion to renew to the Honorable James F. Byrnes the assurances of his very high consideration.8

  1. Handed to William L. Clayton, Under Secretary of State for Economic Affairs, by Ambassador Bonnet on January 6.
  2. Actually there were two Anglo-American petroleum agreements, both unperfected, one signed at Washington on August 8, 1944, and a revised one signed at London on September 24, 1945. For documentation on the earlier agreement, see Foreign Relations, 1944, vol. iii, pp. 94 ff; for information on the revision, see bracketed note, ibid., 1945, vol. vi, p. 244.
  3. For the text of this agreement, entered into on July 31, 1928, by the private American and European oil interests which owned the Iraq Petroleum Company, see Current Antitrust Problems: Hearings before the Antitrust Subcommittee of the House Committee on the Judiciary, 84th Cong., 1st sess., pt. 2, p. 1004. Negotiations leading up to the agreement extended over several years; for documentation on the negotiations immediately prior to the agreement, see Foreign Relations, 1927, vol. ii, pp. 816824.
  4. The British Government had vested the rights of Compagnie Française des Petroles in the IPC under its Trading with the Enemy legislation. The American participants, the Standard Oil Company of New Jersey and the Socony-Vacuum Oil Company, claimed that the Group Agreement had been voided as a result of this action. For a further account of their views and of the resort to court action by CFP as a countermove, see, The International Petroleum Cartel Staff report to the Federal Trade Commission submitted to the Subcommittee on Monopoly of the Senate Select Committee on Small Business, Committee Print No. 6, 82nd Cong., 2nd sess., pp. 101–104.
  5. A reference to the agreement between Standard Oil of New Jersey and Socony-Vacuum with the Anglo-Iranian Oil Company whereby the American companies agreed to buy 134,000,000 tons of petroleum from the latter in 20 years; see telegram 13, January 8, 1947, to Tehran, Foreign Relations, 1946, vol. vii, p. 49.
  6. For documentation on financial and economic discussions between the United: States and France in 1946, including the mission of Léon Blum to the United States, see Foreign Relations, 1946, vol. v, pp. 399 ff.
  7. The French Embassy sent a follow-up note, No. 18, dated January 13, which amplified the note of January 4 (890.6363/1–2047). The Secretary of State acknowledged both communications on February 14, informing the French Ambassador that further time was required for their consideration (890.6363/1–447).