101. Telegram From the Department of State to the Embassy in Tripoli, Libya0
Aidto 223. Subject—Economic Aid to Libya. Joint State/AID message. Libyan expectancy of receiving more aid result of Crown Prince visit stated in MacPhail report of Sikta and Mrusa conversations before leaving Washington. This impression further borne out by Libyan press reports of Prince’s “successful” trip hinting US officials promised something tangible forthcoming.
Although record of Washington talks politely non-committal on financial assistance, President did undertake to look into matter personally.
President and SecState chose occasion of Crown Prince’s visit to outline US offer of military assistance for Air Force and indicated in their remarks this was area in which US Government could at this time be more forthcoming.
[Page 150]Understanding here at conclusion visit and subsequent conversations Sikta-Mrusa was that Sikta-Mrusa and Embassy would separately convey to Prime Minister US Government’s general view that Libya in basically strong economic position with virtually unlimited credit on basis prospective oil revenues beginning next April and increasing rapidly thereafter. In terms AID criteria substantial grants or soft loans simply cannot be justified.
Embassy and USAID are urged to make US view on financial economic assistance clear in tactful way while simultaneously seeking focus GOL attention on measures US might be prepared to take in concert with GOL for alleviating immediate fiscal problems. These include as discussed Ambassador and MacPhail “package” containing a) possible advance payment of about $4 million in Deutschemarks against CY 64 cash base rental; b) two year Title IV agreement; c) Libyan request for IMF team to improve fiscal institutions and practices and d) establishment trust fund by GOL for local costs of program support.
GOL appears not to have publicized current money crisis and might be reluctant publicize base rental advance even if such transaction acceptable. Believe public announcement advantageous from US point of view as indication US responsiveness Libya’s need to get development plans under way before oil revenues peak. This US preference should be intimated to Libyans, and if they unable approve public announcement, US side should nevertheless leave itself room to make our action known in indirect but clear manner.
- Source: Department of State, Conference Files: Lot 65 D 533, Visit of Libyan Crown Prince, Oct. 16-24, 1962. Confidential. Drafted by Carr and McClanahan on November 19; cleared by Mossler, Kent, and Hinman; and approved by Hutchinson.↩