Foreign Relations of the United States, 1947, The Near East and Africa, Volume V

891.6363 AIOC/1–2847: Telegram

The Ambassador in the Soviet Union (Smith) to the Secretary of State

Moscow, January 28, 1947.

207. Highlights Izvestia January 26 article by V. Linetski “Agreement of British and American Companies on Oil line”.

“At end of last year agreement was reached between Anglo-Iranian Oil Company and American firms Standard Oil of New Jersey and Socony Vacuum to ‘explore possibility of constructing oil line’ from Persian Gulf to eastern shore of Mediterranean * * *.¹

This agreement denotes new relationship of forces in struggle of British and American oil companies contesting for primacy in lands of Arabian east * * *.

American oil companies in Near East have considerably strengthened their influence and expansion of American capital seeking possession of sources of raw materials and world resources of energy has attained particular scope * * *.

Whereas US owned no oil in Near East immediately after World War One, companies controlled by American capital now own more than 40 percent of exploited oil reserves in this region * * *.

People in US like to say that ‘Near Eastern game’ whose prize is oil was undertaken exclusively in light of economic considerations and that American concessions in Arabia were prompted by diminishing oil reserves in America itself and by extraordinarily increased expenditure of oil during war years * * *.

British oil bulletin Petroleum Press Service disputing assertions concerning exhaustion of American oil reserves has indicated that * * * fear of rapid exhaustion of American oil reserves lacks any solid foundation * * *.

Real reasons at basis of US desires to strengthen and expand its position in Near East may be found elsewhere. Department of Interior head of Administration of oil and gas questions Davis² recently presented report to Congress stating ‘our military experience has shown importance of possessing strong positions abroad and of having energetically active American capital abroad. Such position can be sustained by healthy foreign policy re oil’.

These strong positions are referred to in Herbert Feis’ book Oil and American Foreign Policy³ * * * Feis has established that ‘basic policy task must be that our country and its armed forces be able to count in wartime on broad supply wherever these forces require it with least military risk and with minimum burdensome obligations’.

In light these statements American oil concessions in Arabia and Transarabia pipeline constitute enterprises undertaken far outside economic framework. They may be referred to as secondary enterprises of ‘American world system of bases’ and as American outposts expanding along British naval and air communications * * *.

Agreement for construction of oil line was concluded without consideration for wishes and interests of peoples of Arabian east * * *.

Many British papers emphasize it gives Britain definite and immediate advantages. However, certain papers indicate if its further aim is considered, agreement will rapidly strengthen US position. Thus magazine Tribune writes ‘deal on mid-eastern oil’ indicates ‘beginning of new phase in world policy of force’ and ‘mighty American base will be created in near future somewhere in mid-east * * *’.

Struggle for Near East oil becomes increasingly acute. Immense strategic significance of oil is generally well known. Hence it is easy to understand that conflicts in this field have by no means economic character alone.”

Repeated London as 25.

Smith

1. These asterisks and the others in this telegram are found in the original.
2. Presumably Ralph K. Davies, Acting Director of the Oils and Gas Division of the Department of the Interior.
3. Dr. Feis’ work was entitled Petroleum and American Foreign Policy. This pamphlet was issued by the Food Research Institute of Stanford University in March 1944.