890F.51/7–648: Telegram

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


396. Finance Minister sent for me today following his return from Riyadh. He referred to inquiry made by Department of Saudi Arabian Government Legation Washington whether Saudi Arabian Government intended take up balance 15,000,000 loan from Exim Bank. Finance Minister stated question had been considered by His Majesty two days ago and it has been decided that no part of remaining loan available would be taken up. He added “decision had been reached in view of attitude taken at this time by US Government”. No specific reference was made to Palestine but meaning was obvious. Finance Minister said he had been instructed by King to acquaint me with foregoing.1

From this and Legtel 395, July 6,2 Department will note Saudi Arabian Government is placing its relations with US on more and more formal basis and is turning to British Government for advice and assistance formerly sought from US. In light many telegrams from this Legation prefiguring this development it should not be unexpected to Department.

[Page 243]

Pouched Arab capitals.

Sent Department as 396, repeated London as 118, Amcon Dhahran as 200.

  1. In a memorandum of July 13 to Garrison Norton, Assistant Secretary of State for Transportation and Communications, Joseph B. Knapp, Director of the Office of Financial and Development Policy, stated that in view of telegram 396, the Export-Import Bank credit to Saudi Arabia should be allowed to lapse (890F.51/7–1348).
  2. Not printed; it reported that the Saudi Arabian Government wished to have the assistance of the Bank of England in introducing a paper currency backed 100% by gold (890F.515/7–648).