Documents 273-292
Washington, May 23, 1962.
/1/Source: Department of State, Central Files, 780.00/5-2362. Secret. The copy sent to McGeorge Bundy is in the Kennedy Library, National Security Files, Country Series, Israel, 4/2/62-5/31/62. SUBJECTConversation with Israeli Deputy Defense Minister Shimon Peres/2/ /2/Peres, who was on an "unofficial" visit to the United States, participated in talks in Washington May 21-23. For a briefing memorandum, prepared by Talbot for McGhee on May 18, see Supplement, the compilation on Israel. As you know, Mr. Peres, during his visit concluded today, paid calls on Messrs. Gilpatric and Nitze in DoD as well as on my brother in the White House. I was myself invited to a dinner in his honor last night by Ambassador Harman and at the insistence of the Israeli Military Attach?, Colonel Prihar, I also accepted an invitation to breakfast this morning with Peres on his last morning before leaving. At the close of this conversation, he indicated that he regarded it as a serious presentation of his government's viewpoint which he wished to have considered and replied to, although apparently not to be regarded as a formal matter for correspondence at the present time. The points covered in the conversation were as follows:
1. Basic Thesis. Peres urged that the U.S., if possible, undertake some marked new initiative designed to stabilize the situation in the Middle East, and above all to relieve Israel's sense of isolation. As alternative means to this end, he suggested such possibilities as a U.S. or tripartite guarantee of the present territories of Israel (perhaps coupled with a declaration that we would join in resisting any external encroachment by Israel from these territories) or some form of association by Israel with the U.S. alone or with NATO, either by way of membership or some form of participation in research and development or other subsidiary activities.
Peres continued that, if such a major initiative were not possible, the U.S. should at least be prepared to take a more major role alongside France as a supplier of military equipment under sales arrangements. Specifically, he urged that, over and above existing small arms, Early Warning equipment and SONAR orders now pending, the U.S. should supply a Hawk missile unit.
2. Elaboration of Point 1. Peres said that Israel had had considerable success in expanding its relationship with [less than 1 line of source text not declassified] as well as with several countries in Africa and even Latin America. While this was psychologically consoling, Nasser and Syria remained hostile. The Israeli would never trust Nasser and would always be afraid that he would attack Israel if he achieved a sufficient preponderance of military power, which he was now building up quite rapidly. Therefore, Israel, feeling itself both a democracy in principle and a stabilizing force in the area, believed that some recognition of these facts by the U.S. was both deserved and a contribution to stability and peace in the area.
3. Elaboration of Point 2. Peres noted that although the French had been willing suppliers in the past, they were clearly going to seek to expand their influence in the Arab world once Algeria was settled. Couve de Murville had complained personally to him that France had been taking the onus of supplying Israel for years, and would feel much relieved if others could pick up a part of the burden. Meanwhile, the British apparently believed that "less and less" dealings with Israel were essential to the maintenance of their own position in the Arab world; Peres disputed this thesis, arguing that the French had maintained a better standing in the Arab world than the British notwithstanding or perhaps even because of their support for Israel, and that some Britishers were now thinking that possibly a policy of "more and more" support for Israel might be a better gambit on the Arab problem or at least provide the opportunity to meet rebuffs by unpleasant action.
Speaking more concretely as to the military need and situation, Peres noted that the UAR had many IL-28 light bombers, and was now receiving MIG-21 fighters. In addition the Israeli had firm evidence that UAR technicians were being trained in the USSR in the operation of missiles; thus, he said it could only be a question of a short time before some form of missile was in the hands of the UAR, most probably the SA-2 surface-to-air missile.
From this, Peres concluded that the Hawk represented a vital element in Israeli military requirements for putting up a convincing deterrent to UAR and/or Syrian attack. He also argued that the true test of a weapon should be its purpose, and that the Hawk was purely defensive whereas some non-missile hardware, such as a bomber, might be equally clearly offensive.
4. Additional Comments. Colonel Prihar indicated that they regarded the Early Warning sales transaction with us as just about wrapped up, since an Air Force team had just surveyed the site. (We had long doubted whether they were serious in this transaction, or whether they were trying to get a better line on the capacity of the equipment through the device of asking for it.) Colonel Prihar also indicated that the SONAR transaction was a sure thing as far as they were concerned. Both Peres and Prihar indicated that they had no other pending sales problems of any consequence, but Peres reiterated that the real key was our willingness to supply something that would be a demonstrable indication of our concern for supporting Israel and maintaining a military balance. He noticeably did not mention any bomber aircraft (which he had appeared to suggest in his conversation with Mr. Nitze).
With reference to the Mirage III purchased from France, I asked Peres about the price and credit terms, and he replied without strain that the cost per aircraft was now $860,000 for the basic airplane, which with fire control systems and initial spares brought the total cost to about $1.2 million per unit. They have a 3-year credit from the French at 7% and an escalation clause on the price providing for a 7% annual rise to meet French labor cost increases. He indicated that the French had given them no special reduction of any sort, but that the price seemed to them fair and reasonable. However, he did indicate that it was a major financial strain on his annual budget situation. (This would suggest that they might seek some form of credit terms on the Hawk if we agreed to let them buy it.)
At the close of our discussion, which diverged over a great many other subjects as well but came back to these points both at the beginning and end, Peres made clear that he was not making a formal request for the Hawk at the present time since to do so might court a formal refusal. However, he clearly wished his ideas to be conveyed to the State Department and others, and expected that we would find some way of indicating whether we were receptive to any part of it.
Comment. From the military standpoint, DIA believes that the Israeli Air Force remains qualitatively superior to the UAR and would probably win an air battle, "if an effective defense of Israel's air facilities could be maintained." The Israeli are particularly short of all-weather fighters. Thus, while one can read into their present insistence all sorts of collateral political motives (such as a desire for a gesture of support from us at a time when they are bulling through the Jordan River development project), there is nonetheless a valid military basis for their concern and for their selection of the Hawk as an item of key importance in their military posture.
As to the question of the UAR acquiring missiles, we have no clear-cut intelligence when the Soviets will deliver but there have been reports pertaining to site preparation in the Sinai. DIA believes the missiles to be furnished Egypt and Iraq will be primarily surface-to-air, but that some surface-to-surface types might have been ordered. Reports from Iraq lead DIA to estimate surface-to-air missiles may be delivered to that country by this fall.
WP Bundy
274. Telegram From the Embassy in Iran to the Department of State
Amini said that he had endeavored to allay these fears and to persuade Saudi officials that just because the US was helping Nasser was no reason to believe it had any less regard for its friendship with Saudi Arabia. He pointed out that the question of the course and policy of the Egyptian Government had long been a complicated one and that although Iran had no cause to love Nasser, it could understand how broader considerations might make it desirable for the US to help him.
I said that I believed our policy toward the UAR was based on the estimate that this was a time of crisis in Egypt, that it might well be a unique opportunity for the West to gain a position of greater influence in Cairo, and that it would be better for the neighboring states if the UAR were to devote its energies to the domestic field. I said that we did not see how the Near East as a whole would benefit if there should be collapse and chaos in Egypt, possibly preceded by foreign adventures, and said that as far as I knew we felt far from certain that a regime which might take Nasser's place would be a more constructive one from our point of view. After reviewing the long standing quarrel between Saud and Nasser, in which Saud was caught red-handed in a plot to break up the UAR, I asked the Prime Minister whether he would wish to see us abandon the UAR to the USSR, to which Nasser would certainly turn in greater degree in a time of crisis. I said that I assumed he would wish that the US were able to have a greater presence in Iraq through its aid facilities, and he thoroughly agreed. Dr. Amini reiterated that he knew that the question of aid to Egypt involved broad policy considerations but urged that we make a greater effort to persuade the Saudi Arabians and the Jordanians of the validity of these. He said he sensed a strong anti-American current in the Arabian Peninsula and also the feeling that the US might be gradually abandoning its interest in Saudi Arabia. He felt that the insecurity which was so apparent in the top officialdom there resulted more from the decadence of the ruling group and the enormous gap between rich and poor than it did from any immediate threat from Cairo.Rockwell
275. Telegram From the Department of State to the Embassy in Israel
Peres based his case on growing military strength UAR and alleged conviction Nasser is committed to strike at Israel when he has achieved sufficient arms superiority. He referred to UAR's access to MIG-21s and Soviet naval vessels or equipment as evidence Nasser is making substantial strides towards military superiority goal. Peres said that expanded US assistance to UAR increases Israel's security problem in that it enables Nasser continue rearmament program with USSR while dealing with critical domestic economic problems. Inasmuch as Israel thus directly affected, he argued, US should make compensatory gesture on Israel's behalf.
Under Secretary McGhee expressed understanding Israel's apprehensions arising from its exposed position but commented US has great respect for Israel's military competence and estimates it as being match for some time to come for any Arab combination. He remarked US has no evidence beyond propaganda statements that Arabs contemplating military move against Israel. He also pointed out that any drastic increase in Israeli armament, particularly to more sophisticated weapons, would likely result in corresponding increase in UAR possibly leading to uncontrolled escalation which might add to rather than decrease instability in region.
USG representatives made no commitment to Peres, although he was informed USG willing to study question of air defense once more.
In conversation with McGhee and Talbot, Peres made frank defense of retaliatory raid as valuable instrument Israel policy. Such raids, he said, employed when Israel is convinced local incidents such as recent Lake Tiberias conflict have central government instigation. He cited relative calm since raid as proof this policy's efficacy and disagreed with Talbot's remark that UN agencies' efforts were principal factor. McGhee and Talbot both questioned not only propriety but efficacy of retaliatory raid policy, McGhee observing that UAR decision to embark on major increase in defense with Soviet assistance appears to have been a result of such a raid.
Rusk
276. Paper Prepared in the Department of State
1. The End and the Beginning.
The successful visits to Cairo by Ambassador Bowles and Dr. Mason, together with other manifestations of our willingness to be of further assistance, set the stage for the visit of Minister of Economy Kaissouni. In one sense Dr. Kaissouni's mission was the culmination of an extended process wherein both the UAR and the US laid the groundwork necessary to the creation of a larger superstructure of US-UAR relations. In another sense, Dr. Kaissouni's visit is the beginning of a new stage in our relations, wherein the UAR increasingly reaps tangible benefits and has in front of it the attractive and not too distant prospect of membership in the rather exclusive development consortium club, and wherein the US commences to imbed the UAR in the Free World, to reduce suspicions, phobias, complexes and frustrations which in the past have promoted anti-Westernism and pro-Sovietism in the UAR with their unhappy reflections in the Near East. The process is a long-term one. The short-term benefits to the US are to be found, first, in the measures already accomplished by action of the UAR; second, in their consolidation; and third, in the gradual but steady broadening of the areas of mutual understanding.
