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240. Editorial Note On June 10, 1967, Kuwaiti oil workers began a strike that completely shut down AMINOIL, the Getty subsidiary, and partially closed the Kuwait Oil Company. (Telegram 1305 from Kuwait City, June 11; National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 17-1 ARAB) Embassy officials were convinced that the Kuwaiti Government had no prior knowledge of the oil workers' actions. Although the Kuwaitis did not acknowledge it, rumors circulated of an imminent meeting of oil-producing Gulf states in Kuwait itself. (Telegram 1306 from Kuwait City, June 11; ibid.) That same day, June 10, Aramco's Brougham met in Dhahran with Yamani who explained that an Iraqi delegation had arrived after meeting with government representatives in Kuwait. According to Brougham's account, the pro-Nasserite Iraqis were urging oil producing countries to use "vigorous measures," including nationalization if necessary; Yamani believed that using the companies as "friendly instruments" was a preferable alternative. Iraq agreed to join Kuwait and Saudi Arabia at a meeting in Kuwait with oil executives the following day. Yamani then said that "he would probably do most of talking for the government side and would probably make a number of harsh statements to the company representatives. It would then be my [Brougham's] cue vigorously defend Aramco and history of its relations with SAG and recent example our successful effort to intercede with USG." After detailing the points that Brougham should make, "Yamani suggested at this point I offer to urge USG through our shareholders to use their best efforts to see that Israel does not gain from its recent aggression." Yamani urged Brougham to cable promptly so that the United States would have time to respond: "I know your government willing give this assurance. I am just trying to find a way for the oil companies to get credit for having produced it and thus prove that companies are friendly instruments." (Aramco cable PC 7683 from Dhahran, June 10; Johnson Library, National Security File, NSC Special Committee Files, Economic [2 of 2]) On June 11 U.S. Embassy officials were summoned to a meeting with oil company executives and the Oil Ministers of Saudi Arabia, Iraq, and Kuwait. As spokesman, Yamani conveyed the bitterness of his colleagues "against US, UK and French Governments as a result of recent ME hostilities and the resulting danger to investments nationals of these governments in ME countries." He said: "We expect from you a real sincere effort with your governments to the extent that they take positive action to stop Israel from gaining anything from their attack, go back to the original border line and nothing to be imposed on the Arabs as a permanent settlement." (Telegram 1319 from Kuwait City, June 11; National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1964-66, POL 27 ARAB-ISR) Brougham commented that "Meeting followed script outlined PC 7683 almost exactly." (Aramco cable PC 7689 from Dhahran, June 11; Johnson Library, National Security File, NSC Special Committee Files, Economic [2 of 2]) Through British sources, the Embassy in London reported that a similar ultimatum had been delivered in Baghdad to the chief representative of the Iraq Petroleum Company: "The oil companies should make representations to the British, American, and French Governments that they should oblige Israel to withdraw behind the borders which existed before fighting started on 5 June. Until this objective is achieved Iraq together with Saudi Arabia, Kuwait, and other Arab producing countries will continue the suspension of oil exports." (Telegram 10336 from London, June 13; National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 17-1 IRAQ) By the end of the day on June 11, Ambassador Cottam was less certain that the Amir and his government had been surprised by the labor strike: "Today's strike was contrived by GOK to exert maximum pressure on KOC and Aramco representatives who met with Kuwaiti, Saudi and Iraqi petroleum ministers this morning....More speculative is my belief that Kuwaitis and Saudis acted in collusion to convince their Iraqi colleague of their complete willingness sacrifice oil in Arab cause, knowing that report of meeting would reach Aref and Nasser very soon. Iraqi left for Baghdad shortly after meeting. Kuwaitis and Saudis may be trying extremely delicate and dangerous game of proving their Arabism and at same time not jeopardizing their long-range interest in keeping oil flowing." (Telegram 1322 from Kuwait City, June 11; Johnson Library, National Security File, NSC Special Committee Files, Kuwait) On June 12 representatives of Gulf Oil Corporation, part owner of the Kuwait Oil Company, met with State Department officials as Yamani had requested. The assessment of one Gulf Oil official "was that neither Kuwait nor Saudi Arabia wanted to shut off oil shipments but that they were both worried about the stability of their regimes if they were not seen to be responding to popular feeling." (Memorandum of conversation, June 12; National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, POL 2 KUW)
