This article is adapted from his latest book, Crude Oil, Crude Money: Aristotle Onassis, Saudi Arabia and the CIA (Praeger, 2019).
The Cold War was fought on many fronts.
Sometimes it was an actual shooting war, such as the large-scale military engagements in Korea, Vietnam, Angola, and Afghanistan. In other dangerous episodes, such as the Berlin blockade and the Cuban Missile Crisis, the great global contest for power and influence that pitted the United States and its allies against the Soviet Union and its communist partners took the form of direct confrontation that carried the threat of all-out war. But the Cold War was also a struggle of ideology and economics. Most of it was fought in the shadows, by diplomats, spies, agents of influence, arms dealers, propagandists, and other civilians whose preferred weapons were money, threats, favors, blackmail, and political pressure. The details of these skirmishes, and of diplomats’ efforts to manage them, were largely unknown to the public until secret documents were declassified decades afterward.
Perhaps the least likely theater of this hidden war was the Kingdom of Saudi Arabia. In the mid-20th century, Saudi Arabia appeared well-insulated from the tensions of the Cold War. It was rigorously anti-communist; it had no diplomatic or economic relations with the Soviet Union or any other communist nation, nor did it have communist neighbors. Never having been occupied or colonized, it had no cadres of resentful nationalists who might have been receptive to Soviet blandishments. The Soviet troops who had imposed Moscow’s will on prostrate Eastern Europe after World War II were thousands of miles from the Arabian Peninsula.
Saudi Arabia was firmly aligned with the United States because a group of giant American companies had an exclusive contract to develop its immense reserves of crude oil, the kingdom’s only source of the revenue it needed for development. As different as Saudi Arabia was from the United States in every aspect of government and organization of human society, the two countries were locked together by mutual need: the United States, land of the automobile, needed the kingdom’s petroleum, and the impoverished kingdom needed the technology, investment capital, and military assistance that only the Americans could provide. This peculiar marriage of convenience, forged during World War II, has endured to the present day, but only after surviving many stern and angry tests, one of which erupted out of the blue in January 1954. The catalyst was a Greek shipping magnate named Aristotle Socrates Onassis.
Even at that time, years before he married Jacqueline Kennedy, Onassis was one of the most famous people in the world, a renowned playboy whose personal life fascinated the tabloid press while his business dealings were chronicled in the Financial Times and the Wall Street Journal. He was the biggest and boldest of the cutthroats known as “Greek shipping tycoons,” the hedge-fund billionaires of their day. Born in 1906 in a Greek community in Ottoman Turkey, he was legally a citizen of Argentina but in truth a citizen of the world, a resident of Paris who was equally at home in New York and on the French Riviera. Before shipping, he had made a fortune in tobacco. He later created Olympic Airways, Greece’s flagship carrier for four decades. His tempestuous affair with the opera star Maria Callas riveted the gossip columns for years. Even in 2016, 41 years after his death, Vanity Fair was reporting on his long-ago affair with Jackie Kennedy’s sister, Lee Radziwill.
His flamboyant lifestyle and scandalous romances contributed to a shady reputation — a reputation that was damaged further when a long probe by the Federal Bureau of Investigation (FBI) resulted in his indictment on charges of defrauding the U.S. Navy. But Onassis operated in a milieu of money, intrigue, and power, where public opinion meant little unless it interfered with business deals. By the middle of the 20th century, he seemed to have it all — money, fame, women, a yacht the size of a football field. Then, in 1954, he made a mistake: he tried to buy his way into the growing oil bonanza in Saudi Arabia. After months of secret negotiations that included promises of handsome payments to prominent Saudis, he signed a contract with the Saudi royal government that would give his ships the right to transport almost all the oil exported from the kingdom, at rates he would control. In exchange, he would finance the creation of a merchant fleet for Saudi Arabia and the training of Saudi crews to operate the vessels. It was a bold move that would have reshaped the global oil market and the international shipping business and would have made Onassis vastly wealthier than he already was, but it brought down on him the wrath of the most powerful enemies he ever faced. For reasons he never fully understood, he became a collateral casualty of the Cold War.
The murky international drama that unfolded after revelation of the contract featured freewheeling business operators, cautious diplomats, and unscrupulous self-promoters. The story had elements of comic opera, but the stakes were high: access to oil, containment of communism, the end of colonialism, and the future of the global maritime industry. In this contest, there were five major centers of power, as the Arabs call them. Two of these were joined in defending the contract: Onassis and a handful of his friends in business and politics, and King Saud bin Abdul Aziz and his ministers. On the other side in opposition were the four major U.S. oil companies that controlled the Saudi oil fields; the operators of every major shipping fleet in the noncommunist world, except that of Onassis himself, and the governments of the countries in which those fleets were based; and the U.S. administration of President Dwight D. Eisenhower, including the State Department of John Foster Dulles, the Central Intelligence Agency of Dulles’s brother, Allen, and the U.S. Navy.
