The Secretary of State to the Consulate General at Tripoli 1
238. FYI McGhee recd Pelt and Power June 13, Clark participating.
Pelt reviewed comprehensively Libyan constitutional development and econ problems. Expressed hope for constitution by mid-Aug and parliamentary elections in Nov followed by estab duly constituted Fed Govt. He expects transfer of powers will coincide with estab of Govt. Unable predict what elections may bring in way of change, if any. Pelt estimates Fed Govt budget at 100,000 pounds. In this connection, uncertainty re sources and coordination of financial support is Pelt’s reason for Washington trip.
Re Geneva mtg, Pelt disappointed over Libya’s intention adhere sterling area. He described decision as virtually eliminating possibility multi-national participation in budget deficit. Said UK control over Libyan currency plus probable preponderance Brit advisers wld lead to criticism in UNGA that UN res re Libya not being properly implemented. He is not certain Egypts will attack implementation in UNGA. While in Cairo he found evidence that Egypt policy is principally that of Salaheddin and Assam [ Azzam ] Pasha and disliked in some influential quarters. (On Clark’s recommendation, Dept planning circulate soon in certain LA and Arab FonOffs plus Rome and possibly others, statement of US views on implementation of UN res re Libya to lav groundwork for later enlisting support if Egypts create issue in UNGA.)
In reply McGhee referred to US support of UN res and to our interest in stable Libya which wld not become cause of internatl friction. He pointed out, however, that it was for Libyans to decide whether join sterling area and to select own advisers. He said we are pleased see UK willing stabilize currency, assume deficits and provide advisers. Pelt agreed test will be how UK uses her influence in Libya. If other nations discriminated against, Libya will become source of friction. Pelt said Libyan use of advisers of various nations wld greatly relieve situation.
After expressing appreciation of Pelt’s understanding of our base requirements in Libya, McGhee told Pelt that $1,500,000 has been included in mutual security program for FY 1952 (Pres’s msg on this program being forwarded) now before Cong and expressed view that, in light of this though not as quid pro quo, Libyans shld see way clear conclude base agreement without additional compensation. (He did not tell Pelt, of course, that we hope have auth in negots to make a direct payment to Libya of an amt yet to be determined in lieu full [Page 1331]amt contemplated under mil security program if such proves necessary to obtaining base rights). He also mentioned benefits Libyan economy will derive from increased mil expenditures. Power attempted point out that Point Four program supposed be altruistic and therefore unsuitable as quid pro quo for base rights in Libya when gratuitous elsewhere. McGhee stated old Point Four concept must be forgotten in connection with mutual security program. He said its greater flexibility shld make it possible to present at least part of $1,500,000 as available for relieving Libyan budget deficit by being earmarked for projects which might fall within scope of Libyan budget. Pelt and Power agreed that such an arrangement wld probably be palatable to Libyans and preferable to describing $1,500,000 as available generally for technical assistance under Point Four, which to Libyans has come to mean available for payment of US experts’ salaries. McGhee emphasized that only small part of mutual security program funds will be used to pay US technicians. Pelt agreeably surprised this new info and felt Libyan budget problem will be considerably eased if Gong takes favorable action on mutual security program. It was made clear to Pelt that projects contained in Pres’s budget presentation to Cong are illustrative and that, in final analysis, Libyan-approved projects will be ones supported by mutual security program within terms of enabling Legis. McGhee emphasized mutual security program is not, in its application to Libya, to be considered price for bases. Two matters need not necessarily be tied together, but Libyans shld be able see that if they denied US bases, application of mutual security program to Libya might be affected. From foregoing, it will be clear suggested change in tactics in base negots in last para of Tripoli’s 407 of June 22 is disapproved by Dept.
Throughout conversation McGhee made it clear US opposed to contd UN control Libya after independence. Said UN res does not contemplate continuation control, vehicle for which wld have been UN trusteeship. Majority in UN by its vote declared Libya capable of sovereignty and now estopped from contending that UN must continue control on grounds Libya incapable. Pelt mentioned need for taking wind out of Arab criticism that new type of colonialism or imperialism is developing in Libya. McGhee defended Brit subvention of Libya, comparing case to Jordan, which is not criticized. He said attacks on our bases and charges of imperialism are straight Commie line which must not be permitted to deter us from our objective.
In summary Dept sanguine that conversation has helped Pelt considerably and that prospects of avoiding his opposition in any UN debate greatly enhanced.