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Foreign Relations of the United States

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United States Department of State / Foreign relations of the United States, 1951. The Near East and Africa

The Near and Middle East: multilateral relations,   pp. 1-342 PDF (132.2 MB)

Page 71

nomic and political stability in the area is dependent upon realistic
policies with respect to oil, and stability is being threatened by the
failure of certain oil companies, in particular by the British companies,
to act in conformity with and in support of the joint United States-
United Kingdom policy in the Middle East.
  2. The low royalty pattern followed in the past by the Iraq Petro-
leum Company and the Anglo-Iranian Oil Company, the failure
in the past of the former company to develop adequate production
rates, and the continuation by both companies of colonial methods in
dealing with local governments have led to increasing hatred of for-
eign oil operations. While on the one hand the British Government
has agreed with the United States on the necessity for stability of the
area, on the other hand, agencies of the British Government have not
in fact been able to assure that British oil companies are acting in
conformity with that policy.
   3. The recent agreement between the Arabian-American Oil Com-
 pany and the Saudi Arab Government represents a significant step
 forward in the development of a proper relationship between oil
 companies and local governments, although it is recognized that
 increased royalties may in fact come in part, though indirectly, from
 the United States Treasury. The company has considerably improved
 its employee welfare program, including education and training. While
 much is yet to be done before an ideal situation has been created, the
 company is headed in the right direction.
   4. The policies of the Anglo-Iranian Oil Company in Iran are
 regarded as highly unsatisfactory, and are responsible to a great
 degree for the present economic problems and lowered Western
 prestige in that country, and throughout the entire Middle East. The
 British Foreign Office has had scant influence upon the company,
 although the British Government is the majority shareholder. While
 there has been some indication that the company has finally recog-
 nized that it cannot force through the Iranian parliament the supple-
 mentary oil agreement without further concessions, and has agreed to
 advance some 35 million pounds to help meet the immediate financial
 crisis with which the Iranian Government is confronted, the Con-
 ference was not optimistic as to the likelihood that there had been
 any fundamental change in company policy, nor that there would
 be so long as it is under its present management. Under present cir-
 cumstances the company is one of the greatest political liabilities
 affecting United States-United Kingdom interests in the Middle East-
 ern area, since it reflects the dominant control of the Iraq Petroleum
 Company by the minority British interests represented by the Anglo-
 Iranian Oil Company.
   5. In Iraq the situation is also regarded as highly unsatisfactory.
 Royalties paid by the Iraq Petroleum Company in the past have been

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