COMMENTS ON NSC MEMORANDUM 'ECONOMIC ISSUES RELATED TO THE SEARCH FOR A MIDDLE EAST SETTLEMENT'

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP70S00385R000100310001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 12, 2016
• Document Release Date: November 27, 2001
• Sequence Number: 1
• Publication Date: October 26, 1967
• Content Type: REPORT

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Comments on
SECRET
1. Summery
The memorandum considers mix esseessmie issues (really proposals)
involving itternational cooperation ix the Middle East that could
be used to yromote 'settlement of politimal differences and help to
make them stick. These propositions are:
a. A rolitical settlement between Jordan and Israel could
help Jordan by enahlings
(1) additional exports of up to $20 million annually
to Israel,
(2) duty-free access for Jordanian exports to
Mediterranean ports,
(3)
(4)
expanded tourism earnings, through freeing two-
way traffic and possibly internationalising
Jerusalem, and
development of potential Jordan Valley water
resources.
b. Political settlement between the UAR and Israel could
bemsfit the UAR very little economically but would
enhance the prospect of increased Western economic aid.
For example, the UK, now losing more than $500 million
a yuar because of Canal closure, maybe induced to aid
in its reopening.
o. A general Arab-Israeli political settlement could resolve
the refugee problem by ineluding limited repatriation,
some compensation to others, and economic development to
aid in resettling still others. If political settlement
is !Jspossible, creation of a consortium of countries is
recommended to aid financially in resett'aeg refugees.
d. A general Middle Eastern political settlement could
enable broader regional development of potential water
resources than is envisaged under la above. The
poseibility of fossil-fueled and nuclear powered
dessiting plants is cited for diseustaion.
Excludd
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e. Settlement of political differences among Arab itates
couLd enable regional development of fertiliser
production and distribution over an area ranging from
Nemec* to Iraq.
f. General economic bemefits could be obtained from any
regional economic cooperation among states in the
Middle East area including Turkey and Iran.
2. comment
la Any expansion of Jordante expert trade would be especially
useel in a country that has been able to maintain a
satf.sfactory balance of payments position only through
recoipt of large quantities of foreign aid. Jordanian
exports, however, would 'consist largely of fruits and
vegittablea, products that Israel now produces in large
quantities and therefore $20 minion in new export earnings
seems very optimistie. Foreign exchange earnings by Jordan
from expanded touriem would depend on obtelning at least a
part of the earnings realised in the city of Jerusalem.
Most of the hotel space is in this city, and about 60 percent
or more of the expenditures of tourists accrue there.
lb In eddition to $240 million in revenues accruing from the
reopening of the Sues Canal, an Arab-UAR settlement returning
the Sinai oil fields would improve the UAR balance of payments
position by about $50 to $60 million a year. Furthermore,
accees to the Canal as a transport route for Egyptian products
would ease internal distribution problems and impediments to
experts.
lc Attempts to settle the long standing refuges problem have
been futile. Political difficulties now include that of
Israel absorbing large numbers of Arabs into a Jewish state
and Jordan controlling hordes of Palestinians spread
throughout the country.
id One opportunity for cooperative development of regional eater
resources is that of the ibphrates River Basin, which extends
across Turkey, Syria, and Iraq. At present, each country
in attempting to develop its own portion of the river with
considerable acrimony between Syria and Iraq, with no
riparian rights yet ceded.
2
'TC RET
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is interregional development of phosphate production in
Morocco, Tunisia, and Spanish Sahara coupled with potential
natural gas production in Algeria and Libya could result in
this area becoming by far the world's largest producer and
exporter of phosphate fertiliser*.
if That benefit. would be obtained from general economic
cooperation among Middle Eastern countries follows by
definition without question.
3
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Herewith are 0111 cosisente cia the MSC
memorandum, "Heonomic Issues Belated to the
Search for a Middle at Settlement%
The IBC manors:dm is attached.
STATI NTL
Attu.
