THE OUTLOOK FOR EGYPT AND THE NASSER REGIME

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A009800030005-8
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• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 23, 2016
• Document Release Date: January 24, 2014
• Sequence Number: 5
• Publication Date: November 12, 1957
• Content Type: NIE

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.10)444444
tEES
424.
NIE 3 6 . 1 ? 5 7
12 November 1957
N? 288 I
NATIONAL INTELLIGENCE ESTIMATE
NUMBER 36.1-57
(Supersedes NIE 36.1-55)
THE OUTLOOK FOR EGYPT
AND THE NASSER REGIME
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency
and the intelligence organizations of the Departments of
State, the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
INTELLIGENCE ADVISORY COMMITTEE
on 12 November 1957. Concurring were The Director of Intel-
ligence and Research, Department of State; the Assistant
Chief of Staff, Intelligence, Department of the Army; the
Director of Naval Intelligence; the Assistant Chief of Staff,
Intelligence, USAF; and the Deputy Director for Intelligence,
The Joint Staff. The Atomic Energy Commission Representa-
tive to the IAC and the Assistant Director, Federal Bureau of
Investigation, abstained, the subject being outside of their
jurisdiction.
DOCUMENT NO
NO CHANGE IN CLASS.
)(DECLASSIFIED
CLASS. CHANGED TO: IS S C
NEXT REVIEW DATE:
AUTH: HR 70-2
R"
DATE:aphajEVIEWER' 0065
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CENTRAL INTELLIGENCE AGENCY
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FOR OFFICIAL USE ONLY
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Title 18, USC, Secs. 793 and 794, the trans-
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TABLE OF CONTENTS
Page
THE PROBLEM 1
SUMMARY 1
DISCUSSION 2
INTERNAL AFFAIRS ?2
Government 2
The Economy 3
Dependence on the Bloc 4
Public Attitudes Toward the Regime 4
Stability of the Regime 6
THE ARMED FORCES 7
EGYPT'S EXTERNAL RELATIONS 8
Relations with the Soviet Bloc 8
Egypt's Area Relations 9
Israel 10
Egypt's African Policy .10
Suez Canal 11
Egypt and the West? 11
TABLE I: EGYPT'S ESTIMATED FOREIGN EXCHANGE HOLD-
INGS BEFORE AND AFTER ADOPTION OF WEST-
ERN EXCHANGE CONTROLS ON 28 JULY 1956 AND
ON 1 AUGUST 1957 5
TABLE II: EGYPTIAN TRADE WITH THE SINO-SOVIET BLOC
1954-1956 5
ANNEX A: EGYPTIAN AGREEMENTS WITH THE SINO-SOVIET
BLOC 12
ANNEX B: SOVIET BLOC ARMS HELD BY EGYPT AS OF 1 NO-
VEMBER 1957 13
sliflitVa
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THE OUTLOOK FOR EGYPT AND THE NASSER REGIME
THE PROBLEM
To estimate: (a) the changes in Egypt's position since the Suez crisis; (b) the
chances for survival of the Nasser government; and (c) probable future developments
in Egypt's internal situation, and its regional and international position.
SUMMARY
1. Nasser has achieved a position of vir-
tually unchallenged authority in Egypt.
Foreign policy and events have served
both as a distraction and an excuse for
the regime's failures to fulfill its promises
of social and economic reform. Although
it is almost certain that the regime will
be unable to make appreciable progress
in solving Egypt's staggering economic
problems, it is unlikely that the regime
will be overthrown in the next few years.
2. Nasser has wide popular support
throughout the Arab world as the symbol
of the resistance of radical Pan-Arab
nationalism to _Israel and to Western
"imperialism." This enables him to exert
heavy, pressures upon the conservative
Arab governments through their own
peoples. Nasser, however, may be con-
cerned that the role of the Soviets in
Syria and the independent policy of the
Syrian government will prejudice his
position as leader of the Arab world.
It is almost certain that Nasser will not
acquiesce in an over-all settlement which
Israel would be willing to accept. On the
other hand, he is unlikely during the next
year or so deliberately to initiate a war
with Israel.
3. Nasser's position has been strength-
ened and his objectives have been ad-
vanced by his association with the Soviet
Bloc. Nevertheless, he has stopped short
of political alliance and, although he has
accepted heavy economic obligations, he
has sought to offset economic dependence
upon the Bloc with revived and increased
trade relations with Western and other
Free World states. However, Egypt is
likely to become more dependent upon
the Bloc over the next few years if the
demand for Egyptian cotton in the non-
Communist world continues to be low.
Egypt's determination to maintain access
to a source of arms which would be open
in the event of war with Israel will also
tie it to the Bloc. Furthermore, political
and psychological pressures favor closer
relations with the Bloc because it appears
to be championing the Arab point of view.
4183Ktkin 1
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4. Nasser is convinced that the US de-
sires his downfall. He believes that the
US hopes to combat Soviet influence and
advance its own interests by exercising
dominant influence over the area states
? and that it is unlikely to accept and deal
with him as a neutral. Nasser may hint
of a desire for US moves toward reconcili-
2
ation, but he is likely to concentrate on
improving relations with other Free
World and neutral states. However, he
is unlikely to make any significant
changes in his neutralist policy in order
to improve relations with the US or other
Free World states.