The opposition of the oil companies and shipping interests was easy to understand, but why would Eisenhower and his national security team care about a business deal with no ideological component between non-Americans in some far-off country? If the oil companies opposed the contract, they would not seem to need the U.S. government’s help; they were vast corporations with deep pockets. They could hire as many lawyers as they needed and litigate in as many countries as necessary for as long as it took. But to officials in Washington, the Onassis agreement with Saudi Arabia was not just a business contract and not just about money. The Dulles brothers, patrician stewards of the Eisenhower administration’s foreign and national security policies, saw the tanker deal as a challenge to a global economic and security order that they were committed to defend. They saw it as a breach of faith by Saudi Arabia, which was dependent on the United States for its development and its security — a breach of faith that could encourage nationalistic upheaval throughout the Arab world and create opportunities for the Soviet Union to spread its influence.
In the 1950s, the United States dominated the global economy; American companies, along with British Petroleum, were the preeminent powers in the international oil trade. The Democratic administration of President Harry S. Truman, concerned about the monopolistic appearance of control of the petroleum industry by the giant companies known collectively as Big Oil, had encouraged smaller, independent operators to seek opportunities in the Middle East. In Eisenhower’s Republican administration, by contrast, the Dulles brothers valued stability and wanted to keep the existing oil order in place. In their view, the Onassis deal could be a precursor to nationalization of the Saudi oil industry, and that contagion would spread across the region. They feared a recurrence of the oil crisis that had erupted three years earlier in Iran, just across the Persian Gulf from Saudi Arabia, which had provoked an international uproar by nationalizing its oil industry. At the same time, in Egypt, Gamal Abdel Nasser, a fiery Arab nationalist, had overthrown a British-dominated monarchy and was forcing British troops to leave his country. Washington was watching apprehensively as postcolonial societies all across Asia and Africa sought to escape the economic and political domination of the great powers.
Eisenhower was sympathetic to the aspirations of colonized and newly independent peoples, but fear of communist expansion sometimes overrode those sentiments. Eisenhower’s national security advisers saw Onassis’s contract with the Saudis as a potential Cold War gift to the Soviet Union, which after the 1953 death of Joseph Stalin was beginning to court favor throughout what came to be known as the Third World. To Eisenhower and his national security team, expansion of Soviet influence was a critical threat to U.S. interests; arrangements that appeared to threaten the existing order — such as the Onassis deal — had to be stopped.
The Central Intelligence Agency (CIA) was already hostile to Onassis because its operatives had discovered that he had used a fleet of Liberty Ships, U.S.-built navy-surplus vessels that he had bought after World War II, to carry cargo to North Korea and China during the Korean War. Anger about that was still fresh in Washington when news of his Saudi Arabia deal broke. The FBI, which had suspected for years that Onassis had defrauded the Navy in the purchase of those Liberty Ships, viewed his Saudi Arabia deal as a threat to the oil supply of Western Europe, which was still recovering from World War II. A senior FBI official who visited the Saudi oil fields in the spring of 1954 concluded that the Onassis contract could lead to the “diversion of the oil to Soviet-bloc interests” and possibly to war.
The Onassis deal became a flashpoint amid the turbulent events that roiled the Middle East in the 1950s as the United States and the Soviet Union maneuvered for advantage at a time of rising nationalism and anti-colonialist sentiment among the Arabs.
Working closely with executives of the oil consortium known as the Arabian-American Oil Company, or Aramco, American officials labored in vain through the spring of 1954 to convince King Saud and his advisers that the Onassis contract would be detrimental to Saudi Arabia, not beneficial, because oil was plentiful and buyers would take their business elsewhere. Then in July, President Eisenhower and the members of his National Security Council gathered at the White House for a broad review of the threat of Soviet expansionism in the Middle East. The president signed off on general statements of policy about countries and issues, and on several “Specific Courses of Action.” One of those was a blunt directive that the United States take “all appropriate measures” to ensure that the Onassis contract never took effect.4 The State Department and the CIA were already looking for ways to do that and now had specific authorization from the president to act forcefully. The White House directive did not indicate what measures would be “appropriate.”
Saudi Arabia was weak, thinly populated, and underdeveloped, but neither the oil companies nor the U.S. government could simply bully the kingdom into doing their bidding. Exxon, Chevron, Texaco, and Mobil, the companies that owned Aramco, were in a delicate position.5 They wanted the tanker contract cancelled, but they did not want to embarrass or humiliate King Saud because he held the ultimate weapon: he could revoke the American companies’ concession and give it to some rival company or group from another country. The oil executives wanted the king to save face so that he would not turn against them.
