867N.01/1–3045

Memorandum Prepared in the Department of State

Palestine: Economic Development

(A Summary)

1.
Large-scale economic developments, because they are essential to the increase of Palestinian production and because they are insistently being demanded by Jewish groups, indicate the necessity for the formulation of a policy with respect to the economic development of Palestine in conformity with the proposed form of government. The low standard of living, which augments the friction between Arabs and Jews, would be ameliorated by large-scale development projects that would provide more electric power for industry and more irrigated land for agriculture.
2.
It is recommended that large-scale development projects should be the joint responsibility of the International Organization and the Trustee Government in order that the natural resources may be exploited for the benefit of all the people of Palestine. It is suggested that the Trustee Government create a Palestine Development Corporation which would undertake an economic survey of Palestine, propose development projects to the Trustee Government, and undertake those projects authorized by the Trustee Government after being [Page 686]certified by the International Organization as being in accordance with the terms of the Charter.
3.
This recommendation is made:
a)
because of the necessity of increasing Palestinian production;
b)
because a competitive struggle between Arabs and Jews to control large-scale developments would foster a political conflict;
c)
because large-scale development projects would not attract private capital investment for profit and because a laissez-faire development policy would lead to serious political complications which would threaten the peace of Palestine.