[Page 130]

44. Memorandum From Harold H. Saunders of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)1

SUBJECT

  • Aid for Jordan—Message from Hussein

King Hussein has asked you (Tab B)2 for the additional $10 million in budget support that you told him we would keep aside for him. He also thanks you for your message on proposed steps to work out the follow-on military modernization program.

This memo deals with both of these subjects and provides a draft reply at Tab A.3 More important for the longer run, it raises some issues in connection with planning our future assistance program for Jordan. I am not seeking a decision on these at this point but would appreciate knowing how you lean.

Budget Support

During his visit to Washington, King Hussein was told:4

—We would provide Jordan with $55 million in budget support in CY 1973.

—We would make an effort to advance as much as $15 million of that between now and July 1.

—Jordan should make a serious effort to raise more money to cover its needs from its wealthy Arab neighbors, particularly Saudi Arabia and Kuwait. We would hold an additional $10 million in budget support in reserve pending the outcome of these efforts.

Shortly after his return to Jordan, King Hussein sent his Prime Minister to Saudi Arabia to ask for more help. The King in his message reports: “I regret to inform you that we were unsuccessful in our efforts and could not get the Saudis to understand or appreciate the urgency of our needs.” What has actually happened is this:

—To help with Jordan’s budget crunch last December, the Saudis agreed to advance two payments under the quarterly Khartoum sub[Page 131]sidies. These advanced payments would normally have been made in January and April 1973 for the first two quarters of this year.

—As a result of this recent trip, the Saudis reportedly agreed to go ahead and make the January and April payments despite the December advance. This effectively added $20 million to Jordan’s revenues for this year.

—The Jordanians, however, apparently accepted the advance payment in December, applied it to the 1972 deficit, and then assumed that the Saudis would make their payments in the first two quarters of 1973 as scheduled, despite the advance on these payments made in December. Consequently, while the Saudis have provided $20 million more than the level of their normal yearly subsidy, the King does not view this added $20 million as anything new.

—In addition to the above, we have learned that Abu Dhabi has just given Jordan $10 million.

There are essentially two choices in responding to the King now:

1. Continue to press other donors. You would thank the King for his message; tactfully note the Saudi payments and hope for more; state the desirability of pressing other donors; say we will continue to hold the additional $10 million available; and note that we are working on ways to try to advance as much as $15 million before July 1 as promised. AID is working on this last point now, but funds are stretched very tight because of added requests for Vietnam. A decision should be possible by about April 15 on how much can be advanced to Jordan, but you should be aware that this may have to come out of funds otherwise earmarked for Vietnam.

2. Promise the additional $10 million now, subject to Congressional appropriation since it is FY 1974 money.

My recommendation would be to take the first approach above, since it remains in our interest as well as Jordan’s to tap as much Arab oil money as possible for Jordan. One trip to Saudi Arabia will not necessarily tell the story for the entire year, and the Kuwaitis are clearly re-thinking their position in the wake of the Iraqi attack on them. Since the year still has nine months to go, I think we should keep the matter open. A reply along these lines is provided at Tab A.

A Broader Look at Aid for Jordan

This message raises again the serious question of how we get a grip on our Jordan aid programs—in Jordan’s interests and ours. This experience with the Saudis shows that the Jordanians will take all the budget support they can get and press for more. On the economic side, our embassy for 1974 projects a $90 million budget deficit assuming present levels of US and Saudi aid. Ambassador Brown is speaking of Jordan’s “headlong plunge into insolvency.” On the military aid side, [Page 132]the shopping list which Hussein gave the Pentagon when he was here has now been costed at about $240 million—twice the cost of the present three-year program.

In short, it is not in Jordan’s interest to become so deeply dependent on foreign aid, and we will not have the money to meet these demands. Unless we make a fundamental decision to budget for a Jordanian aid program of a quite different order of magnitude from the present one. The purpose of this discussion is to address that issue. In any case, we need to get away from dealing with this yearly on an ad hoc basis.

There are two broad issues to be considered: (1) our aid relationship with Jordan and (2) the level of aid.

US–Jordanian Aid Relationship. There are two possible approaches:

1. We could try to reach some form of understanding with the Jordanians relating our aid to Jordan’s management of its own budget.

We would certainly want to avoid any appearance of a patronizing involvement in what are properly Jordanian decisions, but we and the Jordanians share a common interest in assuring that Jordan has the financial help it needs. The objective would be a joint effort to provide greater assurance of financial support than our present year-by-year ad hoc approach.

On the Jordanian side this would require tighter control over spending. The problem is that Jordanian expenditures, particularly in the military field, have increased rapidly, without any commensurate increase in productivity or revenues within Jordan. This leads to a growing dependence on foreign aid, placing Jordan in a very exposed position in the event that such aid is not forthcoming. At a minimum, the unpredictability of behavior in the oil-rich Arab states and in the US Congress argue for trying to end Jordan’s heavy dependence on these sources of support. We would try to help the Jordanians work out a plan for decreasing this dependence and develop a way of concentrating all their resources on priority expenditures. As matters stand now, there is little control exercised in deferring low-priority projects. For example, Jordan apparently intends to construct a new international airport, despite widespread advice from experts that this is a poor investment. The project will cost Jordan at least $15 million out of an already tight budget at a time when the King is pleading for urgent extra assistance.

