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

303. Telegram From the Department of State to the Embassy in the United Arab Republic¹

Washington, June 20, 1966, 6:40 p.m.

6653. Deptels 6581, 6537.² Subject: PL–480.

1. You authorized explain to UARG, at levels you deem appropriate (Embtel 3144),³ that we cannot at present time give favorable response new PL–480 request.

2. Likewise we do not want give negative response and sincerely hope overall climate US–UAR relations will improve enough in future to make favorable response possible.

3. Therefore we propose keep request under consideration and will so inform press, public, and foreign representatives when questioned.

4. Drawing on points made in reftels to extent you feel appropriate, you should emphasize our present inability move positively in no way represents change in US policy toward UAR, has no punitive intention, represents no attempt impose definite conditions, and was not result of representation from any third country. Rather it simply reflects what is possible for us given present overall state of US relations with UAR.

5. In keeping with sincere desire be as forthcoming to UAR as present conditions permit, you may advise UARG:

a. According our calculations, May–June wheat crop, shipments under present PL–480 program, recent CCC purchases, and anticipated foreign deliveries will cover UARG wheat needs through September or October. We willing meet additional requirements by offering CCC export credits for wheat/wheat flour. While there no absolute limits on amounts other than those imposed by US supply situation and UAR needs and ability finance, we are thinking tentatively in terms of 600,000 tons. Tobacco, corn, vegetable oil also available.

b. Anticipate three year credits for wheat/wheat flour, tobacco, corn; one-third repayable end first year, one-third end second year, one-third end third year. Vegetable oil credit maximum one year and dependent supply situation.

c. CCC credits last year required 100% US bank guarantee. Under present regulations US bank guarantees only 10%. While this might present problem for total credits of perhaps $50 million, UARG has been able to secure US bank 10% guarantee for CCC credits now being utilized. Waiver US bank guarantee unlikely. FYI: View commercial arrearages and foreign exchange position there also practical limits on amounts that UAR banks can guarantee. We unable specify limits at this time, but suggest total guarantees significantly greater than $50 million might be considered excessive. End FYI.

d. USG also willing continue technical assistance projects, local currency loans for economic development, and renewed Title III program (about $11 million) in FY 67.

Rusk

1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) 15 UAR. Secret;Exdis. Drafted by Wheelock, Atherton, and James H. Bahti of NE; cleared by Macomber, Assistant Secretary of State for Congressional Relations Douglas MacArthur II, Assistant Secretary of State for Economic Affairs Anthony M. Solomon, Symmes, Davies, Mrs. Jacobson at the Department of Agriculture, Mrs. Bitterman of Food for Peace, and Bromley Smith; and approved by Handley.
2. Telegram 6581 to Cairo, June 4, informed Battle of the consensus reached by the IRG/NEA at its May 25 meeting on aid programs to the UAR and requested his comments. (Ibid.) Regarding telegram 6537 to Cairo, see footnote 2, Document 296.
3. Telegram 3144 from Cairo, June 7, conveyed Battle’s concurrence in the program laid out in telegram 6581 to Cairo and suggested that his initial talk should be with Kaissouni, who had submitted the request for aid. (National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) 15 UAR)