CONGRESSIONAL RECORD

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP75-00149R000600090084-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: November 16, 2016
• Document Release Date: March 17, 1999
• Sequence Number: 84
• Publication Date: November 18, 1954
• Content Type: OPEN

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Middle East Oil
EXTENSION OF REMARKS
of
HON. HERMAN WELKER
OF IDAHO
IN THE SENATE OF THE UNITED-STATES
Thursday, November 18, 1954
Mr. WELKER. Mr. President, while
we are preoccupied with the censure of
one of our Members, events of great im-
portance, which concern us deeply, are
taking place throughout the world. We
might better be devoting our attention,
for example, to what has been termed
"a time bomb ticking away in the Middle
East" which concerns the oil transporta-
tion agreement between Saudi Arabia
and the shipping magnate, A. S. Onassis.
Mr. Onassis, together with a number
of other individuals, is under indictment
in the United States District Court for
the District of Columbia, on a charge of
conspiracy to violate sections 371 and
1001 of title 18, the Merchant Ship Sales
Act of 1946.
The Government of Peru this week
seized certain vessels which belonged to
Onassis. His operations are also a sub-
ject of concern to the State Department
of the United States and of the British
Government with respect to the contract
he has signed with the King of Saudi
Arabia.
The explosive possibilities of this ar-
rangement have been set forth in News-
week magazine, issue of November 15,
1954, and in an article appearing in the
New York Journal of Commerce, Novem-
ber 12, 1954.
So that Senators may study the sub-
ject, I ask unanimous consent that the
two articles..be printed in the Appendix
of the RECORD.
There being no objection, the articles
were ordered to be printed in the REC-
ORD, as follows: -
[From Newsweek of 1,Qvember 15, 19541
MIDDLE EASTS FADI LO.V3 QNASSIS AND OIL
(A. man and events. or months United
States officials have kep "tl e r fingers crossed
while a time bomb ticked away in the Middle
East. This bomb was the oil transportation
agreement between Saudi Arabia and the
shipping magnate A. S. Onassis. Here is the
story of the agreement-the explosive situa-
tion it created, how it Seems likely to turn
out, and the man behind it.)
As clear as the evening summons of the
muezzin} to Allah's faithful, sounds of trouble
were heard last week throughout the Arab
world, from the rough hills of Algeria to the
narrow valley of the Jordan. The French
were- surprised by a sudden spread of terror-
ism from Tunisia to hitherto peaceful Algeria
Jordon-Israeli relations took a quick and
ominous turn for the.worse.
But the most immediate and perhaps the
gravest crisis concerned Saudi Arabia and
the international oil industry. Up until now
this crltis has not made headlines, although
at one point American and British policy-
makers feared it might follow the course of
'the Iranian oil dispute. Now confidential
advises from abroad indicate that King Saud
has taken a hand and that a decisive and
probably hopeful turning point may be
reached shortly because of his efforts.
BAFFLING ARI
The central -.figure- Is a fabulous Greek-
Aristotle Socrates Onassis, owner of a world-
wide tanker, empire, of a. dominant share in
Monte Carlo's chief enterprises, and of one
of the, wdrld'.s most luxurtou yachts. Onas-
sis (An to his friends)_ is np the mysterious
and ruthless charactgr,. }}gwspapers and
magazines portray. NQnet ele?s, the role he
set for .Himself in the' ,, .rabian oil industry
has produced baffling -and as yet largely
undisclosed intrigues.
The crisis began when an agreement was
completed on January,,, 20>. 1954, between
Saudi Arabia, represented by the Finance and
Economics Minister, She1k.Abdullah el Sulai-
man, and Onassis, represented by Shiek Mo-
hammed Abdullah All Ridha. The chief
terms :
1. The formation ofa..company called the
Saudi Arabian Maritiine,Tanker Co., Ltd.,
with at least 500,000 tons of tankers.
2. Shipment of all Saudi oil exports 'in
tankers of the company, except that first
preference would go to tankers owned by
companies with concessions in Saudi
Arabia-but under severe restrictions.
