890F.20 Missions/7–2144: Telegram
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received July 22—6:30 a.m.]
5768. See the Department’s 5199, July 1, 11 p.m. Embassy has now been handed by Sir Maurice Peterson a reply to its letter of July 7 concerning Saudi Arabia. The text of the reply reads as follows:
“Many thanks for your letter of the 7th July regarding the adviserships in Saudi Arabia. We should have been very willing to consider the basis which the State Department have put forward for a joint approach to Ibn Saud if that basis did not itself rest on what seems to us false premises.
I refer more particularly to the statement contained in the 4th paragraph of your letter, viz.: ‘The preponderant interest in Saudi Arabian economy is unquestionably American in character.’
Quite apart from the small export activities of Saudi Arabian merchants, which in normal times have to a very large extent always been transacted with British territories and sterling area countries, there is the revenue arising from the pilgrimage (which is not even mentioned in your letter). Even today, when the pilgrimage is much reduced for war reasons, the foreign revenue accruing to Saudi Arabia from it is estimated at the equivalent of 40 million riyals. Some of this is in the form of pilgrimage tariff revenue accruing to the Saudi Arabian Government and some in the form of money spent in the country by the pilgrims.
While, of course, the pilgrimage is not exclusively a British concern, Britain is the greatest Moslem power and a large proportion of the pilgrims are British, while even those of other nationalities come, to a very great extent, from sterling area countries which is of major importance for Saudi Arabia.
As against this present American contribution to the economic life of Saudi Arabia (apart from the present supply program which is to be shared between us equally and, therefore, need not come into [Page 719] this discussion) is, according to our information, somewhat below 4 million riyals a year in royalties by the oil company plus local expenditure by the company estimated at about 10 million riyals. Incidentally, the arrangement recently made by which the company’s requirements of currency for local expenditure are met by the supply of silver riyals on lease-lend will, in fact, mean that Saudi Arabia will receive the benefit of only a proportion of the foreign currency which the company’s local expenditure would normally bring into the country.
If we turn to the future, it seems certain that the Saudi Arabian income from its oil resources will increase and, indeed, we hope it will be so. It is however at least equally certain that pilgrimage revenues also will increase by anything up to 100% when the Indian and Far Eastern pilgrimages can again take place. It is also to be foreseen that when conditions of travel become easier larger numbers of pilgrims will visit Mecca from Middle Eastern sterling area countries.
In all frankness, therefore, it seems to us that the American claim to present preponderance in Saudi Arabian economy is based upon a misconception of the facts. The situation will no doubt change in the future as oil production develops, and the position can, very willingly on our part, be reconsidered when Saudi Arabia ceases to depend mainly on economic relations with sterling area countries.
I should like to recall again that we have to take account in Saudi Arabia of the undoubted prejudice against Christians. A Christian financial adviser will certainly find difficulties, in obtaining information and in getting his advice accepted, which will not apply to the same extent to a Moslem. I think experience in other Middle East countries shows conclusively that unless the local officials cooperate wholeheardedly it is very hard for a foreign adviser to make effective progress. Therefore as both you and we wish for improved financial conditions in Saudi Arabia it still seems to us more practical to give Ibn Saud the sort of adviser he wants.
I should be grateful if you would bring the above to the notice of the State Department.”
Sir Maurice said that the Foreign Office would be glad to learn and give prompt consideration to the comments of the Department on the contents of this letter.