241. Telegram From the Mission to the Organization for Economic Cooperation and Development to the Department of State/1/ Paris, June 12, 1967, 2216Z. /1/Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 3 OECD. Limited Official Use; Immediate. Repeated to The Hague, London, Ottawa, Rome, Tokyo, Ankara, Athens, Bern, Bonn, Brussels, Copenhagen, Dublin, Lisbon, Luxembourg, Madrid, Oslo, Reykjavik, Stockholm, and Vienna. Passed to the White House and USIA. 20116. CEDTO. Subj: OECD Oil Committee. 1. Session opened with supply sitrep by Chairman (growing out of pre-session caucus US, UK and Dutch dels)./2/ France immediately took floor next with strong intervention expressing displeasure meeting called and noting particular concern over "excessive" press coverage. Further stated France felt Mid-East situation should not give us great concern at present and opposed Chairman's suggestion that agenda include item on action needed. /2/The three nations represented the largest oil companies in the world, known as the "Seven Sisters." 2. Noting fluidity of situation chair passed on to round table contributions by members in order round out supply picture. US del (Asst. Secy Interior Moore) presented statement noting our desire cooperate in assessing situation and participate in any plan action commonly agreed upon by committee. At same time we informed group of our plan of action and made clear while we would wish include provisions for company level cooperation between our firms and foreign companies, committee resolution recognizing emergency or threat of emergency--plus council approval--prerequisite. 3. Netherlands led off for group supporting action by committee to invoke all or part of existing emergency procedures--particularly bringing industry officially on board ASAP--with backing by Sweden, US, UK, Germany and Canada. Several dels, including Spain, Austria, Switzerland, Portugal, Belgium, Denmark and Norway took rather complacent view, noting satisfaction with own stock levels and present general supply situation, but indicated willingness to cooperate. Japan and Greece had received no instructions. France expressed general agreement with idea industry participation as advocated by Dutch but again insisted no decision should be taken at present session. Several dels expressed desire keep out of press results committee deliberations whatever was decided. Piga, Vice Chairman and member Italian del, summarized situation at end general discussion, accused some countries too complacent, and called for bringing industry on board immediately. Belgium countered by suggesting watchdog group to follow developing situation and keep committee up-to-date with daily sitreps. Chair suggested adjournment until afternoon to allow dels to digest info and suggestions so far presented. At this point French, who had been in frequent telephonic contact with ministries, essentially withdrew from session by announcing they would attend afternoon session as observers only. After procedural ruling by Secretariat against observer status, France returned p.m. session as dels but did not participate in debate. 4. Chair opened re-convened session by tabling three options/3/ which in his opinion open to group (reported septel) and challenged any del accept third alternative he colorfully described as simply sitting on our bottoms and doing nothing. With French silent, no del advocated do-nothing course and remainder afternoon spent serious discussion which of two remaining alternatives to accept. (Comedy relief provided by drunken Belgian del who frequently intervened to note Belgium small country but great nation and willing cooperate. Sweden del recommended first option, calling on Council to approve partial activation emergency machinery by creating industry advisory group. US del (Hinton) strongly supported Swedes and clearly outlined situation, including fact two-thirds Mid East oil as of now unavailable. Also called on members (1) not to waste insurance afforded by reserve stocks and (2) urged all dels take into account in forming decision fact it much easier for us all to take common action now rather than trying amend later US action plan implemented without provision for working directly with European companies. Noted key point for us to be able do so this stage is resolution by committee recognizing emergency element in present situation. /3/The three options were to set up an Industry Advisory Committee, to rely on inter-governmental discussions, or to take no action at all. (Memorandum of conversation, June 20; National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 1 OECD) 5. After considerable discussion, most dels, including Japanese who had received new instructions, lined up behind idea activating Industry Advisory Group. Only vocal active opposition was from Greeks who disclaimed ability receive instructions in less than week, at same time echoing chairman's suggestion decision be taken only after consultation with governments. Small drafting group composed Secretariat and interested dels to meet ten o'clock tomorrow, June 13, with committee re-convening at 2:30. Chairman appears determined get decision tomorrow in order refer final resolution to Excomm scheduled for June 15 and thereafter to Council. Trezise
