case, the gravamen of the Department's concern was made explicit: "Companies maintain ENI does not have outlets requiring 20 million tons. Thus their oil, taken as royalty in kind by INOC from IPC operations, would be released on world markets." At the same time, Ambassador Reinhardt in Rome called upon Foreign Minister Ortona to express the U.S. government's "particular concern." Ortona reported that ENI had "taken note" of the protests, but expressed the view that "in light of its own past experiences with major oil companies, it did not see why it should exercise self-restraint in this matter." The mere fact that ENI was a state-owned company, Ortona pointed out, did not mean that it was under the control of the Italian government: "There were limits to pressure Foreign Ministry could bring on ENI," given the fact that "Italy's long quest for sources of oil was [a] matter of continuing and acute public and political interest." Nonetheless, Ortona, said, a "warning" had been given to ENI by the Foreign Ministry. Whether because of the warning or differences over terms, the deal fell through.
Keeping French interests out of Iraq proved more difficult, and ultimately impossible. In the summer of 1967, Iraq passed a new law (No. 97) specifically barring the return of any known reserves to the IPC and giving the country's own Iraq National Oil Company the right to exploit those reserves either by itself or in partnership with other companies. Shortly thereafter a smaller French firm, ERAP, was granted a concession on territory taken from IPC. This was followed by a proposal on the part of the major French Company, CFP, that it establish a joint venture with the Iraq National Oil Company to develop the highly productive North Rumaila field. To the other IPC owners it was bad enough for outsiders to produce on lands IPC claimed as its own, but for one of the owning companies to do so seemed little short of treasonous. On October 13, senior officials of Exxon and Mobil met with Under Secretary Katzenbach "to urge Department to protest formally to GOF [Government of France] recent activities of CFP and ERAP that are detrimental to the interests of the Iraq Petroleum Company. Company representatives expressed their conviction that CFP has been pressured by GOF . . . by threatening to have ERAP negotiate for the venture if CFP does not."
A note was prepared, signed by the Secretary, for delivery to the French Foreign Office no later than October 18. While vigorously worded, its logic is somewhat difficult to follow. The fact that the Iraqi government would still entertain proposals from IPC related to the disputed areas is somehow twisted into an argument that Iraq recognizes "a continuing right in IPC to the areas. . . ." The same conclusion is drawn from the fact that the Iraqi government "has not attempted to cede any of the territory to other foreign oil interests." Yet the note itself ascribes this forbearance simply to the exercise of pressure on aspiring independents: "That no other companies have been granted rights to the disputed territory is due to the vigor with which the IPC shareholders and their respective governments have asserted the continuing effect of the concession agreement between the IPC and the GOI. . . ." That note also emphasized the danger of establishing harmful precedents: "The note also emphasized the danger of establishing harmful precedents: "The GOF must appreciate that the acquisition by French companies of territories claimed by the IPC can create precedents elsewhere which can weaken the security of Western oil rights and thereby adversely affect the national interests of France as well as of the United States." Yet how could developments in Iraq serve as precedents for countries where the growth rate had not been held down to less than half that of other leading Mideast countries, where proven and productive fields had not been suppressed for years on end, where misleading information had not been deliberately supplied to the host government and where, in the words of the Department's own le