Similarly, the U.S. government wanted to break the Onassis contract, but it did not want an open breach with Saudi Arabia, a critical supplier of an increasingly essential commodity and a bulwark of anti-communism with which relations were already strained because of disputes over other issues. United in their objective, the U.S. government and Big Oil were also united in their desire to leave no fingerprints.
The result was a protracted international struggle waged on the surface by diplomats and oil executives but behind the scenes by shady characters, self-appointed mediators, Riviera playboys, brand-name lawyers, anonymous go-betweens, and a few unscrupulous Saudis. The contract itself and Washington’s distress about it were reported in the press at the time, but the campaign to break the deal, and CIA’s involvement in it, were clandestine.
Equally invisible to the public was the high-stakes maneuvering within the Saudi royal court, where a new king was struggling to consolidate his authority. When the contract was signed, Saud had been on the throne only two months after succeeding his father, King Abdul Aziz al-Saud, who was a giant of Arab history as the founder of modern Saudi Arabia and the dominant force in his country for decades. Saud proved woefully unable to match his father’s abilities. The Onassis contract had been negotiated and signed by Abdullah Sulaiman, the kingdom’s longtime finance minister, but the king had ratified it with a royal decree, so his personal prestige was on the line.
The considerations driving policy makers in Washington were economic as well as strategic.
The world of energy had passed a critical milestone late in 1948: the United States became a net importer of crude oil and petroleum products. The United States was one of the world’s largest producers of oil, as it is today. But just as U.S. officials had foreseen during World War II, the lines delineating its output and its rapidly growing demand crossed a few years after the war. Crude oil became the world’s most important commodity, and not just in the United States. Oil supplanted coal to become the fuel of the world’s commerce, powering the ships, motor vehicles, airplanes, and railroads that moved all other goods transported in a growing global economy.
Oil was fueling the reconstruction of Europe and Japan out of the ruins of war; in the United States, it was the energy source for a booming economy of industrial expansion, family cars, suburban living, and long-haul trucks.
In the judgment of President Truman’s national-security and intelligence teams, the importance of securing access to Persian Gulf oil for the United States and its allies was matched by the urgency of denying access to that oil to the Soviet Union and its satellites. The Soviet Union was rich in oil resources and in normal circumstances more than self-sufficient, but its fields had been severely damaged in the war. Production in 1945 was only 60 percent of what it had been in 1941, and after the war Moscow faced the burden of supplying oil to its satellites in Eastern Europe.6 U.S. strategy dictated that the Soviets not be allowed to gain any form of control over Gulf production that could help them or jeopardize the flow of oil to the West.
It became official U.S. policy to ensure that, if the United States and its allies did not have access to Gulf oil, neither would anybody else. On January 10, 1949, Truman approved a plan developed by his National Security Council (NSC) for the “Removal and Demolition of Oil Facilities in The Middle East.”
The plan, known as NSC 26/2, said, “The interests of the United States dictate that prior to the occupation of the Saudi Arabian oil fields and facilities by an enemy, the refinery and other surface facilities, stocks and equipment or such portions thereof as would render them unusable by the enemy, should be removed or destroyed.” The wells themselves should be plugged but not destroyed, so that they could be reactivated once the United States regained control.7
That plan was still in place in 1954, after Eisenhower had succeeded Truman. Explosives had been placed in the oil fields, and CIA operatives were working there undercover as employees of Aramco.
When Eisenhower’s NSC assembled at the White House on July 22, 1954, the president and his senior officials were operating in what appeared to be an unfavorable international environment. Communists had taken over China. The French had been defeated by Communist guerrillas in Indochina. The Soviet Union had taken complete control of Eastern Europe. In the Middle East, nationalist and neutralist sentiments were on the rise, inspired by the rhetoric of Nasser in Egypt. In that context, the NSC’s agenda was both routine and momentous: to evaluate events unfolding around the world, such as the French collapse in Indochina and the apparent defection to the Soviets of the security chief of West Germany; and to review the strategic picture across the entire Middle East, adopt a comprehensive set of policies and objectives for the region, and order specific actions to achieve those goals. According to the minutes of that meeting, much of Middle East conversation concerned Aristotle Onassis’s tanker contract with Saudi Arabia.
The National Security Council, created by Congress in 1947, is “the president’s principal forum for considering national security and policy matters with his senior national security advisers and cabinet officials.”8 By law, the membership includes the vice president, the secretaries of State, Treasury, and Defense, the chairman of the Joint Chiefs of Staff and the director of central intelligence. The president’s national security adviser coordinates the group’s activities and has his or her own staff at the White House.
