Office of the Historian

226. Memorandum From William B. Quandt of the National Security Council Staff to the President’s Assistant for National Security Affairs (Brzezinski)1

Washington, March 20, 1979

SUBJECT

  • U.S.-Egyptian Military Assistance Agreement (U)

We have come close to agreement with the Egyptians on the following terms:

—We will be prepared to request Congressional approval of up to $1.5 billion in military sales to Egypt over the next three years.

—FMS credits could cover as much as 50% of the total sales. The Egyptians would be expected to pay cash for the other 50%. If, by chance, the Saudis and others are more forthcoming than expected, we would not cut back on the FMS credits offered. But the credits will be on standard terms with no forgiveness (e.g., 10 year deferred payment on principal, with 20 years thereafter to pay off the loan). We have told both the Egyptians and the Israelis that they will receive equal treatment on these new FMS credits. (We can expect a joint Egyptian-Israeli lobbying effort to convert the credits to grants. The impact on the budget is a major consideration, since we only have to authorize funds to cover 10% of the credits. In brief, we buy $3 billion in FMS credits with $300 million of the taxpayers’ money).

On specific equipment, Brown has discussed the following major items with General Ali:

—F–4s. Egypt wants 50. Brown has said we will provide something “more sophisticated” than the F–5, which would probably be the F–4.

—10 C–130s. OK.

—20 CH–54 helos. OK in principle.

—800 APCs. OK.

—350 M–60A tanks. No. Suggest Egypt look to British for Chieftans.

—12 battalions I–HAWKs. OK.

—4 destroyers (five-year life). OK in principle.

—Submarines. Maybe.

—Coastal patrol boats. OK. (S)

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In order to stay within the $1.5 billion limit, the Egyptians will probably have to choose among these items. The equipment list is pretty good; the financing arrangements are less attractive. (C)

In answer to your question2 on whether there is anything the Israelis did not get, the answer is essentially “nothing” among their priority requests. They did hope for a larger grant component in the total and will probably work on Congress to get this reversed. (C)

As things now stand, we are committed to sell equipment and services worth $4.5 billion to Israel and Egypt. If present terms are maintained, the U.S. Treasury will be hit for only $1.1 billion of that amount and this is all that Congress will have to authorize. This is on top of the normal annual aid of $1.785 billion to Israel and $1 billion to Egypt. (S)

In sum, the total of resources (goods and services) which we will transfer to Egypt and Israel over the next three years will be almost $13 billion, of which over $3.5 billion will be financed directly by the U.S. taxpayer. (S)

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Country Chron File, Box 11, Egypt: 1–8/79. Secret. Sent for information. A stamped notation reads: “ZB has seen.”↩
  2. See footnote 1, Document 223.↩