Foreign Relations of the United States, 1947, The Near East and Africa, Volume V

NEA Files: Lot 55–D36

Summary Memorandum of Informal Conversations Relating to Social and Economic Affairs in the Middle East¹

secret

Washington, October 23 to 30 [28?], 1947²

I

Opportunity for informal exchange of views and information and discussion of social and economic affairs in the Middle East was afforded by the presence in Washington of Mr. Denis Greenhill of the Middle East Secretariat, British Foreign Office.

Full advantage was taken of this opportunity through a series of frank and informal talks attended by representatives of: the British Treasury delegation in Washington (Mr. A. Christelow), and of the British Embassy in Washington (Mr. Anthony E. Percival), in addition to Mr. Greenhill; and by representatives of the interested offices of the Department of State, namely the Offices of Near Eastern and African Affairs, of European Affairs, of Financial and Economic Development, of International Trade Policy, of Transport and Communications, of Information and Educational Exchange, and of Intelligence Research.

The subject of British and American interest in the social and economic affairs of the Middle East and in the raising of living standards in that area had been raised in a memorandum transmitted by Mr. Bevin to the Secretary of State at Moscow in March 1947. Further explanations of British views and interests in the subject had been communicated in informal conversations between Mr. Greenhill and a representative of the American Embassy at London. Previously, in the spring of 1944, British and American interests in the Middle East had been reviewed in informal conversations held in London between Mr. Wallace Murray, Director of the Office of Near Eastern and African Affairs of the Department of State and officials of the British Foreign Office. Pursuant to these conversations, parallel instructions had been transmitted by the Foreign Office and the Department of State to the British and American diplomatic missions in the Middle East in April 1944. These instructions called upon the respective British and American Missions at each post to arrange for the conduct of Anglo-American relations throughout the area in a spirit of cooperation based on mutual frankness and goodwill.

The informal conversations held in Washington in October 1947 again demonstrated the usefulness of frank and full informal exchange of views and information between British and American representatives with reference to matters of mutual interest involved in the social and economic affairs of the Middle East.

II

The point of departure was the conviction that the maintenance of security and tranquillity in the Middle East is a necessary condition of world peace. A prerequisite for the maintenance of security and tranquillity in the Middle East is the raising of the social, cultural and economic standards of the peoples of the area. If these standards are to be raised there must be constructive foreign influences in the Middle East. It is considered that Great Britain and the United States are among the countries of the world which are in the best position to exercise such constructive influences designed to further the interests and well-being of the peoples of the Middle East. It is therefore essential that Great Britain and the United States cooperate in strengthening each other’s respective positions in the Middle East in order that, by working with mutual understanding and goodwill, they can attain the objective of assisting the economic and cultural development of the Middle East in a manner which will tend to raise its cultural and general economic standards to the benefit of the peoples concerned.

It must be understood that in cooperating with each other there is no intention on the part of either Great Britain or the United States of barring or preventing any other country from having free intercourse with the countries of the Middle East for the purpose of contributing in a constructive manner to their economic and cultural advance. In fact, contributions of this character from other like-minded countries would be welcomed.

In the light of the foregoing, it was the expressed view of the British and American representatives that in a matter of such importance to both the United States and Great Britain, both Governments should endeavor to prevent either foreign countries, or commercial interests, or any other influences from making capital for themselves by playing Great Britain and the United States off against each other. Great Britain and the United States should each follow the general principle that each country endeavor to strengthen the other’s position in the Middle East on the basis of mutual respect and cooperation. It should be contrary to their respective policies for either country to make efforts to strengthen itself or to increase its influence at the expense of the other.

The policy of each Government in the Middle East is to lend the other all possible and proper support for the attainment of the objective referred to above. In cooperating with each other Great Britain and the United States should, of course, take care not to embark on policies which would tend to curtail the economic freedom of the countries of the Middle East, including their right to engage in free economic and cultural intercourse with other nations.

