116. Memorandum From Acting Director of Central Intelligence Walters to the President’s Assistant for National Security Affairs (Kissinger)1
SUBJECT
- Indications of Saudi Reservations Regarding Implementation of U.S.-Saudi Agreements
SUMMARY: There are recent indications that a conscious decision has been taken by the Saudi leadership to delay the full implementation of specific development and other agreements concluded with the United States Government. Factors contributing to this policy involve serious doubts on the part of senior Saudi officials about the real intentions of the U.S. concerning peace in the Middle East. Furthermore, there are strong indications that the Saudi leadership will not consider questions of oil production increases or oil price reductions until renewed assurances are received that the U.S. intends to continue its efforts toward achieving a Middle East peace settlement. END OF SUMMARY
1. From conversations with several senior and middle-level Saudi officials, [less than 1 line not declassified] have recently detected a lack of enthusiasm on the part of Saudi officials for actual implementation of the “new relationship” between the U.S. and Saudi Arabia. While the established working groups continue to perform, they are only producing recommendations which are subject to further review. In Riyadh, these views, [6½ lines not declassified]. Thus, the views [less than 1 line not declassified] set forth below, may well reflect accurately those of more senior Saudi policy makers.
2. Working level Saudi economic planners and economists feel that a conscious decision has been taken by the Saudi leadership to go slow in the implementation of specific development and other projects with the United States Government. A number of factors seem to have contributed to this decision. First, they believe that there is considerable doubt about the real intentions of President Ford toward the Arab World in general and Saudi Arabia specifically. President Ford’s past [Page 417] statements and positions on the Arab-Israeli issue have been examined closely by the Saudi leadership and have done nothing to allay this concern. Although they are in no sense hostile to President Ford, the Saudis have been anxiously waiting for some sign or gesture by the new administration that it sincerely intends to proceed with equal vigor with the policies of the former administration. Since there has been no sign and no tangible progress recently toward a peace settlement, the Saudi Government has consciously adopted a “wait and see” policy. No additional progress in Saudi-U.S. relations can be expected until there is some renewed movement toward an area settlement. (It should be noted that these statements were made to us prior to the announcement of your planned visit to the Middle East 8–13 October 1974.)
3. A second factor causing concern in Saudi leadership circles as of early to mid-September was the sudden increase in rumors, some of which originated from official Egyptian sources, that you will resign before the end of the year. Saudi officials believe that if this is true, it would be a clear sign that the American Government had taken a definite step back from its new policy of evenhandedness in the Arab-Israeli dispute.
4. Working level Saudi officials concerned with petroleum matters believe that Saudi oil production increases and the question of significant price reductions will not receive serious positive consideration from the Saudi leadership until they have received renewed assurances that the U.S. Government intends to continue its efforts for a peace settlement. Although storage capacity problems and adverse weather conditions may have been partially responsible for any recent decrease in Saudi oil production, it is totally unrealistic to think that this would have been undertaken without explicit agreement of the highest levels of the Saudi Government. Without progress towards an area settlement, the Saudi leadership feels itself under no obligation to look for alternate solutions to such technical problems and is likely to continue to go along with the majority of other Organization of Petroleum Exporting Countries (OPEC) in matters of pricing and production.
5. On the purely internal development side, Saudi economic planners have increasingly heard the argument put forth by senior officials such as Nazir and Aba al-Khayl that a rational Saudi development plan can be implemented solely on the income of current Saudi reserves and a greatly decreased level of oil production. Current Saudi free reserves (i.e., reserves over and above current expenditures and obligations) are estimated at US $15 billion. Saudi internal development schemes could be financed on the returns from no-risk investment of these funds alone.
[Page 418]6. Senior Saudi officials in Jidda, [names not declassified] agree that the honeymoon euphoria has cooled noticeably since April. This seems to be the result of the following factors:
a. There has been a natural letdown following the emotional high resulting from Prince Fahd’s trip to Washington and Nixon’s visit to Saudi Arabia in June. This normal psychological reaction was accentuated dramatically when President Nixon resigned and was replaced by a personality unknown to the Saudis and whom they believe may harbor a pro-Israeli bias.
b. The visit of Treasury Secretary Simon in July and the follow-up activity associated with it has been accompanied by extensive publicity in Washington, much of which was not coordinated in advance with Saudi officials in Jidda, which has left the Saudis with the feeling that the U.S. has been hustling them too much.
c. The Saudis are also beginning to have growing doubts about whether the political quid pro quo they bargained for is really going to be paid off. They remember that former President Nixon promised to devote the full energies of the USG to bring about a “just and lasting peace” in the Middle East based on the “full implementation” of United Nations Security Council Resolutions 242 and 338. Although the intelligent Saudi leadership is thoroughly mindful and appreciative of the obstacles and distractions which are delaying the peace effort (and readily concede that many of these obstacles are the result of Arab intransigence on specific issues), they are nonetheless disturbed at the prospect that Saudi efforts to lend economic support to the U.S. (i.e., massive purchases of USG securities and efforts to control rising oil prices) may give the impression to their critics that they have gone too far in supporting the U.S. in exchange for an equitable political settlement.
7. This information is being made available to Ambassador Akins in Jidda. No other dissemination of this information is being made.
Summary: Walters provided Kissinger with evidence of Saudi dissatisfaction in the wake of Nixon’s resignation and Riyadh’s decision to delay the establishment of the “new relationship” between the United States and Saudi Arabia.
Source: Central Intelligence Agency, Executive Registry Files, Job 80M01048A, Box 4, Folder S–34. Secret; [handling restriction not declassified]. David H. Blee, Associate Deputy Director for Operations, signed for Walters.
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