2. Perspective.
For purposes of perspective, it is important that we understand clearly the significant lengths to which the UAR already has gone over the past year or more, voluntarily, to make it possible for the US to render Dr. Kaissouni's mission fruitful and to plan additional steps with the UAR:
a) the UAR has made clear by open and forceful resistance to Soviet interference in UAR affairs and to internal communism that the UAR fully intends to maintain its independence and freedom of action vis-?-vis the Soviet bloc;
b) the UAR has made clear its understanding that increased assistance from the US and the West is dependent in part on keeping the Palestine problem "in the icebox", including the reduction of hostile propaganda and avoidance of military activities against Israel (while the UAR will expect the US to avoid both any serious initiative on the Palestine problem which the UAR would be obliged to oppose and any publicity regarding our tacit understanding on Israel which would force the UAR to prove to other Arabs that no "deal" on Israel had been made);
c) the UAR has finally devalued its currency and committed itself to undertake other financial reforms proposed by the IMF, while it has also made other moves designed to reorient much of its trade toward the West;
d) open support of Castro is no longer a feature of UAR policy although relations with Cuba and efforts to establish a neutralist government there continue;
e) UAR policy in the Congo and West Africa is now reasonably respectable and in some respects actually constructive (anti-Communist advice to Guinea), although UAR propaganda directed toward East Central Africa continues virulently anti-Western;
f) the UAR brand of neutralism has become much more balanced, and in its overt propaganda the UAR is relatively careful of its treatment of the US; and
g) the UAR is moving steadily to improve its relations with various European countries with which the UAR has been seriously at odds.
Having made these adjustments, in its own interest, the UAR is unlikely to be responsive to pressures for further significant policy change unless it can be convinced that a change would hold a balance of advantage for the UAR and could not be interpreted publicly as a concession to US pressure. For example, from early February we have endeavored to persuade the UAR to abate its radio propaganda against Iran and the Shah.
/2/ While Nasser has indicated willingness to cease attacking Iran if Iran will reciprocate, it is noteworthy that UAR propaganda did not let up against Iran before or during the Kaissouni visit, a period which in UAR eyes must have marked a critical test of US intentions. /2/Documentation is in Department of State, Central File 686B.88. 3. Where Do We Stand? The UAR is satisfied with the results of the Kaissouni visit. That there is much to be done to straighten things out with several European countries is well understood by the UAR. That the UAR may be able to take certain unpalatable actions in this connection is a reasonable conclusion in light of the UAR commitment to the IMF to devalue the currency and restrict internal credit. We have demonstrated that our intentions are not only honorable but generous. We have set an example for the European nations. In time the UAR will be able to meet its short-term foreign currency requirements. In its relations with Moscow the UAR will have a new bargaining point: increased US aid. Having before it a pledge of more development loans and the prospect of a development consortium, the UAR is encouraged to continue the course it has chosen to adopt: closer association with the Free World while continuing to maintain good relations with the USSR, relative moderation on the Palestine problem, muting of issues between the US and the UAR outside the Near East, reorientation of a greater portion of its trade toward the West, a more genuine neutralism, and improvement of its relations with [illegible--Israel?].4. What We Cannot Do and Cannot Have in the Short Term.
a. We cannot tie political conditions to our assistance.
b. We cannot constantly complain to the UAR on minor frictions.
c. We cannot expect the UAR to cease propaganda against Israel or to agree to settlement of any facet of the Palestine problem.
d. We cannot expect the UAR to abandon its efforts to unify and lead the Arab world, particularly the Eastern Arabs (with incessant squabbles with other Arabs, some of them our good friends), or to drop its anti-Western propaganda and activities in East Central Africa.
e. We cannot expect the UAR to cease attempting to establish in Libya a government subservient to the UAR.
f. We cannot expect the UAR to restore private capitalism in large-scale enterprises or to cease espousing "Arab socialism".
g. We cannot expect the UAR to abandon its partial reliance on the Soviets for economic assistance and principal reliance on the Soviets for armaments.
h. We cannot count on the UAR to agree to limitation of armaments in the Near East.
i. We cannot expect the UAR to cease attacking military pacts, bases and "imperialism" in the Middle East and North Africa.
These limitations stem from an analysis of UAR fundamental interests and behavior patterns. Without attaching conditions to our assistance we shall try to persuade the UAR to undertake further policy changes in its own interest, but we believe it important that there be an understanding in the United States Government of what generally not to expect from the UAR for some time to come. From time to time the UAR will give us some rather rude shocks, perhaps annoying a segment of the American public and causing criticism of our policy. We should not be thrown off course by occasional differences.
5. The Next Phase.
The stage we are now entering in our relations with the UAR may appropriately be called the "pre-development consortium phase". We would expect it to endure some 9-12 months, or perhaps somewhat longer. We propose to continue our step-by-step approach, carefully laying the groundwork for each move, making clear what obligations the UAR must meet and what the UAR may expect from the US, and requiring adequate performance by the UAR.
For the next several months the UAR will be occupied in making a success of its stabilization program; attracting additional European support for it; negotiating a multi-year PL-480 agreement with the US; settling its financial accounts with numerous other countries arising out of Egyptianization, nationalization and sequestration; trying to make its new political system and nationalized enterprises work; establishing a relationship with GATT while trying to create among neutral countries techniques for dealing with the challenge of the Common Market; and seeking expanded markets in the West for cotton and cotton textiles. During this period the UAR will continue to communicate with the IBRD with a view to establishment of a team of experts to conduct a pre-consortium examination of the UAR economy and economic development plans. In all this we propose to let events take their natural course except for supporting UAR negotiations with the European countries on participation in the stabilization program and on broadening its cotton and cotton textile markets.
We propose, however, to conduct a number of conversations with Nasser and other ranking officials. We also have in mind for the late summer a letter from President Kennedy to Nasser. The conversations would be conducted by Ambassador Badeau. We have already instructed him to follow up with Nasser after Dr. Kaissouni has made his report, to assure that Nasser fully understands not only our commitments but the UAR obligations arising out of Kaissouni's negotiations with us, and with the IMF and the IBRD. We plan to follow this with a series of approaches designed as a follow-up to Ambassador Bowles' talks, dealing with global issues, the position of neutrals, the UAR domestic scene, UAR relations with the Europeans, and area problems including Jordan waters. Regarding the latter we shall gently remind Nasser of his commitment to keep Israel "in the icebox" and urge UAR moderation on the waters issue in the interest of area stability. Also we shall continue to recommend abatement of radio warfare, a reduction in statism in the economic field, broadening of the political base of the regime, rural development, and negotiation of an investment guarantee program for certain fields such as tourism in which the investment of foreign capital would be acceptable to the UAR. If possible we should like to have Ambassador Badeau's dialogue with Nasser placed on a regular, scheduled basis, perhaps alternating with Vice President Baghdadi.
The proposed letter from the President to Nasser is envisaged as a follow-up to our commitments to Kaissouni, a progress report, an encouragement for the future, an expression of continued personal interest in Nasser and the UAR, and a means of encouraging UAR moderation on any global or area issues then current.
In the Fall we expect the IBRD to begin its pre-consortium examination of the UAR. By then we should have completed the negotiation of the multi-year PL-480 agreement and shall be processing UAR applications for development loans within the terms of our commitment to the UAR. The next major move we have in mind is an invitation to Nasser for a state visit to the US. Our thinking has been in terms of December, the invitation to be issued after the US elections on November 6 if circumstances permit. However, we think we should have an alternate date available in February 1963 in the event that a) Tito comes to the US before the end of 1962 or b) the circumstances indicate that the later date would fit better into our moves as planned next Fall. An invitation to Ben-Gurion sometime in 1963 would appear to be desirable if Nasser comes here. With Nasser we would propose the discussion of global issues, US-UAR relations, area problems, the UAR domestic scene, and the possibility of an informal arms limitation understanding with the US playing broker. Providing the IBRD has laid the proper groundwork, the principles and problems of a development consortium should also be discussed in detail with Nasser.
To go beyond this point in our thinking for the new phase would seem fruitless now.
6. What Do We Get Out of Our Efforts?
As stated above and in previous memoranda, our objectives with the UAR are principally long-term, with lasting achievements perhaps decades away. The limitations within which we work are set forth above as are the policy adjustments already made by the UAR.
The benefits we hope to accrue from a continuing accommodation with the UAR are:
a. Higher UAR priority to domestic development.
b. Elevation of the standard of living and level of political awareness; modernization of the economy and society; and eventually progress toward democracy.
c. Gradual reduction in suspicion of the West, in fear of Western imperialism; UAR confidence in its ownership of the Suez Canal; abatement of other complexes; greater self-respect and statesmanship; and firmer membership in the Free World, with such thorough entanglement and with so many benefits therefrom that loss of freedom of action to a considerable degree is accepted.
d. Removal of the threat of Soviet domination of the UAR and hence of other parts of the Near East; and protection of our interests in the Near East.
e. Strengthening of the UAR's cultural and economic orientation toward the West; and increase in US trade with the UAR.
f. Relative moderation on the part of the UAR toward the Palestine problem, indefinitely, with resultant encouragement of stability in the Near East.
g. Constructive UAR leadership of the Eastern Arabs in a world requiring ever more tightly knit relationships, particularly regional.
h. At the end of an extended period perhaps a willingness to live and let live with Israel as the world continues to "shrink" and enters a new stage of organization.
277. Memorandum From the President's Special Assistant for National Security Affairs (Bundy) to the Assistant Secretary of State for Near Eastern and South Asian Affairs (Talbot)
Conversation with Israeli Deputy Defense Minister on May 21, 1962
My brother Bill's memorandum of his conversation with this gentleman
/2/ reminds me that I have not reported on my own talk with him. /2/Document 273. The central point in Peres' remarks to me was that the maintenance of a stable and strong Israel was a service to peace in which the United States should take an increasing share. The particular item which he emphasized was the defense of the three operational Israeli air bases by Hawk missiles. He would like to buy them with some help from us, in a fashion undefined.The rest of his argument was mainly embellishment and statistical argumentation designed to make the point that this was now a necessary contribution to the stabilization of the Middle East. He also appeared to believe that we should gradually get into a steady relation of military assistance to Israel, and I think it is predictable that he will have been making this point to Zionist leaders in this country.