III

The close affinity of British and American objectives, and many similarities of method were revealed in this review of social and economic affairs in the Middle East. Representatives on both sides considered the salient points which emerged from the informal discussions to be as follows:

a) Solutions to the urgent social and economic problems of the Middle East along lines compatible with Western concepts and ideals would significantly influence the political orientation of Middle East countries.

b) The responsibility for the solution of these problems should be carried to the fullest possible extent by the Middle Eastern countries themselves, and whenever practicable the United States and the United Kingdom should seek directly or indirectly to encourage these countries to undertake constructive activity.

c) All practical support should be given to sound schemes of economic development designed to raise the general standard of living in Middle Eastern countries. It was recognized that there are inherent difficulties in meeting the immediate problems of the area with such long term solutions. Where large schemes are not yet possible efforts should be made to encourage the establishment of “sample” projects of an economic size which would serve to stimulate Governments to constructive action at a later date.

d) All major development plans for the Middle East should constantly be considered by the United States and United Kingdom Governments in the light of their respective commitments and plans for economic recovery, reconstruction and development elsewhere, e.g., the European Recovery Program and British Colonial Schemes.

e) Pending general adoption and implementation of the Charter for an International Trade Organization, questions of commercial policy which arise with reference to the area should be dealt with by the United States and the United Kingdom in accordance with the principles embodied in the Geneva Draft of that Charter. The two nations have already agreed to act in accordance with the principles set forth in the document entitled “Proposals for the Expansion of World Trade and Employment” and are parties to the General Agreement on Tariffs and Trade negotiated in Geneva in 1947.

f) It is in the interest of the countries of the Middle East as well as of the United Kingdom and the United States for the countries of the Middle East to increase their earnings of American dollars. The representatives of both the United Kingdom and the United States accordingly share the opinion that both the British and American Governments should in general with due regard to established channels of trade, pursue policies which would tend to encourage an increase in exports from the Middle East to the United States.

g) There is an important common interest in the maintenance of conditions in the Middle East which will permit the oil industry to function effectively and to increase its substantial contribution to the raising of the standards of living in the area. Similar considerations apply to the development of civil air facilities.

h) It is highly important for the United States and United Kingdom to establish by all useful means at their disposal the widest possible cultural and technical links with the countries of the Middle East, and particularly with those groups who may be most influential in promoting the sound economic and cultural development of their countries and the raising of the cultural and economic living standards of the population of the Middle East generally.

i) The exchanges of information and views effected through these informal conversations demonstrated the advantages and usefulness of such exchanges; and similar opportunities for maintaining close informal contact between representatives of the two Governments on these matters of common interest should be availed of whenever suitable occasion may offer.

IV

Among the various matters with regard to which the representatives of both countries found themselves holding the same views were:

a) The desirability of a strengthening of the Economic Committee of the Arab League Council to enable it to function as an instrument of constructive collaboration. Any attempt by the Arabs to use it for undesirable economic or political objectives should be resisted.

b) That the establishment at this time of a United Nations regional economic organization in the Middle East was not favored.

c) That fullest informal cooperation between the staff of the diplomatic missions and consular offices of the United States in the various countries of the Middle East and the staff of the British Middle East Office as well as with the staffs of the British diplomatic missions and consular offices should be encouraged.

d) That the present intention of the Iraq Government to undertake considerable economic development of that country justifies support. The responsibility for ultimate decisions must rest throughout with the Iraq Government, but consideration should be given to the most effective machinery to be devised to produce quick results, making appropriate use of the projected Central Development Board and existing advisory staff. To the extent that the Iraq Government finds external borrowing necessary for the implementation of sound specific projects arising out of its plans, support should be given to application to the International Bank for investment funds.

e) That the United States Government is prepared at the request of the Iraqi Government to cooperate with the British Government in affording to the Government of Iraq technical advice and aid in development plans. The British Government would welcome such cooperation.

f) That the balanced development of the national educational systems of Middle Eastern countries is of high importance, and the Governments of these countries should be encouraged to pay special attention to the provision of technical education.

g) That the economic and social conditions of Egypt gave cause for concern and justified every appropriate effort being made to induce the Egyptian Government to undertake a progressive domestic development program involving full use of local capital available.