242. Memorandum From the Assistant Secretary of State for Economic Affairs (Solomon) to the Under Secretary of State (Katzenbach)/1/ Washington, June 12, 1967. /1/Source: Department of State, E Files: Lot 71 D 84, PET 2 Middle East Department Memorandums 1967. Confidential. The date is handwritten on the source text. A copy was sent to Eugene Rostow. SUBJECT /2/This undated 5-page assessment of the oil situation, plus two annexes, was attached to the source text under a June 12 covering memorandum from Levy to Katzenbach. Levy speculated that the loss of oil exports for a significant time would not only result in "unmanageable" shortages for the West, but would also cause political instability in the Middle East oil producing states. He believed that the cessation of oil supplies was the only tool left to the Arabs and that they and their Soviet backers would not hesitate to use it. Sequestration and/or confiscation of U.S.-U.K. production facilities would be a real possibility. The political unity of the West would splinter, Levy felt, with a tendency for smaller nations to deal directly with the Arab states instead of looking to oil companies for oil. "While we must obviously try to maintain as long as possible a united political and oil front of the free world, we might, if the crisis should not cease very soon, have to decide whether our longer-term interests would not be better served by either closing our eyes to side deals or trying to handle such arrangements on an agreed upon common basis, say through some machinery of OECD which might provide for some ultimate responsibility to an organized group of countries and to the US and British owners of the oil concessions." Even though I agree with the chamber of horrors that Walter has predicted as being possible in the event of total oil denial, I doubt that total oil denial will materialize, or that even the current oil denial program will continue in the same intensity. The most likely outcome to develop during the next few days will be the assumptions of Case 2 or possibly even Case 3 in the attached paper (as distinguished from Case 1 of total Arab oil denial). In other words, even with the closure of the Suez Canal and the Mediterranean pipelines and a total denial of oil from Iraq and with a denial to US and UK destinations of oil from Saudi Arabia, Kuwait and Libya, the shortfall in European and Japanese needs will be quite manageable. The tanker problem, a component of this shortfall, would be the more significant factor but I also assume that the Suez Canal will not be kept closed for more than a few weeks since the Soviets, as well as the rest of the world, will probably bring private if not public pressures to reopen (Soviet tankers and freighters carrying supplies to North Vietnam would have to be almost doubled in number with the Canal closed). If the shortfall in Europe and Japan is manageable and if the OECD Oil Committee contingency arrangements are activated, the dangers of side deals by Italian, French, Japanese and other companies with the Arabs are considerably reduced even though the Middle Eastern crisis might very well push the Italian/Iraqi negotiations to a successful conclusion. I might live to regret this more optimistic prediction but I felt you should have these views in view of Walter's feelings on the other side.
243. Telegram From the Embassy in Libya to the Department of State/1/ Tripoli, June 15, 1967, 1900Z. /1/Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 17-1 LIBYA. Confidential; Priority. Repeated to London, Paris for OECD, Baida, Beirut, Jidda, and Kuwait. Passed to the White House, CIA, USIA, DOD, NSA, COMAC, USUN, and CINCSTRIKE. 138. Subject: Discussion with Libyan Petroleum Minister. During cordial conversation with Econ Counselor and EmbOff morning June 15, Petroleum Minister Muusa made following points. 1. GOL policy banning all exports remains unchanged, despite diplomatic representations by Spain, France, Italy, and West Germany. Contrary to his remarks to Ambassador June 12 (Baida 593) and to OIC Baida prior to meeting Prime Minister Maaziq June 13, Muusa gave no indication that he expects any change in near future. Muusa stated that he had been unsuccessful at June 13 meeting in winning any special consideration for waxy crudes (Tripoli 78). 2. GOL has been kept fully informed about recent meeting in Kuwait of Saudi, Iraqi, and Kuwaiti Oil Ministers and their approaches to oil companies for diplomatic support. GOL has not yet exerted pressure through oil companies, partly because large number (about 40) here./2/ /2/See Document 240 regarding the approach to the companies by the oil producers. The Embassy reported that later in the afternoon of June 15, the first hints surfaced that the oil companies in Libya would be asked to exert pressure on Western governments because of "tremendous pressure" from UAR and the Libyan man-in-the-street. "This comes within hours after Muusa told EmbOffs that GOL did not intend use oil companies as levers against USG. Clearly, Petroleum Ministry was instructed otherwise during afternoon June 15." Later that same day, the four largest oil companies operating in Libya, Oasis, Esso, Mobil, and Amoseas, were asked to meet with Minister Muusa the following day, June 16. The Embassy did not inform them beforehand of the subject of the meeting. (Telegram 147 from Tripoli, June 15; National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 