Foreign Relations of the United States, 1946, The Near East and Africa, Volume VII

890F.51/7–1046: Telegram

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

Washington, July 10, 1946—7 p.m.

185. At request of Saudi Minister, Eximbank on Jul 9 provided him with draft of a letter which he might submit to Bank as formal request for $10 million credit. Letter sets forth terms which are known to be acceptable to Bank’s Board Directors, but to avoid any appearance that Bank is dictating terms, Bank desires SAG to take initiative in requesting these terms. Minister has cabled entire text to Jidda for clearance. Summary important portions for your info follows:

1. SAG requests credit of $10 million for purchase currently required materials in U.S. Types of materials required are cereals and grains, sugar, textiles, agricultural tools or machinery, automotive equipment, office equipment and supplies. (Estimated dollar values of requirements in each category to be provided in letter for Bank’s info but purchases in each category will not necessarily be limited to amounts estimated).

2. Credit to be available until Jun 15, 1948.

3. Initial advance of $2 million to provide working fund. Further advances in amount of $1 million or multiples thereof upon SAG request accompanied by evidence that expenditure of funds previously advanced have been made for materials listed above.

4. For each advance of $1 million Bank will take 10 notes of SAG, each in amount of $120,000, maturing successively on Dec 31 of each of the 10 years from 1948 thru 1957.

5. Without limiting its general liability as maker of notes, SAG will conclude agreement with Aramco whereby company will, as notes come due, pay directly to Bank, out of oil royalties due SAG, $1,200,000 in dollars on Dec 31, 1948 and same date each 9 immediately following years.

6. SAG to have privilege of prepaying notes in inverse order of maturity by payment of amount to be mutually determined by Bank and SAG at time of payment but which will in any event provide premium to SAG.²³

7. It is intention of SAG at some time in near future to submit separate proposal on terms and conditions which might govern credit of $5 million for public works and other developmental projects.

Acheson

23. An agreement establishing these terms and conditions of the $10,000,000 credit was signed by the Saudi Arabian Government and the Export-Import Bank On August 9, 1946 (890F.51/8–946).