I asked Mr. Peres what he thought about nuclear weapons in the Middle East, and he said that it would be better for Israel if they could be kept out, but that if there were signs that others might move in this direction, Israel would of course have to consider her own position.
McGeorge Bundy
1. Israel's Security: Harman said in atmosphere of uncertainty surrounding Israel Government and public his interpretation USG's professions intent to support Israel in case of assault had not dispelled anxiety since assurances USG would be involved if Israel attacked, and that USG had so informed Arabs, had to be qualified by statement USG would not relax its policy re arms supply nor engage in contingency planning. His statement that in case of trouble situation would be discussed on diplomatic level had been disappointing. Secretary commented that this is mode of communication between governments; that decisions could not be made by "colonels on both sides". Harman agreed, but said he assumed US policy implying military involvement would be reflected in advance joint planning and prior establishment agreed channels military communication.
In response to Secretary's query re arms balance as assessed by Israel's military, Harman reported no concern for immediate future but great deal for two or three years hence. He described UAR as key problem since its naval forces so far ahead Israel not even trying keep abreast; its infantry increasing from 11 to 14 brigades; its armor from four to nine brigades; and its ground carrier fleet tripled. Israel's major vulnerability remains air attack since Egypt has received eight TU-16 long-range bombers which can operate from bases deep in Egypt far beyond Israel's attack range. In addition, MIG-21s are on way, UAR pilots having had preliminary training. Israel believes UAR to receive ground-to-air missiles in use of which it probably has also had prior training. While USG's overtures to Nasser may impose restraining influence, this is calculated risk to Israel's security suggesting USG should give Israel compensatory or counter-balancing gesture.
Secretary referred to Department assurances to Deputy Defense Minister Peres (Deptel 755) 3. Direct Negotiations: Harman found Israel very critical of US vote against Brazzaville Resolution. Of all world conflicts only in Palestine complex is negotiation rejected as matter of principle. Direct negotiation resolution would have strengthened hands of those Arabs who are resigned to inevitable settlement with Israel. Secretary asked whether there are such Arabs and emphasized that US enthusiastically supports direct negotiations if there is slightest prospect of success. If such prospect exists, Israel has means to learn about it and also US antennae would be among first to react to evidence such possibility.
On Harman's expression dissatisfaction with Brazzaville Resolution and US role in April 9 Security Council resolution, Secretary remarked Israel Government was fully aware in advance of US attitude. On Brazzaville Resolution, Israel had been informed that US preferred no resolution but Israel had gone ahead to inspire just such resolution. Israel of course is not US satellite but contrary also true. Similarly Israel could be in no doubt as to US attitude towards retaliatory raid. Secretary said he hopes he has made clear that if Israel relies on US support, US is entitled to be consulted.
4. Jordan Valley Development: In connection foregoing Secretary asked if USG has been fully informed Israel's water development schedule and diversion volume planned. Harman replied affirmatively.
Harman complained also of US attitude on status Jerusalem and on Israel's sovereignty over Tiberias.
Rusk
The Kaissouni visit was apparently viewed by Nasser as a test of our good intentions. We were quite forthcoming, though far short of the UAR bids. We promised $20 million in stabilization credits if the UAR met IMF terms (they have) plus up to another $10 million to match other contributions. We promised to consider favorably some $51 million in development loans, and committed ourselves to 400,000 tons more of Title I wheat. Though all this seems impressive, it is in fact just enough to keep Nasser afloat economically; so we haven't gone too far yet.
On the other hand the Shah, Saud, Hussein, and the Israelis are all vocally unhappy at the shift in our policy. They are not persuaded by our argument that if we don't help Nasser he'll become even more mortgaged to Moscow. But the only serious problem is that of the Israeli-Arab balance, which we are seeking to preserve by compensatory moves.
State sees the next several months as a period of wait and see, before moving on to a possible consortium. Nasser has said he intends to write you his thanks for the recent help, which would permit a friendly letter in return. Then, if things go well we can consider an invitation.
Bearing in mind that we are engaged in a long term effort to overcome an ingrained UAR heritage of suspicion of the West, it seems to be going reasonably well. The important thing is not to let the inevitable minor irritants which will crop up deflect our strategy. On the other hand, State is reluctant to go very far as yet with the sort of political dialogue on issues of mutual concern for which improved US/UAR relations should gradually open the way. We will keep pressing State to this end. On April 30, the American Jewish Committee met with the President and raised a number of problems concerning the treatment of American citizens by Arab States. 2. What efforts are being made, and what are the prospects for the success of those efforts, to eliminate restrictions on travel by American Jews in the Arab States.
3. What efforts are being made by the State Department to discourage cooperation by American companies that are being requested to furnish information regarding the religion of their officers and owners when they seek to do business with the Arab States.
I requested a report from the State Department immediately, and I have repeated this request on two occasions, but I have thus far received only promises that they are working on it. I would appreciate it if you would do what you can to speed the State Department memorandum to me and to maintain a continuous observation of these matters. SUBJECT By telephone call to Assistant Secretary Talbot May 21, Mr. Feldman asked why, when other Governments contemplate the establishment of a diplomatic mission in Jerusalem, we review with them the United States position on non-recognition of Jerusalem as the capital of Israel.
A resolution of the United Nations General Assembly adopted November 29, 1947, provided for the partition of Palestine into an Arab and a Jewish state and the creation of a corpus separatum, under direct international administration, of the City of Jerusalem and its environs. This resolution could not be carried out since hostilities broke out in May 1948 between Arab states and Israel. The hostilities were terminated by a series of armistice agreements in 1949. The armistice agreement between Israel and Jordan of April 3, 1949, established armistice demarcation lines which divided Jerusalem into sectors under Israel and Jordan control with a no-man's-land between the two sectors. The United Nations General Assembly on December 9, 1949, reaffirmed its recommendation that a corpus separatum be established, and requested the Trusteeship Council to proceed with formulating a Statute for a Corpus Separatum for Jerusalem. The United States and certain other interested powers did not support this resolution, which was, nevertheless, passed by the Assembly. It was the belief of this Government that events had made efforts at carrying out the terms of such a resolution unrealistic, inasmuch as the two countries in actual occupation of Jerusalem were strongly opposed to the creation of a corpus separatum. The Trusteeship Council failed to produce an acceptable draft statute as did the United Nations General Assembly that same year (1950). The United States undertook, however, to give due recognition to the formal acts of the General Assembly and the Trusteeship Council relating to Jerusalem and has since maintained its position that the Holy Places in the Jerusalem area are of international interest to a degree which transcends ordinary considerations of sovereignty.
278. Telegram From the Department of State to the Embassy in Israel
279. Memorandum From Robert W. Komer of the National Security Council Staff to President Kennedy
280. Memorandum From the President's Deputy Special Counsel (Feldman) to the National Security Council Executive Secretary (Smith)
Discrimination by Arab States
281. Memorandum From the Department of State Executive Secretary (Battle) to the President's Special Assistant for National Security Affairs (Bundy)/1/
Washington, May 31, 1962.
/1/Source: Department of State, Central Files, 325.84/5-3162. Confidential. Drafted by Crawford on May 25 and cleared by Talbot, Wallner (IO), and Palmer (IO/UNP).
United States Position on Jerusalem
Despite the passage of the 1949 United Nations General Assembly resolution, the Israel Government officially transferred the Israel capital to Jerusalem. Israel Ministers began moving to the city, but the Foreign Ministry remained in Tel Aviv for a period. On May 4, 1952, the Israel Government announced that it was transferring the Foreign Office to Jerusalem. The actual transfer took place as of July 12, 1953. On July 9, 1952, the Embassy at Tel Aviv handed an aide-m?moire to the Israel Government (enclosed)/2/ stating that the United States Government did not view favorably the transfer of the Israel Foreign Office to Jerusalem, and that there was no intention of transferring the United States Embassy from Tel Aviv to Jerusalem.
/2/For text, see Foreign Relations, 1952-1954, vol. IX, Part 1, p. 961.
Our position, as frequently stated, is: "the status of Jerusalem is a matter of United Nations concern and no member of the United Nations should take any action to prejudice the United Nations interest in this question. Our objective has been to keep the Jerusalem question an open one and to prevent its being settled solely through the processes of attrition and fait accompli to the exclusion of international interest and an eventual final expression thereof presumably through the United Nations."
As a consequence of this policy, when the Department learns that a government for the first time is contemplating the establishment of a diplomatic mission in Israel, we inform that government of the historical background of United Nations attitudes toward Jerusalem and express the hope that, in deference to United Nations attitudes, its mission will be established in Tel Aviv, where most other missions are located. (This approach is almost invariable, although we would not undertake it in the case of a government hostile to the United States because our effort might be self-defeating.) We are at pains to inform the government that the decision is one for it to make. If, despite our friendly counsels, the government desires to establish its mission in Jerusalem the United States Government makes no further effort to dissuade it. The view of our major allies on the Jerusalem problem is generally similar to our own. They also have on occasion made representations to other states regarding the establishment of diplomatic missions in Jerusalem.
The Department's files show that since Israel's transfer of its capital to Jerusalem we have made approaches along the foregoing lines to the following countries:
| Country | Year | Present Location of Mission |
| Japan | 1955 | mission in Tel Aviv |
| Guatemala | 1955 | mission in Jerusalem |
| Cuba | 1957 | mission in Tel Aviv |
| Liberia | 1958 | mission in Tel Aviv |
| Haiti | 1958 | no resident diplomatic representation |
| Venezuela | 1959 | mission in Jerusalem |
| Ecuador | 1960 | mission not yet established |
| Ivory Coast | 1961 | mission in Jerusalem |
| Ethiopia | 1961 | mission not yet established |
| Philippines | 1962 | mission not yet established |
| Costa Rica | 1962 | mission not yet established (but announced as Jerusalem) |
| Gabon | 1962 | mission in Jerusalem |
As of March 1962, of the 41 nations maintaining diplomatic missions in Israel, eleven were located in Jerusalem, four of these, however, sharing one resident Ambassador./3/ This group includes six African and three Latin American states. The two others are Greece and the Netherlands, both of which are regarded as respecting the status of Jerusalem since these governments designated their consular representatives to mandated Jerusalem as diplomatic representatives to the newly created State of Israel, leaving their consular residences in the original location.
