Foreign Relations of the United States, 1955–1957, Arab-Israeli Dispute, 1955, Volume XIV

106. Memorandum From the Deputy Under Secretary of State (Murphy) to the Under Secretary of State (Hoover)¹

Washington,May 23, 1955.

I discussed the attached file today with George Allen and Francis Russell. Mr.Russell is coming up with a supplemental memorandum.² Apart from the substantive features of the Alpha plan, in essence Mr.Russell’s recommendations about the procedure boil down to:

1. A waiting period of about two weeks to evaluate Nasser’s attitude and to provide Byroade an opportunity to further probe the situation. If affirmative indications at Cairo develop, there will then be opportunity to unfold the plan to Nasser.

2. Mr. Russell is preparing a draft letter which could be sent either by the Secretary or the President to Nasser, urging his cooperation.³

3. In the event that Byroade’s efforts in Cairo prove abortive, then examine the possibilities of working through the Jordanians. . . .

4. If both the Egyptian and Jordan channels bring no success, then in cooperation with the British we would publish our proposals, hoping thus to force the issue and give proof of our constructive attitude.

5. The recall of Elath from London and Eban from Washington to Tel Aviv plus other indications in the Gaza area and public statements might indicate if anything a hardening of the Israel attitude.⁴

Attachment

Memorandum From Francis H. Russell to the Secretary of State⁵

Washington,May 18, 1955.

SUBJ

• Summary Statement of Alpha Proposals

At the meeting in your office on May 3,⁶ you asked me to prepare a summary statement of the Alpha proposals which might be shown to the President and, at an appropriate time, to the heads of other interested departments and possibly to three or four Congressional leaders. Attached is such a statement (Tab A). In a telegram received yesterday,⁷ Ambassador Byroade suggests that, in view of the danger of a leak following the revealing of Alpha to other department heads and Congressional leaders, and the damage which such a leak would do to his negotiations with Nasser, discussions outside the Department be deferred until he has progressed further with Nasser.

Aside from broad approval of Alpha and the contemplated inducements to the parties, it is a matter of special urgency that Byroade be authorized to state to Nasser that the President, in the context of an Israel-Arab settlement, would recommend to Congress US aid in the amount of $100 million in the construction of the High Aswan Dam (Tab B).

Recommendations:

1. That the attached statement of the elements and inducements for an Israel-Arab settlement (Tab A) be approved as a Departmental position.

2. That the President be asked to authorize Ambassador Byroade to state to Nasser that the President, in the context of an Israel-Arab settlement, would recommend to Congress US aid in the amount of $100 million in the construction of the High Aswan Dam (Tab B).

3. That the President be asked to authorize the Secretary, as soon as our discussions with Nasser make it expedient, to discuss the Alpha statement (Tab A) with a few top Congressional leaders.

Tab A

POSSIBILITY OF SETTLEMENT OF PRINCIPAL ISRAEL-ARAB ISSUES⁸

I. The Need for a Special Effort to Achieve an Israel-Arab Settlement

Arab-Israel tension and hostility, periodically breaking out into armed clashes, have continued for seven years after the signing of Armistice Agreements. The continuance of the dispute will be increasingly a major detriment to vital US interests. The strategic Near East has been economically and politically weakened and divided; the situation contains possibilities of renewed open warfare which might involve states outside the area; and measures for strengthening the area to resist Soviet aggression are greatly hampered.

There is no indication that time alone or the efforts of the parties themselves will resolve the smoldering conflict. The bitterness between the parties has thus far resisted efforts by the United Nations and the Western Powers to bring about a settlement of issues. Prospects for the success of a renewed effort are none too bright but a number of considerations lead us to the view that an effort by the US and the UK should be made: (1) two other major issues which troubled the area—the Anglo-Egyptian dispute and the Iranian oil controversy⁹—have been resolved; (2) US influence in the area has increased considerably as a result of our policy of sympathetic and impartial friendship towards both Arabs and Israelis; (3) UK influence has been on the increase since the conclusion of the Suez agreement with Egypt; (4) if the effort is not made in 1955, we will probably lose more than just a year, since 1956, a Presidential election year, would not be propitious for such an effort.

