890F.51/10–2246: Telegram

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


259. In a letter to Suleiman,31 Ex-Im Bank expressed willingness to advance not to exceed $15 million for US costs of sound economic development projects in Saudi Arabia, which might include such projects as water supply and electric power for Riyadh and Jidda, hospitals at Jidda and Taif, irrigation and transportation. Final decision as to projects depends upon presentation of detailed proposals such as might be developed for Saudi Govt by US firms.

In response to urgent plea by Suleiman and special message from Ibn Saud to Pres Truman seeking immediate commitment for construction of railroad from Persian Gulf to Riyadh, Bank proposed to amend terms of existing $10 million credit agreement to permit financing of study by American engineering firm of relative merits of highway vs railroad transportation in Arabia. Key paragraph of letter reads

“If, after examination of the studies herein proposed, it becomes clear that a railroad is equal or superior to a highway in point of relative economic advantage and feasibility, I am sure that we could readily come to an agreement. If, on the other hand, we should come to the conclusion that there is a decided advantage in favor of a highway, I am confident that His Majesty would wish to give serious consideration to such a conclusion. We may, however, envisage the possibility that the construction of a railroad would be found to be feasible and economically sound, although perhaps less so than a highway, in which event we would, of course, be prepared to give consideration to such other factors as His Majesty deems important in reaching a final conclusion.”

In any event, extent of Eximbank financing for railroad would have to fall within limit of $15 million total for all development projects. Text of letter being forwarded by air.

Suleiman accepted proposal for further study of highway railroad question. Expected that combination of firms including Bechtel-McCone, Morrisson Knudson and Sverdrup and Parcell will make study at cost of not to exceed $150,000. Study group tentatively scheduled to leave San Francisco by air on Nov. 6.32

Sent Jidda, repeated Dhahran via Bahrein.

  1. Dated October 4, 1946, not printed; the letter was signed by William McC. Martin, Jr., Chairman of the Board of Directors of the Export–Import Bank.
  2. In telegram 306, November 29, the Department informed Jidda that Bechtel-McCone had sent an “Engineer Mission” of seven persons to Saudi Arabia to study the matter further. The Department noted: “Political and military considerations may be involved in final decision, and Dept desires you keep in touch with survey party and be prepared formulate political views if needed.” (890F.77/11–2946)