h) That whilst His Majesty’s Government were at present thinking in terms of a small technical Nile Board, the usefulness of creating a Nile Valley Authority which would genuinely safeguard the interests of all should be further considered. His Majesty’s Government would welcome any observations or suggestions that the United States Government may feel disposed to make in this connection.

i) That in the interim, to offset population pressure in Egypt and to permit development in the Sudan, every encouragement should be given to the implementation of suitable existing schemes for the full utilisation of the Nile waters. The feasibility of, and possible problems involved in, the provision of dollars for financing the Lake Tana project should receive further study.

j) That it is a matter of high importance to keep in closest touch with educated opinion in Egypt, as in all Middle East countries, and that the early filling of existing vacancies in Egyptian universities with a carefully selected United States and United Kingdom staff provides an excellent method of doing so.

k) That a progressive social and economic program in Iran is necessary. “Sample projects” undertaken with the aid of foreign advisers are of value for this purpose. In appropriate cases support may be given to applications for the financing of sound development projects by the International Bank.

l) That further exchange of information is desirable in considering the problems of the Anglo-Iranian Oil Company, Arabian American Oil Company, etc., and on the manner in which the oil companies are meeting their problems of employer-employee and government relationships.

m) That the economic situation of the Levant States indicates the desirability of encouraging development on a scale commensurate with their resources. This area might well offer good opportunities of initiating “sample projects”.

n) That pipeline and refinery activities in the Levant might help in relieving the dollar situation and should give some employment to skilled and semi-skilled labour thrown out of employment by the departure of the Allied forces.

o) That the Levant States should be encouraged to seek a friendly and reasonable resolution of their financial difference with the French. Similarly it is desirable that the French should be encouraged to adopt a friendly and reasonable attitude in this regard.

p) That British participation in the increasing commercial activity in all parts of Saudi Arabia would be welcome to the United States Government.

q) That if the employment of any substantial number of foreign experts by the Saudi Arabian Government becomes a likely prospect, it might be desirable to consider the formulation of a standard form of contract of employment which would serve to protect the interests of all concerned.

r) That in view of the conflicting activities of the various medical organizations in Ethiopia, it would be desirable if the authority of the Ethiopian Minister of Public Health were built up and future public health activities put under his direction.

s) That the United States Government would take note of the fact that His Majesty’s Government, in view of the balance of payment prospects, attached importance to the principle that dollars resulting from any dollar loan or royalties be made available for expenditure without restriction in any currency area, and not be confined to payments for supplies, services, etc., provided by the United States only.³

1. Jointly prepared by American and British participants.
2. Minutes of meetings with the British, prepared in the Department of State, disclose that discussions concerning Middle East regional economic problems and Iraq took place on October 23 and concerning Iran and Egypt the following day. The two groups reconvened on October 27, after a weekend adjournment, for discussions on, Syria, Lebanon, Transjordan, and Ethiopia. They concluded the meetings on October 28 with talks on Saudi Arabia, Yemen, and Kuwait and on regional matters. There are no Minutes for October 29 and 30. Copies of the Minutes were sent to London in instruction 484, December 5, and are filed with that instruction under 890.50/10–347.
3. Copies of the Summary Memorandum were sent to the Embassy in London on December 5. The transmitting instruction, No. 484, stated: “This memorandum sets forth the views of the representatives of the Department of State and or the British Embassy and Foreign Office who participated in the conversations, as to the manner in which the United States and Great Britain might most effectively cooperate in approaching social and economic problems in the Middle East. The Acting Secretary of State is of the view that the memorandum, having been approved in principle by the interested economic and geographic offices, though possibly subject to certain amendments of detail, can be considered to reflect the present social and economic policies of the Department in the Middle East.

   It was clearly understood by the British and American representatives who contributed to the preparation of this summary memorandum that the Department of State or the Foreign Office might, after further review of the memorandum, wish to propose some amendments of detail, in which case notification to this effect would be made through diplomatic channel. Accordingly, if it becomes necessary to propose any changes as a result of the considered review now being given to the memorandum in the Department, appropriate instructions win be transmitted to the Embassy.” (890.50/10–347)