Foreign Relations of the United States, 1961–1963, Volume XVIII, Near East, 1962–1963

328. Telegram From the Department of State to the Embassy in the United Arab Republic⁰

Washington, September 20, 1963, 1:41 p.m.

1144. In meeting with Ambassador Kamel September 18 Assistant Secretary Talbot discussed forthcoming Kaissouni visit¹ and UAR request for further balance payments assistance. After reviewing current Congressional attitudes toward foreign assistance, Talbot cautioned Ambassador that status AID bill made it impracticable for us give specific response to UAR request for new assistance during Kaissouni visit. However, we hoped have opportunity review with him difficulties which we see as bearing on US-UAR economic cooperation. On economic front, we were concerned at continued rise in short term credit and large balance of payments gap. While we not prepared argue whether size and scope last year’s IMF stabilization program sufficient to problem, we had hoped would have prevented new external financial crisis and given time for UAR take measures prevent further deterioration. We would want to discuss these questions in detail when Kaissouni and party arrive so that could have fullest possible understanding of problem. On political front, problem was drain caused by Yemen campaign. As long as Yemen drain not brought under control, would be a very high hurdle in considering new U.S. assistance. On domestic front, we had number of particular items we wanted to tidy up relating principally to outstanding obligations and claims US citizens.

Talbot expressed hope Kamel understood his comments were in context of our continued strong wish to protect forward movement in US-UAR economic relationship. We considered important that these problems and essential character our response be understood in advance Kaissouni’s arrival.

While appreciating Talbot’s presentation and admitting much truth what had been said, Ambassador hoped USG would keep in mind its long range objectives in Near East which he felt more important than concrete results immediate day-to-day issues. Kaissouni represented Western ideals and was asset for Free World within UARG. In helping him, we would be supporting US and Western objectives. Though not defending results stabilization program, Ambassador said basic problem how stabilize UAR economy remains. If economy badly shaken and if unable gain economic stability, repercussions for US and West in Middle East would be far worse than for example in Viet Nam. For this reason, he was continuing urge idea of consortium which felt only way bring sufficient resources together assure stability and lead UAR on road to recovery.

Ambassador said he appreciated US domestic political situation and UAR would not want embarrass Administration by pushing for assistance now. However, he knew UAR had certain urgent requirements (medicines, spares) which might not have funds pay for and may need some help now. Also hoped that we could suggest Kaissouni come back in two months time for further discussions. This would have advantage of not rebuffing Kaissouni and preserve his position of influence within UARG, hold out hope further assistance meet economic requirements, and give time put some things in order.

Re Yemen, Ambassador reaffirmed UAR desire disengage although felt UAR intervention had helped fill dangerous vacuum and delineated issues by making everyone appreciate how far other side could go. Re US claims, Ambassador thought US might follow British example last year’s loan by tying certain conditions to future loan.

At close of meeting Ambassador mentioned that he had been authorized inform USG that UAR had agreed offer Temple of Dendura as gift to US in recognition for our assistance.

Rusk

0. Source: Department of State, Central Files, AID (US) UAR. Secret; Limit Distribution. Drafted by Dickman on September 19; cleared by Williams (AID), Ely, and Davies; and approved by Talbot.
1. Documentation on the Kaissouni visit to Washington in late September to mid-October is ibid., POL UAR-US, AID(US) 15 UAR, and AID(IBRD) 9 UAR, and ibid., NEA/NE Files: Lot 66 D 9, Egypt, Kaissouni Visit. See the Supplement, the compilation on the United Arab Republic.