DISCUSSION
INTERNAL AFFAIRS
5. The revolutionary military regime which
overthrew the corrupt and unpopular Egyp-
tian monarchy in 1952 quickly established
itself as the protagonist of a radical form of
Arab nationalism, secular and reformist in
character and aimed at ending the exploita-
tion of the country by feudalism from within
and by "imperialism" from without. Gamal
Abdel Nasser, who emerged as the real leader
of the regime, developed and applied this pol-
icy with a vigor and success which attracted
attention throughout the Arab states. He
soon succeeded in identifying himself and his
policy with Pan-Arab rather than exclusively
Egyptian interests, which enabled him to re-
vive traditional Egyptian pretensions to area
leadership.
6. The military regime instituted a bold pro-
gram of social and economic reform which
impressed much of the public with its good
intentions. In the field of government, it in-
troduced a new note of efficiency and honesty,
and promised a transition from military to
constitutional and representative government.
7. However, after five years the Egyptian mili-
tary regirrie has succeeded in no important
respect in realizing its domestic goals. As a
consequence the regime's ability to stay in
power rests principally upon: (a) control of
the armed forces and police; (b) the response
of the radical Arab nationalists to Nasser as
the symbol of dynamic Pan-Arab nationalism
and to Nasser's vigorous foreign policy; and
(c) a residue of respect for the regime's re-
formist intentions and apparent incorrupti-
bility. Meanwhile, Egypt's basic, long-range
problems remain almost untouched.
8. Government: The revolutionary regime has
appropriated all executive and legislative
functions unto itself, leaving only routine ad-
ministrative functions to the established in-
stitutions of the government. During the
past two years Nasser has advanced from the
position of chairman and senior member of
the Revolutionary Command Council to chief-
of-state with near absolute power.
9. Nasser is surrounded by concentric rings of
officials and advisers appointed by himself.
The inner circle of top advisers is probably
made up of men of military background: 'Abd
al-Hakim 'Amir, who confines himself largely
to military affairs; 'Ali Sabri, chief foreign
policy adviser and director of foreign intelli-
gence; Zakariya Muhi al-Din, Minister of In-
terior, who may have suffered a loss of influ-
ence due to the unsatisfactory outcome of the
recent parliamentary elections and 'Abd al-
Latif al-Baghdadi, President of the National
Assembly and chairman of numerous minis-
terial committees. Nasser dominates these
men, who appear to be absolutely loyal to him.
Outside this small nucleus is a group of
twenty-five or thirty important officials and
advisers which includes some members of the
original RCC, and outside that a much larger
group of some hundreds of technicians, and
other functionaries who run the machinery of
the regime and who owe their place and pres-
tige to the regime.
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10. There have been rivalries and differences
within the top echelons of the regime and
some of Nasser's older colleagues resent the
present prominence of new advisers. Nasser
appears to be in control, however, and no
group or clique is believed to exist in the top
echelons which aspires to seize control from
Nasser.
11. The regime's attempt to provide an insti-
tutional foundation for its power has been a
failure. Nasser is unlikely, however, to yield
any power in order to broaden the base of his
government. The Liberation Rally, a substi-
tute for independent political parties, never
attracted popular participation. The extent
of the political failure became evident only in
July 1957, when the regime attempted to make
good on its promises to restore a national
assembly. In carefully staged and controlled
elections the regime's political machine proved
to be weak and no match for the influence
of local notables who secured the election of
candidates of the type sent to Parliament un-
der the former regime. Elements in the Na-
tional Assembly will probably try to embarrass
the regime, but Nasser is in a position to con-
trol them.
12. Until the Suez crisis the regime strongly
emphasized an impressive and expensive social
reform program designed to rebuild Egyptian
society and rally it behind the revolutionary
cause. All the most important projects ? in-
cluding land reform, village improvement, and
the Liberation Province reclamation and re-
settlement scheme ? have as a result of finan-
cial stringencies and the resistance of Egyp-
tian society to change, virtually come to a
halt. Although the public is still generally
convinced of the regime's good intentions, the
progress made on state welfare programs is
insufficient to contribute to the regime's
political stability.
13. The Economy: The Nasser regime, despite
its efforts, is no more likely than its predeces-
sors to cope with the basic economic problems
arising from the effects of heavy population
pressure on severely limited resources and
from heavy dependence on a vulnerable cash
crop ? cotton. The regime has raised popu-
lar expectations for improvement in the stand-
S
3
ard of living, but, barring major technological
advances or the unexpected discovery of ex-
ploitable resources, Egypt does not possess the
means to fulfill these expectations. Projects
adequate to raise, or even to maintain, the
standard of living are probably not within
Egypt's present capabilities.
14. Nasser's long-range program includes de-
velopment of the industrial as well as the
agricultural sector of the economy. This
would require large amounts of foreign capi-
tal, but his present policies inhibit the flow of
funds from Free World sources. His apparent
unwillingness to go as far as Syria in relations
with the USSR may limit the availability of
Soviet assistance. Nasser also aspires to gain
access to Arab oil revenues as a source of de-
velopment capital, but is unlikely to make
much progress in this direction.