6 LIBYA) 3. Discussing earlier meeting in Baghdad of all Arab Oil Ministers, Muusa emphasized that Baghdad meeting did not identify states aiding Israel militarily and thus subject to export ban. To date, there has been no joint Arab decision on this point,/3/ despite recent parallel decisions by Saudi Arabia and Kuwait. Muusa revealed that second major Baghdad resolution (possible confiscation of oil companies owned by nationals of such states) was proposed by Iraq and Algeria; supported by UAR; and opposed by Libya, Saudi Arabia, and Kuwait. Muusa claimed he told Baghdad meeting that Algeria wanted to confiscate non-French companies anyway and this resolution was merely pretext./4/ /3/According to an Embassy report, the Libyan Oil Minister told the company representatives on June 16 that "Libya, in contrast to other Arab oil producing countries, had ordered total shutdown of exports in order not to identify without positive proof any country as being involved on the side of Israel in recent conflict." Muusa also indicated that the "reasonableness of U.S. in resolving this problem could well influence when and to what extent exports will recommence and future relations between Libyan Government and American oil companies operating in Libya." In conveying the message to the U.S. Government, Esso's parent company, Standard Oil Company of New Jersey, stated its concerns: "In view of Jersey's tremendous investments and profit potential here and in other Arab producing countries feel strong approach to state this matter along above lines warranted." The other oil companies received a similar message from the Minister. (Telegram 187 from Tripoli, June 16; ibid.) /4/On June 19 Algerian President Boumediene called for all Arab producers to cut off petroleum production for one year "to save Arab honor." (Telegram 4268 from Algiers, June 19; ibid., PET 17-1 ARAB) 4. In general, Muusa indicated GOL willingness to coordinate oil policy with certain "producers," in which category he clearly included Saudi Arabia and Kuwait and clearly excluded Syria and UAR. In reply to question, Muusa stated that there no present plans for another meeting of Oil Ministers, although there possibility of direct contacts during Foreign Ministers meeting in Kuwait June 17. Muusa not yet sure whether he will be included in GOL delegation. 5. Muusa would not be drawn out on Libyan work stoppage. While he did not seem to condone stoppage, he implied that vigorous GOL opposition not indicated at present, another apparent shift from an earlier position. Newsom
244. Telegram From the Department of State to the Embassy in Libya/1/ Washington, June 16, 1967, 11:41 a.m. /1/Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 6 LIBYA. Confidential; Immediate. Drafted by Oliver on June 16 and cleared by Held (NEA), Post (AFN), and Oliver. Repeated to Paris, London, Kuwait, Jidda, and Dhahran. 211679. Ref: Tripoli 147./2/ Same request has been made previously of concessionnaires by governments Kuwait, Saudi Arabia and Iraq. Dept has received representations from Aramco, Mobil and Gulf Oil, which companies said they were making in order be able report back that cos did communicate with USG in compliance with requests those govts. /2/See footnote 2, Document 243. Agree that you should not seek out cos to forewarn them; however some co managers (Esso and Mobil particularly) may anticipate the purpose of the Muusa mtg and request your advice prior to call on Minister. If they do you should advise them their response to a demand to pressure USG to support Arab position should be that they can undertake only to report substance of conversation with GOL to the USG. Cos, however, should emphasize to GOL that oil industry does not determine USG foreign policy. In the event cos approach Emb after Muusa mtg you should merely advise them to inform the GOL that its views were presented to USG. Rusk
245. Circular Telegram From the Department of State to the Embassy in France/1/ Washington, June 17, 1967, 5:25 p.m. /1/Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 1 OECD. Limited Official Use; Priority. Drafted by Percival and Rogers (EUR/RPE); cleared by Oliver (E/FSE), Patman (L/E), and Moore (Interior); and approved by Solomon. Repeated to all other OECD capitals. 212280. CEDTO. Subj: Council Consideration of Oil Committee Report--June 20./2/ Ref: Paris 20251./3/ /2/See Document 241 regarding the drafting of this report. The report has not been found. /3/Dated June 15. (National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 1 OECD) 1. In Council and pre-Council negotiations of decision on oil, you should bear in mind our conviction that emergency does in fact exist ultimate seriousness of which we cannot judge, but it almost certainly involves necessity for effective coordinated use free world tanker fleet and may ultimately require apportionment measures. 2. We would hope as companies provide more information on oil supply situation to officials host governments potential seriousness will be clearer to them. We are pleased to note German position seems to be moving in right direction. There also some indication Japanese movement. 