Except in emergencies, an official meeting of the NSC’s members with the president that culminates in policy directives is not a spontaneous event. It follows weeks or months of review and discussion among the agencies involved and the NSC staff. In the case of the Onassis contract, the subject of those discussions in the months before the White House meeting was not whether to oppose it — opinion on that was unanimous — but how to prevent it from going into effect without alienating King Saud and blowing up relations with Saudi Arabia.
Six days before the meeting, Secretary of State Dulles had stressed his views in a telegram to George Wadsworth, the U.S. ambassador to Saudi Arabia, that was almost panicky in tone. He said the Onassis contract had been “discussed [at the] highest levels” of the State Department and the armed forces, where it had been “agreed USG [the U.S. government] should back” the oil companies of the Aramco consortium, as they were beseeching the administration to do. Dulles said that the oil companies, which controlled the only port in Saudi Arabia capable of loading tankers, vowed to refuse to service any Onassis-owned ships under the terms of the agreement, even though they realized that “shut-down and possible eventual nationalization could result.”
“Companies surrender to agreement likely create serious repercussion throughout oil and shipping world from point of view private and public commercial interests,” Dulles’s cable said. He instructed Wadsworth to “express in manner you deem most effective very serious view we take of whole question and widespread ramifications which may result.” One point Wadsworth should make, he said, was that “implementation would result in wide and serious public resentment,” not just in the United States but in other countries that did business with Saudi Arabia.
Wadsworth was to make clear that implementation of the agreement would be an “act of bad faith,” would be “inconsistent with established practice world commerce,” and would violate “principle freedom of seas,” damaging commerce worldwide. The government of the United States, Dulles said, “cannot passively acquiesce in establishment [of] such pernicious precedent.”9 Dulles instructed Wadsworth to deliver this message in whatever way he deemed best, but the secretary did not say what actions the Eisenhower administration would take if the king refused to capitulate. That would be up to the president to decide at the upcoming White House meeting.
King Saud had assured Wadsworth that the Onassis contract would not apply to fuel purchased in Saudi Arabia by the U.S. Navy. Nevertheless, Admiral Arthur W. Radford, chairman of the Joint Chiefs of Staff, was one of the most vocal officials lined up in opposition to the contract because of its wider implications. At the July 22 meeting, he argued that the contract “represented one of the most unusual steps ever taken in connection with world shipping.” If it were implemented, he said, “We could expect all other oil-producing countries, including Venezuela, to follow the lead. In effect, each of these countries would say that everything that is exported out of them must be carried in the flag vessels of one particular country. Such a procedure would change the whole picture of world shipping, greatly to the disadvantage of the United States.”10
A week earlier, Radford had written in a memo to Defense Secretary Charles E. Wilson that “the adverse implications of this agreement, as it would affect the operations of United States oil companies in the Middle East and the development of the oil resources of that area, appear to require more comprehensive measures than those proposed” in a draft policy paper circulated a few days earlier by the NSC staff.11 By the time of the July 22 meeting, the NSC staff had accordingly toughened the draft policy statement to include a specific commitment to somehow undo the Onassis contract. That new version was the paper now under discussion with the president.
Eisenhower wanted to know if the United States could muster its economic and diplomatic power to “break” Onassis. “Let the rascal sign his contract and then proceed to break him,” he said. His question indicated that he had not been personally briefed about the deal up to that point, or he would have known that the contract had been signed six months earlier.
To that, CIA director Allen Dulles and Treasury Secretary George M. Humphrey “pointed out to the president that Onassis was a dangerous and slippery character, and Secretary Humphrey in particular agreed that the activities of Onassis and other shady characters of his type in the Middle East presented the United States with a very dangerous problem,” the official minutes say.
Radford told the president that “Aramco had come to the conclusion it would have to close up its operations in Saudi Arabia if the Onassis contract went through,” which was clearly an overstatement, and went beyond the position the Joint Chiefs had taken in inter-agency discussions before this meeting. Radford “also pointed out that our own reserve of U.S. tankers would in this contingency have to go out of business. There would simply be no oil for them to carry if the pattern established in Saudi Arabia established itself in other oil-producing countries.”
Eisenhower asked whether the United States could put pressure on the Saudis by purchasing oil from Iran instead. Some of that part of the conversation remains redacted, but this key paragraph is included in the declassified version of the minutes:
Secretary Humphrey said “he didn’t know the answer to the problem, but that the United States had to do something or else all the oil in the Middle East will have to be shipped in this Greek’s vessels.” The president agreed with Secretary Humphrey, and said “in any case we could not afford to sit around and get blackmailed. He then inquired where the Saudi Arabian oil was sold” and “why the United States did not do everything in its power to promote the sale of Middle East oil in Europe,” another question that revealed how poorly briefed he was on the global oil trade. “Admiral Radford pointed out that 90% of Middle Eastern oil was already going to Europe and that the amount was increasing rapidly, an estimate confirmed by Mr. Allen Dulles.” Eisenhower then asked why “friendly nations in Europe could not be induced to close their ports to ‘this guy’s’ ships,’” as Britain had persuaded its allies to do in the Iran episode. “Secretary Humphrey pointed out that this would be very hard to do, as the Greeks were notoriously mobile.” Onassis had deliberately made the true ownership of much of his fleet hard to decipher.
