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¶ Harold Ickes' much-mooted Government-owned pipeline across Arabia (TIME, Feb. 14 et seq.) will probably die aborning.
If the pipeline is really dead, the U.S. State Department was mainly responsible for killing it. Ignoring the technical problems and the opposition of most of the U.S. oil industry, State refused to consider any concrete Government oil project until after the diplomatic generalities were over. State (plus the oil-wise Navy, which is pro-pipeline but anti-Ickes) now hopes it can achieve the pipeline's purposes without the pipeline.
First Teams. Trouble is that, with all the intramural pulling & hauling, the U.S. still has no oil-wise first team to throw into the crucial conversations with the British. It has a Cabinet-level committee newly appointed by the President—but these "preliminary and exploratory discussions" are supposed to be "on an expert technical level." And Britain's first team of "technicians" is a powerhouse, includes Britain's Secretary of the Home Security Ministry and Permanent Secretary of the Board of Trade Sir William Brown, Anglo-Iranian Oil's Chairman Sir William Fraser, one of Royal Dutch Shell's Managing Directors, Sir Frederick Godber, etc.
The British Government's oilmen and the British oil industry have long been almost indistinguishable. But the Roosevelt Administration still behaves as if it were a sign of original sin for the U.S. Government and U.S. oil companies to sit down together.
First Principles. Nonetheless, when the two nations face each other across a State Department table, the U.S. delegates will at least have a sound set of first principles on which to bargain. Chief among them:
¶ There must be an "orderly development" of Middle Eastern oil properties, with due regard for the economic interests of local governments. This means recognition by the British, in terms of production and not in profitless concessions, that the U.S. has somewhere near an equal interest in the area.
¶ There must be an "Atlantic Chartering" of world oil markets. This State Department phrase means that such market restrictions as may be necessary to avoid wasteful international competition must be arrived at by Government-sponsored trade agreements, and not by private intercompany collusion.
Dollars & Diplomacy. The probable death of the Ickes version of an Arabian pipeline does not mean that the U.S. has abandoned Arabian oil. It merely means that the line is not likely to be Government-owned.
But the U.S. oil industry's need for strong Government help abroad, particularly in the Middle East, has always been more a matter of diplomacy than dollars. If the State Department can persuade the British to sign international conventions guaranteeing fair and full development of U.S. concessions along with their own, one main excuse for any direct Government interest in oil would no longer exist.