312. Memorandum of Conversation0

SUBJECT

  • U.S. Assistance to Saudi Arabia

PARTICIPANTS

  • The Secretary
  • Abdul Rahman Azzam, Special Representative of King Saud
  • Mr. William M. Rountree, NEA
  • Mr. David D. Newsom, NE

Azzam Pasha referred to an earlier luncheon meeting with Mr. Allen Dulles1 at which time he had put forward certain informal proposals for possible U.S. assistance to Saudi Arabia. He said he had since obtained King Saud’s authority to present these proposals formally to the Secretary.

Two problems were of immediate concern: the decline in the value of the riyal and the rise in food prices. He said both of these were of immediate concern because the advent of the pilgrimage would bring more than 600,000 persons from outside Saudi Arabia into the country. When there is so much adverse propaganda against Saudi Arabia, it would be unfortunate, he said, if the food situation was such that people went away from the pilgrimage with an impression of a serious economic situation in the country.

Azzam, in presenting these problems, reiterated that the problems of Aqaba and Buraimi also remained of importance. He stressed that King Saud still needed a major political victory in the area.

In answer to a question from the Secretary on recent events in Saudi Arabia, Azzam replied that while it might appear that something dangerous was happening, he personally believed that Saudi Arabia is the most stable country in the area although there may be a continuing possibility of upsets within the country. He did not believe the monarchy was in danger. Saudi Arabia, he said, was not a country where a coup d’état could take place “in a night.” The tribes remain important and loyal to the King and he doubted that the army could defeat the tribes in a civil war.

Azzam said he was worried, however, at King’s moral position in the Arab world and the Moslem world where he had held a position of [Page 721]arbiter and adviser. The UAR was now seeking to put the King in a bad light through their extensive propaganda campaign against him.

Faisal’s assumption of powers,2 he said, was undoubtedly brought about by pressures on the King. Under the circumstances, he believed it to be the best way out. The King, he said, has to adapt himself to the new circumstances in the country of increased responsibilities and a larger bureaucracy which make the former concentration of power impracticable. Faisal, he said, has in the past been polite to his brother and for this reason and because of his health has not pressed for power. Others in the family had undoubtedly pressed the King to spread the power for the good of the King and the country. This should not be considered a coup d’état. The King retained full authority [1 line of source text not declassified] Azzam said he was generally pleased that the family had banded together and chosen the present move as a way out.

Azzam added that the King still required strong support for his policy and that the recent events had not lessened the necessity for some actions by the United States to this end.

Turning to the financial situation, the Secretary asked if the International Monetary Fund was not working on this problem. Azzam replied that IMF advisers had gone to Saudi Arabia and believed they would be able to straighten out the temporary financial crisis. The country’s debt was not overwhelming and, according to Zaki Saad, the IMF adviser, the country should be able to pull out of the present situation in 18 months. This period could be speeded up, however, if the United States could lend money to Saudi Arabia for a riyal stabilization fund. Zaki Saad had mentioned a figure of $50,000,000 as being required. If, at the same time, the United States could send some surplus food to arrive during the pilgrimage, the two matters would have a markedly beneficial effect.

In reply to a question from the Secretary as to whether these were Azzam’s personal ideas, the latter replied that he had been given authority by the King to express them officially.

Azzam then turned to a discussion of the Buraimi issue, explaining that he had, over the past several months, talked with Selwyn Lloyd, with representatives of the Baghdad Pact powers, and with Sir Pierson Dixon in New York.

[Page 722]

The Secretary commented that he now understood the Saudis wished to discuss this matter with the British rather than with the Sultan of Muscat.

Azzam said the King did not believe a meeting with the Sultan would be useful without some previous understanding on the basic issues. He said the British had now suggested further talks through the Pakistanis. This was all right, he said, but the two parties were already in contact and his talks with Dixon had produced little. The British, he said, had killed his talks by inaction.

Mr. Rountree said it was the Department’s hope that the British might come up with some new idea on the matter. The suggestion for further talks, he said, might imply that they had a new idea.

