Foreign Relations of the United States, 1958–1960, Western Europe, Volume VII, Part 2

222. Memorandum of Conversation⁰

July 30, 1958, 3 p.m.

SUBJECT

• Economic Aid to the Middle East

[Here follows the same list of participants as Document 218.]

Prime Minister Fanfani said that it would be of value to him to obtain some idea of our views on aid to the Middle East. He said that it will be necessary for him to think seriously of eventual Italian contributions to this area. Since other Western nations may well raise this question, he would appreciate learning of our thinking on this subject.

Under Secretary Dillon replied that we have reached no definite conclusions yet; we believe that the multilateral approach to the idea of aid to Arab countries would be best. We hope that other Western nations would be willing to contribute. Aid could not be extended to the Middle East as a whole; it is not practicable to group Israel with the Arab states. We understand that the Secretary General of the United Nations is exploring the possibilities of assistance to this area within the U.N. framework; this might be useful.

Signor Fanfani said that he too believed that aid within a U.N. framework would be possible. Perhaps it would be useful to make such aid dependent upon political assurances of some kind. This would mean that U.N. military observers could be replaced by U.N. economic consultants. It would be necessary to avoid a situation in which the Middle Eastern countries could get help without assuming necessary political responsibilities. It would probably be a good approach to furnish these nations with assurances that their products would be bought by the West; one product in particular would not be difficult to buy. If these nations knew that their produce would be purchased, they would have an obligation to maintain order. Thus guarantees of political stability would pass into the hands of the purchasing countries.

Mr. Dillon said that U.N. consideration of this problem would be desirable and that he believed the World Bank would be able to work with the U.N. on this matter. An aid program would be more attractive to the United States if the World Bank were involved since planning could be expected to be on a sound financial basis.

Prime Minister Fanfani said that he believed these comments to be most encouraging. He felt the sound ideas which had been expressed would help the Italians along the lines that they had in mind. He asked if this program should include a solution of the Palestinian refugees problem in Jordan.

In replying to this question, Deputy Assistant Secretary Berry said that in contemplating a multilateral approach to the needs of the Middle East, it was obvious that aid programs would have to be preceded by a modicum of political tranquillity in the area. Mr. Fanfani agreed that these matters are closely related. Mr. Berry pointed out that the original dispute, essentially between the Arabs and Israelis, had now been replaced by disputes among the Arabs themselves. Regarding the fate of the Palestinian refugees in Jordan, he strongly agreed that it is difficult to separate the problem from the Arab-Israeli dispute. Mr. Fanfani agreed and added that last winter he had established indirect contacts with Ben Gurion and King Hussein and believed there was some slight possibility of better understanding. However, at that time King Hussein would not have dared suggest such a possibility publicly. Mr. Berry said that the Arabs use the Palestinian refugee problem as one of the main points in the dispute with Israelis.

The Secretary said that we have no objections to an attempt to settle the refugee question separately. There is room in Iraq for the refugees to settle and to be useful and productive, if Israel would also take some of them back, the dimensions of the problem would be reduced. At this moment, however, when the Cairo-Damascus axis is exploiting the refugee problem, there is little prospect for a solution.¹ If some general relaxation can be achieved, we may be able to make progress.

Mr. Fanfani said that the action which he had already inaugurated regarding Jordan and Israel will be continued. In the past Jordan’s difficulty has been its fear of Nasser’s reaction; perhaps this is not so important to the Jordanians today.

0. Source: Department of State, Central Files, 865.0077/7–3058. Secret. Drafted by Service and McBride. See also Documents 218–221 and 223–225.
1. Reference is to the United Arab Republic, created in February 1958 by the merger of Syria and Egypt. Large Palestinian refugee populations were settled in both these countries in camps run by the United Nations. The leadership of the UAR rejected plans for their permanent resettlement in its territory and insisted that they must be returned to lands which were now part of Israel.