15. The regime has, however, dealt fairly suc-
cessfully with the short-run dislocations and
problems .occasioned by the Suez affair. The
shortage of foreign exchange occasioned by
the blocking of Egypt's funds in the West has
been partially surmounted by assistance from
Saudi Arabia, by the imposition of stringent
import controls, and by a $30 million drawing
from the International Monetary Fund. Rev-
enues from the reopened canal have added
substantially to the exchange holdings and
barter deals with the Bloc have eased require-
ments for Western currency.' Essential im-
ports have been obtained and the shortages of
manufactured and luxury goods have not had
much impact. The state of Egypt's economy,
however, will depend in large measure upon
Egypt's ability to market its cotton abroad.
16. The Suez crisis and its aftermath have
facilitated the pursuance of the government's
underlying objective of "Egyptianizing" the
economy. In view of the preponderant role
long played by foreign firms, the program of
"Egyptianization" seems likely to enlarge
markedly the scope for Egyptian enterprise.
On the other hand, "Egyptianization" and
other anti-foreign and anti-minority policies
have caused some emigration of valuable
managerial and entrepreneurial skills and has
'See Table I.
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QtrforsaAS
discouraged the inflow of foreign capital.
These developments have contributed to a
significant increase in' government ownership
and control of economic enterprises, especially
in the petroleum industry.
17. Dependence on the Bloc: 2 Egypt's econ-
omy has become increasingly dependent on
the Sino-Soviet Bloc, and has thereby become
subject to significant Bloc economic pressures.
In the first eight months of 1957, 37 percent
of Egypt's total trade was with the Bloc, com-
pared with only 11 percent in 1954. This
increase is due in part to Egyptian and Bloc
policy decisions, but in large measure to the
decline of Western demand for Egyptian cot-
ton and the existence of a rising requirement
for cotton in the Bloc.
18. We estimate that Egypt can liquidate the
remainder of its obligation for arms received
from the Bloc prior to 1957 with about ten
percent of a normal year's cotton exports ?
about $30 million ? each year for the next six
years, which is believed to be the contract
period for payment. This is likely to be diffi-
cult, but is probably manageable. Although
any purchases of additional arms from the
Bloc would increase the debt burden, the im-
pact upon the economy would depend largely
upon the terms of payment. Egypt has con-
tracted with the Bloc for an additional $17
million in industrial and other projects now
under way. Some portion of this indebted-
ness has probably already been paid off. Aside
from the arms purchases, however, Egypt has
a favorable trade balance with the Bloc.
19. Egypt will probably continue to seek to
restore and develop trade with Western and
other Free World nations in order to offset
this dependence upon the Bloc. However, if
Free World demand for Egyptian cotton con-
tinues at its present low level or declines, the
Bloc will be in a position to make Egypt in-
creasingly dependent upon it both as a market
and as a source of imports.
20. Public Attitudes Toward the Regime: Un-
able to point to successes in the field of domes-
tic policy, the Nasser regime must rely for
public support upon the appeal of its foreign
See Table II.
4
policy and upon public approval of the general
lines of its radical brand of Arab nationalism.
External events, such as the attack on Suez
and Sinai and the freezing of Egyptian funds
by the Western powers, have often distracted
attention from and have been accepted as an
excuse for the regime's lack of significant
progress at home.
21. Most of Nasser's active political support,
both civilian and military, comes from the
partially educated and partially Westernized
Moslem middle class which includes most of
the politically conscious urban population.
This group appears to believe that the course
of events has generally vindicated Nasser's
policy and has proved the truth of his warn-
ings of the treachery of Israel and the West-
ern "imperialists." They also believe that the
policy of neutralism has paid off in the Suez
crisis. Nasser's propaganda campaign to
turn the military defeats of late 1956 into vic-
tories was successful because it appealed to
the Egyptian public's inherent compulsion to
save face. Nasser's influence is also bolstered
by endemic suspicion and distrust of outsiders,
which is expressed in fears that Egypt and its
brother Arab states are being threatened by
the "imperialist" enemies of Arab nationalism.
22. Adverse reactions to the authoritarianism
of the Nasser regime have been relatively in-
significant. One of the regime's most pop-
ular policies has been the harassment of for-
eign residents and foreign enterprises, which
has opened the way to greater opportunities
for Moslem Egyptians. The urban Moslem
middle class has benefited from the regime's
discriminatory policies against foreigners and
local non-Moslems and for this reason, among
others, has become more strongly bound to
the regime since the Suez affair. Any effec-
tive alternative to the present government
would probably have to come from this same
class.
23. The principal focus of the present opposi-
tion to the regime is in the conservative group
which takes a view generally in accord with
that of the conservative regimes of Saudi
Arabia, Jordan, Iraq, and Lebanon. This con-
servative group is composed of almost all the
upper class ? about live percent of the popu-
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TABLE I
EGYPT'S ESTIMATED FOREIGN EXCHANGE HOLDINGS BEFORE AND AFTER
ADOPTION OF WESTERN EXCHANGE CONTROLS ON 28 JULY 1956 AND ON
1 AUGUST 1957
(Figures in millions of US dollar equivalents)
Free Exchange
Before Blocking
After Blocking
1 August 1957
Gold ? '
173.92
173.92
.188.27
Sterling
41.04
0.29
US Dollars
53.96
10.05
27.38
Other
38.75
38.75
78.35
Total
307.67
222.72
294.29
Blocked Exchange
Sterling
287.29
328.33
266.34
US Dollars,
43.91
30.62
Total
287.29
372.24
296.96
GRAND TOTAL
594.96 ?
