387. Telegram From the Embassy in Jordan to the Department of State1

1510. Joint Embassy/USOM message. Deptel 1315.2 Budget situation prominent among items discussed by Rifai and King with Rountree. Rifai made long and urgent appeal for $10 million additional aid this JFY, reciting earnest efforts of GOJ to keep requirement to minimum. He said inevitable increase in budget needs followed financial confusion arising from establishment and later dissolution of Arab Union. He said failure obtain additional funds would mean cut-back in security forces which would be not only serious but even “catastrophic”.

Rountree informed both King and Rifai that matter under active consideration by USG and response would be communicated by Wright as soon as instructions received from Washington. However he wished explain situation as he saw it. At urgent request GOJ US had several months ago indicated maximum budgetary assistance which Jordan could expect this JFY. It did so since it realized Jordan needed [Page 672]aid in that magnitude and should have firm knowledge ceiling for FY in order to permit realistic planning. It wished avoid situation in which GOJ without knowing what to expect would incur obligations exceeding availabilities. Amount of aid was appreciable, particularly considering extreme difficulty of USG in providing budgetary support for any country. Difficulty understandably greatly enhanced if budget problems rather than decreasing increased as in case of Jordan over past three fiscal years. He felt Jordan’s leaders would appreciate frankness so that they did not have false hopes re extent which US might now find it possible to assist in resolving new deficit problem. He thought it unrealistic to expect USG would provide $10 million for this purpose. Jordan itself must take firm and vigorous action. For example, we thought Jordan should use that part of reserve ($5.6 million) representing increase from amount in reserve as of time US budgetary support commenced. Rountree said he had been disturbed re reports of negotiations by Jordan for procurement from Britain of additional aircraft which would impose direct drain upon budget. He thought expenditures of this kind should not be undertaken outside of previously approved budget items. Other economies in budget should be effected. He thought USG might be able provide some flexibility between third and fourth quarters JFY. Under most optimistic circumstances, however, problem could not be resolved without serious efforts on part of GOJ. Rifai reiterated he would make all possible efforts but urged, as did King, that way be found for US to help meet serious situation.

Country team has reviewed with Rountree various aspects of budget crisis in light political considerations. Following comments and recommendations are submitted with his approval and concurrence:

(1)
Even assuming earnest efforts by GOJ to resolve problem, it appears unlikely that budgetary deficit can be eliminated without additional US assistance if serious cuts in security forces expenditures to be avoided. In present situation this not only would be highly demoralizing to armed forces but also to GOJ leaders who attach paramount importance to forces which they regard as Jordan’s greatest asset in tense Middle East situation. Rifai persistently stated that regime would collapse if security forces reduced. While this may be exaggeration, it contains enough elements of truth to render it unwise take chance at this juncture.
(2)
Whatever further concessions are made to GOJ in matter of budget, it should be made abundantly clear that they can not be taken as precedent. (Rifai positively assured Rountree in this connection that GOJ would not regard additional budgetary assistance this year as basis for requesting more aid next year, although in Arab fashion he did add words to effect it would be nice if next year budget could be established in round figure $45 million.)
(3)
We recommend that Rifai now be told that provision additional $10 million out of question. First measure to meet situation should be utilization $5.6 million of reserve, bringing total down to figure of September 1957. We believe, however, that deficit remaining after all other practicable economies effected up to $4.4 million should be provided by US, and earnestly hope funds for this purpose can be made available. Thus Jordan’s budget deficit for JFY 1959 would be covered. Figure of $4.4 million might be reduced by as much as $500, 000 representing balance POL net counterpart expected, although impossible at this time to estimate precise amount.
(4)
Immediate authorizations required to meet December budget situation, primarily army payroll, are (a) release of $1.7 million currently on deposit POL counterpart special account, and (b) release $4 million previously reserved for last quarter current JFY.
(5)
As to source of up to $4.4 million additional funds, we believe this must be in addition to $10 million set aside for first quarter JFY 1960. In discussing matter with GOJ and setting forth what we prepared to do meet current budget, we propose make it clear that USG not planning on budgetary aid to Jordan JFY 1960 above level provided JFY 1959 excluding $4.4 million added assistance which for special non-recurring purposes, and GOJ must understand there can be no assurance of any sum before appropriation of funds by Congress and determination world-wide allocation by USG.

Wright
  1. Source: Department of State, Central Files, 785.5–MSP/12–1158. Secret; Priority.
  2. In telegram 1315 to Amman, December 10, the Department instructed the Embassy to discuss with Rountree the Jordanian budget crisis, and the possibility of asking the Jordanian Government to use its reserves to meet the budget problem. No action was planned in Washington on the question until the Embassy’s assessment was received. (Ibid., 785.5–MSP/12–1058; included in the microfiche supplement)