/3/A footnote in the source text lists Central Africa, Gabon, Greece, Netherlands, Guatemala, Venezuela, and Uruguay. Dahomey, Ivory Coast, Niger, and Upper Volta were listed as four "Conseil d'Entente" nations represented by a single Ambassador.
The United States practice (of informing states which may be considering the establishment of a diplomatic mission in Israel of the background of United Nations interest) is known to Israel. The latter has occasionally taken issue with the practice, most recently in January of this year./4/ We have invariably replied that the United States feels it has a moral obligation in this issue; that the United Nations interest is a legitimate one; on this premise we make our views known to interested governments; however, each government must decide its position for itself.
/4/See Document 167. Harman also raised the matter with Rusk during their meeting on May 28. The memorandum of conversation is in Department of State, Central Files, 684A.00/5-2862.
C.K. Johnson/5/
/5/Johnson signed for Brubeck above Brubeck's typed signature.
My reaction to State's 29 May report For my part, however, I'd like to see the following explored:
1. Measures to sustain a balance between Arabs and Israel (e.g. some form of new security guarantee, perhaps Hawk air defense missiles, the proposed exchange of assurances on Jordan waters). Such measures will also signal clearly to the Arab states that our new policies do not betoken any lessened interest in Israel's security.
2. Possibilities of talking Nasser into holding back his Soviet arms purchases if we keep lid on Israelis (this at least will serve to justify our stand if we later sell Hawks to Israelis).
3. More active effort to get Jordan and Saudis to tone down their current noisemaking. I can't understand why, when we're subsidizing Jordan so heavily, we don't tell them to lay off this silly new Palestine plan of theirs.
4. A stronger push behind Joe Johnson's refugee efforts (though this might be counter-productive).
5. A tough line with Israelis not to rock the boat, and to collaborate more effectively with UNEF and UNTSO.
6. A set of quiet but persistent diplomatic and other initiatives designed to remind Arabs that a third round against Israel is futile. We're too cautious about telling Arabs the score.
None of above are new, and all have their disadvantages. But my basic point is that we ought to be forehanded in anticipating new trouble in the Near East, not just sit back and wait for it.
R.W. Komer The attached, I am afraid rather lengthy, file describes the NEA proposal regarding agreement with Israel on Jordan waters. As you will note, IO, in Tab B, dissents as to certain aspects.
I also have certain reservations as to tactics. My own inclination would be to build this around a public statement by Israel to which we would make a public response. Also I believe we could work in certain dams for Jordan as a part of the quid pro quo to the Arabs.
I will try to look in on your meeting when these matters are being discussed.
Memorandum From the Assistant Secretary of State for Near Eastern and South Asian Affairs (Talbot) to Secretary of State Rusk
Washington, May 25, 1962.
Discussion:
Since the Syrian-Israel clashes on and near Lake Tiberias culminating in the censure of Israel on April 9, NEA has considered possible steps to prevent or minimize further violence over Israel's plan to withdraw large quantities of water from the lake some eighteen months hence. Discussions with Ambassador Stevenson and his staff and with Mr. Feldman have not achieved a consensus. NEA thinks the attached note embodies the course of action best calculated to promote our foreign policy objectives and is both defensible and useful from the domestic point of view. Our rationale follows:
1. Is a United States Initiative Necessary Now?
(a) Hostilities have already occurred over the issue, the Syrians are "bloody-minded", and Israel clearly intends to leave no doubt of its right and ability to take the water.
282. Memorandum From Robert W. Komer of the National Security Council Staff to the President's Deputy Special Counsel (Feldman)/1/
Washington, May 31, 1962.
/1/Source: Kennedy Library, National Security Files, Meetings and Memoranda Series, Staff Memoranda, Robert W. Komer. Secret. Copies were sent to Bundy and Kaysen. A June 1 note attached to the source text from Komer to Bundy reads: "Mike is certainly beating on State these days with a drumfire of 'queries.' I'm not sure he realizes that our long-term ability to promote steps toward an A-I settlement depends largely on a sufficiently even-handed attitude toward Arab and Israeli to give us leverage with Arabs. As you know, I agree that pendulum has swung sufficiently that compensatory gestures toward Israel desirable, but I believe that: (1) what Israelis really need and want is reaffirmation of our security guarantee; (2) we should use this prospect to get certain concessions from them."
Mike--
283. Memorandum From the Under Secretary of State for Political Affairs (McGhee) to Secretary of State Rusk/1/
Washington, June 1, 1962.
/1/Source: Department of State, NEA/IAI Files: Lot 70 D 229, Jordan Waters Memoranda. Confidential.
SUBJECT
Proposed Note to Israel Regarding Jordan Waters
Tab A
Proposed Note to Israel Regarding Jordan Waters
(b) Israel's right to an equitable share of the water is unquestioned by the U.S. Government and Israel is determined to begin withdrawal of water as soon as possible.
(c) Our best means of dampening Israel's ardor for military response along the Syrian frontier is our assurance of Israel's right to take an equitable share of the water. Our best hope for minimizing Syrian hostile actions against Israel, and for gaining general international acceptance of Israel's water plan, is to assure that the rights of the Arabs are protected.
(d) The reciprocal assurances we propose to require of Israel are the keystone in the arch of our position with the Arabs on the water issue. Lacking such assurances, we would have no case.
(e) The longer we delay in seeking assurances in writing from Israel, the less likely we are to receive them as Israel becomes more confident of its ability to complete the water program despite Arab opposition, and as the U.S. finds itself obliged to support Israel even though lacking the necessary assurances. Israel is likely to say, "We'll take the Jordan River and Jordan can have the Yarmuk"; this won't do.
(f) We had hoped to remove some of the heat from the water issue by encouraging Jordan to work with the IBRD for development of Jordan's share of the Yarmuk River. This course of action has moved too slowly to achieve the desired result. It seems apparent that time has run out and that an active, overt role must be assumed by the U.S.
(g) Prompt and sustained action by the U.S. may reduce the likelihood that the issue will be taken to the Security Council, and risk of renewed hostilities and their escalation resulting from a miscalculation of the U.S. position will be reduced.
(h) Up to the present the Arabs have not sought pretexts for rendering Dr. Johnson's refugee initiative fruitless. We believe the Arabs will be careful to distinguish between the refugee question and the water issue and will not wish to be responsible for causing Dr. Johnson to fail.
2. What Should be the Nature of the Initiative?
(a) Although Israel has long been aware of our support for its water plan and informally has made apparent its intention to remain within the Unified (Johnston) Plan, reduction of our assurances to writing will remove any lingering Israel doubts and make clear that our support will extend to mobilization of international opinion; reduction of Israel assurances to writing will permit us to preserve the essential features of the Unified Plan and to persuade the Arabs that their rights are being protected. We do not find an oral approach acceptable.
(b) We have come to believe that the issue of sovereignty over Lake Tiberias is extraneous to the problem of use of water and this should be dealt with separately, perhaps by Aide-M?moire at an early date. The essence of our position continues to be that Israel presently has full authority and rights of jurisdiction and control over the lake.
3. Should Further Conditions be Laid on Israel?
(a) One school of thought advocates that in exchange for our assurances we should also require Israel to agree to comply with the provisions of the Security Council resolution of April 9 for the strengthening of the United Nations peace-keeping machinery. We believe this would involve us in a complicated and controversial negotiation which would divert us from the main objective of the note.
(b) In our view, the United States is not in a strong bargaining position. Israel will go forward with its water plan with or without U.S. support. The reciprocal assurances sought in the note are necessary, and are attainable if sought promptly.
(c) Once the United States and Israel have exchanged assurances regarding Israel's water plan, Israel may be amenable to granting more authority and better facilities to UNTSO, now withheld for fear of impairing its ability to act as its security requires. We would be in a sound position to support General Von Horn with both Israel and Syria, and to request support of Israel's friends in the U.S. in our efforts to persuade Israel.
(d) In real terms reciprocal concessions on water between the U.S. and Israel will place the U.S. in a balanced position with Israel and the Arabs on the Jordan waters controversy.
4. Delivery of the Note
(a) You would hand the note to the Israel Ambassador with the suggestion that an early favorable response would enable the U.S. to start its effort to obtain the acquiescence of the Arab states and the support of the international community.
(b) You would ask that Israel keep the note in confidence. If an inaccurate or incomplete version became public, the U.S. would be obliged in its own interests to disclose the full substance of the note to demonstrate its balance between Arab and Israel interests.
(c) You would point out that our assurances should resolve any lingering doubts of our support as well as remove obstacles to Israel cooperation with UNTSO and ISMAC.
5. The Arabs
(a) The note carries with it the certainty of some strain on our relations with some of the Arabs, notably the Syrians. In our opinion there is no satisfactory alternative. However, their reaction will be much more bitter if Israel proceeds to withdraw water without U.S. action to safeguard Arab interests. Our request to Israel for reciprocal assurances is to preserve as best we can our relatively improved relations with the Arabs.
(b) Arab self-interest should prevent their adoption of a more consistently and unitedly hostile position toward the United States in the United Nations. Some of them have an important stake in U.S. aid programs and would be reluctant to alienate the U.S. when it is apparent we had their interests in mind. Most of them now vote against the U.S. on most issues, although Lebanon and Jordan vote with us when they can.
(c) We propose quiet approaches to Syria and the UAR, and eventually to other Arab states, after receipt of Israel's assurances or should a "leak" force us to reveal the full substance of the note. They would be informed that the interests of the Arabs have been protected and world opinion will not support further Arab efforts to deny Israel an equitable share.
(d) Syria would be urged to permit strengthening of UNTSO's effectiveness and to agree to reactivation of ISMAC without prior conditions.
(e) Nasser would be quietly reminded of his suggestion that US-UAR relations would best prosper with Palestine issues in the "deep freeze" and his support or neutrality would be urged for U.S. and U.N. efforts to strengthen the United Nations peace-keeping machinery and damp down the controversy over water. UAR need for Western help for its stabilization program and its prospects for a development consortium should encourage the UAR to moderation.
(f) The Arabs in general would be guaranteed the United States will do its best to assure that Israel's water development does not jeopardize the rights of other riparians and that the U.S. is prepared to lend equivalent support to Arab water development programs, which should not be delayed longer.
Recommendation:
That it be agreed within the United States Government that the attached note be handed to the Israel Ambassador.
