Foreign Relations of the United States, 1955–1957, Near East: Jordan-Yemen, Volume XIII

95. Memorandum From the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs’ Special Assistant (Burdett) to the Assistant Secretary (Rountree)¹

Washington, June 12, 1957.

SUBJECT

• Additional Economic Aid to Jordan

The Kingdom of Jordan’s latest budgetary estimates indicate that projected expenditure for the present fiscal year (April 1, 1957 through March 31, 1958) will amount to $82.8 million. To meet this, Jordan has available domestic revenue amounting to $18.8 million and a Saudi subsidy of $14 million. Although Syria and Egypt have promised support amounting to $16.8 million, we do not believe that Jordan can count on this assistance. Jordan is therefore confronted with a gap of $50 million. (Tab A²)

The United States has to date made available to Jordan from FY 1957 funds $10 million as an initial grant for budgetary support as well as economic development projects. Approval for the use of $10 million primarily for off shore procurement of military items has also just been given by the Secretary. In addition we had hoped to be able to provide further budgetary support on the basis of matching contributions from the Government of Iraq and had authorized that $5 million of additional FY 57 funds be made available on this basis. The US proposal has been discussed with Prime Minister Nuri of Iraq (Tab B³); and while we will continue to seek his support (Tab C⁴), it appears obvious that his Government is not prepared to make a matching contribution.

The most that Nuri has suggested is that the US loan him interest free for three years the equivalent of 2.5 million dinars ($7 million). This proposal raises highly complex legal and administrative questions for the United States and offers questionable political advantages; it is not receiving serious consideration.

Given the present state of Jordanian finances and absence of other sources of aid there appears to be no alternative but for the US to increase its contemplated additional contribution from $5 million to $10 million. There will then be available to the Government of Jordan, in addition to the Saudi subsidy of $14 million, $20 million of US funds for budgetary support and general economic aid plus a $10 million for military assistance. The gap between estimated expenditures and receipts will still amount to $20 million.

This difference is largely accounted for by the extraordinary budget where the expenditures are primarily directed to long term development projects. We believe that to the extent this budget reflects future hopes rather than immediate needs some savings may be possible. To the extent reductions cannot be made it is hoped that some assistance can be given to selected projects in the extraordinary budget by reprogramming about $4 million of prior year MSP funds. Instructions to this effect have already been issued to USOM/Jordan. In addition efforts will be continued to urge the United Kingdom to maintain its economic aid program in Jordan (about $6 million). Should these efforts not fully succeed but through careful management expenditures are held to approximately $6 million monthly, US aid at the proposed higher level, together with domestic revenues and the Saudi subsidy should permit maintenance of the Jordanian economy for about 10 months or through January 31, 1958.

U/MSA has been notified of this new urgent requirement for additional economic aid funds in Jordan. (Tab D⁵)

Conclusions:

1. The proposed loan of funds to Iraq to permit the Government to give assistance to Jordan does not appear to be feasible and a telegram to this effect has been sent to Baghdad. (Tab C)

2. The most practical means of meeting Jordan’s financial needs in the present situation is to increase US budgetary aid from $5 million to $10 million.

Recommendation:

That you approve our pursuing with U/MSA and ICA increasing US budgetary aid by $10 million rather than the $5 million originally planned.⁶

1. Source: Department of State, Central Files, 785.5–MSP/6–1257. Secret. Drafted by John Shaw.
2. Tab A, a paper entitled “Jordanian FY 57 Budgetary Situation,” was not found attached.
3. Tab B, not found attached, was telegram 2064, supra.
4. Tab C, not found attached, was telegram 2421 to Baghdad, June 11. In it the Department instructed the Embassy to continue pressing Nuri for a change in his attitude regarding aid for Jordan. Among other things, the Department instructed the Embassy to remind the Iraqis that the United States had responded “promptly and effectively” to Hussein’s request for aid, a request supported by Iraq and by other friendly Arab States. (Department of State, Central Files, 885.0086/6–1057)
5. Tab D, not found attached, was a memorandum entitled “Jordan—FY 57 Economic (DA) Aid—$10 million.”
6. Rountree initialed the source text and noted: “I agree.”