After this discussion, the council, with Eisenhower’s approval, adopted a slightly modified version of the toughened draft policy statement that the staff had submitted, which specifically called for action to oppose the Onassis contract.
The next day, James S. Lay Jr., executive secretary of the council, distributed to the members a “Statement of Policy” that embodied everything that they had decided and the president had approved. That document, including the Onassis directive, was designated NSC 5428. The president’s signature formalized it.
The assessment of the Middle East that NSC 5428 presented was not encouraging. It saw threats to American strategic, economic, and even religious interests all across the region, most of them attributable to emerging anti-Western sentiment among newly independent people and to the expanding reach of international communism.
“The Near East is of great strategic, political and economic importance to the free world,” it began. “The area contains the greatest petroleum resources in the world; essential locations for strategic military bases in any world conflict against Communism; the Suez Canal; and natural defensive barriers. It also contains Holy Places of the Christian, Jewish and Moslem worlds, and cultural influences affecting people everywhere.”12
Unfortunately, the policy assessment found that “current conditions and trends in the Near East are inimical to Western interests. During recent years the prestige and position of the West have declined. The nations of the Near East are determined to assert their independence and are suspicious of outside interest in their affairs.” France and Britain were in disrepute because of their histories as colonizers, it said.
“The security interests of the United States would be critically endangered if the Near East should fall under Soviet influence or control,” 5428 asserted. “In the Near East the current danger to the security of the free world arises not so much from the direct threat of Soviet military attack as from a continuation of the present unfavorable trends. Unless these trends are reversed, the Near East may well be lost to the West in the next few years.”
The notion that the “Near East” — or any other region of the developing world — could be “lost to the West” seems risible now, six decades later, but at the time the fear of “losing” the region to communism was the overriding motivation driving Washington policy makers.
Faced with an alarming scoreboard that included the Berlin blockade, the communist takeovers of China and Czechoslovakia, the Korean War, the Viet Minh victory in Indochina, the fall of the Egyptian monarchy, and the rapid growth of the Communist Party in Iraq, the administration laid out in NSC 5428 a long list of “General Objectives.” They included the “availability to the United States and its allies of the resources, the strategic positions, and the passage rights of the area, and the denial of such resources and strategic positions to the Soviet bloc,” the same goal that had given rise to the “Denial Plan” in the Truman administration.
To achieve those objectives, the policy document set out “General Courses of Action,” one of which saying that the United States should, among other things, “assume an increased share of responsibility for the area” and “seek to guide the revolutionary and nationalistic pressures throughout the area into orderly channels not antagonistic to the West, rather than attempt merely to preserve the status quo.” Another of these “General Courses of Action” was to “win the Arab states to a belief that we sympathize with their legitimate aspirations and respect their interests.”
That guidance was consistent with Eisenhower’s personal views. The president understood that the era of European colonial empires was ending, and he sympathized with the aspirations for independence among those ruled by Britain, France, and Portugal. “This Administration has never been antagonistic to Arab nationalism,” he wrote to his Washington pastor. “Our own history as well as our sense of justice impels us to support peoples to achieve their own legitimate nationalistic aspirations.” 13
As the historian Roby Barrett wrote, “The new administration intended to chart its own course, and clearly viewed British opposition to emerging national movements and association with London’s colonial past as a liability.” In Eisenhower’s view, U.S. efforts to shore up eroding empires would only damage Washington’s standing among the peoples of the Third World and make them receptive to communist blandishments.14
These two policies — to keep communism out of the Middle East, but recognize and encourage the people’s quest for independence and freedom from colonial domination — would coalesce after the Suez crisis of 1956 in the famous “Eisenhower Doctrine” speech to Congress.
