890F.51/6–2145

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

No. 144

Sir: I have the honor to acknowledge the Department’s long telegram, No. 169 of June 18, 8 p.m., giving the reasons for postponement of proposals to secure Congressional authority for financial aid to Saudi Arabia, and to enclose herewith a copy of the Note36 which I consequently delivered, with some oral comment, to the Acting Minister of Foreign Affairs, Shaikh Yusuf Yassin. I have the honor to submit the following comments:

I. Subsidy and Budgetary Aid for 1945

The Saudi Government has heard nothing from the British or American Governments regarding the amount of a joint subsidy, nor the extent to which they may expect help in balancing their budget for 1945. Delays in delivery of cereals and other subsidy items, uncertainty regarding the Lend-Lease riyals to be furnished, the approaching end of the first six months of the year without any word, and the locust plague, have naturally aroused considerable anxiety, and they are disappointed not to receive any word this month. However, the Acting Foreign Minister and the Minister of Finance, at least, understand fully and accept without question the plain fact that Congress must act on the Lend-Lease bill before any recipients can be informed of the amount of aid they will receive.

In view of this disappointment, I am convinced it would be a disadvantage for us if I am required to join with my British colleague in communicating a joint note stating that the joint subsidy will be limited to a total of ten million dollars, before I am authorized by the Department to communicate the additional aid the United States will give to balance the 1945 budget. I hope the two communications can be made at the same time. So far as the joint subsidy is concerned, Mr. Grafftey-Smith prefers, and I agree, that that note be delivered to the Foreign Ministry here in Jidda without any trip to Riyadh.

II. Long Range Financial and Economic Assistance

The news that action on a long range program of economic cooperation must be deferred until 1946 came very clearly as a hard blow to Saudi hopes and plans. The Acting Foreign Minister and the Minister of Finance have held two long sessions with me in an effort to prepare communications of their own to accompany my Note to soften the blow for the King. Ever since the hope of such a program “in [Page 912] the near future” was held out to them six months ago (Department’s telegram No. 283, December 24, 2 p.m.37) they have been hoping to emerge from the “crisis” stage of always being uncertain of food, a balanced budget, of means for much needed public developments. Now they have to wait other long months before they can hope for an economic accord which will stabilize their economy over a period of time. It is not a question of whether “the King will refuse to wait six months for an American offer”; he has waited six months, and obviously must wait as many months as may be. The question rather is whether we can afford to wait. The “crisis” psychology does not make for stability, nor does it permit sound financial planning by the local government, nor does it provide for the minimum developments needed in the country without delay, such as improvements in transport and agriculture. Without any development fund in sight, for example, what is to become of the FEA Agricultural Mission at Al Kharj, whose time in now half over? Can it be enlarged and continued, and if so with what funds? Or will its fine work come to naught? In this connection, the Department’s telegram nullifies my recommendations in Legation’s A–53 of June 16, and I now urge that steps be taken immediately to provide for the future of the agricultural mission and for the rotation of its personnel, before all the experienced Americans on the spot leave together at the termination of their contract.

Even though budgetary and direct financial assistance must be postponed until 1946, an equal misfortune is the postponement of a loan for development purposes which, surely, is not also without precedent! Much sound planning and thinking has been going on among Saudi officials with regard to improvements in irrigation, water supply to the cities, transport services, electric power, which depend upon funds to initiate. I had hoped that this new era in Saudi economy might begin with a substantial loan this summer to be used for American goods and services. The negotiations with Mackay Radio,38 and with American Eastern39 for sundry commercial ventures may well have been dealt a fatal blow. The loss, I repeat, is one which touches us as well as the Saudi Government.

I believe it is a mistake to believe that the King’s “only alternative would be to accept funds from some other power under extremely [Page 913] onerous conditions.” I venture to predict that his alternative, as well as his temporary recourse, would be to bleed Aramco for loans to stabilize his economy and to initiate such improvements as he is unwilling or unable to postpone. And funds secured this way would not be confined necessarily to American goods and services. The bleeding of Aramco has consequences much less damaging to Saudi Arabia than to Americans: it would be a great hardship on the company who would be confirmed in their growing and articulate opinion that Aramco is the substance and the Legation the shadow, and that United States Government moves in Saudi Arabia end up at their door for them to supplant or supply. I have recently come confidentially into possession of evidence that Aramco does not believe it has much to expect from our government except trouble. To have the King continue to extort loans from them will contribute to the decline of the relative prestige of our government.

I do not believe there is any doubt in the mind of the King of the “mutual trust, confidence, and forbearance” that exist between our two governments. The personal relations are excellent, and the goodwill fostered by American generosity, the friendship of President Roosevelt, the warm hospitality now being shown to Amir Faisal and his party, make any further reassurance on this score unnecessary. The uneasiness, on the contrary, is precisely at the vulnerable point of “ways and means”. The King and his government want nothing more than long time economic cooperation with the United States, to escape exclusive dependence on a regional imperial power, to benefit by acquiring over the years the superior brand of American technical goods and services. But they wonder whether the machinery of American government will permit long range commitments to Saudi Arabia. This they may now ponder for a further space of time. This is the primary anxiety of the King, expressed by him to President Roosevelt, as reported in the Legation’s Despatch No. 80, March 3, 1945, paragraph (d), page 6.40

From the above comments, the Department will understand why in dealing with the Saudi Government I have made very sparing use of the explanatory paragraphs in the telegram under reference, and have confined my observations to the summary of the situation embodied in the enclosed Note.

III. Projects Offered by the Military Mission

These were not mentioned in the Department’s telegram, nor was there mention of the airfield at Dhahran, concerning which the King is still waiting to learn the plans of the War Department. However, [Page 914] now that it is made clear to the King that the only improvements he can expect this year are those offered by the United States Army, it is very likely that I shall be summoned to Riyadh to hear his views on the proposals of the Military Mission, which I think may be amended substantially by him, if indeed they are accepted at all. To disarm criticism by reactionaries against the “infiltration” of the land by foreign military, he had hoped to announce to his people civilian and economic cooperation as well. I do not attempt to forecast his reply to the Army proposals, which will perhaps have been been made before this reaches the Department. In reply to a direct question this morning, I stated that the Army offers still stand, and that they are not contingent upon action by Congress, construction of an airfield at Dhahran, or any other factor. If accepted and undertaken, the Army projects will do much to recover ground for the United States. For this reason I hope the Department will urge upon the Army the expenditure of the very best (and not the easiest nor the cheapest) services, namely the establishment of a well-equipped air mission, and the building of a first-class highway, etc. Since the Army possesses the only financial resources available for improvements in Saudi Arabia this year, and since the Army has a very considerable strategic interest in the country, their resources should be used to the utmost to establish impressive monuments to American technical skill and enduring goodwill.

Respectfully yours,

William A. Eddy
  1. No. 221, June 20, not printed.
  2. Foreign Relations, 1944, vol. v, p. 759.
  3. For proposals to the Saudi Arabian Government by the Mackay Radio and Telegraph Company, see telegram 145, May 22, 4 p.m., to Jidda, p. 1022.
  4. The American Eastern Corporation, an American company engaged in trading activities in the Near and Middle East, had proposed to the Saudi Arabian Government in 1945 the establishment of a shipping company under the Saudi Arabian flag and a development company to construct and operate public and private works to participate in agricultural development, to engage in general merchandising activities, and to furnish technical and other services in Saudi Arabia.
  5. Ante, p. 7; the page reference is to the second paragraph of section (d).