Foreign Relations of the United States, 1955–1957, Near East Region; Iran; Iraq, Volume XII

178. Operations Coordinating Board Report¹

Washington, December 22, 1956.

PROGRESS REPORT ON UNITED STATES OBJECTIVES AND POLICIES WITH RESPECT TO THE NEAR EAST (NSC 5428)

(Policy approved by the President—July 23, 1954)

(Period covered: May 18, 1956 through December 22, 1956)

A. Summary of Operating Progress in Relation to Major NSC Objectives

1. OCB Recommendation Regarding Policy Review. U.S. policy toward the Near East as set forth in NSC 5428 has been reviewed from the standpoint of operating considerations and in the light of experience to date and anticipated future developments. A number of courses of action are no longer applicable to the present situation. It is recommended that NSC 5428 be reviewed as early as circumstances permit.

2. Summary Evaluations. The reporting period was one of very serious stress culminating in the outbreak of hostilities and the sending of a UN police force to the Near East. The Soviet Union, by outright propaganda support of the Arabs and by supplying aid, primarily military armaments, made psychological capital of the situation and greatly strengthened its position, particularly in Syria, Jordan and Egypt. The U.S. was able to retain its economic position and a measure of political influence, particularly in Iraq and Saudi Arabia. In some respects, by its strong stand in support of UN efforts in the crisis, the U.S. psychological position in the Arab states was enhanced. The position of its principal Western allies, however, declined sharply.

3. Availability of Resources, Strategic Positions, and Passage Rights. The U.S. position in oil-producing countries remained relatively strong, but the availability of these resources was seriously curtailed by the blocking of the Suez Canal and the sabotage of the Iraq Petroleum Company (IPC) Syrian pipeline following the British, French, and Israeli military actions in the Canal area.

The Western control of strategic points in the area has been seriously threatened by the wave of anti-British and anti-French feeling following the military action of the U.K. and France against Egypt. British strong points in Jordan and Iraq were particularly threatened and there was unrest in the Persian Gulf Sheikdoms. Moreover, this reaction has raised serious questions about the ability of Britain and France to reassume their previous positions in the face of the current climate of area and world opinion. The Suez Canal base agreement of 1954 between Egypt and Britain is virtually dead. With respect to an extension or a renewal of base rights, the United States, however, continues to exercise rights at the Dhahran Airfield in Saudi Arabia while negotiations continue.

4. Denial of Resources and Strategic Positions to the Soviet Bloc. The denial of resources and strategic positions to the Soviet bloc was made increasingly difficult by the weakened position of the British and French. Throughout the period, the Soviets made efforts to obtain an economic foothold. The Czechs are making a strong effort to obtain the contract for construction of a Syrian Government oil refinery. There were rumors of Soviet bloc efforts to obtain minerals concessions in Egypt and Yemen. The sale of relatively large quantities of Soviet arms to Egypt, Syria, and Yemen brought Soviet bloc technicians to these countries and seriously threatened the traditional Western position of dominance in these strategic areas. However, Saudi Arabia, Jordan, and Lebanon continued to reject Soviet bloc offers of arms aid. Soviet efforts at penetration were blocked in some measure by Western control of petroleum markets and by superior Western technology.

5. Maintenance of Stable, Friendly Governments. The opportunistic and nationalistic Nasser government of Egypt gained in influence throughout the area and other Arab heads of state were less able to resist the formation of governments which catered to this surge of nationalism. The Lebanese Government, previously unfriendly to the West, was replaced by one more friendly on November 19. Syria’s unstable political complex continued to drift leftward. Jordan’s parliament on November 21 called for abrogation of the Anglo-Jordanian treaty and for acceptance of a subsidy from Egypt, Saudi Arabia and Syria. Iraq’s government remained pro-West, but its position was seriously shaken by popular resentment over the Iraqi-U.K. tie. Some civil disturbances resulted. King Saud, while publicly friendly to Nasser and the Arab cause, maintained an independent position using his influence for moderation on nationalistic elements, steering a course between the extreme pro-Soviet and strongly pro-West Arab groups.