594.96
591.25
? Designated for currency backing and not readily available for other use.
TABLE II
EGYPTIAN TRADE WITH THE SINO-SOVIET BLOC 1954-1956
Percent of Percent of
Period 'Exports Total Exports Imports ? Total Imports
1954
56
14
27
6
1955
106
27
48
7
1956
139
34
77
14
1957 (first
eight months)
161
47
89
27
? Values in million US dollars.
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lation. It includes the former big landlords,
successful business and professional men, and
those associated with them. Many of these
have personal, economic, and cultural ties
with the West. The conservative opposition
is drawn together by the fact that Nasser's
radical nationalism-is a threat to their wealth,
their position in society, and their political
and social beliefs. Its greatest strength lies
in the remnants of the once-powerful Wafd
Party. As the July elections appear to have
demonstrated, the Wafd at the local level re-
tains an efficient political organization re-
sponsive to central control.
24. Organized opposition groups with some
backing within the armed forces exist, but
without significantly improved planning, sup-
port, and leadership are almost certain not to
be able to mount an effective political offensive
against the regime or to carry out a coup
d'etat. Any opposition to Nasser suffers from
vulnerability to charges of treachery to the
Arab cause. The conservative stand on basic
issues has little political appeal to the urban
middle class. Furthermore, Nasser is alert
to the possibility of conservative moves against
him and has effective weapons at his disposal
with which to combat them. The greatest
weaknesses of the conservatives, however, are
lack of determination and courage and lack of
an appealing alternative to Nasser.
25. Other opposition to the regime is scattered
widely and includes people in all classes of
society who oppose the regime's reformist
policies. Many of these are former members
of the Wafd Party or are followers of impor-
tant Wafd leaders. The Moslem Brotherhood,
once a formidable opponent of the regime's
secular and modernist policies, retains a large
number of sympathizers. Since the execution
of its leaders by the regime, the Brotherhood
- has probably not been organized for political
action and is unlikely to initiate anti-regime
activities. Ethnic and religious minorities,
both Egyptian and non-Egyptian, are gener-
ally hostile to the regime but have little polit-
ical influence.
26. The Egyptian Communist movement still
illegal, divided, and still with a membership
of four or five thousand, apparently continues
6
to support the regime's foreign policy while
opposing its ban on political party activities.
The regime, despite its cordial relations with
the Bloc, continues to harass low-level local
Communists, partly in order to convince both
the local opposition and the West that it is
neither pro-Communist nor under the thumb
of the USSR. There are, however, several
persons with Communist connections or lean-
ings in the middle level of the government
and in important positions in the government
subsidized press. In the July elections, the
Communists demonstrated for the first time
aggressiveness and competence in anti-regime
political activity, although no known Com-
munist was elected. The Communist Party
cannot be counted as a permanent part of the
opposition forces in Egypt because of its pre-
sumed responsiveness to orders from Moscow.
Under present circumstances the Communists
could add considerable strength in street
fighting and subversive activity to any move
for or against the regime which it chose or was
ordered to support.
27. Stability of the Regime: A continuation
of present economic and political trends is
likely to increase public discontent. The re-
gime, however, can probably continue for the
next few years to hold the sympathy of the
majority and retain the loyalty of the armed
services and the police.
28. With the armed services and the police
on its side, the regime can almost certainly
forestall or defeat any likely attempt against
it from within the country. If Nasser were re-
moved from the scene, we believe that despite
constitutional provisions there might be a
contest for supremacy among his lieutenants,
but one or a committee of them would prob-
ably gain control and seek to carry out Nas-
ser's general policy line." If both Nasser and
his top advisers were removed, some form of
extreme radical nationalist coalition would be
likely to be set up, probably military and prob-
ably less cohesive than Nasser's. It is con-
ceivable that an alignment hostile to the pres-
ent revolutionary group could maintain it-
? The constitution provides for succession to the
presidential office by the President of the Na-
tional Assembly, at present 'Abd al-Latif al-
Baghdadi.
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SECRET 7
self in power after the disappearance of Nas-
ser and his associates, if it could neutralize
or win over the military. Such a regime, how-
ever, would have to appear not to be the in-
strument of a Western power and would be
oblied to pursue an anti-Israel and neutral-
ist policy.
?
THE ARMED FORCES
29. The Nasser regime is still basically depend-
ent upon the armed forces for its ability to
remain in power, although it has dropped
many of its military characteristics and con-
nections. Military personnel approve of what
Nasser has done to raise their standing in the
country and provide arms, and practically all
approve his radical nationalist policies and-the
way he applies them. There are some officers
still in the armed forces, particularly among
those with conservative backgrounds, who
would probably lend their support to an anti-
Nasser move, but the regime keeps a careful
and probably effective check on military per-
sonnel suspected of disloyalty. If public dis-
satisfaction with the regime became wide-
spread, the armed services would certainly be
affected, but would remain loyal longer than
other elements of the population. In general,
iThe Egyptian ground forces are now estimated
to have a total strength of 100,000 men with
approximately 70,000 of them in combat units.
