Office of the Historian

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

Washington, April 4, 1966, 2:45 p.m.

Dave Bell asks your approval of a $15 million non-project loan for Tunisia—all tied to US procurement. Fowler and Schultze are on board.

This is the bulk of our economic aid program this year, except for a little food and technical assistance. We will release it in two stages to maintain pressure for continued progress on self-help measures. At [Page 242] Bourguiba’s urgent request, we are also considering additional military aid, but we will give you a crack at that later since it would be virtually a new commitment.

This is an outstanding example of using our aid to bargain for better self-help. Talks leading to this loan began almost a year ago. Rusk promised continued support for Tunisian development, provided the Tunisians made some economic policy changes. Out of those talks came a major new Tunisian procedure for budgeting development resources. Now we and other donors ($30 million) working through a World Bank consultative group are ready to underwrite this year’s program. It has been a long pull, but the Tunisians have done a good job. The World Bank has just voted its confidence by setting aside $100 million for the next three years.

While this is a sound development loan, there is also strong political justification. As you recall from your last talk with Bourguiba Jr., President Bourguiba has put himself far out on a limb in the Arab world by standing up to Nasser and preaching a peaceful solution for the Palestine problem. He fears Nasser’s retaliation by subversion and is desperately looking for somebody to tie to. He’s even offered us both naval and air bases (which we don’t need) as an inducement for closer ties. We do not want Tunisia to depend too heavily on us; it should look to its natural markets in Europe. But until Bourguiba can smooth DeGaulle’s ruffled feathers, we have an interest in keeping this effective little enterprise going.2

Walt
  1. Source: Johnson Library, National Security File, Country File, Tunisia, Vol. I, Memos & Miscellaneous, 12/63–9/68. Confidential. A handwritten note on the source text indicates that the memorandum was received at 6:15 p.m.↩
  2. A handwritten note in the margin of the source text reads: “When does he come to see us. Check with Rusk & see if we can’t coordinate the two—L.”↩