278. Telegram From the Department of State to the Embassy in Saudi Arabia 1
1246. Embtel 832.2 You should immediately seek audience with [Page 495] King and emphasize Dept has, since receiving report your audience with him June 5,3 been giving most serious attention problems relating project agreements Dammam port and Dhahran air terminal. In recognition King’s remarks June 5 audience that he could not accept project as suggested by Tudor and his emphasis on importance this work, Dept had suggested new language agreement which repeats general details contained in Ambassador Richards’ aide-mémoire and agreed to by SAG. USG in good conscience, while not pressing any particular plan for port, believes further examination details desirable in interests SAG and in view variety opinions, including those of German engineers, which indicate differences with proposals of Egyptian engineer.
You should also stress strongly that, unless project agreements as proposed are signed by midnight June 30, $25,000,000 in USG grant funds currently allocated these projects will no longer be available.4 This is inevitable development under US law and Dept powerless to remedy. USG in no position make commitments for future and under new legislation proposed it is most unlikely that grant funds in this substantial amount will again be available. Stress also USG believes it has fulfilled commitment re Dammam port by current offer and is both concerned and at loss to understand difficulties which have been presented in implementing this initial phase our cooperative endeavors. USG had high hopes two Governments could take advantage special opportunities presented by availability funds this fiscal year and could work together to achieve substantial contribution to economic development Saudi Arabia as symbol our continuing cooperation.
We are particularly distressed at apparent delays re Dhahran air terminal where we did not understand major differences existed.
You may state to King that in all these matters we recognize Saudi sovereignty and fact that these projects are for Saudi Arabia. We wish reach agreement on our part through full appreciation their interest. We wish make certain our contribution is best we can make, however, and take time resolve under less pressure the doubts which we consider legitimate. Agreements as proposed make this [Page 496] possible since they do not refer to specific plans for carrying out projects.
Telegram will follow immediately commenting on proposed language changes.5 Initial study, however, indicates most suggestions unacceptable from standpoint US law. You should stress that bilateral economic aid and project agreements as presented were simplest possible.
(FYI. We do not under any circumstances wish give Saudis any reason believe present offer will still be possible in future fiscal years. In event these funds lost, we will be able discuss economic assistance with them only within framework new and more restrictive legislation.)
Re Hejaz Railway survey, Dept desires you reply orally King along lines para 5 C reftel.6
- Source: Department of State, Central Files, 986A.734/6–2457. Secret; Niact. Drafted by Newsom and approved by Rountree.↩
- Telegram 832, June 24, conveyed the substance of Saudi Arabia’s counterproposals to the U.S. plan for economic assistance. Wadsworth also transmitted his personal suggestions for the Department’s proposed reply to the Saudi counterproposals. (Ibid.)↩
- On June 8, Wadsworth informed the Department that, in an audience with Saud on June 5, the King had expressed his displeasure with the Tudor Engineering Company’s plan for the improvement of the Dammam port. The King preferred a plan drawn up by German engineers which, according to Saud, would require an additional $20–30 million. (Telegram 774 from Jidda; ibid., 986A.734/6–857)↩
- As a result of the agreement, concluded on April 2 by the United States and Saudi Arabia, the United States had prepared a $25,328,450 economic assistance program for Saudi Arabia. The projects included in the U.S. proposal were an improvement in the civil airport at Dhahran, port expansion at Dammam, survey of the Hejaz Railway, and a mapping project.↩
- Not further identified.↩
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This paragraph of telegram 832 reiterated the continuing U.S. desire to reimburse the Saudi Government for cost of the survey and related expenses.
Although on June 28 Wadsworth informed the Department that the King had agreed in principle to the proposed texts of the economic aid agreement and project agreements for the Dammam port and Dhahran air terminal, difficulties with the language of parts of the accord prevented final agreement before the June 30 deadline. (Telegram 852 from Jidda, June 28; Department of State, Central Files, 986a.734/ 6–857; telegram 7 from Jidda, July 1; ibid., 786a.5–MSP/7–157) Despatch 39 from Jidda, August 28, transmitted the final report on negotiations with the Saudis on the proposed economic aid agreement and related projects. (Ibid., 786a.5–MSP/8–2857)
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