161. Telegram From the Embassy in Libya to the Department of State1

357. Time has come when I feel you must give personal attention to recent decision of Export-Import Bank in refusing application Westinghouse International for ten million dollars credit finance dollar costs of rehabilitation of Tripoli electric power system.

I can only describe Deptel 3152 received by me November 17 as “bombshell”. I consider it abrupt and discourteous handling of one of most sensitive political issues in Libya today. Department action in forwarding this cable to me without comment is totally inadequate. Libyan Government officials, in particular Prime Minister, had every reason suppose loan would be processed favorably. Negotiations have been proceeding for many months. US funds have already been invested through Libyan-American Reconstruction Commission in acquisition of ownership of plant by GOL. Plant is living on borrowed time and could break down any day, completely crippling economic and social life of community.

Representatives of major American oil companies here have been informed of decision and are as incredulous and horrified as I am. Most unfortunately Libyan Prime Minister also learned of decision from Westinghouse vice president before I could head him off.

Although Libyan public opinion has veered towards Soviets on basis recent events, I have been able hold Libyan Government as island of pro-western sentiment on basis President’s speech of October 31,3 my personal prestige and skillful political maneuvering by staff this Embassy despite insufficient support from Department. Libyan Prime Minister delivers Throne speech at Parliament opening in presence of King Monday November 26. Soviets are making usual irresponsible offers here and I dread thought that they may learn of latest opportunity we have presented them on golden platter. As Ambassador in Libya I can tell you frankly that I would not blame Libyans one bit if they were to react to this newest example of US [Page 457] bumbling by encouraging or accepting Soviet offer. We would not even be entitled to view as blackmail.

I have previously and emphatically expressed my feelings this subject in Embtel 350.4 In order protect stake of US Government and private American oil companies in Libya I urgently request, before noon November 25, authority tell Prime Minister US Government urgently considering question of power plant including possibility direct US Government loan.

I feel I must add one general comment. Our broad policies on Middle East in recent months have been good and well-expressed. However any policy can be vitiated by negativism in implementation. I realize I have stated basis my case strongly and frequently but remember Trojans ignored Cassandra and Troy fell.

  1. Source: Department of State, Central Files, 873.20/11–2356. Secret; Eyes Only; Niact.
  2. Telegram 315, November 16, informed the Ambassador that Westinghouse’s loan application on behalf of the Libyan Government for a $10 million credit to finance the expansion of the Tripolitania Electricity Corporation had been turned down by the Export-Import Bank due to Libya’s inadequate repayment ability. (Ibid., 873.2614/11–1656)
  3. This was a radio and television report to the American people in which the President opposed the invasion of Egypt. See Public Papers of the Presidents of the United States: Dwight D. Eisenhower, 1956, pp. 1060-1066.
  4. Telegram 350, November 19, described the power plant as political and economic necessity for Libya and a political necessity for the United States. If the Export-Import Bank refusal was final, Tappin advocated an ICA loan. (Department of State, Central Files, 873.2614/11–1956)