3. The shipment of oil sit a predetermined
minimum rate. -
The Onassis contract was immediately in-
terpreted by the major oil companies as a
worldwide threat to the industry. Aramco,
which holds the concession for Saudi Arabian
&c,,Vr'D Nc~1CT PHGE)
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i1UW IialLIL tiiUy 11MVe UU.?ULLicLLY6 1Jlu-16 uuU .huts is ul uaa uL acu l uaaaca- c~nla .v
trary to the terms o1 its UWIL GUL1UV6iLV1l. _
Aramco officials claimed that under the con- that An, to get the treaty, made financial buy up stock until he had a controlling in-
tract Saudi Arabia would be obliged imme- gifts to various ministers." Other sources terest. Now he plans to follow up his in-
diately to ship 50 percent of its oil in Onassis abroad, particularly in Rome, say the oil com- vestment by spending more money to restore
tankers while other companies gradually panies are still trying to obtain the docu- Monte Carlo to popularity with such touches
would be out out completely. ments. as smooth concrete paving on the pebbly
TRADE THROTTLE
In a speech in Los Angeles on September
29, B. Brewster Jennings, president of the
Socony-Vacuum Oil Co., said: "The proposal
has extraordinarily far-reaching dangers. It
is completely contrary to the specific terms
of the Aramco concession, but even that is
perhaps less important than what it could
do to world trade. 'Obviously, if a given
country with an exportable commodity could
require that all of that export be carried in
its own ships, an importing country could
with equal logic require that all its imports
be carried in its own ships. Thus, if all
countries were to follow the Onassis plan,
there would be no international trade at all."
Onassis issued a counterblast on October 4.
He charged that "since the end of the war
country after country" has enacted "prefer-
ential and discriminatory legislation" in or-
der to create its own merchant marine and
that "the United States has gone far beyond
any other nation." (Onassis is under indict-
ment in the United States in connection with
a shipping deal.) He defended his contract
as an "inevitable" development and claimed
that his transportation charges would be
"somewhat lower" than those of the big
shipping companies=which were now en-
gaged in a "most unholy persecution of me."
By August affairs had reached a point
where Aramco officials privately said they
would abandon the concession if the Onassis
contract was put into effect. There were
reports that Onassis planned to force a deci-
sion by sending the largest tanker in the
world to Saudi Arabia to load oil. This ship,
the 47,000-ton Al Malik Saud al Awal (King
Saud I), was constructed for Onassis in Ham-
burg. As of last week it had undergone
trials but Onassis. had not yet accepted de-
livery.
WEIGHTY THREAT
AND WHO IS oNASSIS? beach, air conditioning in the casino, and
"Mr. Aristotle Socrates Onassis, of Greek helicopter service from Nice.
birth and Argentine nationality, whose per- PARTY GIVER
manent residence is_1n_Montevideo, and Onassis conducts personal affairs on an
whose elected dolnic1 his in Parts at 88 Rue equally grand scale. He regularly breaks
Foche." in a new tanker with a series of spectacular
Thus the party oY_ the.second part de- parties on board. When he first brought
scribes himself in the teak of the oil agree- the Tinna Onassis to Britain, he hired a fleet
ment with the Saudi Arabian Government. of limousines to transport his guests from
But this statement only begins to hint at London to Purfleet, halfway to the mouth
the complex operations of the stocky, dapper of the Thames. Once he flew a group of
48-year-old Cosmopolitan businessman. New York businessmen to Peru, where a
Onassis operates through some 30 corpora- helicopter waited to shuttle them out to
tions. His fleet of 100 ships includes a com- his whaling fleet for 2 weeks' fishing.
plete whaling flotilla-and; dry-cargo bottoms In December 1946, Onassis.married Athina
as well as. 1,00,000 tons of tankers. He Livanos, the pretty dark-haired daughter
travels 100,000. miles a year on business. He of Stavros Livanos, the doyen of Greek
speaks English, Spanish, French, Italian, shipping magnates. Educated at Rosemary
and Turkish as well as Greek. Hall in Connecticut and Miss Hewitt's.
