Foreign Relations of the United States, 1958–1960, Arab-Israeli Dispute; United Arab Republic; North Africa, Volume XIII

338. Memorandum of Discussion at the 436th Meeting of the National Security Council, Washington, March 10, 1960¹

Washington, March 10, 1960

[Here follow a paragraph listing the participants at the meeting and items 1 and 2.]

3. U.S. Policy Toward Libya (NSC 5716/1; OCB Special Report on “Implications of Petroleum Developments on U.S. Operations in Libya”, dated September 23, 1959; NSC Action No. 2139; NSC 5911/1; NIE 36.5–60; NSC 6004; Memo for NSC from Executive Secretary, same subject, dated March 7, 1960)²

Mr. Gray presented this subject to the Council. (A copy of Mr. Gray’s Briefing Note is filed in the Minutes of the Meeting and another is attached to this Memorandum).³

Mr. Gray reported that the first split in NSC 6004 occurred in Paragraph 22, where Treasury and Budget proposed the insertion of a provision reading as follows: “Seek to achieve a relationship between the total amount of financial support provided to Libya by the U.S. and that provided by the U.K. which will reflect the relative importance to the two nations of their respective strategic interests in Libya.”

Secretary Anderson said this proposal was part of a fundamental issue. We had always tried to maintain bases in foreign countries by producing in the country where the base was located a favorable climate of opinion, which was established largely by our aid programs. We were increasingly coming to realize that [4½ lines of source text not declassified]. $100 million was to be spent in Libya in the next year in connection with the development of the oil resources. These expenditures plus military expenditures would have a great inflationary effect in Libya. We had announced that we had a balance-of-payments problem. We should ask other countries to help us in that problem; and Britain was in a good position to do so with respect to Libya. Secretary Anderson said the factors he had just summarized constituted the basis for the various differences of opinion in the paper.

Mr. Dillon believed two separate problems were involved. [10½ lines of source text not declassified] Any increase in U.K. assistance to Libya would not lead to a decrease in U.S. assistance, but would, on the contrary, make the Libyans feel that the U.S., as the richest country, should pay even more. In fact, the Libyans had asked that their payments be increased by 2½ times, but they would probably accept about the present payments. Mr. Dillon [11½ lines of source text not declassified] thought no provision in the paper should preclude grant assistance from the Contingency Fund to Libya in an emergency. The Air Force was now paying $4 million, which after 1960 would fall to $1 million. Libya had not agreed to this decrease, but instead wanted larger payments. The 1961 program called for an increase from $15 to $18 million in grant assistance to compensate for the decrease in the Air Force payment. Libya had asked for a $45 million payment. The President expressed astonishment, asking whether Libya wanted us to pay ten times what we were paying now. Mr. Dillon said Libya wanted us to pay 2½ times what we were paying now, since actually we were paying about $19 million for the base in the form of assistance. He agreed that the $45 million figure was ridiculous. [6 lines of source text not declassified]

Mr. Gray said that two separate issues were being discussed by the Council. He suggested that in Paragraph 22 the second sentence might read: “Continue to encourage the U.K. to provide assistance to Libya reflecting British strategic interests in Libya.” Mr. Dillon and Mr. Douglas said this suggestion was acceptable to them. Mr. Stans⁴ felt the sentence should read, “reflecting preponderant British influence.” The President asked why it was necessary to say “preponderant British influence” when U.S. companies were developing Libyan oil. Mr. Stans said the British were preponderant in Libya down to 1958 when they began to withdraw. Now the U.K. had reversed its earlier withdrawal and a recent [2½ lines of source text not declassified].

The President recalled we were holding or were about to hold a conference of industrial nations on economic development. He thought all countries should similarly confer. The U.K., the U.S. and France should be interested in consulting together instead of acting unilaterally as they are doing at present. Before a policy such as the one in Paragraph 22 was firmly adopted, we should ask all those countries with strategic interests in underdeveloped regions to discuss the problem and arrive at a decision as to what each should do. All the NATO countries and others interested in defense problems might participate in this consultation. Secretary Anderson felt it would be desirable to select the places in the world in which the U.K. was predominantly interested in order that the U.K. might be asked to bear a larger share of the burden in those places. He pointed out that the U.K. now considers Latin America a U.S. preserve.

The President wondered why we did not turn our Libyan base over to the U.K. Secretary Douglas said this base was the only factor in North Africa which enabled us to use military forces in the Middle East. Mr. Dillon said we had already agreed with the U.K. on an increase in the British share of assistance to Jordan. Perhaps we could extend these conversations to cover Libya. The President remarked that he was somewhat annoyed at being told that the U.K. had the predominant strategic interest in North Africa and the Eastern Mediterranean, but that the U.S. must pay the predominant share of the cost. Mr. Dillon felt that without the base in Libya we would be doing very little in that country. If we relinquish the base we would not need to provide much assistance to Libya. The President said of course he did not want just anyone to get the base if we did relinquish it. [1½ lines of source text not declassified] Mr. Stans believed the problem was one of priorities. We had difficulty in getting sufficient money from Congress to cover our world-wide needs. Libya was low in the scale of U.S. priorities as long as the U.K. has great strategic interests there. Mr. Dillon felt Mr. Stans’ analysis was not accurate as long as we have possession of our base in Libya. The President agreed with Mr. Dillon. He suggested we might ask the U.K. to take over our facilities in Libya and then the U.K. might ask us to man and operate the base, a procedure which would reflect the fact that we were allies. He repeated his suggestion that we should consult with the British as to the respective U.S. and U.K. strategic interests in Libya. Mr. Dillon said this question could probably be brought up with the British next week when we were holding strategic discussions with them. [14½ lines of source text not declassified]

