Foreign Relations of the United States, 1952–1954, The Near and Middle East, Volume IX, Part 2

774.5 MSP/8–3054: Telegram

No. 1361
The Acting Secretary of State to the Embassy in Egypt

secret

Washington, September 4, 1954—2:57 p.m.

382. Joint State–FOA Message. Re Embtels 268. and 271. Magnitude of Egyptian program considered September 2 with Stassen, who is prepared authorize program $20 million now and likewise prepared consider up to further $20 million for economic assistance, but for this purpose needs persuasive documentation in terms uses MSP and Public Law 480—Agricultural Trade Development and Assistance Act¹—funds and justification of anticipated obligations and expenditures of proposed projects in form discussed Usfoto 100.² Submit telegraphic summary.

Regret cannot yet authorize disclosure possibility $40 million figure to GOE at this time, but you should encourage presentation project material up to this limit.

Need for justification requested above intensified by reduction by Congress funds requested for Development Assistance, major cuts elsewhere in MSP Program and urgent claims unforeseen when budget presented—examples Greece and Pakistan.

Embassy USOM should inter alia appraise total agricultural surplus products that might move to Egypt from MSP funds, pursuant Section 402 of Act, whose local currency sales proceeds could be made available by US provide project local currency requirements. Such use should be consistent with Section 104 of MSP Appropriation Act³ which requires that local currency be used for same purposes as dollars where from granted. Congressional presentation MSP included explanation that $12 million of $20 million requested for Egypt would be in form Surplus Agricultural Commodities. Whatever aid can come from Public Law 480 resources may have to take form of agricultural goods in excess $12 million financed by MSP funds.

Embassy USOM should also consider and comment on effect loan requirements in MSP legislation. USG hopes to have loan provisions worked out at early date in form which will not impair capacity borrow from IBRD and other institutions.⁴

Smith

1. See footnote 4, Document 1350.
2. Not printed.
3. See footnote 1, Document 1359.
4. Ambassador Caffery responded to this final paragraph of telegram 382 on Sept. 9 in telegram 318, not printed. Caffery stressed that Egypt needed aid in the form of grants, not loans, and concluded with the thought that American loan assistance would not be regarded as real aid by the Egyptians. (774.5 MSP/9–954)