Foreign Relations of the United States, 1977–1980, Volume XVIII, Middle East Region; Arabian Peninsula

67. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter¹

Washington, March 29, 1980

SUBJECT

• Economic Assistance for Oman

We are now at a critical juncture in our negotiations with Oman. There is a problem—Oman continues to press for an economic element in our relationship even though we have repeatedly told them that substantial economic assistance is inappropriate in view of our budget constraints and their relatively favorable economic situation.

When you met with Zawawi you made this point.² But in view of Zawawi’s concern that our relationship demonstrate an interest in the welfare of the Omani people, you said we would reexamine what we could do, taking into account Oman’s need for economic development.

The SCC met today and agreed on a low-cost package (up to $5 million ESF per year starting in FY 1981) of technical assistance and other assistance under a Joint U.S.-Oman Economic Commission (to be established).³

However, this probably will not be sufficient to satisfy the Omanis’ perceived need to show their own people a tangible economic benefit from the U.S. relationship.

The SCC identified three options for the outyears which we would hope to use to demonstrate to the Omanis that we are embarked on a long-term relationship and one that is sensitive to their situation. All include the low-cost package starting in FY 1981. They all involve the possibility of $25 million in ESF and $25 million in Ex-Im financing for both FY 1982 and 1983.⁴

Option A: We would be committed to such financing⁵ with an understanding among ourselves that it would involve an addition to currently planned budget levels.

Option B: Is the same, but we would find the money within currently projected budget ceilings.

Option C: We would make no real commitment beyond the $5 million annually for the low-cost package, but might indicate the order of magnitude of the economic assistance and private investment we might envision on the basis of the work of the Joint Economic Commission.

I know you find making commitments in outyears distasteful. However, I must point out the down side risks of Omani rejection coming on the heels of the Pakistani rejection.

In my judgment, access to the Omani facilities is our single most important initiative in underwriting your historic commitment to defense of our vital interests in this region, as outlined in your State of the Union message. Failure of the Oman negotiations would be a major international and, I believe, domestic political disaster.

Accordingly, I recommend we be prepared to go to Option A or B, if necessary this round. State, Defense and JCS believe we should go to Option A now. Henry Owen prefers Option C. OMB believes that Option C (or less) is adequate for the next round of negotiations since it meets Oman’s basic need—which is for services, other than cash. OMB believes the substantial commitments of Options A and B are unrealistic and undesirable in the present or presently foreseeable budgetary circumstances, and doubts that the Congress will support ESF for Oman beyond that needed for the Joint Commission. Jim McIntyre will be sending you a memo separately.⁶

However, the issue that Oman now poses for us is not only a budget one, since the sums are really small compared to what we are doing for Egypt and Israel. The issue is political and strategic, we cannot afford a major setback to our current efforts to shore up a vital area because we are not prepared to make a commitment regarding our longer-term intentions.

That is why I favor instructing our negotiator (who will meet next with the Omanis next Wednesday)⁷ to negotiate on the basis of Option C, but be empowered to fall back to Option A, if necessary, to avert a strategic and politically damaging rebuff.

Your decision:⁸

Option A	_____
Option B	_____
Option C	_____

1. Source: Carter Library, National Security Affairs, Staff Material, Middle East, Subject File, Box 73, Oman: 3/80. Secret. A draft of the memorandum is ibid.
2. See Document 60.
3. See Document 65.
4. An unknown hand underlined the portion of the sentence beginning with “$25 million” to the end.
5. An unknown hand placed parentheses around “such financing” and wrote a question mark above the words.
6. See Document 68.
7. April 2. See Document 70.
8. Option B was checked and an unknown hand wrote “P’s decision” next to it. An unknown hand wrote “OMB is deciding what to do” in the margin below the options.