The army has three infantry and one armored
division headquarters, which perform only ad-
ministrative duties. The seven infantry brigades
and the four armored groups are the largest
Egyptian combat units. The Egyptian Air Force
(EM') is estimated to possess about 295 aircraft,
including at least 90 MIG-15s and 17s (Fagots/
Frescoes) and 35 IL-28s (Beagles). (See Annex
B for lists of Soviet Bloc equipment held by
Egypt.) There are about 30 other Jet fighters of
Western origin. While no accurate information
as to the number of squadrons is available, it is
believed that up to 6 fighter squadrons, 2 light
bomber squadrons, 2 transport squadrons and
miscellaneous training units have been organ-
ized. The EAF is estimated to contain 4,450 offi-
cers and men, including 400 pilots. The Egyp-
tian Navy Is composed of 4 destroyers, 3 subma-
rines, 6 patrol escorts, 1 submarine chaser, some
25 motor torpedo boats, 8 minesweepers, 3
auxiliaries, 4 small service craft and 6 small
landing craft. Personnel strength is estimated
at 8,000.
the present level of morale in the services is
fair and has shown some improvement over
the low point reached after the British-
French-Israeli invasion.
30. The Egyptian armed forces have replaced
the manpower and equipment lost in the Suez-
Sinai campaign. The army's combat effec-
tiveness has probably been returned to pre-
Sinai levels. The air force lost few, if any,
trained personnel during the fighting of No-
vember 1956 and its tactical capabilities have
probably increased since that time as a re-
sult of further aircrew training in the USSR
and the satellites, Bloc supervision of EAF
training programs in Egypt, and improvement
in air facilities. The receipt of three sub-
marines from the Bloc will increase naval
capabilities against Israel.
31. The armed forces are capable of main-
taining internal security but are probably still
a poor match for the armed forces of Israel
in terms of proficiency in the employment of
weapons and aircraft, in combat aggressive-
ness, and in morale. Egypt's forces, even with
continued Soviet assistance and training, will
probably not have the capability to stop an
Israeli ground attack short of the Suez Canal
at least for the next year or so. Egypt will
require a considerably longer period before it
will have the capability to mount and sustain
a major invasion of Israel. However, Israel
is and will remain vulnerable to surprise air
attack by Egypt, and in less than a year its
shipping will be vulnerable to Egyptian sub-
marine attack.
32. The rate of improvement in the Egyptian
armed forces will continue to be relatively
slow, but if Soviet assistance should continue
at roughly the present level, and should out-
side military aid to Israel remain limited, the
military power of Egypt ? aided by Syria ?
will become an increased threat to Israel.
33. About 40 percent of the arms of the
Egyptian Army are of Soviet origin. More-
over, Egypt is dependent on Soviet support
for considerably more than 50 percent of the
Army's requirements in spare parts and am-
munition, although the Egyptians claim to
have adequate supplies for five years. The
Egyptian Air Force is even now heavily de-
SECRET
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pendent on the Bloc for maintenance of its
air strength, as is the Navy for maintenance
and operation of 28 ex-Soviet warships. While
there are spare parts for most items of West-
ern origin units equipped with them could
not sustain operations requiring their, exten-
sive use. Continued development of the Egyp-
tian armed forces is heavily dependent upon'
the numerous Bloc advisers and technicians
now in Egypt,' and upon training programs
being conducted in Bloc countries.
EGYPT'S EXTERNAL RELATIONS
34. The major aims of Egyptian foreign policy
under Nasser have been (a) to free Egypt
and the other Arab states from foreign ?
i.e., Western ? influence and control; (b) to
achieve a settlement of the Israeli problem on
Arab terms; and (c) to unit the Arab states
under Egyptian leadership and to extend
Egyptian influence over Moslem Africa. Nas-
ser's policy of "positive neutralism" has en-
abled him to make considerable headway to-
ward the first of these objectives and has
given him a hold over a majority of the polit-
ically conscious Arabs throughout the area,
even though their conservative rulers with-
hold acknowledgement of Nasser's leadership.
These policies have also encouraged Soviet
Bloc activity in the area.
35. Relations with the Soviet Bloc: The Bloc
approach to Egypt has been designed to give
the impression that its interests, in contrast
to those of the West, run parallel with those
of Egypt and the radical Arab nationalists
throughout the area. The Bloc has sold Egypt
arms, apparently without stipulating condi-
tions., It has provided Egypt with essential
petroleum and wheat imports since the Suez
crisis. In return it has taken cotton which
Egypt has been unable to dispose of in the
West. It has supplied technicians and ap-
5 Reports vary widely ? from several hundred to
two thousand ? on the number of Soviet Bloc
personnel in Egypt and on the kinds of activity
in which they are engaged. We estimate that as
of mid-1957 non-diplomatic Bloc personnel in
Egypt totalled about one thousand, of which the
majority was probably engaged in activities sup-
porting the Egyptian armed forces.