“Our country supports without reservation the full sovereignty and independence of each and every nation of the Middle East,” the president said, while the greatest threat to their sovereignty and independence was international communism, directed by Moscow. “In the situation now existing, the greatest risk, as is often the case, is that ambitious despots may miscalculate,” he said. “If power-hungry Communists should either falsely or correctly estimate that the Middle East is inadequately defended, they might be tempted to use open measures of armed attack. If so, that would start a chain of circumstances which would almost surely involve the United States in military action. I am convinced that the best insurance against this dangerous contingency is to make clear now our readiness to cooperate fully and freely with our friends of the Middle East in ways consonant with the purposes and principles of the United Nations. I intend promptly to send a special mission to the Middle East to explain the cooperation we are prepared to give.” He asked Congress for new economic assistance funds for Middle East countries, and for authorization to use force to protect those countries if necessary.15
His views were already well in evidence at the time of the Onassis affair. The president rebuffed appeals by British Prime Minister Winston Churchill for joint action to preserve the status quo in the Middle East, where Nasser was demanding the departure of all British troops from Egypt. He had considered responding to a French appeal for help in relieving the besieged garrison at Dien Bien Phu, in Indochina, because the Viet Minh were perceived to be communists rather than noncommunist nationalists, but in the end decided it was not worth the risk of drawing China into the fight, as had happened in Korea.16 The French surrendered on May 7, 1954, raising the anxiety level just as Washington was coming to grips with the full significance of the Onassis contract. In the spring, King Saud went to Cairo for a cordial visit with the troublesome Nasser, and then joined Nasser in denouncing the regional defense agreement known as the Baghdad Pact. At that same time, the CIA was busy organizing the coup that in July would overthrow the leftist Arbenz government in Guatemala, another manifestation of Washington’s willingness to interfere abroad where it perceived a threat of communist expansion.
The heartland of the Arabian Peninsula had never been colonized by any country; Saudi Arabia was fully independent from the day it was created, but economically and strategically it was a de facto protectorate of the United States. Eisenhower’s acceptance of nationalist sentiment in countries ruled, or formerly ruled, by European powers did not extend to the sole U.S. outpost in Arabia.
In addition to “General Courses of Action” for the region, NSC 5428 laid out “Specific Courses of Action” aimed at individual countries and activities. Among these was item 14b: “The United States should take all appropriate measures to bring about the cancellation of the agreement between the Saudi Arabian government and Onassis for the transport of Saudi Arabian-produced oil and, in any case, to make the agreement ineffective.” That sent it back to the State and Defense Departments and the CIA to determine what were “appropriate measures.”
In the entire nine-page document, Onassis is the only individual mentioned by name.
If any member of Eisenhower’s team argued that 14b was incompatible with the “general objectives” of winning the Arabs’ friendship by supporting their “legitimate aspirations” and not just supporting the status quo, it is not reflected in the text of NSC 5428 or in the minutes of the White House meeting the day before.
The Soviet Union itself, of course, had nothing to do with the Onassis affair. Moscow may not even have known about it until it was reported in the press because the USSR had no diplomatic relations with Saudi Arabia and no representatives in the kingdom. The USSR had been the first nation to officially recognize the Kingdom of Saudi Arabia when King Abdul Aziz created it in 1932, but the king’s loathing of communism, an atheistic doctrine, put an end to bilateral relations in 1938. By 1954, Saudi Arabia’s rigid opposition to communism and the Saudis’ presumption that it was affiliated with Zionism precluded diplomatic or commercial exchanges of any kind with the Soviet Union and its satellites. Moreover, the Soviet Union, recovering from World War II, was more than self-sufficient in oil and had no need for supplies from the Gulf. Yevgeny Primakov, one the Soviet Union’s leading Arabists and later intelligence director and foreign minister of post-communist Russia, mentions Saudi Arabia only in passing and Aramco not at all in his book, Russia and the Arabs.17
After the death of Joseph Stalin in 1953, his Politburo successors abandoned his narrow, inward-looking policy of establishing friendly relations only with, and giving aid only to, countries sympathetic to Soviet ideology. Instead, Moscow decided to offer a hand of friendship and assistance to all the newly independent and developing countries of the postcolonial era, regardless of political orientation, in the hope of eventually winning them over. An official statement from the Soviet Foreign Ministry said that “the Soviet Government will take a positive attitude toward any steps by the governments of the Near and Middle Eastern countries to apply these principles in their relations with the Soviet Union. The Soviet government, supporting the cause of peace, will defend the freedom and independence of the Near and Middle Eastern states and oppose interference in their internal affairs.”18 This new approach would have led to an effort to build ties with Saudi Arabia if the Saudis were receptive, but at the time of the Onassis contract the policy shift had not yet been announced publicly, let alone fully implemented. In any case, Washington’s fear of Soviet expansionism predated that shift, as adoption of the Denial Plan under Truman had made clear.
That all-encompassing suspicion and fear of Soviet influence had asserted itself within a year after the end of World War II, as the Soviet Union occupied much of Eastern Europe. It was reflected in a statement labeled “Fundamentals of U.S. Policy,” written on November 29, 1946, by Gordon Merriam, chief of the State Department’s Near East division at the time.