His homes- rangs from a $-story New York Classes, Mrs. Onassis, now 24, is a naturalized
town house at 16 Sutton Square to the col- United States citizen. Their children, Alex-
umned Chateau de Is, Croe, on 25 landscaped tinder, 7, and Christina, 5, also are United
acres at the tip of Cap d'Antibes.- From his States citizens.
Riviera residence, Onassis commutes by Onassis spends much time on his 303-foot
-speedboat to his best-known office-the 3- yacht Christina, converted from a Canadian
story headquarters of the Olympic Maritime destroyer escort at a cost of $2.5 million. Its
in the newly air-conditioned building of the appointments include a lapis lazuli fireplace,
old Winter Sporting Club at Monte Carlo. and a marble swimming pool with a bottom
RAGS TO RICHES that rises to become a dance floor. For
Onassis has made a number of fortunes Sport he skis, plays water polo, or water
during a spectacular career that began in the skis behind a seaplane. His choice of friends
1920's when he landed in Buenos Aires-16 often astounds staid business acquaintances.
years old, $60 to his name, and carrying a For instance, in Hamburg, while he was hav-
Nansen passport as a stateless person. The yardthe s built at the e
ano
family-Greek tobacco merchants living in p, his t c l losees st crony was a G Grereek k piano
Smyrna (now Izmir)-had been ruined by player at the night club Die Insel.
the Greek-Turkish war. Onassis rapidly Although he is now the owner of Monte
went from tobacco importing, to hides and Carlo, Onassis In boasts that he has never
k
grains, to shipping. By the outbreak of the gambled there. general, his business risks
Second World War, he was already in tank- are carefully considered. But now Onassi-
ers on a successful but small scale. Onassis ciates deep consider what many of a shipping asses
came out of the war worth a reputed $30 1s in a spectacular . Of his
1,080,000 tons of tankers, his
ers, gamble 120,000 is com-
million. fortabl tied ith T -4t
u
d St
t
The secret of his j ostwar success was his
shrewd analysis of prospects in the world
tanker business. First, he believed that,
contrary to the predictions of most experts,
world petroleum consumption would in-
crease at a fast pace. Second, he knew that
the big oil companies, while expanding their
capital facilities, were chary of overextending
themselves by building too many tankers.
Third, he discovered that supertankers could
cut costs considerably below prevailing rates
and still make a profit. Banking on these
three interlocking factors, Onassis plunged
into a large-scale program of tanker con-
struction. He found liberal financing in
New York, particularly from one of. the big-
gest banks and one of the largest insurance
companies.
LAVISH ROSS
Onassis prefers to build most of his ships
in West German yards, man them with large-
ly German crews, and sail them usually un-
As -things. moved toward a. showdown,
weightier forces-intervened, principally King
Saud himself and the United States Govern-
ment. The 'possibility of Saudi Arabia de-
veloping into another Iran represented a
terrible threat to American policy in the
Middle East. The United States is, there-
fore, through diplomatic channels, cooper-
ating with the King in finding a solution to
.the problem. -1
Ibn Saud was regarded as perhaps the
outstanding Arab leader of this era, and
since his death, the present King has emu-
lated his father by carving a place for him-
self as one of the, busiest and most important
statesmen in the ,t dlle . East. He has
focused his major atten#a on the problems
of the region as a wliole. 5I'he oil iiegotia.-
tions were handled by i;heYB:l`ng's#unction-
aries. Now, however, Shiek Sulaiman, who
negotiated the Onassis contract, has retired
to. live in Beirut, while Saud has informed
United States Ambassador George Wadsworth
that the agreement is being reexamined. If
it conflicts with the Aramco concession,
proper steps must be taken to eliminate such
confgcts. There are some reports that the
contract may be tested in a Saudi court or
referred to the World Court. At any rate,
Washington- professes confidence in a satis-
factory settlement bow, that the facts are
coming before the king.
