841.6363/6–145
Memorandum by the Acting Chief of the Petroleum Division ( Loftus ) to the Assistant Chief of the Division of British Commonwealth Affairs ( Pool )
In accordance with your request, I undertake to set out below the petroleum policy of the United States toward the United Kingdom and to add a brief supplementary comment on our petroleum policy as it relates to British Dominion and Colonial possessions.
Our petroleum policy toward the United Kingdom is predicated on a mutual recognition of a very extensive joint interest and upon a control, at least for the moment, of the great bulk of the free petroleum resources of the world. After allowance is made for the tremendous indigenous production locally consumed of both the United States and the USSR, it appears that the overwhelming bulk of the remaining petroleum resources of the world are controlled either by U.S. nationals, by U.K. nationals, by U.S.–U.K. joint-interest companies, or by British–Dutch interests in which British policy appears to predominate.
Recognizing these realities, it is the view of the United States Government that U.S.–U.K. agreement upon a broad, forward-looking pattern for the development and utilization of petroleum resources under the control of nationals of the two countries is of the highest strategic and commercial importance. Such an agreement in a framework of extremely broad and general principles has been reached in the Anglo-American Oil Agreement negotiated last August. Although this Agreement has not yet entered into force because of [Page 55] certain political difficulties within this country, a redraft acceptable to various conflicting interests within the United States has been prepared and will be used as the basis for renegotiation with the British. There seems little reason to believe that a definitive agreement cannot be consummated which will be substantially similar to the Agreement negotiated last August. One of the principal differences will be that the revised draft will be open to immediate accession by other nations, thus recognizing the legitimate interest of other countries in the pattern of petroleum development to be followed in the postwar period, while at the same time continuing to recognize the de facto control of most free petroleum by U.S. and U.K. nationals.
While the Agreement, both in its original form and in revised draft, is quite broad and general, it provides a framework within which, as the political, strategic, and economic situation evolves, specific decisions can be taken and programs planned. I believe that in view of all of the background discussion within the Department the provisions and intentions of the Oil Agreement are either known or self-evident. I am accordingly attaching a copy of the Agreement as negotiated in August 1944 and a copy of the latest revised draft;17 and will be available to discuss in detail the implications of specific provisions if this is desired.
As for the British Dominions and Colonial possessions, we have no specific petroleum policy other than what is comprehended under such general propositions as that there should be access on equal terms to the raw materials and trade of the world and that American nationals should have rights of doing business within the British Dominions upon terms no more discriminatory than those applicable to nationals of any other country.
There are certain petroleum difficulties in the case of India, the exact significance of which in the postwar period is yet to be ascertained. In the prewar period, American petroleum companies were certainly discriminated against, ordinarily not by general or specific provisions of law, but by the interposition of administrative delays and by the erection of technical barriers to the free operation of U.S. commercial enterprise. The British Government, of course, disavows responsibility for these discriminations and peculiarities. There is some reason to believe that they will not be so acutely in evidence in the postwar period. What diplomatic action can be taken to forestall or minimize them will naturally depend upon the ostensible, as well as upon the actual, status of India after the war.