337. Memorandum of Discussion at the 422d Meeting of the National Security Council, Washington, October 29, 19591

[Here follow a paragraph listing the participants at the meeting and item 1.]

2. Implications of Petroleum Developments on U.S. Operations in Libya (NSC 5716/1; OCB Special Report on the subject, dated Sept. 23, 1959)2

Mr. Harr summarized the OCB Report pointing out that as a result of the oil discoveries in Libya all U.S. operations there will be affected. A country which had been plagued by poverty was now facing the prospect of being moderately embarrassed with riches. The OCB report dealt only with the implications of this development. While there had been other oil strikes previously, it was not until April of this year that oil had been found in commercially exploitable volume. He noted that ESSO was engineering a port and pipeline and that by 1965 approximately 25,000 barrels a day would be going to Western Europe from the ESSO operation alone. He displayed a chart showing the estimated expansion of Libyan oil production and the anticipated revenues to the Libyan Government. He pointed out that by 1964 it is estimated that ESSO would be producing 100,000 barrels per day and that by 1966 the Libyan Government would be receiving revenues of $20–$30 million, which about equals the subsidies it is presently receiving from the U.S. and the U.K. On the basis of conservative estimates of other strikes, it was anticipated that total production by 1965 would be 300,000 barrels per day. It was obvious, he said, that Libyan [Page 734] oil would be in a strong competitive position in Western Europe and ESSO was planning to supply its share of the increasing Western European market from its Libyan production.

Going on to discuss the policy implications of these developments, Mr. Harr stated that we had lost some holds that we had in Libya and gained some new ones. The Libyan Government was beginning to sense already the possibility of elimination of foreign aid and this was affecting its attitude toward our continued presence at the Wheelus Base. The Libyans have tolerated our presence only because of the need for foreign aid. The development of oil production would have political effects within Libya by placing a new premium on economic power and thus affecting central-provincial governmental relations. Petroleum development would also affect international relations. Countries of the area, particularly Egypt, would increase their efforts to control the Libyan Government. All of this would be occurring in a country which was a “weak reed” politically. In sum, this development would improve the economic situation but would considerably complicate the political situation in Libya. As one specific aspect of future problems, Mr. Harr pointed out that the oil companies would be competing for skilled and trainable labor and that it was likely that many foreigners (e.g., Egyptians) would be brought in to handle technical jobs.

The Director of Central Intelligence agreed that development of oil in Libya would affect the policies of other countries of the area. Libya was adjacent to Egypt and it was likely, as had been stated, that Nasser would seek to control it. The President indicated his concurrence in the Director’s view and suggested that perhaps we should make a move in the direction of providing technicians and teachers to Libya on a very rapid basis.

The National Security Council:3

Noted and discussed the reference OCB Special Report on the subject.
Directed the NSC Planning Board to review NSC 5716/1 (“U.S. Policy Toward Libya”) with a view to formulating such policy guidance as may be required in respect to the effect of the recent oil discoveries in Libya on U.S. interests in Libya.

[Here follow discussion of agenda items 3–5. For item 4, see Document 360.]

Robert H. Johnson
  1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Drafted by Johnson.
  2. Regarding NSC 5716/1, see footnote 2, Document 333. A copy of the September 23 OCB report is in Department of State, OCB Files: Lot 62 D 430.
  3. Paragraphs a and b constitute NSC Action No. 2139. (Ibid., S/SNSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)