On the side of aid donors, the obligation would be to assure adequate financial support for military and budgetary expenditures as well as for a development program which, over time, could gradually reduce dependence on outside aid. While some in State and AID would like to use this approach as a way of eventually reducing aid, the same [Page 133]general approach is valid if we continue to provide Jordan with current levels of assistance or even increase aid in coming years.

2. The alternative approach is to continue to deal in an ad hoc way with Jordan’s deficits and not try to develop a strategic concept for getting on top of the deficits over time.

Aid Levels. Apart from the question of aid relationship is the question of whether we should go to a substantially higher aid level. Again, there are two possible approaches:

1. One approach would be to go to a substantially higher level for political and related development reasons. The object would be to build up the East Bank rapidly, and perhaps even to channel some funds via Jordan into the West Bank as well, given the right political context. Over a period of years we would expect that the refugee camp population would decline, that Jordanians and Palestinians would be materially much better off than at present, and that this would provide part of the foundation for a Palestine settlement.

While the details of such a strategy remain to be worked out, some non-governmental groups have done studies suggesting the possibility of very substantial economic development in the Jordan–West Bank area if foreign capital is made available in large amounts. Jordan has begun to move in this direction with its current Development Plan, but the scale of the undertaking could be increased and tied to the West Bank more explicitly if that were desirable. This approach might be particularly attractive if we were looking for ways to work within the confines of the status quo toward a long-term outcome that could provide for a viable pattern of coexistence among Israelis, Palestinians and Jordanians.

2. The alternative, of course, is to stay around current levels of aid which are set in terms of meeting Jordan’s budget deficits with as little aid as we can manage so as to remain within our budget and not to increase Jordanian dependence. This has the advantage of keeping our expenditures as low as possible. But it has the disadvantage of being an ad hoc exercise without much long-term sense of direction. It is no more than a policy of keeping Jordan afloat.

Military Equipment

Just to keep you up to date on the other subject of interest to Hussein, the following is the state of our consideration of his military equipment list:

During their recent visit the Jordanians left behind a list of equipment now costed at $240 million that they would like to receive after the current modernization program is completed in FY 1974. By order of priority, the list includes armored personnel carriers, F5E aircraft, heavy artillery, TOW anti-tank missiles, one C–130 aircraft, helicopters, [Page 134]and various smaller items. The Jordanians seem to have another multi-year program in mind, with MAP aid continuing at much more than the current rate of $40 million per year.

The Defense Department has been reluctant to discuss a follow-on modernization program with the Jordanians. Ambassador Brown has recommended, however, that a survey team be sent to Jordan to assess Jordan’s additional requests. This would be a fact-finding mission, and on the basis of its report decisions could be made in Washington later this year.5 State agrees and is working out details.

Recommendations:

1. That you send the message at Tab Ato King Hussein [less than 1 line not declassified].

Approve6

Other

2. That you indicate for my guidance your general feelings on developing alternative approaches on aid for Jordan:

—Could you see our working with the Jordanians to increase both outside aid and discipline in their budget with the aim of eventual self-reliance provided this were not done in a patronizing way, or do you feel we should limit ourselves mainly to offering the aid?

Work out details of a dialogue with the Jordanians7

Not now

—Are you interested in a plan for substantial increases in aid for Jordan (and perhaps the West Bank)?

[Page 135]

Pursue this idea further8

Not now

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 618, Country Files, Middle East, Jordan, IX, January–October 1973. Secret. Sent for action. Richard T. Kennedy initialed his concurrence.
  2. Attached, but not printed, but see footnote 4, Document 39.
  3. Attached, but not printed. See footnote 6 below.
  4. See Document 30.
  5. An April 9 Department of Defense memorandum to Scowcroft stated that Jordan’s recent submission of a revised request for military assistance totaling $195 million indicated the usefulness of sending a small DOD fact-finding team to Jordan before the next meeting with the Jordanians. (National Archives, Nixon Presidential Materials, NSC Files, Box 618, Country Files, Middle East, Jordan, IX, January 73–October 1973)
  6. Kissinger initialed this option. On April 18, the backchannel message was sent from Kissinger to Hussein. The message reads: “In reply to your recent message, we are pleased to note that the Saudis have at least agreed to continue their quarterly payments. We will be in touch with them and with the Kuwaitis to urge them to provide Jordan with more help. We have in mind, of course, your serious economic needs and we are making our best efforts to advance some funds from our FY 1974 program to meet your current budget needs. It should be possible to notify you of our plans in the next month. In the meantime, please be assured that we continue to make every effort to be helpful.”
  7. Kissinger wrote “See me” next to this option.
  8. Kissinger initialed this option. On May 11, Kissinger approved transmission of a message to King Hussein informing him that the United States could not provide economic help before July 1, but would be “as forthcoming as possible early in the new fiscal year.” On June 2, Scowcroft notified the Executive Secretary of the Department of State that the Department’s proposal to provide $25 million in Supporting Assistance to Jordan in July with subsequent tranches in September and November had been approved. (Memorandum from Saunders to Kissinger, May 11, with memorandum from Scowcroft, June 2, attached at Tab B; National Archives, Nixon Presidential Materials, NSC Files, Box 618, Country Files, Middle East, Jordan, IX, January–October 73)