95. Memorandum of Conversation1


  • Political and Economic Requirements for Growing Saudi Oil Production


  • H.E. Hisham Nazir, Minister of State and President of the Central Planning Organization, Saudi Arabia
  • H.E. Ibrahim al-Sowayel, Ambassador of Saudi Arabia
  • The Honorable William J. Porter, Under Secretary of State for Political Affairs
  • Mr. George Bennsky, Director, Office of Fuels and Energy
  • Mr. Francois M. Dickman, Director, Arabian Peninsula Affairs

SUMMARY. Nazir conveyed Saudi Arabia’s continued desire to cooperate with the U.S. but the Saudis want this friendship reciprocated by acts and not talk. The Kingdom’s oil production is already in excess of revenue requirements. To go beyond present production levels requires economic and political justifications including: (a) U.S. cooperation in Saudi efforts to industrialize and diversify the economy to replace a non-renewable asset; and (b) U.S. policy initiatives to improve the political atmosphere in the Middle East. Ambassador Porter said the U.S. was interested in working with the Saudis to find productive use for their surplus revenues and to improve the atmosphere in the Middle East. The latter, as Ambassador Porter kept pointing out, was very difficult to do without getting a negotiating process started. Nazir argued that U.S. insistence on negotiations while continuing to supply substantial arms, credits, and grants to Israel only froze the situation. This had encouraged Israel’s principal political party to pursue annexation policies in newly occupied territories. He hoped for a change in U.S. policy soon; otherwise Saudi Arabia’s close ties with the U.S. will become almost untenable. END SUMMARY.

After welcoming the Minister’s visit to Washington, Ambassador Porter recalled that he had first visited Saudi Arabia in 1938 and had almost been assigned as Ambassador in 1965. He had not been back to Saudi Arabia for ten years and would like to see its development. [Page 347] Ambassador Porter observed that King Faisal had been following balanced economic and political policies in a difficult world. The U.S. has admired Faisal’s efforts and his leadership and recognized that it had not been easy for Saudi Arabia to maintain its many Western connections. The U.S. remains seriously interested in maintaining close relations with Saudi Arabia in the economic field and in efforts to reach a settlement of the Arab-Israel issue.

Minister Nazir said he had been instructed to deliver a message from his Government which was that Saudi Arabia also wanted to continue its friendly relations with the U.S. However, it was interested in activating this friendship rather than talking about it. Saudi Arabia was presently producing oil at its maximum capacity and beyond the country’s revenue requirements. For Saudi Arabia’s oil production to go beyond this level, there must be economic and political justification. The first would mean U.S. cooperation in Saudi Arabia’s efforts to build up its infrastructure and industrialize in order to create an alternative source of income for a non-renewable asset. The second would be an improvement in the political atmosphere of the Middle East. By this, Saudi Arabia did not want mere U.S. expressions of intention but active U.S. participation in seeking a solution to the Arab-Israel problem.

Ambassador Porter said that the U.S. Government understood the Saudi position. The U.S. was deeply engaged in trying to establish in the Middle East the kind of atmosphere the Minister had mentioned. This effort has been accorded the highest priority as President Nixon himself had said on September 5 and as Secretary Kissinger had reiterated a few days ago. The U.S., however, has great difficulty in bringing about what is essential for this atmosphere—creating a negotiating situation.

Ambassador Porter observed he had been involved in his years in the Foreign Service in many difficult negotiations including those with the Communists in Paris over Vietnam. Even during the years when the situation looked hopeless, the U.S. had persisted. We had learned from long experience that there is no substitute for negotiations. Without some form of contact, it is impossible to work out anything. In Paris the U.S. had an advantage in that it was a direct participant. In the Arab-Israel matter, it is not. The U.S. cannot work miracles and impose solutions but it will continue to work to bring the parties together to get the negotiating process started. Ambassador Porter added that he had lived 30 years in the Arab world and understood the depth of feeling over the Palestine problem.

Something had to be done to bring it to a satisfactory solution but there was no substitute for bringing the parties together. With the passage of time, changes occur and if there is a constant effort to reach [Page 348] a solution and a contact between the parties occurs, then patience will pay off. War was no substitute. While it gives whoever is strongest a temporary advantage, a final settlement can only come if there is a solution which meets the legitimate aspirations of both sides and which the younger generation will accept.

