Office of the Historian

262. Memorandum of a Conversation, Department of State, Washington, September 25, 1957, 11:59 a.m.1

Washington, September 25, 1957, 11:59 a.m.

SUBJECT

  • Pella Plan for Middle East Development Fund

PARTICIPANTS

  • Italian:
    • Sig. Giuseppe Pella, Italian Foreign Minister
    • Amb. Manlio Brosio, Italian Ambassador
    • Sig. Massimo Magistrati, Director General, Political Affairs, Italian Foreign Office
    • Sig. Attilio Cattani, Director General, Economic Affairs, Italian Foreign Office
  • U.S.:
    • The Secretary
    • Ambassador Zellerbach
    • Mr. C. Burke Elbrick, EUR
    • Mr. H. G. Torbert, Jr., WE
    • Mr. A. Jose DeSeabra, Interpreter

Foreign Minister Pella said that for some time now he has had an “idée fixe”, that of a “triangular system” to give economic assistance to countries in the Middle East. The assistance would not be given directly by the U.S. but by those countries receiving loan aid from the U.S. The local currency counterpart equivalent of the amount to be repaid the U.S. under previous loan programs would go into a fund administered and controlled by the U.S. At the rate of 60 to 70 million dollars a year, in about 15 years the fund could build up to approximately 1 billion dollars; the intake could be increased through sale of bonds, etc.

One of the consequences of such economic aid to the Middle East would be that of increasing exports of equipment and goods in general from European countries to the Middle East. Thus additional markets would be obtained by European nations, at the same time that the economic development of the Middle East would be substantially increased.

Before such a program could be put into operation, certain difficulties would have to be ironed out:

1.
The U.S. would be by right and duty the sole judge of what countries should receive what aid.
2.
An Act of Congress would be needed. However, it might be easier (here Pella is speaking from long experience as Finance Minister) to obtain a deferment on the payment of debts than to have new appropriations voted.

[Page 585]

One argument in favor of this plan is that at present the U.S. is spending more than 60 million dollars a year in aid to the Middle East.

The Secretary commented that our general policy is to oppose the creation of new international funds which were frequently presented. (For example: the Japanese had suggested the day before that we contribute $500 million to one for the Far East and the Latin Americans had already suggested one.) However, he did not wish absolutely to foreclose a new idea and suggested Mr. Pella might wish to write up his proposal in somewhat more detail and discuss it with Ambassador Zellerbach.2

  1. Source: Department of State, Central Files, 880.00/9–2557. Confidential. Drafted by Torbert. The time of the meeting is from Dulles’ Appointment Book. (Princeton University Library, Dulles Papers) Italian Foreign Minister Pella was in the United States as head of the Italian Delegation to the 12th session of the U.N. General Assembly.↩
  2. On October 28, Foreign Minister Pella forwarded to Ambassador Zellerbach a memorandum embodying Pella’s proposals for a Middle East Development Fund under cover of an undated letter from Pella to Secretary Dulles. The text of the memorandum and the covering letter were forwarded to the Department of State in despatch 543 from Rome, October 30. (Department of State, Central Files, 880.0000/10–3057) On November 29, Zellerbach forwarded to Secretary Dulles a signed copy of the two documents and a supplementary memorandum from the Italian Foreign Ministry. In his covering letter to Dulles, Zellerbach stated that his reaction to the basic political premise on which Pella’s proposal rested was generally positive. Zellerbach also noted that Pella’s stated aim was to obtain U.S. assent before discussing the matter with his European colleagues. (Ibid., 880.0000/11–2957)↩