U.S. Treasury Secretary G. William Miller renewed assurances to Saudi Arabia today that the freeze of Iranian assests in American banks was an extraordinary measure that set no precedent for Saudi funds in similar U.S. accounts.
"The situation that gave rise to the freezing of Iranian assets was a unique situation," he said at a joint news conference with his Saudi counterpart, Finance Minister Mohammed Aba Khail.
Aba Khail asked whether the American explanation satisified Saudi Arabia, replied: "Mr. Miller explained this act clearly and the extraordinary circumstances that led to it. We cannot take what happened in Iran as a precedent. This explanation made by Mr. Miller was sufficient."
The Carter administrations decision to block about $8 billion of Iranian government funds on deposit with U.S. financial institutions aroused considerable private concern here among government officials and financiers. At the same time the Saudi government has been careful to express in public its understanding of the U.S. move, as Aba Khail did again today.
The Saudi reaction is key because of the wealthy oil kingdom's huge reservices. Riyadh's usused profits are estimated to total about $50 billion, more than two-thirds of which are on deposit in U.S. banks or other financial institutions.
Any move to shift these investments to other countries could unsettle U.S. financial markets. In addition, because of its financial and political authority in the region, Saudi Arabia traditionally sets the tone for other Persian Gulf oil producers, such as the United Arab Emirates and Kuwait.
Miller, who met with Aba Khail yesterday, said the freeze was one of the major topics of conversion. The Saudi finance minister is reported to be among the younger Saudi leaders who have expressed concern privately about the decision.
A Saudi official explained that concern here arises from fear that Saudi Arabia and the United States, despite good relations now, could find themselves in a confrontation over the Arab-Israeli conflict or a possible oil embargo such as the one that followed the 1973 Middle East war.
If Washington can freeze Tehran's assets in response to the taking of hostages at the U.S. Embassy in Iran, he asked, what is to prevent it from a similar move to counter an oil shortage stemming from an embargo imposed on the basis of U.S. support for Israel?
The most immediate goal of Miller's trip was to press the Carter administration's case for continued high levels of Saudi oil production and moderation in any price increases decided at next month's meeting of the Organization of Petroleum Exporting Countries in Caracas. Nearly 15 percent of total U.S. oil is supplied by the Saudis.
Aba Khail emphasized in the news conference that the Saudi government is still making up its mind on both issues, and Miller said he had received no commitment.
Responding to a plea from Carter, Crown Prince Fahd agreed last summer to raise production by one million barrels to about 9.5 million a day through the end of 1979. The decision whether to drop back to a lower level in January could have a substantial impact on availability of oil in the United States. In addition, the Saudis are expected to carry substantial weight in OPEC price deliberations next month, where great pressure is expected to bring official OPEC prices more closely into line with higher spot market levels.