Foreign Relations of the United States: Diplomatic Papers, 1945, The Near East and Africa, Volume VIII

890F.51/2–1245: Telegram

The Minister in Saudi Arabia (Eddy) to the Secretary of State

Jidda, February 12, 1945—8 a.m.
[Received 8:29 a.m.]

61. Reference Department’s 27, February 3, 3 p.m. British Minister waiting instructions before joining me in discussion of Saudi finance and currency requirements. He insists privately that there is no currency problem, we should lend lease no more riyals and he resents our sale of bullion gold to Saudi. Obviously he will press for substantial cut in total subsidy without regard to Saudi budget and needs. I agreed to defer discussion of budget and currency for a few days.

He agreed to join me in recommendation “that the subsidy supply program of commodities be continued for 6 months January 1–June 30, 1945 at the same level of quantities and total cost as 1944 subsidy, with substitutions and improvements proposed through MESC, provided: that any joint subsidy for 1945 or fraction thereof be decreased in total cost to combined governments below 1944 figures by (1) increase in revenue from oil (2) increase in revenue from pilgrimage and (3) profit from sale of bullion gold.” To this I agreed as these increases, if any, will appear in Saudi budget.

Comment

1. In view of expectations we have raised in Saudi minds (reference Department’s 283, December 24, 2 p.m.¹⁷) urgent we balance their legitimate budget and not join British in imposing less help than in 1944. While joint subsidy should allow for increased Saudi income as above and though certain commodities such as textiles should be partially returned to commercial channels the USA should assure balanced budget by additional help outside of subsidy if necessary with or without Jordan’s concurrence in Saudi budget figures.

2. If lend lease to Saudi Arabia will end in June I recommend urgently that total lend lease riyals for entire year be authorized and minted before June. Ten million at least needed again. Consult Lebkicher Aramco¹⁸ who believes 15 million additional riyals for sale to Americans needed this spring. Riyals and gold bullion may be our only present means of supplementing Saudi income if British insist upon inadequate subsidy.

3. Comment on Saudi budget will follow shortly.¹⁹

Eddy

17. Foreign Relations, 1944, vol. v, p. 759.
18. Roy Lebkicher, representative of the Arabian American Oil Company who acted in a liaison capacity with the Saudi Arabian Government on currency questions.
19. In despatch 77, March 2, 1945, the Minister in Saudi Arabia stated: “I am convinced that the Saudi Arabian budget statements are modest and reasonable. Obviously, some of their expenditures cannot be verified, but it may be noted that, in spite of a sharp rise in costs, they have not increased their expenditures in the estimate for 1945. In summary, a grant of five million dollars would balance the Saudi Arabian budget for 1945.” (890F.51/3–245) For Saudi Arabian budget figures, see footnote 16, p. 848.