6. The Arab-Israeli Issues. Hostilities between Israel, Britain, France and Egypt brought to an abrupt end, for the present, efforts to pacify the frontier and greatly complicated and dramatized the need for effective long-range efforts to secure a permanent peace. There was abandonment by Britain and France of the Tripartite Declaration, and Israel declared the Armistice Agreements of 1949 with Egypt to be no longer valid. The Secretary of State’s message of August 26, 1955 and a White House statement of April 9, 1956 remained the basic U.S. approach to a solution. (See attachments 1 and 2)²

7. Reversal of Anti-American Trends. The initial reaction in the Arab world to the U.S. position in the face of Israel-British and French action was extremely favorable. Subsequently, however, Soviet propaganda and the threat of Soviet military intervention caused the USSR to be given the greatest credit in the Arab world for the cessation of hostilities in Egypt. U.S. emphasis on a peaceful solution of the Suez Canal controversy and strong U.S. support of the UN effort to restore peace has resulted throughout the crises in relatively favorable treatment in much of the Arab press tending somewhat to reverse previous anti-American trends. [3 lines of source text not declassified] Arab bitterness over the U.S. support of Israel continued, however. The extent to which current events will alter a long-standing anti-American feeling in certain political circles cannot yet be determined.

8. Prevention of the Extension of Soviet Influence. Soviet influence was considerably extended in the area through the use of propaganda, and by diplomatic, economic and quasi-military measures, which enhanced the Soviet position with Arab people and with some governments. Egyptian and Syrian military and economic dependence on the bloc was increased. By support of the Arab nations and particularly Egypt and Syria throughout this period, the Soviet Union appeared as the defender of the sovereignty of small countries and of Arab nationalism against the threats of Western “imperialism.” The Soviet position as military purveyor and technical adviser gave it a military foothold of great future potential in the heart of the Near East. Egypt and Syria recognized Communist China and Syria took steps to permit the opening of an East German Consulate in Damascus. The USSR and its satellites made increasing efforts, in the political, economic and cultural fields, to influence the Sudan in the formative months of the new republic. While the U.S. may gain by its current stand on the Israeli, British and French actions, such a gain will probably not be at the expense of the current Soviet position. Events in Eastern Europe appear to have had little effect on the public opinion of the Near East though serious efforts have been made to keep the issues alive in the area.

9. Progress in Meeting Objectives in Military Program Schedules. The rate of delivery of grant military aid to Iraq, the only country in the area receiving such aid, has been satisfactory. Shipments amounted to $13 million as of August 31, 1956 of an FY 1950–56 program of $17.9 million. The Iraqis, however, continue to press for a larger program with increased speed in deliveries. Orders for military equipment under the Reimbursable Sales Program were received from Saudi Arabia, Israel and Lebanon but there were no substantial shipments to any of these countries.

10. Progress in Meeting Economic Program Schedules. Technical cooperation programs in Iraq and Lebanon are proceeding normally while those in Egypt, Israel and Jordan are almost at a halt with the bulk of Mission personnel having been evacuated. Development assistance to Egypt has been decelerated since the nationalization of the Canal on July 26; no new commitments are being made but deliveries against prior contracts are continuing. Similarly, development assistance to Israel has been decelerated since the outbreak of hostilities. Development assistance operations in Jordan are continuing to the extent possible under present conditions.

11. NSC 1290–d Programs for Iraq and Syria. During this period, arrangements were completed for the training of ten Iraqi police officials in the United States, thus implementing one of the recommendations of the 1290–d study. An Embassy recommendation regarding assistance in penal reform in Iraq was under study. The police survey has not as yet been implemented. Because of the political sensitivity of the British on this subject, negotiations have had to proceed slowly. Regarding Syria, the previous OCB recommendation that no action be taken to strengthen internal security forces in Syria remained valid.

12. New NSC Action 1550³ Commitments Entered into During the Reporting Period. A commitment to spend $25 million over five years in U.S. funds for services to Saudi Arabia in connection with the extension of the Dhahran Airfield Agreement was made in August. Clearance is being obtained for an additional commitment in this connection under the new procedures established under NSC Action 1550.

B. Major Operating Problems or Difficulties Facing the United States

13. Nationalism. Throughout the Arab area there have been increasing manifestations of an awakened nationalism, springing in part from a desire to end both real and imagined vestiges of the mandate and colonial periods, but stimulated by opportunism, Soviet propaganda, aid and infiltration, and by Egyptian ambitions and intrigue. Because the former mandatory and colonial powers were from Western Europe, the nationalism has assumed generally an anti-Western form. This situation has created opportunities for Soviet exploitation, and has, at the same time, placed the United States in a difficult position. The natural U.S. sympathy with those genuinely desirous of becoming free and completely sovereign nations runs, at times, into sharp conflict with actions required to maintain the strength of the Western alliance and to support our closest allies.

