Bonn (Apr. 7)
— West German moves toward closer economic relations with the Arab oil-producing countries is clearing the way for large-scale arms sales to Saudi Arabia, government sources have indicated. Bonn, acting in concert with France, is expected to borrow large sums from the oil-rich states as part of an economic deal that would include major German-made weapons systems and jointly manufactured Franco-German weaponry for the Saudis.
Chancellor Helmut Schmidt, who is scheduled to visit Saudi Arabia and possibly other Persian Gulf oil producing nations beginning April 27, is strongly in favor of the plan, the sources said.
Consultations on the projected borrowings and on other forms of cooperation with Saudi Arabia will be held here this week. The sources confirmed reports that the Arab loans would amount to 20 billion Marks. These funds would be used to finance unemployment programs and other government projects rather than to meet budgetary deficits.
Observers believe that the borrowing plan is a severe setback for opponents of arms sales to the Saudis in the Bundestag and within Schmidt’s Social Democratic Party (SPD). Schmidt himself has made clear that the cooperation with France in this matter would broaden the basis of support for the arms package.