“The fundamentals of our Near Eastern policy,” it said, “should be based on the realization that (a) the Near East is a strategic key area of vital importance to this nation, (b) that Russia must be regarded as a potential aggressor and thus it is evident that it is bent on dominating the Near East, (c) and that the Near East is too weak in its present state to withstand Russian penetration and gradual absorption.”19 Those sentiments intensified over the following decade as the Soviet Union tightened its grip on Eastern Europe.
In January 1953, a few days before Eisenhower was to assume the presidency, the government’s civilian and military intelligence agencies delivered a collective assessment — known as a National Intelligence Estimate — on the subject of “Conditions and Trends in the Middle East Affecting U.S. Security.”
The United States and its allies, the report said, had “a specific and basic concern with the extensive oil resources and strategic location of the area.” Because the region’s governments were generally weak and ineffective, it said, “The USSR will continue to encourage disorder and anti-Westernism and to exploit the substantial opportunities for creating friction among states of the area, between them and the West, and among the Western Powers.” Throughout the region, the intelligence assessment said, “There is a general disposition to eliminate the powers that be, with little thought for what comes after.” That sentiment derived from “a desire to eliminate foreign influence. The Middle Eastern governments and people are basically suspicious of Western motives and tend to become increasingly nationalist and neutralist.”20
Saudi Arabia, dependent though it was on the United States, was not entirely immune to those sentiments.
Eisenhower did not need much convincing about the threat of Soviet expansionism; he essentially agreed with the intelligence analysts. In his first two years as president, the notorious Senator Joseph McCarthy was in full cry in his witch hunt for communists in the U.S. government. The president found McCarthy personally odious and disapproved of his bullying methods, but he shared the senator’s view about the menace of global communism.
“American freedom is threatened so long as the world Communist conspiracy exists in its present scope, power and hostility,” he said in his State of the Union address on January 7, 1954. “More closely than ever before, American freedom is interlocked with the freedom of other people. In the unity of the free world lies our best chance to reduce the Communist threat without war. In the task of maintaining this unity and strengthening all its parts, the greatest responsibility falls naturally on those who, like ourselves, retain the most freedom and strength. We shall, therefore, continue to advance the cause of freedom on foreign fronts.”21 That was three years before he promulgated what came to be known as the Eisenhower Doctrine.
Secretary of State Dulles was fully on board with the president’s views.
“The Soviet Communists are planning for what they call ‘an entire historical era,’ and we should do the same,” he said at a meeting of the Council on Foreign Relations a few days after Eisenhower’s speech. “They seek, through many types of maneuvers, gradually to divide and weaken the free nations by overextending them in efforts which, as Lenin put it, are ‘beyond their strength, so that they come to practical bankruptcy.’ Then, said Lenin, ‘our victory is assured.’ Then, said Stalin, will be ‘the moment for the decisive blow.’ In the face of this strategy, measures cannot be judged adequate merely because they ward off an immediate danger.” He espoused a policy of “massive retaliation” in the event of a Soviet attack.22
Even as the National Security Council was putting together NSC 5428, the government’s intelligence organizations were at work on another assessment that would be distributed on September 7. That document, National Intelligence Estimate 36-54, “Probable Developments in the Arab States,” presented the collective assessment of the CIA, the State Department’s intelligence unit, and the intelligence commands of the armed forces. “Communist activity in the Arab states has increased noticeably over the past year,” it said. “Continued instability in the area will favor a further increase in Communist activity and strength,” although an outright communist takeover of any Arab state was “not likely.”
These concerns were not abstractions. According to Peter Hahn, a historian of U.S. Middle East policy, U.S. analysts “interpreted Soviet broadcasts in Middle East media in 1953 about the arrests of prominent Jews in Prague and Moscow as a bid to impress Arab audiences.” They were “especially sensitive about apparent Soviet support of a labor strike among oil workers in Dhahran,”23 Aramco’s headquarters in Saudi Arabia. In truth, there never was any serious communist penetration of Saudi Arabia, before or after the Onassis contract, but officials in Washington worried that there might be.
That was the context in which NSC 5428 was developed. Issued in July of 1954, NSC 5428 did not initiate the U.S. government’s campaign against the Onassis contract. It merely gave the president’s formal authorization to an effort that had begun in Washington almost as soon as the State Department learned about the deal. From the beginning, the question was not whether to torpedo the Onassis deal; it was how to go about it without embarrassing King Saud or further jeopardizing a bilateral relationship that was already under considerable strain because of the Saudis’ territorial dispute with Britain over the Buraimi Oasis; U. S. support for Israel; implementation of the Point Four aid program; the Eisenhower administration’s reluctance to supply weapons; and the kingdom’s ceaseless demands for more revenue from oil operations. Washington did not wish to make bilateral relations worse by appearing to bully the king. Thus the objective was not just to get rid of the Onassis contract but to do it without being seen to do it.