Excellency: I have the honor to state that recent events which have occurred in the Lake Tiberias area have drawn attention to the question of the rights and obligations of the parties in the area and in particular to the effectiveness of the peace-keeping machinery established under the Israel-Syria General Armistice Agreement. Central among our several concerns is the determination to prevent, if possible, an insupportable strain on sensitive area relationships resulting from controversy over the waters of the Jordan Valley.
As Israel and her Arab neighbors have long known, the United States Government believes it is in the best interests of all concerned that these water resources be peacefully and fully developed for the progress and prosperity of the area. Proposals for the equitable distribution and full utilization of the resources of the Jordan River system were accepted by Israel and the affected Arab states at the technical level in 1955. While the prospect of international agreement continues remote, it is the United States view that stabilization of the Near East and a more durable peace will not be advanced by prolonging the period during which riparians along the Jordan River system are denied equitable shares of this important natural resource by intra-area rivalries. In a degree these rivalries are perpetuated and exacerbated by the delay in division of the waters.
The United States Government considers that Israel's use of the waters of the lake within equitable limits would be in accordance with the general principles of international law governing international river systems. Therefore, when withdrawal of water from the lake becomes necessary for Israel's continued development, it is the view of the United States Government that Israel will be justified in carrying its water development project to completion.
Accordingly, upon receipt of the affirmation described hereafter, the United States Government is prepared to inform the other riparians along the Jordan River system that it considers Israel to be justified in taking an equitable share of the river water, using Lake Tiberias as a point of diversion. Further, the United States Government, as circumstances require, will support diplomatic efforts by Israel to obtain general international approval of its withdrawal of water from Lake Tiberias. The United States Government likewise will wish to support the efforts of other riparians to create means of employing their allocations of water under the Unified Plan for the Development of the Jordan River Valley (Johnston Plan). I should like to emphasize that the ability of the United States Government effectively to support Israel's water use plan is dependent upon action by Israel to assure that the onus for tensions in the area will not fall on Israel. In the belief that it is in Israel's interest to cooperate fully with the United Nations and to conduct a policy of restraint along Israel's borders, the United States Government will wish to explore with the Government of Israel means of strengthening the effectiveness of the United Nations machinery in the area. The United States Government will also hold discussions to this end with the Syrian Arab Republic and with other governments.
In the interest of prompt and effective implementation of the line of action described above, the United States Government will appreciate receiving early affirmation of what it understands to be the position of the Government of Israel as follows:
1. Israel's firm intent to take no more than the quantity allocated to it by the Unified Plan. (The position of both Israel and the United States would be strengthened by a public announcement of such intent by Israel at an appropriate time.)
In conclusion, Excellency, I should like to express my personal interest in the frequent consultations between our two governments which inevitably are entailed in the search for a solution to this issue in which deep emotions are involved on both sides. I am convinced that a peaceful solution can be found.
Accept, Excellency, the renewed assurances of my highest consideration.
Memorandum From the Assistant Secretary of State for International Organization Affairs (Cleveland) to the Under Secretary of State for Political Affairs (McGhee) and Secretary of State Rusk
Washington, May 25, 1962.
In general, I agree that we should assure the Israelis we support withdrawal of waters from the Jordan by Israel on the understanding that it will agree to take no more than the capacity allocated to it by the Unified Plan and it will cooperate in establishing effective means for assuring impartial supervision over the use of the waters. However, since there are a number of aspects of the problem which deserve careful exploration, I believe it would be useful, if you would agree, to convene a meeting of the interested bureaus to consider the following questions:
1. Israel is not expected to begin withdrawal of water before mid- 1963. Is it necessary therefore to provide appropriate assurances at this time while we are actively engaged in supporting the Johnson Mission? Could the question of assurances be postponed until early 1963?
2. Has the nature of the assurances been explored generally or specifically by Mr. Feldman with Ambassador Harman, and if so, what have these conversations revealed regarding the possible Israeli reaction?
3. Is the best method of achieving our objective in our negotiations with Israel to lay out our full bargaining position in a piece of paper at the outset?
4. Can more be done at an earlier stage to prepare the Arabs and to reduce the possible adverse repercussions, particularly with Syria?
I believe a full exploration of the above questions in a meeting in your office would be helpful. In addition, it would provide us an opportunity to consider Ambassador Stevenson's reservations as indicated to you on Tuesday of this week.
We may be heading for another crisis in Iran. Plan Organization and 3d Plan are in a parlous state, new budget is so big that either plan will have to be postponed or big US loan needed and Shah is making noises about much bigger MAP package than we offered. Amini is fatigued and seems to have lost control of situation.
State is trying to find out if situation as bad as feared (Holmes doubts but he's been here since Shah's visit). And I've been arguing we should run scared nonetheless. A stitch in time, you know.
Meanwhile, Shah continues to recall promises we can't track down. Latest is alleged JFK promise we'd underwrite a 2,000-man commando brigade for Tehran riot control. As I recall, JFK and Shah discussed internal security problem at dinner; President thought Shah not interested enough in this and we subsequently told Taylor to look into what more we could do. (We're working now on a program submitted by Holmes.)
Did JFK recall promising a 500 kw transmitter? (1) Pass following questions GOJ for reply: (a) Has work within cemetery and immediate environs ceased? (b) If not what are GOJ further plans (hotel, stadium, more roads) for development of the Mount of Olives area?
(2) Urge GOJ cease all work immediately if GOJ replies are cause for "anxiety" on Israel's part.
Gazit asked USG assurance of replies to above questions within one week. Regardless of replies Israel reserves right claim appropriate redress from GOJ. Israel public opinion cannot but be highly aroused should work continue. Israel UNDel discussing problem with Bunche.
Strong replied USG can readily understand and share GOI concern. We have matter under discussion with GOJ and will pursue. However, issue requires quiet diplomatic handling and cannot usefully be treated by "ultimata" or "deadlines". Additionally, this is UN concern. GOI would have been well-advised engage chief UN representative on spot (Von Horn) at outset. Desirable Israel bring him into picture now. Gazit replied Department knows GOI attitude toward Von Horn. In his view Von Horn was aware of Jordanian activities in cemetery long ago yet had done nothing and shown no interest.
For Amman: Request comments particularly in light guidance reftel. What info or GOJ replies to GOI questions (a) and (b) might be conveyed without USG commitment? Embassy may also wish consider whether desirable for qualified US technician examine Mount Olives site to evaluate GOJ intentions and determine whether, as Israel claims, alternative road location feasible.
For USUN: Reftel and previous background this problem being forwarded. Mission requested discuss Israel approach with Bunche and solicit his comments.
For Jerusalem: Suggest you discuss foregoing with Churley and obtain his views on possible UNTSO role.
Rusk
Attachment
Tab B
NEA Memorandum on Jordan Waters
284. Memorandum From Robert W. Komer of the National Security Council Staff to the President's Special Assistant for National Security Affairs (Bundy)
285. Telegram From the Department of State to the Embassy in Jordan
286. Telegram From the Embassy in Iraq to the Department of State
/3/On December 26, 1961, Jawad had told the Iraqi news agency that the "Iraqi Government will be compelled review attitude toward diplomatic relations with states which establish diplomatic relations with Kuwait." (Telegram 283 from Baghdad, December 27, 1961; Department of State, Central Files, 686D.00/12-2761) A chronology of events related to the exchange of diplomatic representation between the United States and Kuwait, prepared on May 29, 1962, indicates Jawad's remarks of December 26, 1961, as the first warning received from Iraq. (Ibid., 611.86D/5-2961)
/4/Not found.
He and I both expressed regret that matters had come to this point and I again remarked to unfortunate tendency GOI policy was having in reducing [garble] between Iraq and non-communist countries. Went on to say I hoped, nevertheless, that recall of Ambassadors would not have substantive effect on our relations. Jawad minimized practical importance of reduction of level representation in our case as in others and said that so far as he was concerned he expected matters to proceed normally both in regard to American Embassy Baghdad and Iraqi Embassy Washington. I said I believed this would be our own wish and expectation and that I knew of no plans to change character of our Embassy here. I did point out, however, that withdrawal of Ambassadors was of at least some importance because of psychological impact it could have on popular opinion.
Minister then took initiative to say that he himself wanted to retain British and American Ambassadors and Embassies here because they were of importance to Iraq and he still hoped our respective relations could be friendly and could improve. We should realize on both sides that there were areas of agreement as well as disagreement and should try to increase the former. I replied I heartily agreed and regretted that Iraqi attitudes did not always seem to reflect this philosophy. Arabs in particular, I said, seemed to feel that if anyone did something they did not like they must automatically be opposed to that nation or individual in everything. Jawad admitted there was tendency to go to extremes in Arab countries but asked for understanding on grounds of their political immaturity. I then asked whether he could see any possibility of breaking Kuwaiti deadlock in which Iraq found itself in relation to us and to others. His only answer was a smile and the remark that he was an incurable optimist even when things looked black.
Finally, I told Jawad of my unchanged plan to attend Athens Ambassadorial conference, Bob Komer
287. Memorandum From Robert W. Komer of the National Security Council Staff to the Assistant Secretary of State for Near Eastern and South Asian Affairs (Talbot)
288. Memorandum From the Department of State Executive Secretary (Brubeck) to the President's Special Assistant for National Security Affairs (Bundy)
Status of Matters Flowing From Meeting Between the President and King Saud at White House on February 13/2/
/2/See Document 191.
1. Economic Assistance for Saudi Arabia:/3/ The members of the economic mission to Saudi Arabia have been selected and are expected to arrive in Jidda on June 15. The mission will include an economist who is a Middle Eastern specialist, an agricultural-water expert, and a transportation specialist.
/3/Documentation is in Department of State, Central File 811.0086A.
2. Gift of Three 5-Kilowatt Radio Transmitters:/4/ In order to expedite shipment of the transmitters, which were urgently requested by King Saud, AID secured a waiver of the bidding procedure and placed an order directly with a firm which displayed special competence, quoted a reasonable price and indicated a desire to service the order rapidly. The three transmitters are scheduled for shipment from the United States on July 1, August 1 and September 1, respectively.
/4/Documentation is ibid., 986A.40.
3. Credit Terms for Latest Saudi Arms Purchase Request:/5/ The Department has officially requested AID to arrange with the Department of Defense a $16 million credit for the latest Saudi request for purchase of arms. Although we have indicated to the Saudis our pessimism about obtaining credit, the prospects now appear more favorable than before.
/5/Documentation is ibid., 786A.5, 785A.5-MSP, and 886A.10.
