890F.20 Mission/15: Telegram
The Secretary of State to the Ambassador in the United Kingdom (Winant)17
5199. Please make the following reply to Sir Maurice Peterson’s letter of June 8 concerning Saudi Arabia quoted in your 4615 of June 9:
“I have been asked to convey the gratification of the Department of State that you have expressed in your letter of June 8, 1944, reiterated assurance of adherence to the agreed principle that the larger financial and supply problems of Saudi Arabia ought to be dealt with as far as possible on a joint basis in consultation between our two Governments.
The support to which you refer accorded to Dr. Millspaugh by [Page 712] British officials in Iran is fully appreciated. It may be recalled, however, that Dr. Millspaugh’s mission was formed at the suggestion of the British Government, as well as upon the request of the Iranian Government, to cope with special conditions arising out of the war. The situation in Iran, therefore, for this and other reasons does not appear to be entirely analogous to that prevailing in Saudi Arabia.
In considering Saudi Arabian matters, both our Governments, I believe, are seeking a solution of long-range problems which will ensure the prosperity and development of Saudi Arabia, as well as safeguard our respective interests in that country. It is recognized that the Near East, in which there are many British Moslem subjects, is an area of primary British military operational responsibility. For this reason the Department of State, in conjunction with the War Department, signified its approval of the Foreign Office’s suggestion that a joint military mission be sent to Saudi Arabia under the leadership of a British officer of Anglo-Saxon extraction. This approval, however, was made contingent upon the understanding that any financial or economic mission which might be sent to Saudi Arabia should be headed by an American. By this reference was meant any mission of a financial or economic character or any expert or experts furnished by either the American or British Government for the purpose of advising the Saudi Arabian Government with respect to financial or economic matters. In making this suggestion the Department had in mind particularly the request for a financial adviser reported to have been made last March by King Ibn Saud. It was contemplated, therefore, that if but one adviser should be furnished, he should be an American and that, if he should be provided with an assistant, such assistant should be British or, if with several assistants, they should be of mixed nationality.
The reason it was proposed that the head of any financial mission or that a single financial adviser furnished to the Saudi Arabian Government be an American is that the preponderant interest in Saudi Arabian economy is unquestionably American in character and will presumably remain so for many years to come. As you know, the principal economic resource of Saudi Arabia is its petroleum reserves. As you know also, the concession to develop these reserves is held by an American company. Inevitably, therefore, the economy of Saudi Arabia will be based upon oil produced as the result of substantial American capital investments. For this reason it is considered that the question does not arise as to which party may have a preponderant economic and financial interest in Saudi Arabia at such time as a financial mission might be formed.
Saudi Arabia’s traditional commercial relations with neighboring British countries, however, must be taken into consideration. Thus, it is sincerely hoped that satisfactory arrangements may be worked out to deal jointly with the larger Saudi Arabian financial and supply problems.
Of course, with respect to furnishing advisers, we must be guided by the wishes of King Ibn Saud. However, I think you will agree that, if our Governments are to support the Saudi Arabian economy through the extension of joint material aid, it would not appear unreasonable to suggest that King Ibn Saud have the benefit of the advice of qualified experts as to the manner in which this aid is utilized. [Page 713] Advice of this kind not only would contribute to the implementation of our plans for the extension of joint assistance but also undoubtedly would prove helpful to the Saudi Arabs themselves. It might be well, therefore, to ask the King whether he is agreeable to our suggestions, namely, that he avail himself of the services of a joint military mission headed by a British officer of Anglo-Saxon extraction and of an American financial adviser to function either singly or as head of a joint financial mission. To demonstrate to him our cooperative approach toward the solution of Saudi Arabian problems, it is proposed that our respective representatives at Jidda be instructed to visit King Ibn Saud together in order to make these suggestions to him. In the event you feel you cannot concur in this proposal, my Government may contemplate instructing the American representative to visit the King to ascertain his views regarding the adviser question.
If it should appear that the location of the Treasury at Mecca presents complications, an inquiry might be made as to the possibility of transferring the Treasury elsewhere. At least, such a transfer should not present many physical or transportation difficulties. However, if this should not prove feasible, it is believed that a foreign financial adviser could function effectively with respect to matters of policy at Jidda, the port of Mecca.
It is hoped that we shall be able soon to formulate detailed plans for dealing with Saudi Arabian financial and supply problems on a joint and cooperative basis and that our representatives in Jidda may be instructed to discuss the adviser question with King Ibn Saud in the near future.”
- Repeated verbatim to Jidda in telegram 119, July 3, 7 p.m.↩