In the end, after more than two years of behind-the-scenes maneuvering, the administration achieved that objective, but not entirely or even mostly because of the efforts of the State Department and the CIA. The decisive factor was an event that no one foresaw at the time Onassis and the Saudis signed the contract: the Suez war of 1956.
Because of their universal opposition to the exclusivity and freight-pricing policy in the Onassis Saudi contract, buyers and shippers of commodities all across the non-communist world boycotted his ships. He was near financial ruin when the 1956 war closed the Suez Canal. Because oil produced in the Gulf countries suddenly had to be shipped all the way around Africa to ports in Europe, demand for tanker capacity soared — and Onassis, his fleet largely idle because of the boycott, was the only operator who could meet that demand. He made so much money in just a few months that he no longer needed the Saudi deal, which had brought him more trouble than it was worth. When the Saudis, under pressure from Washington and London, offered him an opportunity to walk away without penalty, he took it, even though the validity of his contract was still being considered by an international arbitration panel. Aramco’s total control over all aspects of the Saudi oil industry would not be challenged again until the1970s. Communism never did gain traction in Saudi Arabia, which remained firmly in the American sphere of influence long after the Soviet Union itself had vanished into history.
1 Sam Kashner, “A Delicate Balance,” Vanity Fair, May 2016, 136.
2 Nathan J. Citino, “Defending the Postwar Petroleum Order: The U.S., Britain and the 1954 Saudi-Onassis Tanker Deal,” Diplomacy and Statecraft, 11, no. 2 (July 2000), 137-160
3 Belmont to Boardman, June 16, 1954, FBI Onassis files, part 11, https://vault.fbi.gov/Aristotle%20Onassis/Aristotle%20Onassis.
4 Statement of Policy by the National Security Council, July 23, 1954, Foreign Relations of the United States (FRUS) 1952 ‒ 1954, IX, part 1, document 219.
5 The corporate names were Standard Oil Co. of New Jersey (Exxon, or Esso as it is still branded in many countries); Standard Oil Co. of California (Chevron); the Texas Company (Texaco, later acquired by Chevron); and Socony-Vacuum Co. (Mobil).
6Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power (Simon and Schuster, 1991), 421.
7 The text of NSC 26/2 is online at https://nsarchive2.gwu.edu//dc.html?doc=2869656-Document-01-National-Se…, accessed April 14, 2019.
8From the NSC Web site https://www.whitehouse.gov/nsc/ (accessed August 27, 2018)
9Dulles to Wadsworth, July 16, 1954, FRUS 1952‒1954, vol. XI, document 351.
10This account of the July 22 meeting is drawn from the official minutes, “Discussion at the 207th Meeting of the National Security Council,” Eisenhower Library, Ann Whitman file, Papers as President, NSC Series, box 5, folder 207.
11Radford to Wilson, July 13, 1954, Eisenhower Library, NSC staff papers, “Disaster File,” box 64.
12The text of NSC 5428 is in FRUS 1952‒1954 IX, part 1, document 219.
13Eisenhower to Elson, July 31, 1958. Copy provided to author by Dr. Elson’s daughter. The Eisenhower-Elson correspondence has since been donated to the Eisenhower Library.
14Roby C. Barrett, The Greater Middle East and the Cold War: U.S. Foreign Policy under Eisenhower and Kennedy (I.B. Tauris, 2007), 11-12.
15“Special Message to Congress on the Situation in the Middle East,” January 5, 1957. Public Papers of the Presidents Series, accessed August 27, 2018, https://millercenter.org/the-presidency/presidential-speeches/january-5….
16Stanley Karnow, Vietnam: A History (Viking, 1983), 196-198.
17Yevgeny Primakov, Russia and the Arabs: Behind the Scenes in the Middle East from the Cold War to the Present (Basic Books, 2009).
18English version published in Current Digest of the Soviet Press 7, no. 16 (June 1, 1955).
19Merriam to secretary of state, National Archives, Records Group 59, 54D 403, NEA subject file 1920-1952, box 1.
20National Intelligence Estimate 73, accessed August 27, 2018, https://www.cia.gov/library/readingroom/docs/DOC_0000119704.pdf.
21State of the Union Address, January, 1954, accessed Dec. 29, 2018, https://www.presidency.ucsb.edu/documents/annual-message-the-congress-t….
22Address to the Council on Foreign Relations, January 22, 1954, text in Department of State Bulletin, January 25, 1954.
23Peter L. Hahn, Caught in the Middle East: U.S. Policy toward the Arab-Israeli Conflict, 1945-1961 (University of North Carolina Press, 2004), 151.