Office of the Historian

389. Memorandum From the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Rountree) to the Deputy Under Secretary of State for Economic Affairs (Dillon)1

Washington, May 13, 1958.

SUBJECT

  • Increase in Special Economic Assistance for Tunisia

Discussion:

For Fiscal Year 1958 $10 million was allocated to Tunisia as Special Economic Assistance. In view of the lack of French payments of any of the substantial aid promised for 1957 (12.5 billion francs) prior to the Sakiet incident and the increased strain we knew would be placed on French-Tunisian relations as a result of that incident, $5 million additional was earmarked in February 1958, to be utilized if required. The Embassy was notified of this action in Deptel 557 of February 12 (Tab A).2

It is now apparent that the additional $5 million will be required. A cable from Ambassador Jones on May 8, 1958 (Tab B)3 points out that the worsening of French-Tunisian relations since Sakiet has resulted in the continued withholding of anticipated money credits. The Government of Tunisia is now faced with a $30 million deficit in its [Page 845] development budget. Since a good portion of the work under that budget has already been started, the government is rapidly approaching a situation where it will not be able to pay its bills. The effect on the Tunisian public’s confidence in its government and the soundness of the Tunisian economy would be most serious if this should happen. Since it is in our interest to help maintain the present moderate, pro-U.S. government of President Bourguiba, we should do whatever we can to prevent such a situation from occurring.

Recommendation:

That you approve an increase in the Special Economic Assistance firm requirement for Tunisia from $10 to $15 million.4

  1. Source: Department of State, Central Files, 772.5–MSP/5–1358. Confidential. Drafted by Buckle; initialed by Bovey, Rountree, and Dolgin; and concurred in by Palmer, Barnes, and Van Dyke. The source text bears the handwritten notations by Barnes and Dillon: “This will formalize your earlier oral agreement to this action. RGB”; and “Approved CDD”.↩
  2. Document 375.↩
  3. Telegram 1490 from Tunis, May 8. (Department of State, Central Files, 772.5–MSP/5–758)↩
  4. Icato 374 to Tunis, May 15, informed the Embassy and Operations Mission that the additional funds were available for Tunisia. (Ibid.)↩