886A.2553/7–350: Telegram

The Ambassador in the United Kingdom (Douglas) to the Secretary of State

confidential

40. Deptel 3165, June 281 and Jidda’s 372, June 22.2 While recognizing British generally keep in mind political implications of their foreign economic policies, we do not believe British negotiations re use of sterling by Aramco represent attempt employ financial weapons regain dominant political position in Saudi Arabia, or indeed, that there is concerted campaign of any kind to bring SAG to heel on wide front. As reported Embtel 3763,3 UK has agreed in principle to [Page 61]use of sterling essentially as desired by Aramco, which seems quite satisfied with understanding reached.

British concern in present instance seems to have arisen primarily from general financial and economic considerations not peculiar to SA rather than from political difficulties resulting from UK–SAG differences. This concern, moreover, seems to have emanated from British treasury rather than Foreign Office, which to best our knowledge has played little part in present discussions.

Furthermore, with regard to implication in conversation reported by Saud’s Private Secretary (Jidda’s 378, June 26),4 we do not think it is in any sense British policy to advance in SA at expense US position or influence. To contrary, conversations we have had with responsible Foreign Office officials indicate that UK places great value on security deriving from strong US position in NE generally and would wish do nothing weaken or discourage this support. Foreign Office officials seem fully appreciate underlying importance US role in SA to common US–UK objectives of stability and security in NE as whole and to recognize direct benefit to UK position our presence in area signifies.

We are not unmindful of fact that differences with SAG are source of irritation to UK and that, in promoting its case, UK may at times show impatience and resort to somewhat brusque tactics in dealing with SAG. We do not, however, find sufficient ground here for suspecting UK of deliberate effort impose its will on SAG through pressures such as suggested in Jidda’s 372.

Sent Department 40, repeated info Jidda 2.

Douglas
  1. Not printed; it contained a request from the Department of State to the Embassy in London for information on British regulations against Aramco sales in the sterling area.
  2. Ante, p. 57.
  3. Not printed; it reported British agreement to an Aramco plan to make sterling expenditures in the sterling area and to make certain payments in sterling to the Saudi Arabian Government. The British, however, stated it would be necessary to stabilize the amounts of sterling Saudi Arabia would use in order to avoid great fluctuation, and indicated final agreement would be subject to arrangements made with Aramco’s parent companies for the utilization of sterling. (886A.2553/6–3050)
  4. Crown Prince Saud’s secretary told the Ambassador Saud feared British actions with regard to Aramco might be the first step in a British plan to crush Saudi Arabia. (786.00/6–2650)