E' See Annex i)
8
pears to have accepted Egyptian trainees in
accord with Egyptian specifications. It has
provided technical, financial, and material
assistance for several industrial projects. The
Bloc has greatly increased its information
service and cultural activities in Egypt. It
has provided diplomatic and propaganda
support for the Nasser regime to the extent
of threatening the UK, France, and Israel and
publicly discussing the dispatch of "volun-
teers" to the Near East at the time of the Suez
crisis.
36. Relations between the Soviet Bloc coun-
tries and Egypt are apparently kept with
scrupulous care on a government to govern-
ment basis and the Bloc personnel in Egypt
have apparently confined themselves to their
business as advisers and technicians. Egyp-
tian Communist organizations probably play
little or no role in the new Egypt-Bloc rela-
tionship. Nasser has continued to voice his
opposition to local Communism and his Min-
ister of the Interior continues to direct spo-
radic raids on Communists, releasing one
group in order to make room in the jails for
another.
37. Most of the Egyptians who know about
the relationship between the regime and the
Soviet Bloc approve of it. Few Egyptians
know much about Russia or have any compre-
hension of its record in dealing with small na-
tions or of the meaning of Communism. Most
tend to trust the Bloc states because they sup-
port the Arab-Egyptian position against the
Western powers and Israel, and because they
have no record of colonialism in the Middle
East or Africa. They admire the Soviet Union
for its rapid change from an underdeveloped
country into an industrialized great power.
38. There has been some indication that on
occasion the Nasser regime has become ir-
ritated with the Soviets for such reasons as
delayed deliveries of promised goods and weap-
ons, failure of goods to meet specifications,
high-handed conduct of certain officials and
technicians, Bloc resale of Egyptian cotton
to Western markets, and exertion of economic
pressures. It is probably also dissatisfied with
some of the conditions of trade with the Bloc,
particularly in barter arrangements. Reports
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of dissatisfaction have to date, however, been
remarkably few, considering the magnitude of
the transactions between Egypt and the Bloc.
39. Nasser will almost certainly seek to re-
main a neutral and to be opposed to domina-
tion of any Arab state by either the Bloc or
the West. Even if his relations with the US
worsen, he is likely to endeavor to build up
his associations with other Western and Free
World states to offset his dependence upon the
Bloc. However, Nasser is likely to find it dif-
ficult to maintain a neutral position. Al-
though Nasser may be concerned about Soviet
activities in Syria, he probably believes that
Soviets interests run generally parallel to his
own. Moreover, his need for arms and for a
dependable outlet for Egyptian cotton exports
are likely to tie him to the Bloc with increas-
ing firmness. An additional factor is the
propaganda which he has fostered in support
of his policies and which has stimulated pub-
lic attitudes favorable to relations with the
Bloc and unfriendly toward the West.
40. Egypt's Area Relations: 7 Nasser has been
neither vague nor modest about his own con-
ception of his role as area leader and he prob-
ably does have greater influence throughout
the Arab world than any other leader. The
Egyptian state radio and the Cairo press,
which are completely in his hands, are the
most influential and the most powerful prop-
aganda instruments in the area. Nasser also
has at his disposal Egyptian diplomatic per-
sonnel, military attaches, teachers, business-
men, and other Egyptian residents in every
Arab country. He uses them to contact, in-
struct, encourage, and supply the extremists
who are eager to assist the radical Arab na-
tionalist cause. Nasser probably has, how-
ever, a fairly realistic understanding of his
limited capability to direct these local ex-
tremists in any disciplined or controlled ac-
tion. Palestine refugees, some of whom are
organized in para-military groups, are par-
ticularly amenable to exploitation by Nasser.
41. Since the initiation of the Baghdad Pact
in February 1955, Nasser has been attempting
to organize a competing alliance of Arab states
' See NIE 30-2-57.
9
under his own leadership. His efforts to en-
large this beyond its Egyptian-Syrian nucleus
have proved ineffective in the face of divisive
forces in the area, particularly the conflict be-
tween the leaders of radical and conservative
groupings. Although individual issues and
incidents involving non-Arab forces have
brought a public rallying of Arab leaders in
the name of Arab solidarity, Syria and Egypt
are privately opposed by the leaders of the
other Arab states.
42. As Egypt and Syria have emerged as the
strongholds of radical Pan-Arab nationalism
there has been considerable discussion of a
union of the two countries. Indeed, a joint
command structure has been established
which is designed to control forces of both
countries in coordinated operations. Most of
the initiative for union has come from Syria.
However, since the consolidation of the radical
nationalist coalition, Nasser has been obliged
to make a great show of solidarity with Syria.
His dispatch of troops is probably due in part
to his wish to counteract those Syrian leaders
who are inclined to conduct a policy indepen-
dent of his. Nasser may also be concerned
that the growing importance of the Soviets
in Syria will prejudice his position as leader
of the Arab world.
43. Nasser regards the rulers of Jordan, Saudi
Arabia, Iraq, Libya, the Yemen, and the Per-
sian Gulf rulers as relics of the past who must
eventually yield to the demands of the radical
Arab nationalists. He is certainly keenly
aware of the pressures which the radical Arab
elements can exert upon the conservative re-
gimes. He has taken advantage of the op-
portunities offered by the Arab-Israeli situa-
tion, the Gulf of Aqaba issue, the Oman re-
bellion, and the alleged external pressures up-
on Syria to force the conservative leaders to
make gestures in favor of Arab solidarity.