With regard to economic relations, Ambassador Porter said the U.S. supports Saudi aspirations to diversify the Kingdom’s resources and to use U.S. investment as it desires. We recognize that Saudi Arabia is providing the world with a great resource, and the U.S. Government is encouraging American business firms to see if there are areas of cooperation which are acceptable to Saudi Arabia. Ambassador Porter hoped the Minister’s talks in Washington would convince him of the serious attention being given at high levels in the U.S. Government to cooperate with the Saudis to invest their surplus revenues productively. At the same time, the U.S. did not underestimate at all the need to bring about an improvement in the political climate in the Middle East the Minister had mentioned.

Nazir replied that what Ambassador Porter had said about negotiations in terms of political science is correct but in this instance, the circumstances are different. Since there is a victor who continues to receive the support of the U.S. in the form of arms, credits, grants, and other assistance, his position is frozen and negotiations are almost useless. Israel has no incentive to change the situation. In fact, the platform of its principal political party now calls for measures which would result in outright annexation of territories occupied during the June 1967 war. The introduction of the U.S. as a third party in the Arab-Israel question would be useful but there are other things the U.S. could also do to show its intentions. It could end its unrestricted arms supply and economic aid to Israel, for example. By only pushing for a policy of negotiation, the U.S. was supporting the position of the victor.

Ambassador Porter understood and appreciated this frank statement. However, what really was essential was the disposition of the two principals to begin talking. There was no way for the U.S. to move unless this was assured. If there was an indication of a disposition for serious contact, the U.S. would be able to take positive steps to help the negotiations get started and achieve useful results. But it is very difficult to do anything in the absence of assurance that the two parties are going to talk.

Nazir commented that under these circumstances and if U.S. aid to Israel continues, the U.S. in effect is asking the Arabs to accept the annexation of Arab lands by force of arms.

Ambassador Porter replied that the U.S. was not asking the Arabs to do this at all. What we believed in was that contact between both [Page 349] sides was necessary to have the gradual emergence of a position that could be worked out. The fact that contacts were underway would cause many nations, including the U.S., to review what they could do to encourage further progress in the negotiating process. Getting negotiations going would bring all kinds of useful results outside of the negotiations themselves. We understood it was difficult for Arab leaders to contemplate this but we believed it could be done.

Nazir said he hoped that the U.S. would consider changing its position. Otherwise, it will mean that the situation in the Middle East will remain frozen and Saudi Arabia’s close ties with the U.S. will be very difficult to maintain; they will be “almost untenable.” Nazir said the point of his mission in Washington was to encourage the U.S. to do what it can in the UN and outside to take an active role. Given Israel’s heavy dependence on the U.S. for arms and aid, Saudi Arabia was convinced the U.S. could do more. Saudi Arabia did not see how the U.S. could condone annexation of territory by acts of war; this was not congruent with American aspirations. As friends of the U.S., the Saudis wanted the U.S. to change this impression.

Ambassador Porter said that the impression the Minister referred to had been built up among those who had been hurt but the U.S. had never condoned military aggrandizement. Whenever the latter occurs, it has an unstabilizing effect if it is maintained. But once it occurs, there is no substitute to getting the parties together to try and settle the matter by the force of logic rather than by the force of arms.

Nazir said the purpose of his message had been two-fold: to try and persuade the U.S. to do more on the political aspects of the Middle East problem and to get more U.S. support for Saudi economic development efforts. He wanted to stress that the two were intertwined. Saudi Arabia was embarked on a challenging social experiment to develop its economy and human resources where the private sector played a major role with the government remaining in the background. If this social experiment succeeded, it might be copied by others in the Middle East. Saudi Arabia would be extremely unhappy if the lack of a Middle East settlement would upset Saudi development.

Ambassador Porter replied that all that the Minister had said simply added to U.S. determination to try and bring about something in the Middle East that will unlock the impasse. Meanwhile, we continued to appreciate Saudi restraint in view of the apparent political difficulties. The Minister’s views had been clear and valuable, as is Saudi Arabia’s friendship for the U.S., and these views will be conveyed throughout the U.S. Government.

  1. Summary: Under Secretary of State for Political Affairs Porter and CPO President Hisham Nazir discussed the developing economic relationship between the United States and Saudi Arabia and U.S. policy toward the Arab-Israeli dispute.

    Source: Washington National Records Center, OASD Files: FRC 330–78–0002, Saudi Arabia (15 November 1973). Confidential. Drafted by Dickman; cleared by Atherton; approved in P on October 9. The meeting took place at the Department of State. According to Nazir’s schedule, the meeting took place at 10 a.m. (National Archives, RG 59, Central Foreign Policy File, 1970–73, POL 7 Saudi Arabia)