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

145. Letter From the Assistant Secretary of State for Near Eastern and South Asian Affairs (Sisco) to the President of the Export-Import Bank (Kearns)¹

Washington, October 28, 1970.

Dear Henry,

I am sure that you are aware from your visit to Saudi Arabia last January of the political as well as the economic importance of this Middle Eastern country to the United States. I know that the Export-Import Bank is involved with a number of worthwhile projects in Saudi Arabia, and we are grateful for the keen interest which you personally have taken in expanding the Bank’s credit facilities to that country.

For some time now, the Saudi Government has been planning to modernize its Coast Guard and Frontier Force, a law enforcement body subordinate to the Ministry of Interior and responsible for patrolling Saudi Arabia’s extensive land and maritime borders. At the invitation of the Saudi Arabian Government, the AID Office of Public Safety conducted a survey in 1969 of the Coast Guard/Frontier Force’s needs and requirements. The survey team’s recommendations were contained in a report presented to Saudi Minister of Interior Prince Fahd in January 1970. A copy of that report is enclosed.²

During his October 1969 visit to Washington as the guest of the Secretary of State, Prince Fahd raised with the Secretary and myself the issue of possible U.S. Government assistance to Saudi Arabia in carrying out this modernization program.³ We made no commitment to do so but did express to Prince Fahd our willingness to provide whatever help we could once he and his staff had had an opportunity to study the recommendations of the survey team report. While the question of U.S. Government financing for this modernization program was not raised specifically during Fahd’s visit, the Prince has since made a strong plea to Ambassador Thacher in Jidda for credit assistance in carrying out the recommendations of the AID survey team report.⁴ He was quite upset when informed that, because of Congressional difficulties involving the Foreign Military Sales bill, no credits from this source could be made available to Saudi Arabia at this time. Prince Fahd noted that this modernization program has a high priority within the Saudi Government and asserted that failure of the USG to assist its Saudi friends in its implementation might be misunderstood by the King and by the Saudi public. He strongly urged that we consider alternative ways in which we might provide some credit assistance for this program, and he specifically mentioned the possibility of ExIm Bank help.

I recognize that the Bank normally prefers to consider specific proposals from U.S. exporters rather than give a judgment in principle about its willingness to support a given project. Under the circumstances, however, we believe it would be most helpful were your staff to review the recommendations of the AID survey team to determine whether or not there are aspects of this program which might be suitable for ExIm Bank financing for export of U.S. equipment and contractor services. I am aware, of course, of the strict ceiling placed on the Bank’s ability to offer credit for sales of military equipment to developed countries. While no clear USG decision has been made regarding Saudi Arabia’s status as “developed” or “less developed,” we understand that in practice the Bank has long treated Saudi Arabia as “developed” for purposes of export credits.

Another possibility would be to examine which components of the recommended modernization program could appropriately be regarded as “non-military” for purposes of ExIm Bank financing. For example, it strikes me that certain equipment for the force, including boats, vehicles, transport aircraft, and communications equipment, is required for anti-smuggling control, maritime safety, and other civil police functions rather than for para-military purposes. The proposed program also includes construction projects presently estimated at $50 million and maintenance and training contracts potentially worth approximately $30 million. The total price tag currently placed on this program is about $190 million, of which about $43 million are costs of equipment procurement.

I would appreciate very much your taking a look at this program and letting me know as soon as feasible whether there is any way in which the Bank can be helpful. If you wish, I will be pleased to have members of my staff sit down with officers from the Bank to discuss this matter in further detail.⁵

Sincerely yours,

Joseph J. Sisco ⁶

1. Source: National Archives, RG 59, Central Files 1970–73, DEF 12–5 SAUD. Secret. Drafted by Wrampelmeier and cleared in NEA/RA, NEA, AID/OPS, and PM/MAS.
2. Not enclosed.
3. See Document 131.
4. Reported in telegram 3877 from Jidda, October 20. (National Archives, RG 59, Central Files 1970–73, DEF 1 SAUD)
5. In telegram 4062 from Jidda, November 7, Thacher reported that he told Fahd that the Export-Import Bank agreed to extend credit assistance to Saudi Arabia to offset some of the costs of modernizing the CG/FF. (Ibid.) In a December 2 letter to Sisco, Thacher wrote that he was “grateful” for Sisco’s “personal intervention with Henry Kearns which made it possible for Prince Fahd to go off to London in a much happier frame of mind toward the USG.” (Ibid., POL 3 UAE)
6. Printed from a copy that bears Sisco’s typed signature with an indication that he signed the original.