786A.5 MSP/2–1453: Telegram

No. 1449
The Ambassador in Saudi Arabia (Hare) to the Department of State1


621. Following is recapitulation Embassy’s views regarding grant aid in compliance Deptel 469, Feb. 12.2

In course negotiation Dhahran airfield agreement we informed Saudis confidentially of efforts being made obtain congressional authority for grant aid to countries of near eastern area other than Greece, Turkey and Iran and intimated that, if such action were taken, Saudi Arabia might expect receive substantial share reflecting our strategic interest in this country. In other words, this was implied quid pro quo in lieu of rent or some such other consideration and there is no doubt it contributed very considerably to successful outcome of negotiations. When therefore requested authority was obtained but not used, we were placed in a position of having our good faith open to question.
It was originally emphasized that any grant aid must supplement, not supplant, cash reimbursable assistance and fact that SAG was slow in implementing latter constituted at least partial argument for our going slow in grant aid but this is no longer case since orders being placed and training has begun both here and in US.
Saudis have always felt that we have not adequately recognized their contribution in according rights at Dhahran airfield as compared with our treatment such countries as Turkey and Iran. They also point out resultant exposure of their position in respect of hostile Soviet intent and criticism both within and outside country to effect Saudi Arabia falling unduly under American domination and had sold itself short of concluding Dhahran airfield agreement. This sensitivity would of course be greatly accentuated in event any other Arab country or Israel given grant aid either before Saudi Arabia or in undue proportions.
Although Saudi income has increased greatly in recent years, country began from scratch with virtually no communications, industry, urban development or other attributes of even semi-modernity. Same is true of military establishment where must begin entirely from beginning, financial requirements great and necessary compete with other important developmental projects, some of which being stimulated by TCA. Defense minister is consequently up against very real financial difficulties.
Although Saudis were forewarned, they have been genuinely shocked by cost American military equipment and training, and [Page 2435] find it difficult reconcile with charges by other countries, even when acknowledging superiority of what we have to offer. Thus, misunderstanding regarding payment for and high cost of military training in US is currently causing widespread bitterness in government circles with resultant indirect and adverse affects on operations Dhahran.

Consequently, aside from considerations of good faith, there is practical need for grant aid supplemental to cash reimbursable assistance in order to facilitate military assistance program, to help maintain better atmosphere at Dhahran airfield and to check deterioration in our basically friendly relations with this country at stage where action can be on relatively modest scale as contrasted with what might later be case, i.e., proverbial stitch in time.

As regards fields in which grant aid would be most useful, I would invite comments General Grover, head of MAAG, with whom I have kept in constant touch in this regard and who shares my views regarding importance of grant aid in principle. In view however of fact that problem attains importance because of its general bearing on our relations with Saudi Arabia as well as situation at Dhahran airfield, I would personally suggest that due regard be given to activities in which Saudis are particularly interested, especially student training in US and building up modest air force, while at same time giving balancing consideration to actions which we may hold essential but of which Saudis find difficult understand importance.

  1. Transmitted in two sections and repeated to Dhahran for General Grover.
  2. Not printed; it urgently requested further Embassy views in answer to the letter of Jan. 16, supra, to furnish a strong brief in favor of grant aid for Saudi Arabia. (786A.5 MSP/12–2152)