Foreign Relations of the United States: Diplomatic Papers, 1945, The Near East and Africa, Volume VIII

890.24/8–1645

Sir Wilfrid G. Eady to the Assistant Secretary of State (Clayton)²

London, 16 August, 1945.

Dear Mr. Clayton: I enclose a copy of the interim arrangements agreed upon to govern disposals in the Middle East. If you will confirm that this is satisfactory to you, as I understand it is, we shall make arrangements to instruct our people in the Middle East accordingly and no doubt you will be doing the same. It will be a mercy to get this piece of grit out of our shoes!

Yours sincerely,

W[ilfrid] Eady

[Enclosure]

Interim Arrangements on Disposals in the Middle East

1. These interim arrangements will apply to the sterling area countries in the Middle East (i.e. Egypt, Iraq, Palestine, Transjordan, Aden, Cyprus and Anglo-Egyptian Sudan).

2. All United States surpluses (including surpluses of identifiable Lend/Lease origin) will be sold for local currency without distinction between “essential” and “non-essential” and, subject to the concurrence of the local governments concerned, without import license or other impediments. Except by agreement, such surpluses shall not be transferred between sterling area countries or imported from outside the sterling area.

3. Local currencies from such sales will be paid into separate local currency accounts which will be freely expendable in the country of sale for the purpose only of U.S. military or other U.S. Government expenditures, except the purchase of goods for export.

4. British surpluses (excluding surpluses of identifiable L/L origin) will be freely disposed of. Proceeds of sale of “unidentifiables” will be carried to suspense pending determination of the appropriate U.S. and U.K. shares in such proceeds. It is understood that the United Kingdom Government will not institute any special recording procedure in respect of disposals of British surpluses which may be “similar” to items received on Lend/Lease.

The above interim arrangements are without prejudice to any agreement which may be reached respecting points of difference between the proposals in Mr. F. G. Lee’s letter of June 12th,³ Mr. Clayton’s letter of July 9th⁴ and the State Department’s Memorandum of April 21st⁵ as regards:-

(a) convertibility and exchange guarantee in respect of residual balances;

(b) questions which may arise from the disposal of “similar” goods.

These outstanding questions will be taken up at an early opportunity.

Either Government is entitled to ask for the termination of these arrangements on due notice.

[ London ,] 14 August, 1945.

2. Sir Wilfrid Eady was Joint Second Secretary of the British Treasury; William L. Clayton Was Assistant Secretary of State for Economic Affairs.
3. To the Chief of the Division of Lend-Lease and Surplus War Property Affairs (Fetter), not printed. Frank G. Lee was attached to the United Kingdom Treasury delegation in the United States.
4. Addressed to Mr. Lee, not printed.
5. Text incorporated in telegram 1000, May 10, 1945, 6 p.m., to Cairo, not printed.