14. Readjustments in Economic Relationships. Nationalistic leaders in some of the Arab nations have rejected established economic and commercial relationships with the Western European powers which they have linked to the earlier mandatory colonial relationships. The two most significant examples in the area were the nationalization of the Suez Canal Company by Egypt and the unilateral repeal of tax exemption provisions in oil company concessions in Lebanon. This trend has made the United States particularly observant of any indications that similar actions may be taken against the extensive operations of U.S. companies in the Arab area.

15. Differences in U.S.-Western European Assessments of Situation. Differences of assessment, both as to the character of the threat to the West and the means to meet it, have arisen between the United States and Britain and France. While the United States sees in nationalism much that represents a threat to the West, it tends to regard this nationalism as an inevitable development which should be channeled, not opposed. Britain and France have seen this nationalism, backed by Soviet encouragement, as a threat to their entire position in the area. They have tended to think that, once the group in power is defeated by force, people and leaders will arise who will welcome the re-assertion of British and French influence. Significant manifestations of these differences appeared even before the most recent British and French actions in Egypt, in discussions between the U.S. and these nations over the Persian Gulf principalities, over the dispute between Yemen and Aden, over Suez, and over events in Jordan.

16. Intra-Area Rivalries and Disputes. In seeking stability in the area, the United States faces the problem of numerous traditional rivalries and disputes. The rivalry between Egypt and Iraq made the creation of a collective security arrangement in the area more difficult. The rivalry between Syria and Egypt on the one hand and Iraq on the other has grown in intensity and has handicapped constructive measures for stabilizing the situation in Jordan. The United States did assist in lessening the separation of Iraq and Saudi Arabia and in reducing [less than 1 line of source text not declassified] support for anti-Western opposition elements in Jordan, Syria, and Lebanon. Divisions still remain, however, which make any stabilization of the area difficult.

17. Arab-Israeli Hostility. The most bitter of the intra-area disputes, that between the Arab states and Israel, remains a principal basic cause for area instability. Israeli military action against Egypt commenced at the end of October and ended early in November when both sides complied with the UN cease fire resolution. The basic causes of this conflict, including the question of ultimate boundaries, however, remained unsolved.

18. Status of United Nations Prestige. The United States looks to the United Nations as the instrument for the creation of stable borders and ultimate peace between the Arab states and Israel. United Nations inability to stop border incidents and, in particular, Israeli retaliation and the actual Israeli flouting of UN observers have tended seriously to lessen the prestige of the UN in the area. However, the strong role played by the UN in bringing to an end the hostilities in Egypt and presence of UN troops have brought hopeful increase in the stature and prestige of the UN in the area.

19. Soviet Economic and Military Penetration. Fulfillment of United States policies in the area, already beset by growing nationalism, by differences in assessment with its Western allies, by continued disputes, and by the weakening of the United Nations, and by the recent crisis over the Suez Canal, has been complicated further by the opportunistic activities of the Soviet Union. By offering arms to the Arab nations, by subsidizing Eastern bloc nations in economic competition with the West, and by efforts to turn serious events into propaganda victories, the Soviet Union has entered into affairs in the area as never before. The Soviets sought to capitalize on the disruption of trade with the West caused by the Near East crisis by prompt renewal of shipments to Egypt after hostilities ended and by new shipments of petroleum to Syria. Its immediate purpose appears primarily to destroy Western influence, to frustrate any Western plans for collective security, and to establish strong Soviet economic and political influence among all the nations of the area.

C. Immediate Operating Problems

A serious problem is the vacuum created by British and French collapse and preventing the USSR from filling it. The United States faces certain immediate problems arising directly out of the recent British, French, Israeli, and Soviet moves in the area:

20. Withdrawal of Foreign Forces from Egypt. The British, French and Israeli forces have begun their withdrawal from Egypt and the UN forces are assuming control. The clearance of the Suez Canal is expected to begin soon. The Secretary General of the United Nations has now moved to institute a damage survey leading to a reopening of the Canal.

21. Problem of Relations with Israel. The U.S. faces the problem of the extent to which its normal relations with Israel will be continued, particularly in the event of any reluctance on the part of Israel to comply completely with the UN resolutions on the cease fire and troop withdrawal.