44. We believe Nasser's strategy will be to
erode the support of the conservative gov-
ernments and to force their leaders into dif-
ficult positions. In Jordan he will continue
his efforts to undermine King Hussein and the
conservative regime and re-establish a radical
nationalist government like that dismissed by
King Hussein last April. He will probably not
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sostsmo. 10
promote the dividing-up of Jordan, as this
would almost certainly precipitate a general
scramble in which Israel would feel compelled
to participate and which would greatly in-
crease the chance of great power involvement.
In Saudi Arabia and Libya he will concentrate
much effort upon attempts to strain and break
the monarchs' ties with the West. He is likely
to favor the Persian Gulf and the periphery of
the Arabian Peninsula as locales in which to
stir up conflict between Arabs and the "im-
perialists." In Lebanon and Iraq he will, in
conjunction with Syria, conspire against the
conservative governments.
45. Israel: The Egyptian view on Israel has
not changed in its essentials. Nasser almost
certainly believes that Israel continues to have
aggressive intentions toward Egypt and the
other Arab states. We believe that, although
Nasser may show a willingness to discuss the
Arab-Israeli situation, it is almost certain that
he will not acquiesce in an over-all settlement
which Israel would be willing to accept, or
even a settlement of individual issues, includ-
ing the refugee problem. He is likely to sus-
pect that any Western move to bring about a
general settlement is aimed only at providing
security for Israel at the expense of the Arabs.
Nasser might cooperate with the Soviets in a
scheme to offer negotiation on the basis of
UN resolutions in order to publicize Arab
"reasonableness" and to embarrass the West.
Nasser will probably try to keep the UNEF
between him and Israel as long as he can do
so without political loss. He is likely to con-
tinue to bar the Suez Canal to Israeli-flag
shipping and vessels carrying strategic ma-
terials to Israel. He will continue to use the
Israeli issue as a means of embarrassing con-
servative rulers in their relations with the
West. For example, while Nasser has left the
initiative in the Gulf of Aqaba to King Saud,
he will be vigilant to see that Arab opinion is
brought to bear on Saud if the latter appears
to be relaxing pressure.
46. Nasser will take into consideration the
response of the great powers to any move he
might make against Israel and will be very
cautious about deliberately initiating a war
with Israel, at least until he feels he has ob-
tained military superiority. At the same time
he might carry out harassing activities against
Israel as a stimulus to Arab unity.
47. Egypt's African Policy: Egypt's primary
objective in Africa is the assurance of a large
share of Nile water. Negotiations with the
Sudan, which has extensive projects of its own
for the use of Nile water, have dragged on
without coming to a conclusion. Egypt has
not yet entered into negotiations with the
other Nile countries, Ethiopia and Uganda,
which will probably eventually insist that all
Nile states agree on the division of waters.
While Nasser is likely to seek an agreement
with the Sudan, he will probably go ahead
with his plans for Nile water use with or with-
out an agreement.
48. Egypt's secondary objective is the estab-
lishment of cooperative governments in the
African Arab states. Egyptian propaganda
and bribery will probably be an important fac-
tor in the Sudanese Parliamentary elections
scheduled for February 1958. However, it is
unlikely that Egypt can get the kind of gov-
ernment it would like to have in the Sudan
and Nasser will probably continue to bargain
with the Sudan from weakness on the ques-
tion of Nile water.
49. Egypt's third objective is to increase its
influence and to harass Western "imperialist"
interests in East Africa and in Africa south of
the Sahara. In furtherance of this objective
Egypt is carrying on an extensive propaganda
campaign.
50. Libya, Morocco, and Tunisia have turned
to the West to supply their needs for arms,
development skills, and capital. If disap-
pointed in this direction they would probably
swing away from the West to the benefit of
Egypt and the USSR. Egypt's influence is
likely to be extended by Egyptian teachers,
particularly in the field of Arabic and Islamic
studies, in North African states and in
Somalia. Libya is probably more vulnerable
to Egyptian influence and subversion than the
other North African states.
51. The emergence of Tunisia and Morocco to
independent status has greatly reduced the re-
liance of the Algerian nationalists on support
from Cairo. If Tunisia and Morocco eventu-
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ally join the Arab League, as seems likely,
their present governments would probably
side with Iraq and Saudi Arabia against
Egypt. So far, there is no indication in either
Tunisia or Morocco of the development of an
important opposition with which Egypt could
form a subversive alliance.
52. Suez Canal: Egypt regards its control of
the Canal as a matter of national prestige.
It will seek to operate and develop the Canal
in an efficient manner, particularly in view
of the fact that it will have to seek outside
financial assistance for necessary development
of the Canal, and the importance of Canal
revenues as a source of foreign exchange.
Egypt is unlikely to interfere with traffic,
other than Israeli, except under crisis condi-
tions. Nasser will remain adamant on the
question of the transit of the Canal by Israeli
flag vessels or by vessels carrying strategic
materials to Israel.
