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

390. Memorandum From the President’s Special Assistant (Rostow) to President Johnson¹

Washington, February 14, 1967.

SUBJECT

• Lunch Discussion of UAR

Secretary Katzenbach would like to discuss at lunch² the UAR’s April 1966 request for a new PL 480 agreement. This is the toughest—but the most important—decision facing us in the Middle East today. Many of us—and Nasser’s vice president as well—feel we’re rapidly sliding into a showdown. Nasser more and more sees us behind all his troubles in the Middle East. To us, the UAR looks increasingly incompatible in interests, outlook and temperament.

Although Egypt needs the food, the real question is whether we try to maintain a relationship with Nasser. Last summer, we extended $70 million in CCC credit, but that’s run out. The USSR tided Nasser over with 250,000 tons of grain—about five weeks’ imports—and appears to have offered to help round up another 400,000. Even that will leave the UAR at least 600,000 tons short of its FY 1967 grain needs. But entirely apart from food needs, Nasser regards our decision as the main indication of whether or not we’re out to get him. We have little else going for us, since our economic aid has shrunk to a little technical assistance and school feeding.

One key question is whether abandoning the field would result in unchallenged Soviet influence or whether Nasser’s own interest in maintaining his independence would bring him back to the West. Many of our friends—some Israelis, British and Saudis—have urged us to stand aside and let the full weight of Nasser’s economic problems hem him in. His foreign exchange is at rock-bottom, and he has even had to default his latest repayment to the IMF. Yet it was interesting to hear that Israeli Teddy Kollek during his last trip here told Averell Harriman that we should “keep our relations with Nasser open and not leave the field to the Soviets.” He felt we had given Nasser too much in the past but hoped we wouldn’t go to the other extreme now.

Since our effort over the past 5 years to get closer to Nasser has gained us little positive, it’s tempting to try the tougher line. But we’ve received enough quiet signals from Nasser through Bob Anderson and other private Americans to make us wonder whether he isn’t already as close to the brink of complete dependence on Moscow as he can afford. Most recently Nasser’s top military man has invited a group of top-level US business executives to visit the UAR this Easter. If he is trying to find a western anchor again, it’s hard to cut him adrift completely.

Why should we care?

We’re all reluctant to picture the consequences of a break with Nasser. Arguing that line rubs us all the wrong way because no one likes the idea of paying off a bully.

Nevertheless, there are few major situations affecting our interests in the Near East, where we don’t bump in to Egyptian influence. Nasser could cut off important overflight rights—as he has just done on our airlift to Jordan.³ He could turn the Arab boycott into an even more effective restraint on American trade. He can make plenty of trouble for friendly regimes—and for us—in Jordan, Saudi Arabia or Lebanon. He could cause trouble for our shipping in the Suez Canal, bring out the demonstrators against Wheelus Base, stir up more trouble for Israel via the Palestine Liberation Organization or even trigger the nationalization or harassment of our oil companies.

More positively, Nasser is still the most powerful figure in the Middle East. At least out of respect for Israel’s power, he has restrained wilder Arabs who have pushed for a disastrous Arab-Israeli showdown. Despite its mounting economic problems, the UAR has the trained manpower and the will to modernize that will make it the most advanced nation in the area. Two American companies have brought in promising oil finds, and the chances of the UAR becoming a substantial oil exporter look good. It’s hard to argue that we should burn all our bridges with the capital of the Arab world.

Secretary Katzenbach has been considering four alternatives:

1. A $68 million agreement through June including 250,000 tons of wheat, 500,000 tons of corn and/or milo and some vegetable oil, tobacco and tallow. Dollar repayment over 10 years, 2 year grace, US Treasury rates.

2. A $52 million deal with all the above except wheat. Same terms.

3. A $25 million program with 250–300,000 tons of wheat and the remainder in other commodities. Dollar repayment over 15 years, no grace, Treasury rates.

4. A $17 million program of 250,000 tons of wheat, just matching the recent Soviet deal. Dollar repayment over 10 years.

This spread of alternatives reflects the division of opinion. The first two are the choices posed by those concerned chiefly with the consequence for our Near East interests. The last two reflect concern with domestic reaction. AID and Doug MacArthur have predicted strong reaction on the Hill. We would also expect strong reaction from our friends in the area. But while I understand all the pressures for letting this decision ride, I have watched our relations with Nasser closely since 1961 and am reluctant to see us close this door. Our experience in Indonesia is strong argument for buying a little insurance against a better day.

This program is not all political. The UAR is a natural potential showplace to demonstrate what can be done in agricultural production and population control. Its problems are as acute as anywhere, and yet it has the homogeneous population, compact area and happy combination of water, soil and climate to get relatively quick results. The government is putting more into agricultural development, and so far in FY 1967, it has bought some 700,000 tons of grain here on CCC credit.

Time is running out, Ambassador Kamel has seen Secretary Rusk twice, and the Secretary has promised to get him an answer. This need not influence our decision, but in all fairness we ought to answer soon and not allow the decision to drift any longer. Our purpose at lunch is to get a sense of your priorities.

Walt

1. Source: Johnson Library, National Security File, Country File, United Arab Republic, Vol. V. Secret.
2. The President had lunch at 2 p.m. on February 14 with McNamara, Katzenbach, Rostow, White House Press Secretary George Christian, and Special Assistant to the President Joseph Califano. (Ibid., President’s Daily Diary) No record of the discussion has been found.
3. The UAR Foreign Office informed the Embassy on February 12 that the UAR Government had decided to cancel its previous permission for U.S. aircraft to overfly the UAR carrying arms for Jordan. (Telegram 4542 from Cairo, February 12; National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 17–1 US)