The Secretary of State to the Legation in Saudi Arabia
256. 1. Unused portion SAG credit with Eximbank amounting to 15 million was due to expire June 30. At Dept request Board Directors Bank agreed to two weeks extension while SAG is deciding whether or not to ask for further extension.
2. Legation here asked SAG for instructions and has told Dept (a) SAG will not request extension because of current resentment our attitude Israel and (b) if we permit credit to expire without extension this would be considered further evidence of unfriendliness on our part.
3. Eximbank naturally reluctant to grant extension without request from borrower. Strong pressure from Dept might overcome this [Page 242] reluctance, but we have no assurance on this point nor do we believe at present Dept should exert such pressure.
4. If SAG requests extension before July 14 Dept believes chances very good that Board will act favorably.
5. Even without extension Bank would consider loan applications for specific projects on their merits. Thus, no substantive loss to SAG through expiration except remote possibility Bank funds will approach exhaustion. Nevertheless, Dept believes expiration without adequate explanation in advance to SAG would unnecessarily strain relations between US and SAG.
In view attitude of SAG and factors outlined above Dept proposes to take no action regarding this line of credit unless it receives an indication that SAG desires the loan extended beyond July 14.