890F.51/5–545: Telegram
The Acting Secretary of State to the Minister in Saudi Arabia (Eddy)
131. ReLegs 193, May 5, 6 p.m. Department appreciates the situation with which you will be confronted upon visiting the King and is providing you with the following statement of developments and the nature of plans now being worked out as expeditiously as possible.
Early this year, as soon as statistical information regarding Saudi Arabian 1945 supply requirements became available, we proposed to the British that the 1944 joint supply program be continued on substantially the 1944 basis during the first 6 months of 1945 until a plan could be formulated for the entire year. The British, however, proposed a drastic reduction of approximately 50 percent for 1945 as compared with 1944. We, on the other hand, maintained that Saudi Arabia’s minimum essential requirements must be met. British representatives in Washington then referred the question to London with a request for further instructions. After the lapse of several months British officials have just indicated to us unofficially that the British Government will cooperate in a reduced joint supply program for 1945 amounting to 10 million dollars and will acquiesce in a proposal of the United States Government to make up the difference independently between the 10-million-dollar figure and what we consider to be Saudi Arabia’s minimum essential requirements for 1945. We are now, therefore, confronted with the necessity of expending larger funds than originally contemplated. The Foreign Economic Administration has expressed its willingness to finance our half share of the proposed reduced joint program as well as our contemplated independent supplementary program, provided Congress appropriates the necessary funds, which are requested in the FEA appropriation bill for the fiscal year 1946 presumably to be acted upon by Congress within the next 60 days. Although, of course, we cannot predict with certainty what action Congress will take, we are hopeful that the funds requested will be appropriated.
[Page 892]The Department has been discussing with the Export-Import Bank the possibility of a 5-million-dollar development loan to the Government of Saudi Arabia. It will be necessary to work out a satisfactory method of assuring repayment of principal and payment of service charges in dollars. It is hoped that the Bank will, in the near future, be in a position to present a development loan plan for the King’s consideration.
As you know, we had planned to request Congress to appropriate funds for the extension of direct financial assistance to Saudi Arabia on a long-range basis to meet governmental budgetary deficits during the next 5 years or as long as, in our judgment, such financial assistance is needed for this purpose. After preliminary discussions, however, it now appears to us that a more practicable method of extending such aid would be through the Export-Import Bank by means of loans quite distinct from the development loan under consideration. We are hopeful that it will be found possible for the Export-Import Bank to render financial assistance to the Government of Saudi Arabia after Congress approves pending legislation authorizing a substantial increase in the Bank’s capital.
Although we regret that we are unable to provide you with concrete and detailed proposals for presentation to King Abdul Aziz at this time, it should be readily apparent from the foregoing that there is reason to be hopeful that satisfactory detailed plans can be worked out in the near future for the extension of adequate financial and economic assistance to Saudi Arabia.
You are authorized to inform the King of such of the foregoing as you may consider advisable in the exercise of your discretion except for that portion relating to our discussions with the British in regard to the supply program. With respect to the supply program, you should inform the King that we are working on a program whereby we hope that Saudi Arabia’s minimum essential 1945 requirements will be met. In your discussions with the King you should make clear that the information which you are imparting to him does not represent definite commitments but only plans which we are hopeful can be translated into accomplishment.