22. Relations with Egypt. It is likely that for the time being Nasser will remain the leader in Egypt. Recent relations with Egypt, however, appear to indicate that the United States cannot successfully deal with President Nasser. The United States is faced with decisions regarding future aid to Egypt, its attitude toward the Nasser regime, and the degree to which it will actively seek to curb Nasser’s influence and Egyptian activities in the Near East and Africa. There is substantial evidence of active Egyptian Government interference in the affairs of other Arab nations. This came to light particularly in Libya where the Egyptian military attaché was declared persona non grata on November 6, 1956. The Lebanese have also uncovered extensive Egyptian covert activity, but have taken no similar action in the matter.

23. Problems in Syria and Jordan. Whatever the outcome of the present situation in Egypt, the unstable situations in Syria and Jordan will remain serious threats to the peace. Syria, in particular, remains a likely focal point for communist influence. The likelihood of Jordan’s retaining its ties with Britain seems slight although Jordanian leaders are seeking a formula to retain British subsidy. Some progress is being made toward a Syrian-Jordan economic union as committees from the two countries discuss customs, transit and other steps toward economic collaboration. The United States will face the problems of what to do about the present Syrian regime and what attitude it should adopt toward political changes which may occur in Jordan.

24. Arab Refugees. The Arab-Israeli dispute remains a continuing, serious long-term problem. The United States will face, immediately, however, the problem of what to do about continuing international support of the Arab refugees especially in the Gaza Strip. It is planning to seek, through the United Nations, to return responsibility to the host nations, but recent events create great difficulties for this plan.

25. Collective Security and the Baghdad Pact. Iraq has announced it will no longer participate in meetings of the Baghdad Pact Council at which Britain is present and all area members have strongly urged U.S. adherence. Furthermore, the Asian members of the Pact are becoming increasingly nervous over Soviet moves in the Near East. The future of the Pact itself, and the future U.S. relationship to the Pact and the Pact countries are currently under review. Meanwhile, the United States is considering measures to strengthen Iraq, the one Pact member in the Arab world. Defense and State are working actively on steps to aid the Iraqi Air Force and to increase the already approved MAP program by an additional $10 million for army material.

26. Economic Dislocation. There is a deterioration in the economic situation throughout the area caused particularly by the dislocation of the petroleum industry. Shortages have resulted in Syria and Egypt, and Saudi Arabia has demanded that American companies provide [for?] these shortages. There were further economic dislocations due to cessation of traffic through the Suez Canal, which, coupled with the inability of oil-producing states to dispose of their normal oil output, constituted exploitable weaknesses in the area, with each side losing. Even when full pipeline transit is restored, the pipeline complex will continue to be threatened by disputes between the companies and the transit countries over payments. Oil producers and consumer countries can, in the light of recent and present crises, be expected to continue examining and developing alternative methods of shipment and alternative sources of supply.

27. Dhahran Air Field Negotiations. In June the five year agreement with Saudi Arabia, granting U.S. rights at the Dhahran Airfield, expired. In initial negotiations for its extension the King made clear his belief that Saudi Arabia needed “justifications” for extending the agreement. The “justification” initially amounted to requested grant aid of $250 million yearly for five years but has since been scaled down. However, temporary extensions were given which presently run into 1957, and the U.S. Government is preparing to present a package which will include the continuation of present services, including increased training assistance for the Saudi Army, and the “Royal Guard” Regiment, an air force training program and assistance in constructing an air terminal.

D. Additional Major Developments During the Period.

[Here follow numbered paragraphs 28–31 summarizing the events following President Nasser’s July 26 nationalization of the Suez Canal Company up to the withdrawal of Israeli forces. For extensive documentation on these events, see volume XVI.]

32. Events in Jordan. Following the ousting of General Glubb in March, the political situation in Jordan deteriorated steadily and the influence of pro-Egyptian anti-British politicians grew. The Iraqis attempted to increase their influence in Jordan and planned to send in forces to stabilize the situation, but disagreements arose over questions of military command. Later, following the British, French, Israeli action, troops entered Jordan from Syria, Iraq and Saudi Arabia. Elections on October 21 resulted in substantial gains for pro-Egyptian elements and the installation of a Cabinet largely opposed to continued alliance with Britain. The Parliament decided to abrogate the Anglo-Jordan treaty and seek diplomatic relations with the USSR.

