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

250. Memorandum of a Conversation, Department of State, Washington, December 10, 1959, 2:30 p.m.¹

Washington, December 10, 1959, 2:30 p.m.

SUBJECT

• (1) US Economic Assistance to the UAR
• (2) DLF Aid to the Syrian Region
• (3) Over-all DLF Assistance

PARTICIPANTS

• Mustafa Amin, Editor-Publisher Akhbar al-Yom
• M—The Under Secretary for Political Affairs
• NEA—G. Lewis Jones
• NE—William D. Brewer

(1) US Economic Assistance to UAR: Mr. Amin emphasized that President Nasser hoped that US–UAR relations will continue to be good. In Nasser’s view, however, the recent improvement in our relations came at an unfortunate time in view of the current emphasis of Secretary Anderson and others on achieving a balance in US foreign trade and thus circumscribing US foreign assistance.² President Nasser therefore hoped that considerable US aid might be extended through loans of PL–480 local currency for industrial projects. Mr. Merchant assured Mr. Amin that we had the greatest sympathy for the economic development problems of the UAR and desired to do whatever we could to assist. However, ours was a large and bureaucratic government, and it was not possible to move as rapidly as one would wish. There was, however, every desire to meet UAR needs to the maximum extent feasible. Mr. Merchant noted that he had discussed this matter with Under Secretary Dillon, who would be disappointed to learn on his return from Europe that he had missed Mr. Amin’s visit, and knew that Mr. Dillon had a deep and genuine interest in this question. Where delays occurred, they were not due to US procrastination. We desired a steady increase in the warmth, depth and breadth of our relations with the UAR. The needs of the UAR would continue to receive genuine, rapid and sympathetic consideration.

Mr. Merchant noted, however, that the US was now faced with a problem in continuing its foreign assistance. This problem related to the negative turn which our balance of payments had recently taken. Actually, this development signified that the commercial and foreign aid policies which we had been following for the past decade had achieved unlooked-for beneficial results. However, the drain on US reserves, while so far not of great concern, could be very serious if allowed to continue. We definitely did not wish to retreat behind a new protectionist wall, but it was now necessary to take other steps to see that a new balance of US payments was achieved at a high level of world trade. Any trade actions which the US might have to take in the immediate future should be viewed in this perspective. On the related question of foreign aid, we remained hopeful that it would be possible to obtain Congressional approval for approximately the same magnitudes as last year.

(2) DLF Aid to the Syrian Region: Mr. Amin referred to Syria, noting that the Syrians had so far received no US assistance, although this had been the fault of successive Syrian governments. On the other hand, the USSR had offered substantial assistance to Syria prior to the establishment of the UAR. This Soviet help had subsequently been suspended, and an opportunity had thus been provided for the US now to do something which would make Syria a show-case of what Western help could do at a time when the USSR was stepping up its efforts in Iraq. The Iraqi situation was moving very rapidly and Iraqi developments would continue to play a major part in influencing Syria. In this situation, the UAR wished to consolidate its position by demonstrating the availability to Syria of US aid. In fact, President Nasser had informed the UAR Cabinet last year that one-quarter of the aid which the Egyptian region had received was being transferred to the budget of the Syrian region. This statement had elicited a favorable reaction from Syrian ministers. President Nasser now hoped that the US would do something substantial in Syria such as sales of surplus commodities or making them available through charitable organizations, along the lines of the CARE program in Egypt.

Mr. Jones assured Mr. Amin that the Department was fully aware of the political factors which made US assistance to the Syrian region desirable. It was, however, necessary that the UAR translate these political factors into development project priorities. So far this had not been done, all priority projects designated by the UAR having been for the Egyptian region. Mr. Amin said that he had understood that the DLF did not wish to extend assistance to the Syrian region, and that this fact might have been the reason that the UAR had limited its priority requests to the Egyptian region. The DLF had apparently felt that the Syrian region had no suitable projects. Mr. Merchant noted that the US Government was influenced by the UAR’s own estimate of priorities and suggested that one or more projects for the Syrian region be included in the next priority listing.

(3) Over-all DLF Assistance: Mr. Amin observed that Under Secretary Dillon had assured him in May 1959, that the DLF would be prepared to extend approximately $40 million in loans this year. Now, however, the UAR felt that there had been some “shrinkage” in this amount. Mr. Brewer recalled that Mr. Dillon had spoken illustratively regarding DLF programs in Turkey and Iran and had stated that there would appear to be no reason why the UAR could not expect assistance in a similar magnitude provided qualifying projects were submitted. Mr. Amin replied that the UAR felt that DLF assistance was being reduced to $25 million. Mr. Merchant observed that no such ceiling had been set to his knowledge. However, the DLF Board could not consider projects for the UAR in the absence of suitable documentation. We were often accused by foreign countries of delaying loans when the actual cause of the delay was the failure of the country concerned to submit adequate documentation. In those cases, requests for additional information had to be made. Mr. Brewer observed that this had already happened in the case of the UAR. Mr. Merchant emphasized the desirability of the UAR submitting project applications as promptly and in as much detail as possible in order to facilitate rapid processing of requests by the DLF.

1. Source: Department of State, Central Files, 786B.5–MSP/12–1059. Confidential. Drafted by Brewer on December 15 and initialed by Jones. The source text indicates this is part two of two. The other part has not been found. In a briefing paper for the conversation, Jones indicated that Amin was in the United States primarily for a medical check-up, but also to convey Nasser’s dissatisfaction at the pace of U.S. assistance. (Ibid., 611.86B/12–1059) A memorandum of Amin’s conversation with Jones, Meyer, and Brewer at 12:15 p.m. is ibid., 786B.5–MSP/12–1059.
2. On December 4, Hare reported that he had discussed U.S. assistance with Nasser who had made an obvious effort to be reasonable, but was still chafing at delays. (Telegram 1728 from Cairo; ibid., 786B.5–MSP/12–459) Hare also summarized the questions that Amin would raise in Washington.