Onassis was reported last week in Jidda.
On the way to Saudis Arabia in his yacht,
the Christina, he stopped off in Beirut. A
Newsweek correspondent reported from there
that Onassis "hinted he had made some very
big advances to various Saudi personalities
in exchange for their cooperation in get-
ting the dealrthrough." The Paris paper,
der the flags of Panama, Honduras, Costa
Rica, or Liberia. He thus avoids high con-
struction cost% and wage scales, and union
regulations, but he boasts that he - pays his
seamen well above the going rates. The cap-
tain of his newest tanker in regular service,
the 45,000-ton Tinna Onassis, is said to be
the highest paid merchant seaman in the
world, with the exception of the commodore
of the Cunard Line.
The Onassis Monte Carlo headquarters
has the unromantic, practical advantage
of the fact that the tiny principality of
Monaco levies no income taxes. Onassis'
acquisition of the Societe des Bains de Mer
et Cercle des Etrangers, which runs the re-
sort, is a revealing example of his methods.
When the former directors of the company
y
p w e
a
es com-
panies until 1961. Another 330,000 is cov-
ered by a deal with Shell Tankers which ex-
pires in 1956. Few think this will be re-
newed. And he has an estimated $75 mil-
lion outstanding in American loans. Thus
the Saudi Arabian contract may be vital to
Onassis.
[From the Journal of Commerce of November
12, 19541
ONE MILLION DOLLAR MELON FOR SHIP DEAL-
ONASSIS CONTRACT PAYMENTS BARED
(By Edward P. Tastrom)
Aristotle Socrates Onassis, Greek born
shipping titan, who negotiated an oil trans-
port treaty with the King of Saudi Arabia
early this year, which has drawn world-wide
protests, is reported to have paid approxi-
mately $1 million to Government officials
through an intermediary to help close the
deal, according to a deposition, sworn to by
one of the negotiators before the acting
British consul general on September 27 in
Nice, France.
The deposition and exhibits, copies of
which have come into the possession of
the Journal of Commerce, claim these sums
were distributed as follows:
1. One hundred and twenty-five thousand
pounds ($350,000) to Mohamed Abdullah
Alireza, now Minister of State, for bringing
about signing of the contract.
2. One hundred thousand pounds ($280,-
000) paid to Alireza but intended for the
Minister of Finance to exempt Onassis'
shipping company from taxes.
3. Two hundred thousand dollars to be
distributed to palace officials who were close
to the King. -
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38G4 C
OTHER DETAMS
reza is to #75,000 ($210,000) after
get
GRESSIONAL RECORD - APPENDIX November 18
ddress by Averell Harriman Before
the
first ship loads her first cargo of on under
the contract, as well as other benefits.
The statement further declares that the
payments were made by drafts drawn on a
Zurich, Switzerland, bank.
The final transaction was reported closed
April 7, 1954, 2 days before the treaty was
signed by the King and made public.
The oil transport pact, which has been
protested by the United States, United
Kingdom and six other leading maritime na-
tions, gives Mr. Onassis, in exchange for put-
ting at least 500,000 tons of shipping under
the Saudi Arabia flag, and other considera
tions, priority In the ocean movement of oil
from the lush Middle East field.
The contract runs for 30 years and sets
up an involved formula of existing tonnage
replacement by Onassis ships, which has
been interpreted to mean that eventually
Mr. Onassis will handle the bulk of Saudi
oil at rates which could be considerably
above world tanker charter prices.
MAJOR PRODUCER
The major concessionnaire and developer
of the rich field is Arabian American Oil Co.
(Aramco). This is an American-financed
producing company which does not engage
directly in ocean transport of the oil but
sells to buyers who provide their own ton-
nage.
The company has claimed that the Onassis
deal violates the pact which it holds with
the nation, negotiated nearly 20 years ago
with Ibn Saud (deceased), father of the
present King.
