91. Paper Prepared by the National Security Council Staff1


Developments within the Middle East over the past two months may well have increased the prospects for movement toward an overall Arab-Israeli settlement. The key changes have occurred in the Arab world, with the result that Egypt and Jordan are in a better position to address questions of peace than has been true in years. In addition, the ability and incentives of the Syrians or Palestinians to block progress toward negotiation has been reduced. Similarly, the Soviet standing in the area is much lower than it has been in several years, with the significant exception of Iraq, and consequently Soviet ability to impede a peace settlement has diminished. Finally, Israeli leaders are signalling an interest in ideas that might help to overcome Egyptian reluctance to enter negotiations. While there are no grounds for believing that an Arab-Israeli peace settlement is imminent, the atmosphere is more conducive to serious diplomatic efforts than has been the case since early 1971.

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For much of this year President Sadat seemed unable to decide on a direction for Egypt’s foreign policy. He first probed the prospects of a diplomatic approach, then threatened to resume hostilities, and in the end announced that Egypt was prepared to develop a long-term strategy of mobilizing Arab resources for the battle with Israel. Oil and Arab financial support were the key ingredients of this strategy, and as the year wore on it became apparent that Sadat had his eye on the largest source of these resources, Saudi Arabia, and was willing to hold Libya at arms length in order to develop a close relationship with King Faisal. In opting for a Saudi connection instead of a Libyan one, Sadat was also rejecting President Qadhafi’s messianic vision and the concept of integral Arab unity under Egyptian hegemony—the Nasserist legacy—in favor of a more traditional view of building strength by coordinating the policies of the key independent Arab states acting in accord with the requirements of the balance of power rather than ideological imperatives. Thus “socialist” Egypt and Syria could very well work together with conservative Jordan and Saudi Arabia.

Thus far President Sadat’s strategy has worked quite well. He reportedly has received $800 million in aid in recent months from Kuwait, Saudi Arabia and the Gulf Emirates. Saudi Arabia and Libya both seem to be willing to purchase military equipment for Egypt. King Faisal has given cautious verbal support to the idea of using oil as a political weapon, and Qadhafi has engaged the battle in earnest. This is not a bad record for Sadat who seemed to be giving away his trump card in July 1972 by expelling over 10,000 Soviet advisers and combat personnel.

As Sadat’s domestic opposition has lessened recently, and as his relations with Saudi Arabia have improved, he has appeared to be less enamoured by radical rhetoric and more intrigued by diplomatic and economic means of advancing Egypt’s cause. With little thought for his reputation among the fedayeen, Sadat recently restored diplomatic relations with Jordan without preconditions.

While President Sadat has been sorting out his Arab relationships, his Foreign Minister has provided several hints of a soft line toward a settlement with Israel. Earlier in the year he publicly distinguished between Egypt’s problem of securing Israeli withdrawal from Sinai and the overall Palestine problem, which he implied was not of equal concern to Egypt and should be left to the Palestinians (and now Jordanians) to solve. Later, at the UN in July, Foreign Minister Zayyat said that Egypt would be willing to have direct contacts with Israel if Israel were to drop the precondition of refusing to consider full withdrawal. President Sadat reportedly told Secretary Waldheim much the same [Page 275]thing, saying that direct negotiations could begin as soon as some form of withdrawal was underway.


During his twenty years in power, King Hussein has wavered between asserting his credentials as an Arab nationalist in cooperation with his neighbors in opposition to Israel and standing alone in the face of radical opposition from both inside and outside Jordan. After three years of virtual isolation in the inter-Arab context, Jordan is now embarked on a course of returning to the ranks of Arab respectability. Among other things, this requires the King to be conciliatory toward the Palestinians, including some of the more moderate fedayeen elements within the Palestine Liberation Organization (PLO).

The King is a shrewd and skillful politician, but is not immune from making serious miscalculations, such as his entry into the 1967 war against Israel. Nonetheless, he seems to be clearsighted in defining his present objectives: restoration of normal relations with Syria, which has economic and political benefits; resumption of the Kuwaiti annual subsidy of $40 million, possibly with back balances held in escrow of over $100 million; support from his Palestinian subjects, especially those on the West Bank; weakening the fedayeen movement by neutralizing active Syrian and Egyptian support and by drawing moderate leaders into a dialogue with Jordan.

