Foreign Relations of the United States, 1958–1960, Arab-Israeli Dispute; United Arab Republic; North Africa, Volume XIII

234. Telegram From the Department of State to the Embassy in the United Arab Republic¹

Washington, March 17, 1959—6:38 p.m.

2729. Joint State–ICA message. In effort maintain momentum in improving US relations with UAR Department has decided it would now be appropriate remove remaining limitations on use of aid funds.² We accordingly plan inform UAR that USG prepared institute discussions Cairo immediately re agreement on use of Egyptian pounds from PL 480 sales in 1955–56. Steps to be taken involve negotiation of loan agreement and subsequent mutual agreement re use of funds for economic development in Egyptian Region under Section 104(g) of PL 480. Exact amount that would be available is at present uncertain due to shortfall in sales and exchange rate complications but will be somewhat less than $13.6 million.

Since UAR Ambassador officially requested Dept release these funds some months ago, Dept planning, after informing UK, communicate decision to UAR Ambassador here along foregoing lines. We will advise you of date he informed so that you may inform Nasser, Kaissouni and other UAR officials of US decision and take initiative arrange any working level discussions that may be necessary in Cairo with respect details reactivation this assistance.

Subject your views, Dept not contemplating any publicity this development.

FYI We would also plan include normal provision use local currency for economic development purposes in any new PL 480 agreement which may be concluded with UAR. However, believe it unnecessary inform UAR this fact except in context new negotiations. End FYI.³

Herter

1. Source: Department of State, Central Files, 786B.5–MSP/3–1759. Confidential. Drafted by Brewer and Kennedy; cleared with Rountree, Murphy, ICA, E, G, H, W/MSC, BNA, and EUR; and approved and signed for Herter by Dillon. Repeated to Beirut, Baghdad, London, and Paris.
2. This decision was approved by Dillon in a memorandum, also dated March 17, from Rountree. (Ibid.)
3. On March 23, Hare was informed that the British concurred. (Telegram 2813 to Cairo; ibid., 786B.5–MSP/3–2359) On the same day, Rountree told Ambassador Kamel. (Memorandum of conversation; ibid.)