Memorandum by the Associate Chief of the Division of Financial Affairs (McGuire) to the Director of the Office of Financial and Development Policy (Ness)

Recent cables from Jidda report that Fuad Bey Hamza, newly appointed “Director of Economic Development” for the Saudi Arabian Government, wants the Export-Import Bank to extend its present line of credit to provide $52,190,000 over and above the $10,000,000 already made available. $32,190,000 would be utilized for the Riyadh-Dhahran railroad and harbor already considered and $20,000,000 for a new project for a harbor at Jidda and a railroad from Jidda to Mecca and Medina. For “political reasons” the Saudi Arab Government prefers Eximbank financing to private financing. Hamza remarked that loans to Saudi Arabia had the same political justification as loans to Greece and Turkey in addition to repayment security. The [Page 1334]Saudi Government would finance from its own resources other development projects, such as municipal utilities, hospitals and schools, if Eximbank would take care of the railroads and harbors. Hamza requested guidance in the form of an “advisory opinion” from the Department as to whether the U.S. would be prepared to reconsider its position on the railroad loan if the Saudi Government were to submit a formal request.

[Here follow remaining two paragraphs of further discussion of the matter.]