Enclosure 2
UAR EXPECTATIONS OF
MASON MISSION
Since Suez, economic matters—or more explicitly U.S. aid—has been an area
in which U.S. and UAR relations
reflected a spirit of satisfactory cooperation. The resumption of U.S.
assistance, which had been halted subsequent to the Suez crisis, led to
a normalization of relations in favorable contrast to the low point in
the 1956–58 period. While the magnitude of our aid, especially in the
form of food, has steadily expanded, the modestly cooperative atmosphere
accompanying it has not noticeably improved. A plateau seems to have
been reached in our overall relations. Under present arrangements, it
has no doubt appeared to the UAR that
the U.S. doles out aid the UAR [solely
?] needs, such as wheat, while remaining ready at any time to withhold
further deliveries.
U.S. willingness to continue its help, however, through periods of
heightened political disagreement such as the Congo crisis has
apparently resulted in some increased confidence in U.S. intentions.
The past six to eight months have witnessed probing by both sides.
Initially the UAR asked the U.S. to
consider a multi-year PL 480 sales
program to facilitate its longer term economic development planning and
endeavored to ascertain more clearly U.S. intentions with respect to
economic development loans. On the U.S. side, we began to consider
whether a less cautious posture could lead to greater mutual confidence
in U.S.-UAR relations and facilitate
achievement of our broader objectives in the area.
In this atmosphere the UAR Ambassador
reported to his government conversations with Administration spokesmen
regarding U.S. aid criteria. Subsequently he conveyed to U.S. officials
on specific authority of President Nasser a request for U.S. assistance of three main
elements: (a) high level planning assistance; (b) a consortium for
development financing; and (c) a long term commitment on food
supply.
Dr. Mason’s mission represents an
initial response to (a). With regard to (c), we have already informed
President Nasser we are prepared
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to consider a multi-year
PL 480 sales agreement. Both
responses are probing rather than definitive. One of Dr. Mason’s missions is to determine and
advise the U.S. whether and in what form planning aid might be
considered. Our PL 480 approach is
intended to produce recognition and acknowledgement by the UAR of the real value of our food
supply.
Whatever its professed desires, the UAR’s
primary objective in its current approaches to the U.S. appears to be to
obtain increased financial assistance.
Specifically, the UAR is likely to try to
derive from the Mason mission (a)
a loan of as much as $125 million to tide it over the present crisis;
(b) U.S. support vis-à-vis the IMF to
eliminate current obstacles to creation of an IMF-supported stabilization fund; (c) assurances of
continuity of American economic aid; and (d) U.S. support for an
international consortium to mobilize resources on a long term basis for
carrying out the UAR’s five-year plan.
The UAR will no doubt also seek American
or international planning help but probably desires this only in the
context of assurances of larger contributions of American aid.
To a certain extent, thus, the UAR
objectives will be in conflict with our own which are geared to long
term assistance to Egypt as an entity rather than as short term help to
the Nasser regime per se. Our
objectives can perhaps be reconciled, however, within the framework of
(a) a multi-year PL 480 agreement; (b) a
sound IMF stabilization program; (c) the
possibility of sending a planning team; and (d) a possible
pre-consortium study by the IBRD.
Ambassador Bowles has recently
emphasized to Nasser that we will
have to move into the economic picture on a step-by-step basis with each
step being measured in terms of UAR
responsiveness and in terms of sound economic justification.