53. Egypt and the West: Since the Suez crisis
there have been important changes in US-
Egyptian relations. Before Suez, Nasser and
his principal advisers had disagreed with the
US on the subject of Israel, area defense ?
particularly the Baghdad Pact ?, and on the
conditions for obtaining US arms. They had
come to the conclusion that the US was irrev-
ocably tied to the UK, France, and Israel.
Nevertheless, they hoped that the US would
accept Nasser's policy of "positive neutralism"
and agree to accept Egypt on the same terms
as it did India and Yugoslavia.
54. However, after a short period during which
they believed that the US role in the Suez
crisis heralded a complete turn-about in US
policy, the Egyptian regime turned against the
11
US. Gradually the US's attitude of aloofness
and its continued economic pressures con-
vinced Nasser that the US Government sought
to isolate him and bring about his downfall.
Nasser was particularly embittered by the
freezing of Egyptian funds and the refusal of
the US to resume sales of PL 480 wheat. Fur-
thermore, Nasser has frequently stated that
the American Doctrine offered the states of
the area a choice of joining the Western alli-
ance against the Soviet Bloc or of being iso-
lated and cut off from the US and Western
assistance. Viewed in this light, this policy
would be a direct challenge to the Arab na-
tionalist policy of "positive neutralism" with
which Nasser had identified himself. He
claims that, whereas his objective is neutral-
ity, the US is driving him into closer relations
with the Bloc.
55. Nasser is not likely to break with the US
and at intervals will hint at a desire for US
moves toward reconciliation, hoping to bal-
ance his relations with the Bloc. Nor do we
believe that he would break with the USSR
in return for American friendship and sup-
port. He will feel it of over-riding importance
that he maintain access to the Bloc market
for Egyptian cotton and to an arms supply
which would remain open in time of war with
Israel. Fear of dependence upon the Bloc
is unlikely to cause Nasser to abandon his con-
cept of "positive neutrality" as the instru-
ment for attaining his goals. However, such
fear may cause him to proceed at a more cau-
tious pace; this, together with the impasse in
US-Egyptian relations probably will cause
Nasser to turn increasingly to other Free
World states as a balance to both the US and
the Bloc.
*aro
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Triffinffikessar,
ANNEX A
EGYPTIAN AGREEMENTS WITH THE SINO-SOVIET BLOC
MILITARY AGREEMENTS:
Czechoslovakia, USSR
Sept 1955 At least $250 million worth of So-
viet Bloc arms and military tech-
nicians; repayment over 8-year
period.
ECONOMIC AGREEMENTS: '
Czechoslovakia 1955-56 ? Construction of a ceramics factory,
cement plant, Cairo water filtra-
tion plant, and a radio station;
credit for the ceramics factory is
$1.1 million; value of other pro-
jects unknown.*
East Germany 1955-56 ConStruction of a power plant;
value unknown,
Hungary 1955-56 Construction of the Helwan bridge
and small power plants; value un-
known.*
USSR Feb 1956 Establishment of a 20,000 kw re-
actor nuclear physics laboratory in
Cairo; 15 Egyptians are studying
nuclear physics in the USSR; value
unknown.*
TRADE 'AGREEMENTS:
Bulgaria
Communist China
Czechoslovakia
Hungary
Poland
Rumania
East Germany
USSR
Apr 1950
Sept 1955
July 1955
Feb 1947
Jan 1951
Jan 1954
Mar 1953
Aug 1953
General trade agreement; manu-
factured goods for Egyptian raw
-material; indefinite period; re-ex-
port of cotton prohibited.
General trade agreement; indefi-
nite period.
General trade agreement; indefi-
nite period; includes provision for
technical assistance.
General trade agreement; indefi-
nite- period.
General trade
for indefinite
newal permits
al consent.
General trade
rate period.
General trade
nite period.
General trade
nite period.
agreement; renewed
period in 1955; re-
re-exports by mutu-
agreement; indefi-
agreement; indefl-
agreement; indefl-
*Estimated value of all Bloc projects now underway under existing agreements
is $17 million.
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-ialer,fz,
4,4
14
ANNEX B
SOVIET BLOC ARMS HELD BY EGYPT AS OF
1 NOVEMBER 1957
CATEGORY OF WEAPONS INVENTORY OF WEAPONS
Army
T-34 medium tank 142
JS-3 heavy tank 40
BTR-152 Armored personnel carrier 132
BA-64 Armored personnel carrier 40
100mm self-propelled gun 69
122mm gun 20
122mm howitzer (USSR) 54
37mm antiaircraft gun 54
85mm antiaircraft gun 32
Quadruple Mount antiaircraft gun 18
57mm antitank gun 100
Rocket launching vehicle
132mm (32 tube) 24
132mm (16 tube) 9
Navy
Destroyer 2
Submarine 3
Motor torpedo boat 19
190 ft. T-43 class minesweeper 4
40 to 60 ft. landing craft
Air Force
. MIG-17 jet fighter
1,90
MIG-15 jet fighter
11,28 light jet boinber 35
IL-14 twin engine transport 37
Trainer aircraft: Yak-11, U MIG-15, U-IL 28 small number of each
Early warning radar ("KNIFEREST-FISHNET") several
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13
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