3. Begin FYI. Our objectives are: a. To avoid position of demandeur while protecting U.S. interest in health free world economy and position of Anglo-American oil companies both in producing and distributing areas. We are concerned at danger of nationalization or take over both in Arab world and in European markets. b. Staying as close as possible to existing OECD plan both because it provides agreed rules and because those rules exempt U.S. from apportionment formula. End FYI. c. Establishing International Industry Advisory group as soon as possible with mandate that would permit it to advise Oil Committee on use of available tanker capacity. We think Europeans should share our concern that mere study exercise will lose us all valuable time. d. To obtain recognition that emergency exists in order to facilitate decision that will permit American companies to participate actively in International Industry Advisory group. This last objective is derived from domestic U.S. requirements and unfortunately it appears to conflict with European, especially French, interest, in avoiding action which allegedly might stimulate irrational Arab reaction. To extent OECD agrees on common approach as a precautionary measure, however, we would hope likelihood of irrational Arab reaction may decline. Moreover, supply shortfall is likely to be greater without an agreed plan of action, and impact would fall unevenly on European countries. 4. If, in your soundings of other delegations prior Council meeting, you find major opposition to setting up Industry Advisory group closely linked to C(60)83 Final,/4/ Council consideration could perhaps be kept essentially exploratory. If another country wishes delay Council meeting for short period this could be accepted. In our view both time and the information which should become available to governments are working towards adoption recommendation 3(a) in Oil Committee report although we recognize French for own reasons may continue to obstruct. /4/Reference is to the original OECD decision document on cooperation during an oil crisis which was agreed in 1960; see footnote 3, Document 230. Document 241 details the actual 1967 OECD proposals. 5. It is most important that Council action be based on 1960 arrangements because of allocation aspects of plan. We consider it certain that pressures for U.S. participation in allocation mechanism would be greater under approach not connected to 1960 agreements than under implementation of 1960 agreements, which are European arrangement from which U.S. is exempted. Moreover, advantage of allocating under previously agreed rules is an important one. 6. U.S. Defense Production Act and relevant provisions of Voluntary Agreement concluded pursuant thereto require that emergency situation exist which affects or threatens to affect adversely the defense mobilization interests or programs of the U.S. before U.S. companies can participate in concerted action otherwise inconsistent with anti-trust law, including participation in international industry advisory body to be set up by OECD. Since direct effect of present disruptions of oil supply falls mainly on European countries rather than on U.S., clear statement that Europeans agree emergency situation exists is highly important to support giving of authority to U.S. companies to engage in cooperative efforts. Conversely, indication that they doubt seriousness of present situation makes it nearly impossible to support conclusion that US faces emergency threatening its security interests. 7. We therefore need as clear indication as Europeans willing give that they consider present interruptions of normal petroleum supplies constitute emergency. For this purpose, following are possibilities in order of preference: a. Statement that action setting up industry advisory body is being undertaken in response to existence of emergency. b. Statement that action setting up industry advisory body is being undertaken in response to existence of supply disruption which adversely affects or threatens to affect security of OECD members. c. Implicit agreement that adverse effects or threat exists by reference to documents (such as C(60)83 Final or para 3a document contained in Paris 20158)/5/ that provide for actions by OECD in event of emergency. /5/Dated June 13. (National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 3 OECD) 8. In any of these cases, acceptability of wording to U.S. depends, at least for purposes of Tuesday Council meeting, also on explicit reference to 1960 arrangements and, of course, on provision for establishment international advisory group. 9. If other members agree on wording acceptable in terms paras (7) and (8), you may accept. If such wording provides that U.S. companies would necessarily participate in international industry advisory body, you may accept ad referendum or reserve, approval to be given when it certain U.S. companies will legally be able participate. If wording not acceptable in terms paras (7) and (8), you should seek delay or, if impossible postpone decision without giving appearance U.S. obstructionism, you should abstain. 10. We believe there will be considerable pressure on French to agree as major countries such as Germany and Italy realize that, while France might be able maintain her own supply, she is unlikely to be of any real assistance to them. If French were to abstain from Council decisions, we assume that under rules of procedure way could be found for others to implement industry advisory group and for group to be effective even without French. We prefer French abstention on decision implementing first part of OECD emergency plan to either sui generis study group idea or French multi-subgroup idea (Paris 20299)/6/ in any form which would separate out "guilty" countries (U.S. and U.K.) from all or most other OECD members. /6/Dated June 16. (Ibid.) Rusk
