Carter, Fahd Say Oil Will Not Be Used As Political Weapon in Mideast

President Carter and Crown Prince Fahd of Saudi Arabia ended two days of talks today. Emerging from their final 90-minute meeting at the White House Carter said that “so far as I know there are no disturbing differences at all” between them and “there is no threatened (oil) embargo at all.” (Meanwhile, reports from Israel said the U.S. has a peace plan draft calling for a two-stage Israeli pullback. See story P. 3.)

Both the President and Fohd told reporters that oil will not be used as a weapon to coerce the United States in its relationship with Israel during the search for a Middle East settlement. Carter said he had been personally assured by Fahd that the threat was a “completely false report.” Fahd repeated to reporters that Saudi Arabia would not use oil in the political process.

Carter’s remark that there were “no disturbing differences” immediately produced speculation that the President and the Crown Prince had reached an understanding on how to settle the Arab-Israeli conflict. Fahd had talked consistently about the “Palestinian issue” which he said is the “core” of the conflict. He spoke of a Palestinian “homeland” but in his public remarks he did not mention the PLO. President Carter did not speak of the PLO either.

But White House Press Secretary Jody Powell said yesterday that Carter and Fahd had spoken of “safe and secure boundaries” for the “homeland” which would apparently establish the “homeland” as a state. If the “homeland” presumably would be a territory adjoined to Jordan, the White House spokesman would have referred to Jordan’s borders, it was said here.

With respect to the oil embargo threat, Egyptian Foreign Minister Ismail Fahmy said on Sunday that the Arabs would use the oil weapon. That statement followed other Middle East reports to the same effect. Fahd, in an interview with a Beirut newspaper, made it plain that an oil embargo was a possibility.

ARAB DIPLOMATS ELATED WITH THE TALKS

Meanwhile, Arab diplomats and correspondents were described today as “elated” with results they understand Fahd has attained in his conversations with Carter and his principal aides. Twice yesterday and once today “they feel he is working miracles,” a source with the Saudi Arabian entourage told the Jewish Telegraphic Agency. “They are very optimistic the President will soon say he favors a Palestinian state.”

In his toast at the White House dinner last night Carter emphasized the Saudis gifts to Americans and the vast economic interests that link the two countries politically. Saudi Arabia, the President said, has “about $60 billion invested in our country, and they are one of our largest customers since we sell them about three-and-one-half billion dollars worth of U.S. produced goods each year. This trade relationship is very important and it helps to tie us together in dealing with political problems which we face in a mutual way.”

Characterizing the current Saudi-American discussions as “very productive,” Carter said, “we told them that our deep commitment was to the security and peaceful existence of Israel and they understand this very well. And we emphasized the importance of a fair and permanent peace in the Middle East. In both these commitments, the Saudi Arabians share our purpose.”

In his response to the President’s toast, Fahd again emphasized “the Palestinian issue with all its ramifications” as the “core” of the “instability in the Middle East.” He again lauded the President’s position towards the Palestinians. (See related story P. 3)