4. Saudi Concern with British Role in Southern Arabia:/6/ During the White House conversation King Saud referred to the British policy of "colonialism" in the southern part of the Arabian Peninsula, including Buraimi, and asked the President to seek to modify British policies in the area. The President promised to look into the matter and said that Department officials would be in touch with him further. Acting Assistant Secretary Grant gave the Saudi Ambassador a run-down of the U.S. position (Department telegram 285 to Jidda, enclosed)/7/ on February 21 and our Ambassador in Jidda was requested to do the same with the Saudi Foreign Ministry. The Foreign Ministry's reply was submitted in an aide-m?moire dated April 15, which the Embassy has forwarded under the cover of a despatch (Jidda Despatch No. 301, enclosed)./8/ The essence of the Saudi Arabian Government's reply is to reiterate that it will not resume diplomatic relations with the U.K. until the Buraimi dispute (now being explored by a special UN representative) is settled.
/6/Documentation on U.K.-Saudi differences over Buraimi is ibid., 780.022 and 641.86A.
/7/Dated February 24, not printed. (Ibid., 811.0086A/2-2462)
/8/Dated May 2, not printed. (Ibid., 641.86A/5-262)
5. Saudi Apprehensions About U.S. Aid to the U.A.R.:/8/ The King's apprehensions about U.S. economic aid to the United Arab Republic, which were communicated to the President in February, have increased. The Saudis now appear to feel our aid to the U.A.R. implies a lessening of U.S. concern for Saudi Arabia. In their bitter propaganda exchange with Cairo they are claiming that Nasser, by accepting large amounts of U.S. aid, has betrayed the Arab position vis-?-vis the Israelis. Ambassador Hart has recently sought to reassure the King that U.S. aid to Nasser does not imply any lessening of American regard for Saudi Arabia.
/8/Documentation on U.S.-Saudi discussions on this topic is ibid., 611.86A. See also Supplement, the compilation on Saudi Arabia.
C.K. Johnson/10/
/10/Johnson signed for Brubeck above Brubeck's typed signature.
PARTICIPANTS In response to questions from Department officers, Dr. Johnson commented as follows on his just completed (April-May) "second round" trip to the Arab host countries and Israel:
1. General Climate: Both Arabs and Israelis were uniformly friendly to Johnson personally, Mrs. Meir possibly excepted. On the Arab side, despite the fairly "stale" resolution adopted by the Arab League at the Riyadh meeting, there is less rigidity of thought, "more viscosity," than was evident in September 1961. There is a sense of movement--even if the Arabs are dissatisfied with its direction--and a fumbling for some new position, perhaps a Palestine "entity," a "liberation" force, or a simple long-range building of strength. Johnson counseled the Arabs very strongly on the futility of any such moves. The Arabs were invariably told that as a UN official Johnson had to recognize that Israel existed. Not once was this challenged. There is a change in attitudes towards Israel's permanence, or at least semi-permanence. There is a concern with practical things such as where compensation will come from.
Israel not only does not want any refugees back but would prefer no Arabs in Israel. Its drive is toward "uncompromising exclusivity." The Arabs are "second class" citizens, a fact recognized in Arab arguments that there can be no refugee return to "Israel" as such. Manifestly, also, Israel has a distaste for anything connected with the United Nations.
2. Program: The first task is for the Special Representative to define specific proposals which come as close as possible to what each side might reasonably accept in the light of its security and other national interests as communicated to Johnson during the "second round." The concept of a pilot project within a given maximum number of refugees (20,000) was rejected by both sides and must be abandoned. Therefore, procedures must be evolved for finding out what the refugees want, for counseling them in confidence as to the alternatives realistically open to them, etc., in such a way that Israel will not see this process as a hazard to its existence. The proposal must be simple, must anticipate arguments from all sides, and must be predicated on acquiescence rather than cooperation of governments. It must be accompanied by statements that the UN cannot assure implementation, that preferences can be changed, and that implementation will in any case take time. Equally, compensation must be carefully studied. It must be paid for more than just loss of property. From some source, it must also be provided to those who return to Israel and cannot take up residence in their old homes. In all, an estimated $1.4 billion ($1500 per refugee) will be required for compensation.
When the Special Representative's proposals have been elaborated, it will be necessary for them to be examined and endorsed by the highest levels of the US Government.
After quiet approval by the US, possibly some time in September or October, the Senior Advisor to the Special Representative would personally deliver the text of the proposal to the Arab host governments and Israel. The Senior Advisor would entertain suggestions but the Special Representative himself would not further negotiate his own proposal. At the same time a process of quiet consultation with other key governments (the U.K., France, Netherlands, India, Ghana, etc.) would be initiated.
At the UNGA, the final text of the proposal would be floated, if possible about mid-November. If it is a reasonable proposal that reasonable nations weary of the problem can adhere to, and the parties reject it, the UN can properly say it has tried, failed, and can henceforth wash its hands of responsibility.
3. Sanctions; Other Moves: Nasser seems primarily concerned with domestic developments. He will have no interest in progress on the refugees in Gaza, where the problem seems unsolvable, but must be persuaded at least to remain neutral and not make trouble elsewhere.
Sanctions with the Arabs include the threat that the UN will wash its hands of responsibility for Paragraph 11 of Resolution 194, the reduction of UNRWA (heretofore admittedly not a credible deterrent), the Special Representative's final report, and the threatened passage of Israel's direct negotiations resolution.
Sanctions with Israel lie primarily in the hands of the U.S. But there is additionally the threat of Israel's isolation from reasonable nations in the UN if it has rejected a fair proposal that the Arabs have accepted. United States supporters of Israel can perhaps be helpful. There are also some very divided councils in Israel. Israel will not like the recording of refugee preferences, even if these are kept confidential, but there is the possibility of a U.S.-Israel understanding as to the maximum repatriation the U.S. will support, perhaps also a U.S.-UAR understanding, outside the cognizance of the Special Representative. If a procedure for recording refugee preferences does go forward, it should do so under an individual, perhaps on the pattern of the UNHCR. The PCC should not try to be the administrator of the recording procedure.
4. Reconstitution of the PCC: The Arabs are less unhappy with France's presence on the PCC than before but, not unreasonably, seek an enlargement to accord with the changed composition of the UN. Moderate Arabs have suggested that the U.S. might wish to consider taking the lead in such an enlargement.
Assistant Secretaries Cleveland and Talbot expressed the Department's deep appreciation of Dr. Johnson's patient diplomatic skills so vividly demonstrated again during his just-completed visits to Near East capitals.
It was agreed to meet again on June 27, at which time Dr. Johnson hopes to have a first draft of his proposals.
At meetings on June 8 with the Department working group it was agreed that prior to June 27 the Department will:
1) Develop information on screening procedures used in previous refugee interrogations in other areas;
2) Re-examine the "legislative history" of the problem of compensation ("and" vs. "or") as provided for in Resolution 194;
3) Be in touch with Dean Sayre regarding his sponsorship of a possible series of "social" meetings between Dr. Johnson and appropriate Congressional leaders, after June 27, for informal discussion of the Johnson mission.
Dr. Johnson accepted the Department's suggestion that he see, in the interim, certain Congressional leaders identified with movements favoring U.S. sponsorship of direct Arab-Israel negotiations.
Following our meeting on June 1 to discuss Israel's security situation we have prepared a revision (attached at Tab A) of the paper on the above subject in line with your comments on the previous version. 2. We prefer that decision on the sale of the Hawk to Israel be deferred for about two years, until after the issue of Israel's large-scale withdrawal of water from Lake Tiberias has been dealt with. We consider it wise, if possible, to deal with the Arabs on only one major issue at a time. However, we leave the door open against the contingency of earlier UAR/or Syrian acquisition of ground-to-air missiles.
3. We are exploring the possibility of unilaterally reactivating the Tripartite Declaration of 1950 in private statements orally to both Israel and certain Arab states, principally to meet Israel's desire for a security guarantee.
4. In accordance with your request we are reviewing our policy on the status of Jerusalem and shall provide you shortly a study with recommendations.
At the conference of GTI and NE ambassadors being held in Athens June 12-15, I propose to have a full discussion of principal problems in the Near East. Following my return I shall forward to you such further views as I might have as a result of the conference.
289. Memorandum of Conversation/1/
Washington, June 7, 1962.
/1/Source: Department of State, Central Files, 325.84/6-762. Confidential; Limit Distribution. Drafted by Crawford on June 12.
SUBJECT
PCC-Johnson Arab Refugee Initiative
Dr. Joseph Johnson--Special Representative, Palestine Conciliation Commission
Mr. Sherrington Moe--Senior Advisor to the Special Representative
NEA--Assistant Secretary Talbot
IO--Assistant Secretary Cleveland
NE--Robert C. Strong
UNP--Joseph J. Sisco
NEA--James M. Ludlow
UNP--Stephen E. Palmer, Jr.
NE--William R. Crawford, Jr.
290. Memorandum From the Assistant Secretary of State for Near Eastern and South Asian Affairs (Talbot) to Secretary of State Rusk
Israel and United States Policy
Tab A
A. Our Posture toward Israel.
Within the limits (described in D. below) dictated by the necessity for a reasonably friendly relationship with most of the Arab states, in order to protect our interest in the Near East, we:
(1) seek to maintain cordial and close relations with Israel;
(2) contribute heavily in money or money equivalents to enable Israel to meet its security and growth (including immigration) objectives without directly implicating the United States on the sensitive aspects;
(3) frequently reassure Israel that it has in effect an unwritten but effective security guarantee from the US, that the Arabs understand this, and that Israel is thus in a position to conduct a policy of restraint;
(4) encourage other friendly states to assist Israel in meeting its military needs;
(5) encourage Israel to expand its unilateral efforts to earn wider friendship and economic benefits in the community of nations;
(6) support those UN instrumentalities in the Near East which contribute to maintenance of a peaceful condition, and demonstrate support for certain UN resolutions of importance to the world community;
(7) permit Israel to buy, and provide credit for, a wide range of unclassified military equipment and supplies requiring export licenses;
(8) avoid close military relationships and consultations as well as partnership with Israel in ventures outside of Israel; and
(9) undertake a wide range of cultural contacts and placement of many research contracts in Israel.
Each matter arising in our relationship with Israel is carefully weighed in terms of its effect on our policy of impartiality as between Israel and the Arabs and of its effect on Israel's security. Over a period of years we have come to learn what can be done on behalf of Israel without creating serious tensions with the Arabs.
