890F.24/9–1044: Telegram
The Appointed Minister to Saudi Arabia (Eddy) to the Secretary of State
Jidda, September 10, 1944—1 p.m.
[Received 8:22 p.m.]
[Received 8:22 p.m.]
275. Yesterday held preliminary conversation with Jordan re subsidy for 1945. He insists on one-third cut from 3 million sterling to 2 million. I stated that I have no instructions to help force Saudi Government back to their 1941 budget, that we had jeopardized benefit of 1944 program and much good will by haggling, that I must, therefore, seek specific instructions from Department before joining in any recommendation. Jordan urges three arguments:
- (1)
- To reduce burden on British and American taxpayers which I conceded in principle.
- (2)
- To make Saudi Government self-supporting which increased 1945 oil and pilgrimage revenues should permit. Against this I claim not even well-organized nation can suddenly cut revenue by one-third. Increased revenue problematic and, in any case, would be realized late in 1945. Expansion of refineries for Army may postpone Aramco production. Some new revenue should be available to King to purchase durable goods when markets and shipping open up. Present budget and reforms by MESC committee only just beginning. Saudi Government should have chance to put house in order before mortgaging all potential income. I suggest maintenance present subsidy. If economy becomes stable next summer we can announce cut in subsidy for 1946.
- (3)
- To estimate [stimulate?] revival of merchant trade. Jordan proposes to maintain food and transport subsidies cutting off subsidy in cotton textiles etc. Against this I claim, and Coneybear agrees, benefit will be to textile industry in Britain and India alone and entrench British in Saudi import business. Futhermore, commodities in question should come to Saudi Government not to local merchants, otherwise costs will increase, prices soar and distribution be prevented. Revival of merchant trade should be in goods not now supplied. When subsidy is cut U.S. trade should have equal chance.
Urgently request early instructions.
Eddy