Office of the Historian

874.00 TA/1–754

No. 1268
Memorandum by the Director of the Office of Near Eastern Affairs (Hart) to the Deputy Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Jernegan)1

secret
Washington, January 7, 1954.

Subject:

  • Economic Aid to Egypt

The suggestion of Ambassador Stevenson (Cairo’s 732)2 was discussed by BNA with Ambassador Aldrich. The Ambassador suggested [Page 2192] no further approaches to the British for the time being. He felt that Stevenson should bring the idea to the attention of the Foreign Office himself. In view of the strong pressure recently applied to the British on the subject of Egypt, I am inclined to concur that further approaches at this time would not be productive.

With respect to the extension of aid by the US, I believe that economic aid should not be extended at this moment. The principal reasons for this are:

1.
Ambassador Caffery has not made a case that economic aid would affect favorably the base negotiations.
2.
The neutralist campaign in Egypt. Extension of aid at this time would make it appear that the US was acting under threat and would tend to encourage extremists and neutralist tendencies in other countries of the area. I am particularly concerned over the possible reaction in Saudi Arabia, Iraq and Syria to the extension of large blocks of aid to Egypt unless it is simultaneously quite clear that the “neutralist campaign” was a tactical maneuver which has been dropped.

Once we have reached the conclusion that there is no longer any hope of an agreement at present, we might consider extending some aid in a final effort to retain Western influence in Egypt.

  1. The following appears beside Jernegan’s name on the source text: “O. K.”↩
  2. In telegram 732 from Cairo, Jan. 2, not printed, Ambassador Caffery reported that Stevenson had seen him and said that he and Fawzi several days earlier had agreed that they should try to improve the atmosphere; therefore, Stevenson had recommended to London that 15 million pounds in blocked sterling balances should be released on Jan. 1. London, however, would agree to release only 5 million. Caffery thought this was unfortunate and recommended that the Department consider taking up the idea with the Foreign Office. (641.74/1–254)↩