B. Israel's Desires and Tactics.
During the first year or so of the Kennedy Administration, Israel appeared principally to watch developments, creating no major issues, but constantly probing relatively gently in such areas as a security guarantee, military equipment, military relationships, economic assistance, cooperation in technical assistance to third countries, and an Israel relationship with the Common Market and the OECD.
Perhaps the opening gun of the current major offensive was the so-called "Brazzaville resolution" of December 1961 inspired originally by Israel and sponsored by 15 other members, principally African, of the General Assembly calling upon Israel and the Arabs to conduct direct peace negotiations for the settlement of the Palestine conflict. US opposition to this resolution has been a source of continuing criticism of the US Government, to a limited extent by Israeli officials, but on a considerable scale by Israel's American sympathizers. The criticism increasingly has been linked by domestic critics to President Kennedy's campaign statements calling for a comprehensive settlement in the Near East. Statements are appearing more frequently to the effect that it is time for the President to redeem his campaign pledges.
A steady campaign of criticism has flowed also from the Security Council resolution of April 9 censuring Israel for its retaliatory raid and only deploring Syrian "hostile acts." Israel's action is portrayed as being necessary to defense of its security in the absence of prompt and effective UN action.
In addition, fingers are pointed at the hostile propaganda conducted by the Arabs against Israel, the indoctrination of young Arabs with hatred of Israel, the increasing Soviet armaments (particularly aircraft) reportedly being acquired by the UAR and Syria, the strengthening of the UAR by expanded US economic assistance, and the declaration by the Arabs that large-scale withdrawal by Israel in 1963-64 of Jordan waters will be a casus belli.
The ensemble of these arguments appears designed to point to a growing threat to Israel's security and a need for measures by the US to redress the balance. No doubt Israel is concerned that with an Algerian settlement France will reduce its support. We are sure neither the Israelis nor their supporters in the US believe it possible to achieve a peace settlement in the Near East or to eliminate hostile propaganda or teachings. We have evidence from several sources that Israel expected to be condemned for its retaliatory raid of March 16-17. We believe the Israelis intellectually understand that a better US-UAR relation is useful to Israel. While they are concerned at a possible UAR surprise air strike, they have a variety of means of assuring effective defense. They know that the UAR has the means to acquire Soviet arms whether the US assists the UAR economically or not. The Israelis also know that their water diversion system cannot be damaged seriously from the air and that Syria cannot successfully mount a ground action to destroy the pumping station.
While American Jewry has concentrated on the need for an overall settlement, we believe the recent visit of Israel's Deputy Minister of Defense, Shimon Peres, has brought into focus the true Israel objectives. Ambassador Harman's call on you on May 28 tends to confirm our thesis. A principal argument used by both Peres and Harman was that the US, having worsened Israel's position by aiding the UAR, should now make a compensatory gesture to Israel. The fact that Peres did not mention Israel's desire for a United States assurance on Israel's right to Jordan waters may well stem from his understanding that such an assurance will be forthcoming. Mr. Peres' principal concerns seemed to be a) an arrangement for continuing military consultations between Israel and the US, b) bolstering of Israel's air defenses by acquisition of the Hawk missile system, and the Minister of the Israeli Embassy proposed in the context of Peres' visit a c) security guarantee by letter from President Kennedy to Prime Minister Ben-Gurion.
Thus, we believe that considerable pressure will be mounted against the Administration domestically in the context of the President's campaign references to the Near East and in terms of US assistance to the UAR, but that Peres' objectives are what Israel will really seek. Israel has pressed in past years for both the Hawk missile system and US- Israel military consultations, as well as for a security guarantee. It seems reasonable to assume that in this election year another "college try" will be made by Israel and its supporters here and that a serious effort will be made to show that Israel faces a situation of unusual peril in the next two to three years.
C. Israel's Security Problem.
The latest "Israel-Arab Situation" report prepared by the intelligence community is dated December 1961. The next revision is due in June. Dealing with military factors alone, the report of last December does indicate certain Israeli vulnerability to air attack, but points to continuation of Israeli air superiority, despite acquisition by the UAR of TU-16 bombers, as a result of Israel's purchase of Mirage III aircraft, some of which have now been delivered. Israel's clear military superiority on the ground continues.
We continue to believe there are a number of political and psychological factors which will indefinitely deter the Arabs, principally the UAR and Syria, from undertaking major aggression against Israel, whether by ground attack, by air attack, or by a combination of both:
(1) The Arabs have a deep fear of Israel and its military prowess.
(2) The Arabs fear, with reason, Western intervention on behalf of Israel.
(3) The consequences of defeat would be serious for those Arab leaders responsible for it.
(4) The UAR clearly has given high priority to domestic development for some years to come. The Egyptians have consistently proved capable of calculating coldly where their interests lie and are not controlled by emotions. They now appear to be considering the problem of Israel on a long-range rather than a short-range basis.
(5) A lesson learned by the Arabs in 1948 is that they cannot possibly cope with Israel if their forces are operating independently. Divisive forces in the Arab world are too deep to be overcome in a short time.
(6) The Arabs have come to have more confidence in the US as the US has continued to pursue a balanced policy and to show due regard for Arab interests. As time passes and as our policy is implemented consistently, the Arabs will have greater confidence in our will to prevent expansion by Israel.
(7) We plan to continue inspections of the Dimona reactor by qualified American scientists and, if possible, by "neutrals" as well, and to continue to provide the Arabs with assurances of its peaceful nature. This course of action should be sufficient to remove temptation for a surprise UAR or UAR-Syrian air raid on the reactor.
The foregoing factors must be given heavy weight in assessing Israel's security situation. In our opinion, Israel is in little actual danger of an Arab assault now and is not likely to be in any real danger over the next few years. In NEA we consider this problem practically daily and are fully alert to all its aspects.
D. The Rationale for Our Policy toward Israel.
Our problems with Israel stem largely from: a) unrequited Israeli desires for the establishment of a special relationship between Israel and the US in matters of national security, and b) Arab-Israel frictions along Israel's borders. Although Israel has sought US sponsorship of training in Israel for third-country nationals, has proposed cooperative US- Israel ventures in technical aid to third countries, objects to our policy of suggesting to other countries that they establish diplomatic missions in Tel Aviv rather than in Jerusalem, and differs with us on the question of sovereignty over Lake Tiberias, these matters are of relatively minor consequence to the tenor of our relations.
We believe that in seeking continuing military consultations with the US and in proposing periodically a US security guarantee, Israel seeks not only reassurance for its own people, but also a clear demonstration to the Arabs that the US is, in effect, allied with Israel. In requesting the US to supply the Hawk missile system Israel seeks to eliminate any vulnerability it may feel to attack by manned aircraft and thus assure the security of Israel against the Arabs until such time as offensive missile systems may be introduced into the Near East.
(1) Arguments for and against a Special National Security Arrangement with Israel.
a. For
i. From the foreign policy standpoint, there are no advantages.
ii. From a domestic point of view, the American supporters of Israel would be pleased and would be less critical of our policy.
b. Against
i. Would constitute a direct challenge to the Arabs by the US, destroy growing Arab confidence in our impartiality, and remove the protective covering of the UN behind which we deal with most Palestine issues.
ii. Could not be counterbalanced by creation of a corresponding relationship with the Arabs.
iii. Would render the US responsible in Arab eyes for every Israeli military venture.
iv. Would encourage the more fanatical Arabs to seek a similar relationship with the Soviet Union and would hand the Soviets a very useful propaganda weapon.
v. Would be the only US security arrangement with another country not directed against the Sino-Soviet bloc, and would cause us further problems with Pakistan in refusing to take Pakistan's side in the Kashmir dispute.
vi. Would lead to increasing Israeli demands for sophisticated weapons.
vii. Would put greater pressure on Arab leaders well-disposed toward the US.
viii. Would be unnecessary to maintenance of Israel's security.
ix. Would pose security problems for DOD.
We believe Israel and its supporters should accept that a reasonably good US-Arab relationship is in Israel's interest and that Israel's proposals for a special relationship with the US would be self-defeating if executed. While rarely mentioned, the Tripartite Declaration of 1950 has never been declared dead by the US and could possibly be the basis for providing additional assurances to Israel without provoking the Arabs.
(2) Arguments for and against Supplying the Hawk to Israel.
a. For
i. From the US foreign policy standpoint, possession of the Hawk would strengthen the weak link in Israel's defenses and thereby reduce any temptation Israel may have to take preemptive offensive action.
ii. From the domestic standpoint, American supporters of Israel would be pleased and would be less critical of US policy.
b. Against
i. Sale of the Hawk would jeopardize the security of its classified elements.
ii. Although the Hawk is a defensive weapon only, its sale to Israel now would pin on the US responsibility for adding a new element of sophistication to weaponry in the Near East and would contribute to heightening of the arms race and the economic burdens attendant thereon. (At such time as the UAR and/or Syria obtains such missiles this factor will cease being a serious one.)
iii. In the interest of impartiality the US would have to consider whether to offer the Hawk to Israel's Arab neighbors, whose ability to handle it is doubtful. Spreading such weapons around the Near East might place civil aviation in some jeopardy.
iv. The door would be opened to further requests by sophisticated equipment such as air-to-air missiles, also allegedly defensive. We doubt that Israel would rest satisfied with having gotten the Hawk. Rather, it would set a new objective and would not have achieved appeasement or surcease of pressure by Israel.
v. Deterrents against Arab surprise air attack are listed in C. above.
E. How We Propose to Deal with Israel.
(1) We consider it important not to give in to Israeli and domestic pressures for a special relationship in national security matters. To undertake, in effect, a military alliance with Israel would destroy the delicate balance we seek to maintain in our Near Eastern relations.
(2) We believe a decision on sale of the Hawk missile to Israel should be delayed for approximately two years, or, if earlier, until
a) Ground-to-air missiles have been introduced into the area by the Soviets, in which case sale of the Hawk to Israel would be more defensible. Should at any time a decision to sell Israel the Hawk be taken or become likely, we urge that NEA be allowed time to discuss the matter with the UAR and perhaps Syria with a view to reducing reaction to our decision before it becomes public knowledge.
b) In the spring of 1964 Israel presumably will undertake large-scale withdrawal of water from Lake Tiberias. Since this is a matter of importance to the Arabs, we prefer to deal with it without the complications that would ensue from the early provision of the Hawk to Israel.
c) Israel's Chief of Staff has stated that Israel is not afraid of the Arabs through 1966 and that the Arabs would be no real threat to Israel's existence up to 1970. If in 1964 Israel continues to have the same problems, i.e., defense against low-flying aircraft, it might prove useful in the next election year to have the Hawk available for discussion.
d) We expect to be able to carry out further inspections of the Dimona reactor and thus to be able to continue to reassure the Arabs. This should serve to remove an Arab fear which might tempt the Arabs otherwise to attempt a surprise air attack on the reactor.