Azzam said he did not believe the United States, if it could do nothing on this matter, should continue to give the King the impression that something might be done. The United States, he said, should be frank with the King and, if nothing could be done, say so.

Referring to the Aqaba matter, he said the removal of the Israeli warships from the Gulf was of pressing importance in view of the advent of the pilgrimage season.

The Secretary said that the United States had been successful in keeping these ships tied up. Azzam acknowledged this and said that he was grateful but that as long as the ships were in the Gulf, they represented potential threats. He said he believed the ships were of little real military value to Israel.

Mr. Rountree commented that the Department may have attached more importance to the ships being tied up than had the Saudis. He said the United States had pointed out to the Israelis the application of the armistice agreement with Egypt to any movement of these warships.

Azzam replied that the entrance of these ships into the Gulf was in violation of the armistice agreement. The ships’ presence represented profit from aggression; they should have been removed when the Israeli troops withdrew from Sinai. This would have brought about a true restoration of the status quo. Merely tieing the ships up has satisfied neither Moslem nor Arab, particularly as the pilgrimage approaches.

The Secretary commented that having them tied up was better than having them maneuvering. Azzam agreed, but pointed out that the Gulf was a small place and that the presence of the ships, besides being a direct threat, gave propaganda opportunities to the King’s enemies. The King, he said, has lost the propaganda battle on every issue with which he has been connected: Buraimi, Aqaba, Oman. He took a position based on friendship with the United States and this position has gotten him nothing. Nasser is laughing at Saud’s inability to do anything. Azzam said the King may have been wrong to accept responsibility for these [Page 723]issues, but whether right or wrong, the fact remained that he had suffered a psychological defeat.

Azzam pointed out that Aqaba had always been of interest to Saud and that in assuming responsibility for this issue, he was merely taking back responsibility he had previously given to Egypt. He acted under the assumption that the status quo would be re-established in the Gulf.

The Secretary said he could assure Azzam that, if there was any way the United States could help in this situation, it was prepared to do so. There were certain things, however, which the United States did not feel it could properly do. It was willing to exert influence on the British and the Israelis, but not willing to coerce. A lot of states, he said, wish the United States to coerce third states, but they did not wish to be coerced themselves. The United States did not wish to start on a course which could make other states fearful of relations with the United States.

Azzam repeated that he believed the United States should also be frank with the King on Aqaba. However, he said, while the King might understand the United States relations with the British, he would find it harder to understand that the United States, on whom Israel depended for its very life, could not exert greater influence on the Israelis.

The Secretary, in concluding, said that he would look into the economic suggestions to see if there were any steps which could be taken quickly.3

Azzam stressed the necessity for doing something, particularly with surplus food, to bring down prices. He said he would also discuss this and the stabilization fund matter with others in the United States Government, including, possibly, Secretary of the Treasury Anderson. The Secretary said he had no objection to Azzam’s doing this.

  1. Source: Department of State, Central Files, 786A.5–MSP/3–2658. Secret. Drafted by Newsom and cleared by Rountree.
  2. No record of this meeting has been found.
  3. On March 22 King Saud delegated major responsibilities for formulating internal, external, and financial policy of Saudi Arabia to his brother, Crown Prince Faisal, who was already Prime Minister and Foreign Minister. King Saud gave Faisal [text not declassified] instructions, [text not declassified] which made it clear, [text not declassified] that Faisal would remain a loyal assistant under supervision of the King. (Despatch 196 from Jidda, March 31; Department of State, Central Files, 786A.00/3–3158)
  4. In telegram 1374 to Jidda, March 28, which summarized this DullesAzzam conversation, the Department instructed the Embassy to contact Faisal or an appropriate Foreign Office official to ascertain why the special food problem connected with the pilgrimage to Mecca had not been mentioned in earlier U.S.-Saudi discussions on PL–480. Should the Saudis request PL–480 food, they would have to provide supporting justification to fulfill Congressional legislative requirements. The Department was sending a U.S. Department of Agriculture official already in the area to assist the Embassy and the Saudi Government in meeting this problem. (Ibid., 411.86A41/3–2858)