246. Telegram From the Department of State to the Embassy in Germany/1/ Washington, June 19, 1967, 9:19 p.m. /1/Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 3 OECD. Confidential; Priority. Drafted by E. Crowley (EUR/GER) on June 19; cleared by Akins (E/OR/FSE), Puhan (EUR/GER), McCall (S/S), Springsteen (EUR), and Rostow. Also sent to Paris and London. Printed from an unsigned copy. 212733. NATUS, CEDTO. Subject: Discussion of Oil Situation with FRG Economic Minister./2/ /2/Schiller's views were also summarized in a memorandum from Akins to Enders, June 19. (Ibid., POL 7 GERW) 1. Under Secretary Rostow discussed the oil situation at length with FRG Economic Minister Schiller on June 19. Rostow told Schiller it was important that arrangements be worked out in OECD for declaration of emergency or threat of emergency in order to allow U.S. to permit companies to cooperate to meet oil situation. Also said it was important that agreement be reached on Industry Committee. 2. Schiller said he was becoming more and more concerned. He had seen German press reports of rumors of rationing coming out of Paris. He had earlier been operating on assurances from companies that stocks were adequate. He now sees danger of a run on supplies in the FRG. Rostow said the question now was cooperation between producers to arrange for efficient use of tankers. OECD not talking of allocation or rationing and we hope it will not have to. Cooperation between Europe and the US is necessary, in order to minimize impact of any shortfall in Europe. 3. Schiller said he saw declaration of emergency as connected with US antitrust laws and not a concern for Europe. Then entered into lengthy diatribe saying foreign oil companies had through rough competitive methods taken over German energy market and now had a responsibility to meet their commitments, from Western Hemisphere sources if necessary. Should it become necessary to go ahead with national energy policy in FRG (which French had already suggested), everyone would be faced with an entirely new situation in the energy field. 4. Rostow said possibility of increasing supplies from Western Hemisphere could be one item for discussion in industry advisory group. Schiller expressed strong reservations on adverse effect on Arab oil deliveries if faced with optical collaboration of Western consumers. He favored something less apparent. Rostow impressed on him that Western cohesion would have a beneficial effect on conservative oil producers since it would strengthen their hand in arguing that Nasser was damaging Arab interests and would show that hard Arab line not likely to succeed. On the other hand if we do not have a common stand, we will be picked off one by one. Added that convening of industry group hardly likely to be major political event, either way. 5. FRG Economics State Secretary Schoellhorn said FRG could accept any of three proposed approaches to question but wanted to work out something satisfactory to both US and France. Schiller said he was concerned both with domestic impact in FRG and also with impact on Arabs. He said FRG in very weak position. He could not say what cabinet would decide, but he favored second alternative because of domestic and Arab reaction. He reiterated his view that companies who conquer market must accept responsibilities. If not, everyone is going to say FRG must move in French direction. This would be a point of no return. FRG must have oil however much he personally opposed action by Government. He feared this entire process will escalate to rationing, controls and Government intervention. 6. Rostow concluded by saying that threat in crisis not to US but to Europe. We are ready to do our part by joining in contingency planning. This seems to us only simple prudence. If Germany and other OECD members believe there is no real danger we hope they are right. But should Iraq and above all Libya--which is in bad political shape--remain closed down, there will be a serious problem. Need to reroute tankers around Cape plus failure to act so far mean that effective European stocks not much over 30 days. For Bonn: We are disturbed by Schiller's tone and views. If crisis persists we will need to get to German Government to overcome this narrow approach. Appreciate your views on how best to do so./3/ /3/The oil companies were also trying to get the German Government to modify its views so they would be in a better position to respond to the crisis. On June 19 Mobil Oil in London reported that it had again instructed its German affiliate to "urge on German Government existence of emergency situation." (Telegram 10473 from London, June 19; ibid., PET 3 OECD)