II. Timing and Method of Approach

The proposed settlement would involve the solution of the principal issues between Israel and her Arab neighbors, including a cessation of acts of belligerency. It is not proposed, however, to aim immediately at formal and comprehensive peace treaties and the establishment of normal diplomatic relations. It would be hoped that the removal of the principal causes of tension and the passage of time would lead to an ultimate formal peace.

It is planned to sound out Nasser to see whether Egypt would take the initiative. Egypt has indicated in the past a willingness to cooperate in taking measures to reduce tension with Israel. The next stage would be a carefully planned disclosure of the suggested elements of a general settlement to Jordan and Israel. Assuming progress, other Arab states as well as other friendly Western powers will be approached shortly after.

If this method of approach to the problem should prove unproductive, the proposed terms of settlement might be urged upon the parties publicly by the US and the UK, possibly in the UN.

In view of the inflammability and suspicion in public opinion in the area, the utmost secrecy is essential during the initial stages of the program.

III. Elements of a Settlement

The following are the principal issues on which it is hoped that settlement can be reached:

A. Territorial: It is proposed that Israel and the neighboring Arab states agree to a definitive border which would include the following adjustments:

1. A division of the present “demilitarized zones” and “no man’s lands” created by the Armistice Agreements;

2. Returning to border Arab villages, almost entirely in Jordan, a portion of the adjoining farm lands upon which they are dependent for a livelihood and from which they were cut off by the existing Armistice Line. The net total of these cessions by Israel would be 77.5 square miles;

3. Giving to Israel a portion of the Latrun salient, making possible the resumption of use of the most direct road from Tel Aviv to Jerusalem;

4. Allocating to Egypt and to Jordan triangles of land in the Negev which would make possible land communication between Egypt and the rest of the Arab states, with over- and underpasses connecting the two triangles and the two Israel sections of the Negev;

. . . . . . .

(The area presently occupied by Israel, excluding demilitarized zones, is 7,805 square miles.)

B. Refugees: The approximately 800,000 Arab refugees who fled and were subsequently debarred from their homes in what is now Israel constitute probably the greatest cause of friction between Israel and her Arab neighbors. This problem must be dealt with by a program that calls for the repatriation of a comparatively small proportion of the refugees, the eventual resettlement of the remainder, and compensation for expropriated land.

It is proposed that Israel would repatriate up to 75,000 Arab refugees at a rate of 15,000 yearly, with priority being given to those presently living in the Gaza Strip.

Israel would assume a liability of £100 million ($280 million) for the payment for real property left by Arabs who fled Palestine. Israel would also renounce counter-claims which it has against the Arab states, and the Arab refugees would renounce claims for movable personal property and community property. Israel, with assistance from world Jewry, would be asked to raise some 30% of the compensation fund. The balance would be loaned to Israel on a long-term, low-interest basis, primarily by the US and the UK. Payments to individual Arabs would be made through the UN under conditions designed to achieve the greatest amelioration of present bitterness, to encourage work-creating investment in the area, and to prevent inflation.

The great bulk of the refugees will have to be resettled, largely in Arab countries where, as a result of expanding economies and projects such as the Jordan Valley Development Plan and the Sinai Project, they could be gradually integrated.

C. . . .

D. The Boycott: The Arab states would remove restrictions on Israel commerce and vessels transiting the Suez Canal; cease their attempts to prevent trade between Israel and non-Arab countries; and repeal all legislation and multilateral boycott arrangements based on the existence of a state of belligerency. The Arab states would not be pressed at this time to engage in direct trade with Israel.

E. Jordan Waters: It is hoped that this issue can be resolved within the next few months through the negotiations of Ambassador Johnston.

F. Free Port at Haifa and Transit Rights: Israel would agree to establish a free port at Haifa. She would grant Jordan transit rights to Haifa across Israel territory, and Egypt and Jordan transit rights across the northern Negev. Arrangements would also be made for travel of commercial aircraft and for telecommunication facilities by each side across the territory of the other.

G. Border-Guarantee Treaties: In the event that agreement is achieved on the above elements of a settlement, the US and the UK would agree to enter into treaties with Israel and each of the neighboring Arab countries guaranteeing the agreed borders against change by armed force. The treaties would provide for consultation in the event of a threat of armed attack by any of the parties and for joint measures to maintain or, if necessary, restore the agreed boundaries. The guaranteeing states would not be bound to intervene in the case of boundary incidents or raids. These would remain the responsibility of the United Nations Truce Supervisory Organization. The treaty of guarantee would relate only to borders; it would not underwrite other elements of the settlement.

