Foreign Relations of the United States, 1946, The Near East and Africa, Volume VII

Committee Secretariat Staff Files: Lot 122

Report of the Ad Hoc Subcommittee on Near East Economic Policy¹⁵

confidential
CITAS D–7

[Washington,] November 19, 1946.

At the CITAS meeting of October 14, an Ad Hoc Subcommittee consisting of representatives of NEA and the economic offices was asked to examine the document “American Economic Policy in the Middle East” (ECEFP D–71/45)¹⁶ with a view to (1) determining whether the economic policies set forth therein are still valid; (2) preparing recommendations for revision, if necessary; and (3) preparing recommendations for the implementation of policies in that document or its revision.

Messrs. Gay—CP, Shaw—CP, Ansara—FN, Lincoln—ED, and Rountree—NEA have acted upon the instruction of the Committee and submit the following report:

(1) The broad economic policies set forth in ECEFP D–71/45 are still valid, although this document recently has been supplemented by a statement which has been included by NEA in the over-all policy statement in relation to the area.¹⁷ The Subcommittee believes that the revised document should be considered the present statement of United States policy.

(2) It is not considered necessary that the long-range policy objectives of the United States toward the area be revised. It is recognized that some of the objectives cannot be accomplished within a short period; for example, development of a mechanism for international cooperation in the economic work of the area will require careful planning and will probably be achieved only after considerable time. However, it is felt that the objective itself is sound and should remain a long-range policy of this Government.

(3) The Subcommittee feels that the main problems have been the limitations upon our ability to implement the United States economic policy toward the area. It is recognized that the present strained economic, financial, technical and personnel resources of the United States are limiting factors upon the extent of our assistance to the several countries. Within these limitations, however, the Subcommittee feels that we are making progress in implementing our policies. Economic development of certain countries of the area is being assisted through the extension of loans and credits and by other means. We are cooperating in the development of an international trade organization, designed for the widest possible participation, which looks toward increased world trade and production and which will remove forms of discriminatory treatment which would hamper the movement of goods to and out of the several countries. Exchange difficulties are being solved as rapidly as possible. CP is proceeding with commercial treaty work as rapidly as practicable. Although the field personnel problem remains acute, we have been successful in providing field offices with junior officers to assist with their economic work. While every effort is being made to meet the large number of requests by NEA countries for economic and technical advisers, that problem also remains acute. Under two of the long-range objectives set forth in the memorandum, however, little or no progress has been made. These are:

(a) To encourage the creation and the efficient operation of a regional institution which should be initiated, supported and operated by the local Middle East Governments for the purpose of improving the standards of agriculture, transportation, communications, public health and related matters. (An organization of this type has been created within the framework of the Arab League, but the extent of United States efforts to promote the efficient operation of this body has been very limited.)

(b) Little or no progress has been made in developing mutual coordination between outside powers interested in the area, particularly, Great Britain, the U.S.S.R. and France.

The Subcommittee recommends that the Committee consider the following specific suggestions as to steps, in addition to the Department’s current efforts, which should be taken toward the implementation of the stated policies of this Government:

(a) It has been proposed that a meeting of principal economic officers in the area be held in the near future at a convenient capital in the area. The purpose of such a meeting would be to discuss economic affairs common to the area, to consider issues in which the interests of major powers conflict, and to bring all economic personnel up-to-date on this country’s trade and financial programs. Such a meeting has been proposed on several previous occasions, but for reasons existing at the particular times it has never developed. It also has been suggested that a survey of the resources of the area be undertaken with a view to enlarging the line of products which economically can be marketed abroad. This would include not only finding additional products with export possibilities, but improving the marketability of current exports to the United States. Memoranda from Mr. Shaw expanding upon these suggestions are attached. (See Enclosure 3 [Enclosures 2 and 3])¹⁸

(b) One of the current difficulties in effectively implementing American policies in the area is the shortage of qualified economic personnel in several State Department offices. It is suggested that the Committee consider this problem with a view to assisting with whatever means are at its disposal in the assignment of qualified officers, including the establishment of adequate budgets for this purpose.

(c) It is suggested that the Committee continue to study the problem of international cooperation in the area, with a view to increasing international economic coordination, both by outside powers interested in the area and by the local government offices. Specifically, the Subcommittee recommends:

1. That the Committee continue consideration of the proposal outlined in D–6¹⁹ for the establishment of a mechanism for international cooperation of the powers, with the view of proceeding with some such plan at the appropriate time.

2. That the Committee support the proposal (Ref. CITAS M–4)²⁰ that the United States Government recommend to ECOSOC that the Subcommission on Economic Development undertake a survey of the economic conditions and problems of the area.

3. That the Committee consider the position of the United States in regard to economic activities of the Arab League with a view to determining the attitude of the United States with regard to this form of cooperation among the several countries, and what action, if any, the United States should take in respect to this activity.

4. That the Committee consider despatch 2198, dated October 22, 1946, from London, setting forth the desire of the British for American participation in the advisory program of the British Middle East Office in Cairo. A copy of this despatch is attached. (See Enclosure 4)²¹

15. To the Committee on Iran, Turkey, and the Arab States (CITAS). The report was submitted to the Committee on December 4, 1946.
16. See report by the Coordinating Committee of the Department of State, May 2, 1945, and footnote 5, Foreign Relations, 1945, vol. viii, p. 34.
17. Not found in Department files.
18. Memoranda by Mr. Shaw to Mr. Gay, dated October 24 and November 8, 1946. Both memoranda were entitled “Implementing United States Economic Policy for the Near East”; neither printed.
19. CITAS D–6, October 8, 1946, not printed; it recommended that “The United States with other major powers and in collaboration with the Near East countries establish a regional economic organization for the Near East under the Economic and Social Council of the United Nations. The Organization should have no coercive or executive powers but should function wholly on the basis of discussion, study, report and recommendation”; also “The organization should help coordinate and implement for the Near East the postwar economic objectives and programs of the major powers and the Near East countries, help to reconcile their economic interests and policies, attempt to restrain unilateral action, mediate conflicting interests and lay a solid basis for a peaceful, efficient and integrated economic development of the Near East” (Lot 122)
20. Minutes of meeting of October 14 not printed.
21. Not printed.