247. Telegram From the Embassy in Libya to the Department of State/1/ Tripoli, June 22, 1967, 0905Z. /1/Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 17-1 LIBYA. Confidential; Immediate. Repeated to London and Paris for OECD. Passed to the White House, DOD, CIA, USIA, NSA, COMAC, CINCSTRIKE, and USUN. 288. Ref: State 213238./2/ /2/In telegram 213238 to Tripoli, June 20, the Department noted that the Ambassador should specifically mention oil during his meeting with the King: "In your audience with the King, be sure impress upon him our concern at failure to resume oil production and export. We appreciate Libyan statement that they wish avoid singling out US and UK, but it is clearly in interest of Libya resume at least to Western Europe. Of course we would like all exports resume soonest." (Ibid.) 1. During audience with King June 21, I expressed deep regret that false charges against US and UK of collusion with Israel were threatening significant relationships of mutual value./3/ I mentioned particularly oil and our desire see flow commence. He said stopping production particularly regrettable. He had told government so, but government had said in present situation it best stop production as temporary measure for appearances sake. He said he regretted if government had not consulted first with Ambassadors of countries concerned. /3/A similar message was passed to the Esso representative for transmission to Libya: "With regard to the charges of aggression levied against the US, the USG has categorically denied the charges and wishes to assure Libya of their complete falseness. Furthermore, the USG has invited an impartial UN investigation of these charges. This invitation has not been taken up, not even by the state that originated the charges." (Telegram 212867 to Tripoli, June 20; ibid., POL ARAB-US) 2. King made it plain this is matter he has left to government and, although vital interests involved, he is not, for moment, likely step in. 3. Meanwhile there are reports cabinet, which met June 20, is trying to prepare public for positive decision on oil in near future. Libyan radio has been laying groundwork in broadcast June 20 which stressed degree of Libya's sacrifice in comparison with other oil producing states. Newsom
248. Telegram From the Embassy in Germany to the Department of State/1/ Bonn, June 23, 1967, 1205Z. /1/Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 3 OECD. Confidential; Immediate. Repeated to London and Paris. 15121. TOCED. Subject: Oil Supplies and OECD. 1. I am disturbed by what appears to be a continuing tendency on our part to regard the problem of oil supplies for Europe as a European problem which does not immediately affect us and in which we need not share. The instructions to our delegation in Paris (most recently expressed in State 213850)/2/ that we must avoid the application to the US of any apportionment measures is, I believe, evidence that we are pursuing a dangerous course which ignores the clear warnings expressed in our 15025 and 15066./3/ Germany, at least, expects that American and other foreign oil companies will recognize the obligation inherent in their dominant position in the German market, and that they will continue to supply that market, even if this requires changes or dislocations in the normal production and marketing patterns in the US./4/ /2/Dated June 21. (Ibid., PET 1 OECD) /3/Dated June 20 and 21, respectively. (Ibid., PET 3 OECD) /4/See Document 246. 2. In this context I find it completely unrealistic even to speak of the possibility of everyone going his own way, as indicated in State 214217./5/ I am sure that the American companies involved would also regard this as unrealistic, and would in fact do everything they could to serve their customers as equitably as possible--whether or not freed from the threat of anti-trust action. Obviously they can cooperate better if freed from that threat, however, it is unrealistic to even consider the possibility that our companies could take the cream of profits from their operations in Germany in good times, and not give them their fair share of oil and shipping in time of crisis. /5/Dated June 22. (National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 12 FR) 3. Approval of the recently announced plan of the Foreign Petroleum Supply Committee/6/ is no doubt more important and helpful for them than what we have produced so far in the OECD. Action there, and in relation thereto, has only again put us into conflict with deeply held European political concepts. /6/Regarding the Foreign Petroleum Supply Committee mechanism, see Document 234. The referenced plan was produced by a committee of 21 major U.S. oil companies and dealt with technical questions of supply and routing. (Telegram 15093 from Bonn, June 22; National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 3 OECD) 4. If the Europeans have not seen through our insistence on references to OECD documents which exempt the United States from apportionment and from sharing the discomforts of an oil shortage, we may yet have to face some uncomfortable moments when they do get wise. I do not understand how the U.S. Government can allow itself to be placed in this position. 5. It is not clear to me either, whether and why in my further discussions with the Germans here, I should be urging them to accept an OECD resolution in terms of "emergency," which they have made clear they find distasteful. I would want to avoid a situation analogous to that with regard to the maritime declaration, where the Embassy and the Department were out of phase, i.e. the Department was telling the German Embassy that the declaration was still under consideration while we--as was obvious--were telling them it had been overtaken by events. Insofar as I understand the issues, a U.S. Government finding that an emergency situation exists with respect to the supply and transport of oil should be sufficient to meet our U.S. anti-trust problem. If this is so, we should let the companies then get on with the job, and give them every encouragement and help to meet their obligations in Europe--as they will from the standpoint of their own interests very much wish to do--without prolonging further politically divisive arguments. McGhee
