Foreign Relations of the United States, 1969–1976, Volume XXIV, Middle East Region and Arabian Peninsula, 1969–1972; Jordan, September 1970

136. Telegram From the Embassy in Saudi Arabia to the Department of State ¹

Jidda, January 27, 1970, 1315Z.

307. Subject: Fahd’s Requests to Secretary Rogers. Following is from Ambassador in Riyadh:

Met with Prince Fahd at his home evening Jan 26. After conveying greetings from Secretary and other friends, I said could now provide some answers to questions he had put at his Oct 13 meeting with Secretary.² Fahd asked that I convey his greetings to Secretary, Assistant Secretary Sisco and “other friends” and recalled with obviously genuine pleasure his visit to US:

1. Barter Oil: Drawing on Dept’s CA–6046,³ I recalled we had immediately approached ARAMCO to see what might be feasible. ARAMCO had pointed out barter oil deal specifically limited to East European countries for what struck us as very good reason that it should not displace commercial oil on Western European markets. Principal revenue earner is of course commercial oil and we had been assured subject of increasing offtake already under active discussion between ARAMCO and MinPet and that prospects seem good for a substantial increase in offtake coming year. So far as US concerned I noted study currently underway within USG re possibility eliminating existing oil import quotas. Ultimate outcome still unclear, but it highly unlikely any specific country quotas will result. Should import quotas be at any time removed, I felt personally confident that ARAMCO offtakers would be among those scrambling for share of any such market. In any case offtake under constant discussion between ARAMCO and MinPet where it belongs. Fahd readily agreed increased offtake is most effective way increase Saudi revenues and seemed satisfied with response.

2. Defense Program Payments: Recalling his request for stretchout of Hawk payments, I explained that MODA Prince Sultan had subsequently clarified this⁴ to indicate Saudi interest in equalizing Hawk, SAMP and RAMP payments if this should be possible. State/DOD had studied request as amended in some depth, and I then went through with him in detail para 4 CA–311.⁵ Stressed SAG should weigh carefully potential damage to its creditworthiness in return for only modest relief. I suggested that before responding, matter be discussed with MinFinance Prince Masa’ad and SAMA Governor Anwar Ali who best able assess possible damage to SAG’s financial reputation. Perhaps even King should be consulted. I recalled it was under HM’s aegis that previously badly tarnished Saudi financial image had been changed to one of high reliability. Any such excellent credit image should not be cast aside lightly. Nevertheless, if SAG wished, State/DOD willing pursue equalization schedule with other interested USG agencies and see what might be worked out. Speaking personally and as friend, I hoped SAG will not go this route. Fahd was clearly impressed with creditworthiness risk which he had probably not heretofore considered. He requested copy of illustrative table to permit study by his colleagues. Pursuant State/DOD 11738⁶ I had to tell him not authorized do so since figures set forth therein not firm, but I permitted him take some notes on clear understanding tables represent no definitive commitment. They could change considerably as result intra-USG consultation. He professed understand situation and seemed appreciative effort that had been made. He indicated might be in touch with us again on this matter after consultation with his cabinet colleagues.

3. Coast Guard/Frontier Force (CG/FF): Told Fahd I had few days earlier sent to him and to Prince Sultan, through FonOff, copies of Arabic translation DA survey report which should be read in conjunction overall AID/OPS survey report.⁷ English texts of both reports and Arabic translation of AID/OPS report had been sent to him earlier. We assume SAG will now study reports and advise us of how it plans to proceed on CG/FF development. While no commitment possible, I thought USG would be willing study with SAG how it might be able help. Fahd said he had not seen my letter or DA report, but expressed appreciation for USG interest as evidenced by AID/OPS–DA surveys. He was particularly grateful that survey reports had been translated into Arabic. He reiterated SAG’s determination strengthen CG/FF and said he will wish discuss reports with CG/FF Commander General Malik. Thereafter SAG will make firm decision how to proceed.

