That you sign the attached memorandum for the President.
Attachment
Draft Memorandum From Secretary of State Rusk to President Johnson
SUBJECT
- PL–480 Assistance to the UAR
Recommendation:
That you authorize us to negotiate a new six-month PL–480 agreement with the UAR in accordance with one of the following alternative
proposals:
-
Alternative A: A $68 million program
containing 250,000 tons of wheat, 500,000 tons of corn and/or
milo and some vegetable oil, tobacco and tallow. Dollar
repayment over ten years, two year grace period, US Treasury
rates. This would assist us in maintaining tolerable relations
with the UARG.
-
Alternative B: A $52 million program
containing no wheat but all of the other commodities in A above
on the same dollar repayment terms. The prospect of future US
wheat assistance would be held out
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to the UAR. This might still be attractive enough to the
UAR and indicate our desire
to minimize policy differences.
-
Alternative C: A $25 million program
containing 250,000–300,000 tons of wheat, with the remainder
made up of other commodities. Dollar repayment over fifteen
years, no grace period, US Treasury rates. This could be
acceptable to the UAR provided
the preconditions attached to A and B above are sufficiently
watered down.
-
Alternative D: A $16 to $17 million
program of 250,000 tons of wheat, just matching the recent
Soviet wheat aid. The UAR might
accept on credit terms of A above and provided there were no
preconditions. However, this further shortening of the leash
might well be counterproductive in terms of hopes for improved
US–UAR relations.
Discussion:
Opinion is divided on this difficult and complex foreign relations
problem. This is reflected in the spread of alternatives. The issue is
where the balance falls—i.e., on the side of consequences to our Near
East interests or with the unfavorable repercussions on Congressional
attitude toward both food and dollar aid. PL–480 legislation requires that you determine it in the
national interest to make concessional food sales to the UAR.
Alternatives A and B represent the decision of the Inter-departmental
Regional Group for Near East and South Asia. Considerations underlying
this decision are: A negative or inadequate US response will be taken by
Egypt as a challenge. The reactions of Egypt, the most powerful Arab
country, can be detrimental to our interests, especially in the current
increasingly tense and unstable Near East scene. There are few major
situations in the area where we do not bump into Egypt and its
influence. Recent American oil discoveries in Egypt have added new
dimensions to that country’s economic future and our interests there.
Egypt has some influence in less developed areas where we contest with
the Communists for position.
US–UAR relations have not changed for the
better since we ended PL–480 assistance
in June. But time has run out on keeping Egypt’s April 1966 request on
ice as was indicated by Nasser’s
reference to a “starvation war” in a recent major speech. The
implications of this long delay have had some beneficial effects in
terms of increased Egyptian concern with its food and population problem
and of signals from Nasser,
through private American and foreign government contacts, of a desire
for better relations. Offer of a modest PL–480 program, in terms of UAR needs, will preserve at least the minimum effective
US–UAR relationship, maintain some
of our influence in Cairo, keep up the hope of those around Nasser who favor good relations,
continue to offer an alternative to ever-increasing reliance on the
Soviets and
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provide an
umbrella for cooperative Egyptian pound programs in the critical areas
of agricultural production and population control.
There will be adverse reactions to renewed PL–480 assistance from some leaders friendly to us in the
Middle East area and from certain elements in Congress, but, on balance,
IRG/NEA decided such criticism would be less disadvantageous to
US interests than the probable foreign policy effects of not doing so. A
fuller explanation of this rationale is set forth in Enclosures 1 and
2,2 including the conditions
precedent to a new PL–480 agreement.
Alternatives C and D reflect concern with domestic reaction. AID, with
the endorsement of the Economic Affairs and Congressional Relations
Bureaus of State, believes that the disadvantages of further loss of
Congressional support for the Administration’s foreign aid programs
outweigh the possible advantages to US foreign policy interests of a new
PL–480 program with the UAR. AID is skeptical that Egyptians will
starve if PL–480 is not available, and
that such assistance affects Egypt’s long-run policies toward the US and
the Near East area. (By contrast, the IRG and Intelligence and Research Bureau assessments
indicate that the UAR’s long-term
non-alignment policy is vulnerable to full dependence on the Soviets,
that there is some scope for UAR changes
of policies to avoid confrontations with the US, and that alleged
starvation could be made into an issue.) If a decision is made to go
ahead on foreign policy grounds, AID and the Economic Bureau believe the
program should be kept sufficiently limited ($25 million) so that
Congress can be shown we are still pursuing a “short leash” policy
toward the UAR. The Congressional
Relations Bureau believes that the opposition in Congress is so strong
that no PL–480 program of any size should
be initiated at this time. To the catalogue of Egyptian activities that
incense some members of Congress may soon have to be added charges, yet
unsubstantiated, of UAR use of poison
gas in Yemen. A fuller explanation of these positions is set forth in
Enclosures 3, 4 and 5.3
Alternative D would undoubtedly be the easiest to live with from the
domestic standpoint, but it would be too small to support any
preconditions much less maintain a minimum effective relationship with
the UAR. While it would match the
250,000 tons of Soviet wheat actually agreed to, it does not take into
account the additional Soviet
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offer of 400,000 tons which apparently remains open but not yet agreed
upon.
