333. Memorandum From the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Rountree) to the Acting Secretary of State1
SUBJECT
- Syrian Refinery—Proposal for U.S. Financial Support to Selective Western Bids
Discussion:
Reported final bids in which the United States is most interested are as follows: Procon, $15.7 million, Czechoslovakia, $15.5 million, Lummus, $14.9 million, and Ralph Parsons, $19 million. The [Page 590] Department is unable to assess, however, just how firm the foregoing bids are and whether escalation clauses and credit terms are included. Full information on the Lummus bid is not available. The Procon bid, while said to be technically very satisfactory, lacks attraction since the Company is unable to arrange credits to finance repayment over a period of ten years.
Recent conversations with the United Kingdom on the feasibility of British supporting Procon by the loan of P.L. 480 sales proceeds, while unsuccessful in terms of interesting the British Government in financing the project, have revealed the capability of the United States supporting the Procon bid, for example, through a direct loan of the proceeds of a P.L. 480 sale. (Tab A)2 The policy problems raised by such a loan are summarized in the attached memorandum which was sent to U/OP as a progress report. (Tab B) While similar conversations have not taken place with the French or Italian Governments, it is believed that the United States also has a capability of assisting bids based upon French or Italian suppliers.
In view of the strong probability that a contract will be awarded shortly after the return to Damascus, September 20, of the Egyptian engineer advising on the award, the United States should enable the three U.S. groups which have been in touch with the Department on this project to know of the United States capability of assisting through loan of foreign currencies; these include Procon, Lummus and Parsons.
Due to the vital importance of Middle East oil to the Free World, every effort must be made to secure the awarding of the Syrian refinery to a reliable Western firm. A Czech bid will provide a means of entry for 300–400 technicians and a basis for infiltrating and influencing developments in the Middle Eastern oil industry, including the oil fields and transportation facilities.
Recommendation:
- 1.
- That we explore the willingness of France and Italy, in addition to the United Kingdom, to utilize the proceeds of new P.L. 480 sales for a loan to the successful bidder or to earmark presently available currency for such use.
- 2.
- That, if the Governments agree, interested American firms be told of the possibility3 of the United States to support their bids with foreign currencies generated from P.L. 480 sales, and
- 3.
- That, on the basis of this assurance, the interested companies be urged to consider4 bids at the lowest feasible level.5
- Source: Department of State, Central Files, 883.2553/9–1756. Secret. Drafted by Shaw and concurred in by ICA and E.↩
- None of the tabs are attached. According to the source text, Tab A was “ICA exchange telegrams London TOICA 58 and ICATO 59”. (Washington National Records Center, ICA Message Files: FRC 58 A 403)↩
- At this point, the word “willingness” appeared in the original document, but Hoover crossed it out and inserted the word “possibility”.↩
- At this point, the words “submit firm” appeared in the original document, but Hoover crossed them out and inserted the word “consider”.↩
- Hoover initialed approval on the source text and added the comment “subject to approval by Mr. Rountree”.↩