Memorandum by the Acting Secretary of State for Near Eastern, South Asian, and African Affairs ( Hare ) to the Assistant Secretary of State for Economic Affairs ( Thorp )
This Bureau was considerably disturbed by the failure of the Board of the Export-Import Bank to take action on the application of Saudi Arabia at the meeting held on June 29, 1950. This application has been pending since February 27, 1950; it has been thoroughly examined and discussed by the Staff and Board of the Bank; and the unequivocal support of the Department has been conveyed to the Bank by Assistant Secretary McGhee at the Board meeting held on April 26, 1950. The delay appears to be explained largely by the pressure of other business, but in view of the high priority assigned to the Saudi Arabian request by the Department, and in view of the favorable report on it submitted by the Bank’s Staff, doubts could be expressed as to whether this explanation meets the test of the Bank’s and the Department’s responsibility. The leisurely processing of the Saudi Arabian application is a source of increasing embarrassment to the Department.
It is not necessary to recount to you the critical elements of the situation which are shaping up in Saudi Arabia, including the financial and budgetary crisis, the prospects of less favorable oil royalty arrangements, and reported unrest and anxiety within the Kingdom. These complications underline the urgency of prompt action on the pending application, since public knowledge of substantial U.S. support of Saudi Arabia through an Eximbank loan will tend to allay [Page 1181] the fears of insecurity, which, if not checked, could lead to damaging instability in that country. If I am correctly informed, the only remaining significant obstacle to favorable action on the loan is the delay of the NAC Secretariat to acknowledge receipt of the Bank’s letter providing information on the application, since NAC review or formal consideration was not contemplated. NEA assumes that formal approval by NAC is not necessary since according to the proposed terms of the loan contract with Saudi Arabia the Bank’s security will be more than adequately covered by the earmarking of future oil royalties accruing to the Kingdom.
In NEA’s view the above brief adds up to compelling evidence that the Department should intervene in such a manner as in your discretion would quickly remove the last obstacles which are blocking final approval of the Saudi Arabian request. Therefore, NEA respectfully requests that you, as the Alternate Member to the Secretary of State, both as respects the National Advisory Council and the Board of Directors of the Export-Import Bank, take such steps which will be calculated to accomplish the objective described.1
- For information on final approval of the loan on July 20, see editorial note, infra.↩