IV Inducements to Parties to Reach a Settlement

Since the border guarantee and the benefits to the parties inherent in the settlement will in all probability not be sufficient to secure their cooperation, it is contemplated that additional inducements to cooperate might be offered in the form of economic and military assistance, possibly of the following magnitude, shown in terms of expenditures presently contemplated regardless of the projected settlement, and those which would be additionally required:

(1) Funds probably required during the next five years under a continuation of the present situation:	(millions of $)
Funds appropriated and presently being held in US Treasury for UNRWA Sinai and Syrian resettlement projects	$44
US commitment as supporter of UNRWA five-year plan for Arab refugee relief	80
Unified Jordan Valley Plan (if agreement is reached by Ambassador Johnston)	112
Probable regular economic aid to Israel and Arab states over next five years on basis of present programs	250
	$486

(2) Additional funds probably needed for Israel-Arab settlement:
US loan to Israel for payment of compensation to Arab refugees(repayment to US doubtful)	$150
Additional economic aid to Egypt (including portion of funds needed for High Aswan Dam), Jordan, Syria, and Lebanon	145
Military aid to Israel and neighboring Arab states conditional upon settlement	25010
	$545

Tab B

Memorandum From Francis H. Russell to the Secretary of State¹¹

Washington,May 18, 1955.

SUBJ

• Inducements to Egypt; High Aswan Dam

The Alpha project assumes that economic inducements to Egypt will be required in order to secure her cooperation. One of the most effective forms which this could take would be assistance in financing the construction of the High Aswan Dam. Ambassador Byroade may soon, if he is to be persuasive, have to make his proposals to Nasser in definite terms.

The cost of the High Aswan Dam (dam, civil works, turbines and generators) is estimated at from $500 to $550 million, spread over a 10-year period, of which roughly 50% would be foreign exchange. The Government of Egypt itself should be able to finance most or all local costs and, by drawing upon its gold reserves, about $85 million of the foreign exchange cost. The IBRD might be expected to loan $85 million. Thus, a gap of some $80 million would remain which the US might undertake to provide.

Additional auxiliary works (power transmission lines, indemnities to the Sudan, and land reclamation) would add costs of possibly another $500 million, of which about one-fourth would be foreign exchange. The US might well contribute some $20 million of this.

Any US assistance in the High Aswan Dam project and auxiliary works should be in the form of grants, since Egypt’s entire ability to finance foreign loans would be committed.

Recommendation: That the US state to Nasser that if (a) there is a settlement of the major Arab-Israel issues, and (b) the High Aswan Dam proves otherwise feasible, the President will request a Congressional authorization and appropriation of $100 million toward the foreign exchange costs of the High Aswan Dam and the auxiliary works.

(All figures used above are based on current estimates and are tentative.)

1. Source: Department of State,NEA Files: Lot 59 D 518, Alpha—Memos, etc., beginning after 2nd London Talks—April 26–June 30, ’55. Top Secret.
2. Infra.
3. See Tab B below.
4. The Embassy in London reported that Eliahu Elath, Israel’s Ambassador in the United Kingdom, informed Shuckburgh on May 13 that he and Eban had been recalled to Tel Aviv for routine consultations.Shuckburgh, however, regarded their recalls to be “further evidence Israeli anxiety regarding plans of U.S. and U.K.” (Telegram 5056 from London, May 17; Department of State, Central Files, 684A.86/ 5–1755)
5. Top Secret; Alpha. The source text bears a notation that Dulles saw this memorandum.
6. See footnote 2, Document 86.
7. Document 97.
8. Top Secret; Alpha. Drafted by Russell on May 18. Attached to the source text is a 2-page summary of this statement.
9. For documentation on the U.S. interest in the settlement of the Anglo-Iranian oil dispute, see Foreign Relations, 1952–1954, volume X.
10. This amount should not be regarded as exclusively chargeable to an Israel-Arab settlement. It would be used to promote area security against an internal and external communist threat. [Footnote in the source text.]
11. Top Secret; Alpha.