4. Navy: I recalled that shortly after my return to SA last Nov, MODA Prince Sultan sent word that SAG accepted US naval survey presented early 1969 “with only minor modifications.” When I had actually seen Saudi naval concept,⁸ I had to tell Prince Sultan that my preliminary review suggested more than “minor modifications” involved and in all frankness concept seemed a bit grandiose given Saudi manpower and financial limitations. I had pointed out Saudi ideas will have to be studied by USG to see what, if anything, we can do to help and such study currently underway in DOD. I had also suggested to Sultan that Saudis might be well advised take force goals outlined in US naval survey as first bite. If such goals achieved there no reason why Saudis cannot proceed with further naval development if they feel additional requirement exists. In meantime, however, it is a mistake to establish unrealistic goals. Sultan had in fact told me Saudi naval force goals could be subject for discussion and modification. I also referred to Sultan’s recent request to Secretary Laird for four senior military evaluators, including one naval person, to assess existing and proposed Saudi military programs in terms of Saudi economic situation and plans.⁹ While USG still studying request, I could only applaud this wise idea and had commended it to Washington.¹⁰ Fahd agreed real need exists for such overall evaluation and seemed pleased with my remarks on subject.

5. Comment: Fahd expressed his deep appreciation for Secretary’s and Assistant Secretary Sisco’s continuing interest in Saudi problems. He noted our discussion had been “between friends” and frank evaluations we had given helpful. Fahd is no financial nor economic expert and some of points probably over his head. Told him I would also mention defense payments matter to Sultan when I meet with him again Jan 27¹¹ and he agreed this desirable. Interest payments (para 2 SecState 11738) did not arise. We have now replied to all of Fahd’s questions to Secretary and, while further discussions may develop on one or more of these subjects, our immediate obligations arising from Fahd’s October visit to US may be considered as completed.

Eilts

1. Source: National Archives, RG 59, Central Files 1970–73, POL SAUD–US. Secret; Limdis. It was repeated to the Secretary of Defense, CHUSMTM, and CINCSTRIKE/MEAFSA.
2. See Document 131.
3. In airgram CA–6046 to Jidda, November 7, 1969, the Department stated that ARAMCO expected Saudi production to increase in the coming year, and that the marketing of barter oil was limited and (given the U.S. import quota system) the oil would not be marketable in the United States. (National Archives, RG 59, Central Files 1967–69, PET 17 SAUD)
4. As reported in telegram 1054 from Dhahran, November 28, 1969. (Ibid., DEF 12–5 SAUD)
5. In airgram CA–311 to Jidda, January 19, the Department stated that in light of Fahd’s request for a stretch out of payments, it and the Defense Department had examined the Hawk, SAMP, and RAMP repayment schedules and enclosed a table indicating the resulting reduction in payments per year. (Ibid., DEF 19–8 US–SAUD)
6. In telegram 11738 to Dhahran, January 24, the Departments of State and Defense stated that negotiations over repayments might not produce the optimum figures expected by the Saudis. (Ibid.)
7. As reported in telegram 249 from Jidda, January 22. (Ibid., DEF 1 SAUD) The report was officially presented to Saudi Arabia in a letter from Laird to Prince Sultan, January 28. (Washington National Records Center, RG 330, OSD Files: FRC 330–76–067, Box 83, Saudi Arabia, 1970)
8. In telegram 3832 from Jidda, November 19, 1969, Eilts reported that Prince Sultan would ask the United States for assistance in expanding the Saudi Navy beyond the limits suggested in the naval survey. Eilts cautioned that the United States should try to scale down Saudi thinking and determine the degree to which the United States was willing to assist in terms of vessels and training in keeping with the naval survey. (National Archives, RG 59, Central Files 1967–69, DEF 6–2 SAUD)
9. This request was sent in the form of a letter from Prince Sultan to Laird, December 26, 1969, delivered January 6, 1970. (Ibid., DEF 1 SAUD)
10. Reported in telegram 139 from Jidda, January 13. (Ibid.)
11. See footnote 4, Document 137.