Mr. Gray proposed the following as the last sentence of Paragraph 22: “Seek to reach an understanding with the U.K. as to the provision of assistance to Libya and as to the maintenance of military facilities there which will reflect British strategic interests in Libya.” The President said we could not use the word “predominant” in connection with British strategic interests in Libya because, as Secretary Douglas had said, our base in Libya provides us with the only means of reaching the Middle East with land-based forces. Mr. Gray asked whether the President wanted the overall study on the feasibility of rental payments for bases made. The President approved the study provided it were made by the Departments of State and Defense. [2 lines of source text not declassified]

Mr. Gray then briefed the Council on the split in Paragraph 27, where the majority wished to continue to provide assistance for development projects in Libya, insofar as possible on a gradually declining basis, shifting as rapidly as possible from grant aid to loans to be repaid from future oil revenues. Treasury wished to make no new commitments for economic assistance after FY 1961 except those required to retain the base. Budget was willing to make loans but not grants for economic assistance. The President thought that Paragraph 27 was related to Paragraphs 22 and 23. Mr. Dillon said it was necessary to continue development assistance to Libya in the form of loans. In view of future Libyan oil revenues, loans could be bankable loans and could be extended through the Export-Import Bank. Secretary Anderson felt assistance to Libya in large amounts in addition to the oil revenues which would be accruing to that country would result in a disruption of the Libyan economy. The President wondered whether the assistance would not help the economy if it were put into capital investments. Secretary Anderson felt the Libyans would not use assistance in this way. Mr. Dillon said we had been trying to induce Libya to hire experts to help with its development program. [5½ lines of source text not declassified] The President wondered whether the majority should not state what our policy is now and eliminate the provision for phasing out. Mr. Stans said he was also concerned with “phasing out” because the Financial Appendix showed no phasing out in future years. Mr. Dillon said a reduction in our assistance to Libya was not possible as long as we have the Wheelus Base, but assistance could be shifted to a loan basis. The President agreed that we must keep Wheelus, that we should shift from grant assistance to loans, and that we want to pay as little as possible for Wheelus. Mr. Gray said that Treasury and Budget felt we should get out of the economic assistance business in view of the prospect that Libya would be receiving increased revenues from its oil. The majority on the other hand felt we should continue to give economic assistance to Libya. Mr. Dillon said the majority wanted to give Libya such assistance as was necessary to retain the base. Mr. Gray asked whether in Paragraph 27 we should tie our assistance to maintenance of the base. The President said that even if we abandon the base we might want to give Libya assistance. We could not just forget Libya even if we did not have a base there.

The National Security Council:⁵

a. Discussed the draft statement of policy on the subject contained in NSC 6004; in the light of the views of the Joint Chiefs of Staff thereon, transmitted by the reference memorandum of March 7, 1960.

b. Adopted the statement of policy in NSC 6004, subject to the following amendments:

(1) Page 17, paragraph 22: Delete the bracketed sentence and the footnote thereto; and insert the new paragraph below following paragraph 22 (renumbering subsequent paragraphs accordingly):

“Seek to reach an understanding with the United Kingdom as to the provision of assistance to Libya and as to the maintenance of military facilities there which will reflect British strategic interests in Libya.”

(2) Page 17, old paragraph 23: Delete the bracketed phrase and the footnote thereto, revising the first line of the second footnote to read as follows:

“* The Department of Defense is being directed to undertake promptly, in collaboration with the Department of State, an overall study of the feasibility”

(3) Page 19, old paragraph 27: Include the Majority version on the left, and delete the Treasury–Budget version on the right and the footnote thereto.

(4) Page 19, old paragraph 28: Delete the bracketed clause and the footnote thereto, in view of the new paragraph added following paragraph 22.

Note:NSC 6004, as amended by the action in b above, subsequently approved by the President; circulated as NSC 6004/1⁶ for implementation by all appropriate Executive departments and agencies of the U.S. Government; and referred to the Operations Coordinating Agency as the coordinating agency. The Directive in the footnote to old paragraph 23 of NSC 6004, as approved by the President, subsequently transmitted to the Secretaries of Defense and State for appropriate implementation.⁷

[Here follow a note about the President’s and Dillon’s departure from the meeting and item 4.]

Marion W. Boggs

1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Drafted by Boggs on March 14.
2. Regarding NSC 5716/1, see footnote 2, Document 333. Regarding the September 23, 1959, OCB report, see footnote 2, supra. Regarding NSC Action No. 2139, see footnote 3, supra. NSC 5911/1 is printed as Document 268. A copy of NIE 36.5–60, “The Outlook for Libya,” January 12, is in Department of State, INR–NIE Files. NSC 6004 is ibid.,S/P–NSC Files: Lot 62 D 1. A copy of Lay’s March 7 memorandum is ibid.
3. Not attached to the source text. The minutes of all National Security Council meetings in the Eisenhower administration are in the National Archives and Records Administration, RG 273, Records of the National Security Council, Official Meeting Minutes File.
4. Maurice H. Stans, Director, Bureau of the Budget.
5. Paragraphs a and b and the Note that follows constitute NSC Action No 2192. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)
6. Infra.
7. The directive was transmitted in a March 15 memorandum from Lay to Gates and Herter. (Department of State, S/S–NSC Files: Lot 63 D 351)