Foreign Relations of the United States, 1964–1968, Volume XVIII, Arab-Israeli Dispute, 1964–1967

243. Memorandum From Secretary of State Rusk to President Johnson¹

Washington, October 11, 1965.

SUBJECT

• U.S. Aid to the U.A.R.

Recommendation:

That you authorize our Ambassador in Cairo to enter negotiations with the U.A.R. Government for a new short-term PL–480 agreement. Our willingness to enter into the new agreement could be conveyed when I meet with the U.A.R. Deputy Prime Minister for Economic and Financial Affairs on October 12.²

Discussion:

For the past nine months we have used a suspension of our aid to press the U.A.R. toward policies and courses of action which conform more closely to U.S. interests. We have met with some success. Present U.A.R. attitudes toward the Congo, Yemen, Vietnam and the Palestine question indicate an increased respect on Nasser’s part for U.S. interests and a heightened sense of his need to get along with the United States. In addition, there has been encouraging recent progress on settling private U.S. claims (reduced from $15 million to less than $5 million), and the U.A.R. has promised to pay restitution for damages to U.S. property (our library reopened October 3). A newly-installed cabinet offers hope that more resources and energy will be directed toward economic development; the new Prime Minister (Muhyadin) is believed more pro-Western than his predecessor (Ali Sabri).

We have derived all the benefits we can expect to get from a continued suspension of aid. There is now risk that further pressure, without a demonstration of willingness on our part to help with the U.A.R.’s pressing food problems, will damage rather than promote our policy objectives with the U.A.R. We estimate current food stocks will carry the U.A.R. through the end of the year, perhaps a little beyond. With this critical supply situation the time is fast approaching when Nasser will have to seek alternative sources of food if he concludes that the U.S. does not intend to resume its aid. In order to assure himself of such alternative sources, he may be forced to make far-reaching political decisions that will fundamentally alter U.S.-U.A.R. relations and throw him into an unwanted dependence on the Communist states.

A resumption of PL–480 aid will not solve all our problems with the U.A.R. We will continue to have policy differences. But Nasser, unlike many other Afro-Asian leaders, has demonstrated some willingness and capability to adjust U.A.R. policies and actions to accommodate us. PL–480 sales, granted on a short-term basis and flexibly administered in terms of amounts, offer the best means to maintain the leverage we need to contain and reduce our differences.

We therefore propose that we indicate to the U.A.R. that we are prepared to enter into negotiations for a new short-term PL–480 agreement. The conditions of the new agreement would be harder than our previous agreement with the U.A.R. Two possible proposals are outlined in the enclosure.³ Both would be for an agreement of not more than one year duration. We believe any new agreement should reflect a shift toward Title IV sales which are repayable in dollars. We would also incorporate a provision for periodic review of the amounts being supplied so as to give us flexibility for upward or downward revision depending on the overall climate of U.S.-U.A.R. relations. There would also be a provision for termination by either party.

A resumption of PL–480 sales on a short-term basis will satisfy our policy requirements for the time being. We would not recommend any lending activities over and above this for the present.

We need to come to a decision in principle about a new PL–480 agreement soon. We will begin to lose advantages when Nasser gets the idea we are trying to back him up against his own supply deadline in order to squeeze further political concessions from him. I am seeing the U.A.R. Deputy Prime Minister for Economic and Financial Affairs on October 12. He leaves for Cairo the next day. In my opinion the time is now right to proceed, and we will gain maximum impact if I am able to indicate our willingness to enter negotiations for a new agreement at this meeting. Detailed negotiating instructions can be sent to Ambassador Battle later.

Dean Rusk

1. Source: Johnson Library, National Security File, Country File, United Arab Republic, UAR Memos, Vol. IV. Secret. A handwritten date of 10/8/65(?) appears on the memorandum, but the Department of State copy is stamped October 11. A handwritten note on that copy states that Secretary Rusk took the memorandum to the President on October 11. That copy also indicates the memorandum was drafted by Sterner. (National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) 15–4 UAR)
2. The memorandum bears no indication of the President’s approval or disapproval.
3. The enclosure, unsigned and undated, is entitled “Range of Possible PL–480 Arrangements With the U.A.R.” Proposal A was for a Title I agreement and a Title IV agreement, each worth $70 million, both for 1 year but subject to review after 6 months. Proposal B was for a 1-year Title IV agreement for $98 million, also subject to review after 6 months. Rusk noted in the margin that he preferred Proposal A.