(3) To meet with relatively small risk the Israeli desire for a security guarantee, we are exploring the possibility of a unilateral reactivation of the Tripartite Declaration of 1950 (attached Tab B) (6) We propose to take as liberal a view as possible toward Israel's requests to purchase military equipment.
(7) In recognition of the heavy cost to Israel of military purchases elsewhere and of resettlement of large numbers of immigrants, we shall support continued economic aid on as large a scale as in past years.
(8) Should it prove possible to invite Nasser for a state visit next winter, we plan to suggest to the President that he sound out Nasser on the possibility of an informal arms limitation arrangement, or a freezing of armaments at the level then existing.
(9) We have in mind a letter from President Kennedy to Nasser in the late summer and believe a friendly letter to Ben-Gurion about the same time would be useful, particularly if Israel has provided assurances in connection with its water diversion plan and has proved willing to be more cooperative with UNTSO and ISMAC.
(10)As requested by the Secretary, we are reviewing our policy of approaching other governments regarding the status of Jerusalem when those governments are considering the question of where to locate new diplomatic missions.
(11)We propose to continue to oppose initiatives designed to place pressure on the Arabs to undertake direct negotiations with Israel, and at present we are inclined to wish Dr. Johnson to continue his mission on the Arab refugee problem, thus requiring us to continue to urge Israel to cooperate with him.
Our positions will not be fully satisfactory to Israel and its American supporters, but we believe them to be defensible and that they should be maintained as the most suitable to our own national security interests while adequately protecting Israel's security for a further period. We should not underrate the importance to Israel of an undertaking by the US to support fully Israel's large-scale withdrawal of water from Lake Tiberias. On this hangs resettlement of at least 500,000 immigrants and the development of the Negev.
Further, the Hawk is not a counterpoise to similar ground-to-air missiles in the hands of Israel's neighbors. The Hawk is an anti-aircraft missile not an anti-missile missile. The Hawk as a defensive weapon should be measured against weapons on the other side at which it would be aimed. The question is: Does Egypt have an important air-strike capability against Israel and, if so, does Israel have a sufficiently credible defense against such airstrikes as to provide reasonable security? I recognize that the reciprocal of the same question can be asked about Israel air-strike capability and Arab defenses. But what is relevant to Israel's need for Hawks is Arab aircraft--not Arab ground-to-air missiles.
This needs prompt and further discussion with me.
I am not now suggesting what the answer ought to be but I am not clear that we have yet found the basis for reaching a satisfactory answer.
291. Memorandum From Secretary of State Rusk to the Assistant Secretary of State for Near Eastern and South Asian Affairs (Talbot)
/3/According to the notes for the Secretary's Staff Meeting of June 11, "the Secretary asked Mr. Cottam to follow-up immediately on the Secretary's comments on NEA's paper on Israel." (Department of State, S/S Files: Lot 66 D 147, Secretary's Staff Meetings)
DR/4/
/4/Rusk's initials appear in an unidentified hand, indicating Rusk signed the original.
Total budget deficit has been tentatively identified on order $250 million, about $160 million for the administrative segment and about $90 million for development sector. Revenues are forecast approximately at 1339 level. Oil increases are largely offset by projected declines customs receipts and profits government companies. Tax receipts sluggish due recession with latter contributing factor failure GOI press tax collection and new tax measures. While decision may now be taken impose new taxes on civil service and others, unlikely that actual short-range benefits such actions would be significant.
Administrative expenditure commitments are now at very high levels. Completion Second Plan and other government projects require additional operational and maintenance outlays. The military anticipate a 20 percent increase in defense budget (about $30 million) reportedly for technical improvements. Foreign and domestic obligations re past expenditures represent considerable burden. Carryover unpaid bills on 1340 budgetary authorizations approximate $60 million. Obligations to foreign governments and companies already overdue or falling due this year apparently exceed $100 million spread between operational and development budgets. Main problem, however, has been irrational wage increases for civil servants. Amini's predecessor, who authorized substantial pay increases for engineer graduates, later loosely interpreted to cover science graduates, fell in large part due his resistance increase for teachers. To mollify latter, Amini authorized almost double pay increase which in combination with engineer/science increases has raised expenditures about $40 million in both 1340 and 1341. Other groups, including police and doctors, have been promised higher salaries. Total potential effect on 1341 payroll estimated at $70 million, including cost extending wage increases to employees retired at full base pay.
Development budget for 1341 consolidates investment expenditure formerly divided between Ministry ($56 million in 1340) and Plan Organization budgets. Total development program expenditures being projected 22 percent above last year, including cost land distribution and partial completion public building program halted 1340. Indicated development deficit of $92 million assumes 55 percent oil revenue allocation for development; $71 million interest and principal on foreign loans; $91 million receipts from existing foreign loans and $6.5 million domestic debt retirement. If no expansion of public investment is undertaken for 1341 development deficit would be about $42 million.
By filling long-vacant post Finance Minister and by ordering administrative budgets to be cut 15 percent below 1340 levels, Amini has taken step in direction reducing deficit. Effectiveness reduction decision limited, however, by apparent intent carry out commitments to teachers, police, military and to agriculture programs related to land reform. As result now appears administrative budget will be pared back, certain obligations will be shifted to capital budget, debt postponements will occur, and certain necessary expenditures will not be made. Given the political and economic rigidities in the present situation, the chances are not bright that GOI can reduce the administrative deficit below $60-70 million without strong possibility of breaking the cabinet. While part of this deficit could be covered by bank credit without undue inflationary consequences, legal and policy problems would be involved since bank charter does not permit credit for GOI operational deficits and cabinet pressure could lead resignation bank officials. To some cabinet members diverting oil revenues from development is preferable to the hard choices in drastically reducing the operational budget and appears a logical adjustment to phased out US grant aid of $30 million last year.
Until budget is finally drawn up it is difficult to give precise answers to specific questions contained reftel. At present, however, we do not believe that Amini has deliberately changed his declared economic and fiscal policies, namely reasonably balanced budget, essential monetary control, and implementation of Third Plan. However, developments have shown that Prime Minister, while continuing to profess these policies, has not been sufficiently aggressive in dealing with the underlying economic and fiscal situation. As a result the attainment of his policy goals is now in serious jeopardy and his expectation of US financing assistance has apparently grown. While we do not think that he has deliberately shifted from his professed policy positions to an attempt to build a case for assistance, we anticipate that before end month he will present to us a program for fiscal reform and a request for large scale transitional emergency assistance.
We also think fact that GOI has been virtually one-man-show, has in past months drained Amini of his extraordinary energies and has made it almost impossible for him to exercise required degree cabinet discipline and to follow-up on specific remedial measures. With regard to specific support by Shah, we do not feel Amini can have serious complaint; the difficulties confronting him at present time are due far more to actions or inactions of himself or his government than to role of Shah. It would of course be of considerable help to Prime Minister if Shah were to agree to reduction in military budget, but it would probably be too much to expect Shah to bail Amini out of a situation essentially created by Amini himself.
In sum, we do not believe Prime Minister has changed his objectives of fiscal responsibility. However, he has permitted situation to develop wherein these goals have been eroded. The chickens have now come home to roost and whether Prime Minister has ability and courage sufficient to undo damage which has been done and to face the serious political disadvantages and repercussions inherent in drastic budgetary cutting remains to be seen. Meanwhile, in conversations with Prime Minister, Foreign Minister, Finance Minister and others, we have consistently pressed for a convincing indication that serious effort has been made to correlate expenditures with domestic resources and have made clear that US interest in assisting Iran financially lies in the field of economic development loans and decidedly not in budgetary support. As mentioned above, however, GOI persists in belief their situation is such that flexible emergency financing will be forthcoming in some form.
In pursuing the line indicated above, we have not of course given any indication of the possible level and specific form of US aid contemplated this year. As this is significant factor affecting GOI budget planning, it might be useful if Ambassador upon his return were authorized to inform GOI that US willing consider requests up to some selected figure in loans for projects and commodity imports related balance of payment need. As part this strategy clear conditions should be conveyed such as: (a) allocation oil revenues to development remains unchanged, (b) credit expansion to public sector not to exceed $30 million and (c) operational budget expenditures over $30 million deficit to be directly tied to revenue increases. We also recommend for consideration that a fiscal stabilization program, including possibility rescheduling foreign debt repayments, be considered as part of the contemplated September 1962 consortium.
Rockwell
292. Telegram From the Embassy in Iran to the Department of State/1/
Tehran, June 12, 1962, 3 p.m.
/1/Source: Department of State, Central Files, 888.00/6-1262. Secret; Priority.
1008. Joint Embassy-USAID message. Deptel 894./2/ Amini government is being subjected severe strain resulting from fiscal situation. From outset he was confronted with difficult political, economic and administrative problems. By dint personal drive, reform convictions, political finesse and substantial US political and economic assistance, he has been able continue in office more than year, to initiate land reform program, and to make progress with anti-corruption effort. As yet, however, he has been unable establish cohesive cabinet, significantly improve administration, safeguard integrity of Third Plan, or to establish viable political support his government. In recent months he has slipped badly in part due to evident personal exhaustion and almost inevitable difficulties of compromising conflicting political interests. Amini performance in fiscal leadership has been disappointing. He inherited difficult situation which has worsened as 1340 operating expenditures increased 25 percent without compensating actions in revenue field.
/2/In telegram 894 to Tehran, June 1, the Department of State requested the Embassy to prepare an assessment of Amini's current economic and fiscal objectives and the possibility for the successful implementation of his policies. (Ibid., 888.00/6-162)
Despite reiterated efforts this mission, as well as Plan Org and Central Bank advisors, he has drifted with fiscal problem that predictably was heading into serious crisis unless remedial actions were taken. Had this problem been energetically attacked many months ago, it would still have been a most difficult operation in political and economic sense. However, underlying problem has been aggravated by further commitments for additional operating outlays in 1341 and indecisiveness re critical need increase revenue collections; as result difficulty of bringing fiscal situation under control has increased substantially. Belatedly Amini has become aware that fiscal situation could contribute to collapse his cabinet and he is attempting reduce budgetary deficit.
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