33. Baghdad Pact. Baghdad Pact activities continued to expand in the economic field and military planning directed at defense of the area from the attacks from the north went forward. The next Baghdad Pact Council meeting had been scheduled for Karachi in January. Strong pressure has come from the Prime Ministers of the four Asian countries for the U.S. to adhere. A U.S. military liaison group which the U.S. announced at the April meeting was formally established November 1. The U.S. issued a statement of support for the area members of the Baghdad Pact on November 29. (See attachment 7).⁴

34. Saudi-U.K. Dispute over Buraimi. This dispute remained unsettled but both formal and informal exchanges between Saudi Arabia and the U.K. continued until the breaking of diplomatic relations on November 6.

35. Soviet Pressure. The Soviet Union made a major intervention by demands on Israel, Britain and France for immediate withdrawal of troops and by other threats of action in the area.

36. Syrian Developments. During early December charges of Soviet influence in Syria originated in Iraq, Turkey, Israel, and other Western-oriented sources. Syria has countered with verbal attacks on the Government of Nuri Said in Iraq and with charges that Anglo-French-Israeli and Turkish troops were massing against her, none of which charges have been substantiated. A number of pro-Iraqi, pro-Western politicians have been arrested and charged with complicity in an alleged Iraqi-sponsored plot to overthrow the Government of Syria. Syrian Army G–2 Sarraj has, especially since October 29, increased his influence in the Syrian army. As the representative of the army in a time of emergency and in collaboration with leftist and anti-West politicians, Sarraj has increasingly dominated the civilian government. Since October 29, Syrian foreign policy has closely paralleled that of the USSR.

37. Evacuation of U.S. Citizens. The U.S. throughout this period watched closely for conditions which might place Americans in jeopardy, mindful, however, that any evacuation must be so timed so as to not adversely affect political conditions. Evacuation phase I was made effective for Egypt on July 28 and for Syria and Jordan on August 13. Phase III was declared effective for Egypt, Jordan, Syria and Israel on October 28, when evidences of Israeli intentions against Egypt had been made clear. A full and successful evacuation of non-essential American citizens from these four countries was carried out by ships of the Sixth Fleet, assisted by military and civilian aircraft and merchant ships.

[Here follows a list of attachments.]

Note: The following National Intelligence Estimates are applicable to the Near East:

1. The Outlook for Saudi Arabia, NIE 36.6–56, April 24, 1956.⁵

2. The Outlook for U.S. Interests in Libya, NIE 36.5–56, June 19, 1956.⁶

3. The Outlook for Iraqi Stability and Foreign Policies, NIE 36.2–56, July 17, 1956.⁷

4. UK-French Military Intentions in Egypt, SNIE 30–6–56, Nov. 6, 1956.⁸

5. Sino-Soviet Intentions in the Suez Crisis, SNIE 11–9–56, Nov. 6, 1956.⁹

6. Outlook for the Syrian Situation, SNIE 36–7–56, November 16, 1956.¹⁰

7. Soviet Actions in the Middle East, SNIE 11–10–56, November 27, 1956 (to be published).¹¹

8. Probable Consequences of U.S. Adherence or Non-Adherence to the Baghdad Pact, SNIE 30–7–56, December 14, 1956.¹²

1. Source: Department of State, S/S–NEA Files: Lot 61 D 167, Near East (NSC 5428). Top Secret. Transmitted to James S. Lay, Jr., under cover of a memorandum from Elmer B. Staats that indicated that the progress report was concurred in by the Operations Coordinating Board on December 19. Staats also noted: “In considering this report, the Board agreed that transmission of the report to the National Security Council be delayed about a week to permit recording the final withdrawal of the U.K. and French forces from Egypt, if that event took place as expected. This report, therefore, covers the period from May 18, 1956 through December 22, 1956.”

   The progress report was discussed at the 310th meeting of the NSC on January 24, 1957; see Document 187.

2. For text of Secretary Dulles’ address, see Department of State Bulletin, September 5, 1955, pp. 378–380; the text of the White House statement is ibid., April 23, 1956, p. 688. For related documentation, see volume xvi.
3. NSC Action No. 1550 was taken by the National Security Council at its 283d meeting on May 3, 1956. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)
4. See Document 152.
5. Not printed.
6. Vol. XVIII, p. 454.
7. Document 435.
8. Vol. XVI, p. 1018.
9. Ibid., p. 1020.
10. Vol. XIII, p. 601.
11. Document 151.
12. Document 170.