It was reported earlier this week that
Mr. Onassis was in communication with the
King and that a few alterations would be
made in the contract to calm international.
fears. A spokesman for the shipowner
added: "There is no question of revising
the entire agreement."
Other considerations, according to the
deposition, to be given Alireza personally,
once Onasrsis ships start moving the oil, are
a royalty payment of sixpence per ton of
oil moved, with a guaranteed minimum of
#50,000 ($140,000) free and transferable
sterling a year for duration of the pact, and
sole agency for Onassis vessels 'in all Saudi
Arabia ports at a fixed agency fee of #100
($280) per vessel.
The covering letter provides that in case
of Alireza's death before expiration of the
treaty the sums will continue to be paid
to his heirs.
At the time news of the treaty became
known there were rumors that Mr. Onassis
had posted a bond of $1 million to guarantee
performance under the pact.
The deposition declares that Mr. Onassis
insisted on no penalty clause for nonper-
formance be incorporated in his agreement.
He is also reported to have informed the
Minister of Finance not to inform Aramco of
the pact until he (Onassis) had an opportu-
nity to discuss it with the company directly.
This strategy, it was reported, was based on
the possibility of getting some concessions
from Aramco in return for canceling the pact
with the King.
A somewhat similar situation was disclosed
in Saudi Arabia recently involving the Ger-
man engineering firm, Govenco. K4"ng Saud
held the company's 140 employees prisoners
for 7 weeks.
All were subsequently released, except four
who were held as hostages to secure a favor-
able windup of the company's contract.
The scandal led to the resignation of Ab-
dullah Suleiman, who quit office for reasons
of delicate health.
It is reported that the disclosure of pay+
ments to effect the oil transport deal have
been placed before the King. Whether jie
will take action and force revision or canOl-
lation of the contract is now a matter for
speculation.Ap proved For Release 2
etropolitan Area Committee of
ainian Congress Committee
EXTENSION OF, REMARKS
'f H. LEHMAN
IN THE SENATh',~?F' $HE UNITED STATES
Thursday, November 18, 1954
Mr. LEJiMAT, Mr. President, Prof.
Lev E. Dobrignsky, of Georgetown Uni-
versity, president of the Ukrainian Con-
gress Committee of America, has brought
to my speolal. attention an excellent
speech delivered on Sunday, September
19, by the L:overnor-elect of New York,
Mr. Averell.4ari1man.. ---
Mr . Harriman delivered this speech
before the metropolitan area committee
of the Ukrainian Congress Committee,
which was presided over by Mr. Stephen
J. Jal'eilia, tfie present executive secre-
tary of thfs`oufstanding organization.
I ask un n moos consent that- Mr.
Harriman's speech, together with a de-
claration tghich was unanimously
adopted by the, 3,000 individuals assem-
bled at this meeting, be printed.in the
Appendix of the RECORD.
- There being no objection, the address
and declaration were ordered to be
printed in theLL ~RECORD,' as follows:
ADDRESS BY AVEAELL HARRIMAN BEFORE THE
METROPOLITAN.' AREA COMMITTEE OF THE
UKRAI4IA1I CONGRESS COMMITTEE, MANHAT-
TAN CENIR; 1QEW YORK, N. Y., SEPTEM-
BER 10, 1954
I am happy to. be with you today at this
meeting of the Ukrainian Congress Com-
mittee.. It is appropriate that your gather-
ing is being held on Citizenship Day, when
all of us-from whatever lands our fathers
and grandfathers camfr-are pausing to give
thought to our obligation as American citi-
zens. Our greatest obligation, I believe, is
to dedicate ourselves to the defense of free-
dom-with the determination to preserve
freedom for ourselves and for all free men,
and to help in the struggle to achieve free-
dom for the peoples who are now enslaved.
