780.5 MSP/8–3053: Telegram

No. 150
The Ambassador in Egypt (Caffery) to the Department of State1

top secret

272. Other recommendations of third RECNE meeting held Cairo, August 2829:

II. United States economic aid fiscal year 1954.

(a)
RECNE took note of Department’s objectives in requiring “belt-tightening” by Israel and gradually diminishing United States grant aid with reduction to $50 to 55 million fiscal year 1954.
(b)

Preliminary reactions to apportionment as among other countries: Caffery wishes at least $25 million be available for use at appropriate time in resolution Suez base problem.

Moose feels $17 million maximum for Syria not unrealistic, but observes (1) Syrian interest in economic aid secondary to military; (2) we should do nothing discourage Syrians in their stated intent finance GHAB with borrowed money; (3) Euphrates development requires detailed negotiations Syria, Iraq, Turkey.

Berry holds present view that no special economic aid now needed in Iraq. Will take another look in light regional and other considerations and report directly to Department.

Lynch goes along with $10 million figure for Jordan.

Bruins states no present demonstrated need for special economic aid Lebanon. Decision as to United States grant component in financing Litani construction should be made soonest after completion phase II Point IV survey and Lebanon efforts finance with local and loan capital are known.

Jones urges significant United States grant aid program Saudi Arabia of magnitude several million dollars in fields water development, irrigation and roads, justifiable on grounds United States [Page 415]economic and strategic interests Saudi Arabia. Saudi Arabia program should stand comparison with those in other Arab States.

(c)
RECNE members unprepared comment on latest Departmental proposals regarding specific projects this time. (Exception is Egypt–Caffery goes along with all projects listed in TCA document.) Will review with economic and FOA staffs and comment directly to Department.
(d)
Lack of enthusiasm for regional projects in general and highway proposals in particular. Haifa free-port with connecting roads unrealistic for fiscal year 1954. Syrians more interested in roads opening Jezirah than in communications with other countries. Iraq desires system putting Baghdad on trunk line, rather than feeder. Mission chiefs will comment further after more study.

III. Arab Development Bank.

General agreement as to value of idea, but doubts as to present prospects. Capital from oil poor states unobtainable. As for oil rich states: Iraq’s revenues committed to development board for next five years; Saudi Arabia still chronically overspent and in any event prefers capital exports other Arab States on basis political largesse, rather than economic investment; Kuwaiur revenues fully employed in local development and relieving fiscal pressure on United States. Skepticism as to motives behind Arab League’s proposal or Arab ability follow through. United States should watch and encourage this development but not count on it.

IV. Jerusalem.2

Department’s proposal studied with interest. Doubt expressed by Caffery whether Catholic support for Article 1 (d) of Swedish draft resolution would be forthcoming since this tends confirm Greek Orthodox in their possession of certain holy places. Russell feels idea attractive and suggests (1) if put into effect Israel be invited renounce all future claims old Jerusalem; (2) care be taken keep USSR and satellites out of United Nations overseer machinery. View other members is that revived Swedish proposal would be viewed by Arabs as formal recognition Israel fait accompli and that we are better off with situation as now stands. Proposal worthy of re-examination in framework over-all attack on all outstanding issues between Arabs and Jews.

V. Jordan–Yarmuk Development.

Broad principle of unified development Jordan Valley for maximum refugee resettlement and greatest good to greatest number highly laudable. Caffery thinks TVA proposals could with some difficulty be sold to Egyptians as they now stand. Russell states Israel would strongly object, but TVA report represents only sound policy and should be implemented. Lynch states TVA proposals unrealistic in light current political situation and attempted payment would retard rather than advance United States objectives in area. Moose and Bruins have grave doubts as to political feasibility TVA proposals.

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There is also hesitation recommend that United States take major policy step in light of highly conflicting engineering judgments as to technical feasibility as between TVA and TCA/Jordan. Feeling is that United States Government should be completely sure of ground technically before embarking on political course action. Among technical questions to be firmly answered are (1) suitability Tiberias as reservoir view evaporation and geological faults, and (2) firm opinion from Baker–Harza engineers on spot as to feasibility cost time of construction Maqarbn Dam. Baker–Harza study should forward as expeditiously as possible while more convincing data regarding Tiberias as reservoir should be sought from all sources including Israel.

VI. UNRWA.

RECNE took note of projected firm line of Carver report to United Nations General Assembly.3 Agreed would be useful take further diplomatic steps convince Arabs relief has time limit and necessity for more expeditious cooperation on resettlement.

Caffery
  1. Repeated to the Arab capitals, London, Paris, Tel Aviv, and Ankara.
  2. For documentation on this subject, see Documents 381 ff.
  3. Not further identified.