249. Telegram From the Department of State to the Embassy in Germany/1/ Washington, June 24, 1967, 3:12 p.m. /1/Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 3 OECD. Confidential; Priority. Drafted by Rogers (EUR/RPE), cleared by Oliver (E/FSE), Crowley (EUR/GER), Enders (M), Patman (L/E), Moore (Interior), and Solomon. Repeated to Brussels, The Hague, London, Paris, Rome, and Tokyo. 215890. BUSEC; CEDTO; NATUS. Subject: Oil Emergency Actions. Ref: Bonn 15093,/2/ Bonn 15121,/3/ Paris 20659./4/ /2/Dated June 22. (Ibid., PET 3 OECD) /3/Document 248. /4/Dated June 25. (National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967-69, PET 15 OECD) 1. In answer to your question (para 5 Bonn 15121) we continue think it important you and other key Embassies maintain contact and continue exchange views with host govts as appropriate on oil situation and steps to meet it, but we do not think it desirable for you now to urge them further to take specific line of action in OECD. 2. OECD Council decision has again been postponed, apparently due in large part to German Del's lack of instructions./5/ Council decision now scheduled for June 27. We are reviewing position for June 27 meeting. As stated State 212280,/6/ we want to avoid position of demandeur, and we do not, therefore, intend put pressure on FRG or others to take actions we believe in their best interests. Evolving situation may well bring them to conclusion establishment oil industry committee is warranted. Unfortunately, loss of time in reaching conclusion could become significant factor. /5/Ambassador Trezise at the OECD reported that the Germans were awaiting the outcome of negotiations in Libya. (Memorandum of telephone conversation between Trezise and Stephen H. Rogers (EUR/RPM), June 19; Department of State, E Files: Lot 71 D 84, PET 3 ORGS & CONFS, OECD Oil Committee) /6/Document 245. 3. US Foreign Petroleum Supply Cte has presented proposed plan of action to Secretary of Interior. Plan cannot become effective, and companies cannot legally participate in joint activities either within US or with Europeans, until plan approved by Interior, Office of Emergency Planning and Attorney General. 4. These approvals have not yet been given. Approval requires that each approving agency be persuaded that necessity exists for concerted action in order to prevent adverse effect on US national defense interests. Interior's June 10 determination of emergency is not sufficient by itself./7/ /7/See footnote 3, Document 235. 5. Since Europe and Japan, but not US, are directly threatened with supply shortage, their assessment that emergency exists is good supporting evidence for finding that our defense interests are adversely affected. This does not mean US is not involved. We clearly are, because (a) directly affected countries are our allies whose economic health is of major concern to US; (b) US companies supply Europe/Japan; and (c) traditional sources for part of US oil imports have been cut off. 6. We therefore have not said and do not intend say US will not help meet European/Japanese supply problem. We expect cut in US imports from Eastern Hemisphere and perhaps Venezuela will make substantial increased quantities of oil available if they are necessary, and further, the US production will if necessary be increased to permit exports. 7. Question of apportionment is premature, as Europeans have recognized to the point of insistence. Supply of oil to Europe at this moment is primarily function of tanker availabilities rather than oil at shipping points. In fact, production of oil has been slowed by unavailability of tankers to carry it. 8. Thus, rather than trying tackle very difficult and complex apportionment problem now, when it premature, we (like Europeans) believe present focus our activities should be immediate problems of (a) getting best possible (i.e., industry) assessment of current situation, and (b) if, as we believe, assessment shows necessity of using limited tanker capacity with maximum efficiency, establishment as soon as possible of mechanism to do so. 9. We assume US oil companies will make great effort to meet European supply needs regardless of OECD action. However, there is no physical means of doing so if necessary tankers do not exist, and maximum efficiency in tanker use requires organized approach that we think can best be accomplished through OECD industry advisory group. Katzenbach [Continue with the next documents]
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