If King Hussein’s new policy is successful, his country will not only be more economically viable than it has been in the past three years, but also he will be protected from radical pressures in any future settlement with Israel. In addition, his claim to speak on behalf of the bulk of the Palestinians will be supported by key Arab countries. The only price he pays for these gains is a commitment to forego a separate agreement with Israel, which has never really been in the cards, and the offer of a limited reconciliation with the Palestinians, which would be an essential prelude to his recovering the West Bank in any case. If he can keep his balance in the game of inter-Arab politics, King Hussein, like President Sadat, may be in a relatively strong position to sustain a serious interest in a peace settlement with Israel over a prolonged period of time.

The Palestinians

Palestinian political life is intimately bound up in inter-Arab politics, and thus has been in flux in recent months. Palestinians on the West Bank and in Gaza have still not developed institutions or leadership of their own, but have shown anxiety about Israeli annexationist tendencies and a renewed interest in King Hussein’s bid for reconciliation. The fedayeen organizations in Lebanon and Syria have continued to suffer from severe factionalism, but the trend of the main body of the [Page 276]movement toward terrorism, which was apparent earlier in the year, now seems to have been reversed, with the Syrian supported Saiqa openly condemning terrorism and supporting rapprochement with Jordan. Fatah and the PLO leadership have also publicly denounced recent terrorist acts, and have sought to present an image of respectability. Part of Fatah, however, as well as some of the smaller radical groups, continues to use terror as a primary means of advancing Palestinian interests. Libya, and perhaps Iraq, provide resources and funds for these efforts, which may place the terrorist minority beyond the control of other Arab supporters of the Palestinians and of the fedayeen leadership itself.

King Hussein’s recent offer of amnesty to imprisoned fedayeen may further accentuate splits within the movement. President Asad has already closed down the Palestinian broadcasting station inside Syria and seems to be trying to weaken Fatah in favor of Saiqa, the Syrian supported movement. President Sadat seems to have turned his back on the fedayeen for the moment, and King Faisal continues to try to isolate radicals by supporting moderates. From time to time we receive indirect queries from the fedayeen leadership concerning USG views, which indicates a continuing interest in relating to any eventual political settlement that might offer some outlet for a Palestinian identity. On balance, these developments suggest that the fedayeen, as well as other Palestinians, neither have the capability nor the strong incentive to block a movement toward a peace settlement, nor are they likely to have the support of Syria and Egypt in any efforts to unseat King Hussein or interfere in Lebanese internal politics.


President Asad continues to be skeptical that a peace settlement can be reached, but he has been willing to reduce pressure on Jordan, to keep the fedayeen in Syria under control, and to hold the Soviets at arms length, while taking their weapons in large quantities. King Hussein seems to feel that he can work with Asad and has reported the Syrian President as saying that he will join Egypt and Jordan if serious prospects for peace arise.

Saudi Arabia

King Faisal has adroitly dealt with Egypt over the past year to minimize Soviet influence, to dampen Sadat’s militancy on the Arab-Israeli issue, and to introduce the oil factor into Middle East politics. Thus far Faisal has not threatened to use oil in an overt manner to change US policy, and in fact we have been reassured on numerous occasions that Faisal does not intend to weaken his relationship with the United States. He has not yet placed Saudi prestige on the line with respect to solving the Arab-Israeli conflict, and seems aware of the dangers of [Page 277]doing so. Thus far his role has contributed substantially to structuring the inter-Arab contest in ways conducive to a peace settlement.


The Israeli leadership seems to sense that the status quo is not uniformly developing in Israel’s favor, particularly as Arab oil and wealth begin to make themselves felt in Europe and the United States. Impending Israeli elections have precluded any new initiatives and have led to a hardening of Israeli policy toward the occupied areas as the price for keeping Dayan in the party. Nonetheless, Israelis appear to sense that the United States is serious when it says a Middle East settlement is of high priority. Dayan, among others, seems to feel that Israeli interests would be well served by putting forward new positions concerning Egypt that would shift US attention from trying to elicit Israeli flexibility to persuading the Egyptians to enter negotiations. At the same time, Eban has been downplaying the importance of the new policy toward the occupied territories, terming all of Israel’s territorial demands negotiable. With the Soviets out of Egypt and the specter of growing oil power, some Israelis apparently have concluded that the time may be approaching when issues of an Arab-Israeli settlement must be addressed with a new sense of seriousness.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 1173, Harold H. Saunders Files, Middle East Negotiations Files, M.E. [Middle East] Jarring Talks, 9/1/73–10/31/73 [1 of 2]. Secret. Drafted by Quandt.