To me, freedom is the very essence of
America. Everything that has gone into the
building of our-great Nation has contributed
toward making the word "American" synony-
mous with freedom, Not just freedom from
a foreign yoke, but freedom from tyrannical
forces within. And not just freedom for
those who live upon these shores, but free-
dom for all men. For it took all kinds of
men to plant and.bring to fruition the seed
of freedom on American soil-the pilgrims
who escaped religious-Persecution, the colo-
nists who fought against economic and po-
litical injustice, and the countless millions
from the old World who poured into this
new land seeking relief from oppression in
many forms ?
of mankind in general. Since earliest times
man has struggled to free himself from all-
forms of tyranny, and his struggle has known
no geographical or political boundaries. Be-
cause there is this intimate connection be-
tween freedom in America and freedom in
the world. Americans have always felt a
special kinship for peoples whose will to
be free and independent is unbroken, and
have always extended a hand to help them.
I am mindful, as I say these words, that few
other peoples have fought as long and as
stubbornly for freedom as the Ukrainian
people.
Indeed, the entire history of the Ukrainian
people-even as the history of the American
people-is one long story of the struggle to
be free. It is a struggle that goes back
further than America's, to the beginning of
the Middle Ages, when first the Russians and
then the Mongols invaded Ukrainian terri-
tory anii imposed their rule upon the Ukrain-
ian people.
This year, 1954, marks the 300th anniver-
sary of an historic event that we can well
study now, because it set a pattern for
much that has happened in our own time.
In 1654-300 years ago-the Ukrainian na-
tion, sorely pressed for military assistance,
turned for help to the Tsar of Moscow, who
seems to have had much in common with the
men who now rule in the Kremlin. A treaty
was entered into at Pereyaslav for a military
allian.ce~ As the Ukrainians understood it,
the treaty provided only for a military alli-
ance agalnst.a common enemy, and contained
no threat to the independence or sovereignty
of the Ukraine.
The real intention of Moscow, however,
was of an opposite nature. There the treaty
was Interpreted as an act of submission,
rather than as an alliance among equals.
Russian garrisons, which were permitted in
the Ukraine under the guise of military allies,
became the instruments and focal points for
enforcing upon the people the protection
of the "big brother" in Moscow.
The guaranty of. sovereignty of the
Ukraine in respect to religious beliefs and
national freedom and independence were vio-
lated by Moscow in the execution of Ukrain-
ian leaders, the arrest and execution of
scholars, the liquidation of the Ukrainian
Orthodox Church, and the ultimate assimi-
lation of the Ukraine as a part of Great
Russia.
Many other independent nations, in east-
ern Europe and in Asia, have since disap-'
peared into the embrace of the "big brother,"
under strikingly similar circumstances.
In 1917 and 1918 t9, free and independent
Ukraine was reestablished, but regrettably its
life was short indeed. The Ukraine once
again, and again by the sword, became a part
of the Russian empire-a new empire based
on Godless corarqul1i m. And ruled by the
materialistic cox}0 , that the state is all and
the individual iSjp ping.
Just as in '1654, the nations where the
Kreiiilti~'s military power was established
after World War II were relentlessly gathered
- under the Kremlin's protection-among
them Poland, Hungary, Czechoslovakia,
Latvia, Estonia, and Lithuania.
Today these oppressed people behind the
Iron Curtain are denied the right to wor-
I am deeply sensitive to the sacrifices that ship Cod in their own way, and are deprived
immigrant groups like the Ukranians have - of freedom of speech, freedom of the press,
made in establishing themselves in America. and the enjoyment of human rights.
It is a land of opportunity, and we wish to In the Ukraine live 42 million people, 91
keep it so. I am happy to see the great con- percent of them non-Russian. ' They repre-
tribution made by these Immigrants, and sent 20 percent of -tbe total population of
the increasingly important positions their the U. S. S. R. and are the largest non-Rus-
children are taking in all walks of American scan nation within the Soviet Union. A great
life. And today it will take all kinds-men many of these 42 million- Ukrainians speak
of all national origins and religious beliefs, their own language in everyday affairs-a
of all races and creeds-to keep America free language that has been molded by such great
and to expand the frontiers of freedom over national poets as Taras Shevchenko.
the globe. There is.als0'In. the Ukraine a fine 'litera-