Acting Director
Economic Desearch
26 October 1967
Distribution (of attacInent):
Orig & 1 - DCI
1 - 0/DDI
1 - St/EX ) 5 7/1/C-
1 - Ch/IRA.
2 - OD/OER
1 - FW/NE
2 6 OCT 1967
STATI NTL
L---z79/LF-47-
V-6
STATI NTL
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TRANSMITTAL SLIP
DATE
?
TO:
0 a /0 6: biZ. /4 /4 i.
ROOM NO.
BUILDING
REMARKS:
5--- ;Zi q
OER Comments prepared in FW/NE -
in response to
request from 0/DDI by
00B Thurs, 26 Oct 61, in connection
with NSC meeting.
OER Distribution:
(2)- OD/CER
1 - St/EX's-ildc_,
1 - Ch/IRA
1 - FW/NE
?
FROM: OD/OER
ROOM NO. I.
ig 1
BUILDING
Hq .
FI )N1 NA .2 4 1 REPLACES FORM 36-8
WHICH MAY BE USED.
(47)
STATI NTL
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NEKORAMX24
11 August 1967
SUBXBOTt Crude Oil Production Principal Producing and
&porting Countries f the Middle East, Africa,
and the Western Bezdagbere
REFERENCE: Memorandum, subject as above, I August 1967
I. The following estimate. Of production reflect the best
available inf,rmation as of 10 August 1967 (in thousands of
barrels per disy).
1267
tla
iM
Barly August
Saudi Arabia
2,951
1,863
2,900
Kuwait
2,386
1,498
2,800
Iraq - Northern Fields
Soo
387
Boo
Southern Fields
580
0
500
Trucial Coast
374
348
370
Qatar
265
254
260
Bahrain
69
TO
70
Algeria 806 Soo
Libya 1,748 369
Total Arab States 2412 5,
Iran 2,310 2,451
Nigeria560
Venezuela r;f:: 3,600
United States 8,500 8,600
Total 24,799 124222
800
2,000
10,500
2,700
60
3,700
9,400
2. Data shown for May and June represent average daily rates;
dattotor "early August" reflect rates attained on various days but
areAnecessarily daily averages. Actual daily production and ship-
ping rates vary as empty tankers are available at loading ports.
Subject to the availability of tankers, production and exports
will continue to exceed the May rates as oil stock levels in
consuming countries, reduced during the immediate post-crisis
period when imports were interrupted, are restored.
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k. Belated Development,'
a. Ho exports are being made through Tapline. (One tanker
was loaded for Spain from Tapline terikinal stocks in late July.)
Although earlier reports indicated tbdit *rile had prohibited re-
sumption of tbe Tapline operation, evideteee accumulates that in-
sistence by Studi Arabia on higher posted prices for crude at the
Neetern Mediterranean terminal of Tapline is the principal impediment
to resumption.
b. Libya reportedly hap flaked the oil companies for an in-
crease of 80 cents per barrel in the posited price of crude oil.
Libya points cut that the delivered price of its oil in Western
Europe is now $2.56 per barrel compared to a delivered price of
$3.35 per barrel for Persian Gulf oil. (The posted price of Libyan
crude is $2.11 per barrel; comparable Persian Gulf oil is $1.85 per
barrel.)
c. The principal lamediate effect of the new Iraqi Law 97
(August 1967) denies the Iraq Petroleum Company (IPC) any rights to
the proved, but not producing, North Bumalia oilfield. IPC's claim
to this field ':rias been the source of a long-standing dispute with
the Government as an outgrowth of the relinquishment provisions of
Law 8o (1961). IPC's rights to producing arms in the northern and
southern oilfields are unaffected by either Law 80 (1961) or 97
(1967).
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UNCLASSIFIED I ZNT X SEC'
CENTRAL. iNTELLIGEICE AGENCY
OFFICIAL ROUTING SL17.1?
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NAME AND ADM:ZEES
DATE
INITIA!..0
1
Chief, 'R/FP
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2
Chief, DiR
35
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Thi n ? ted blind memo was prepared for
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use when, and if, required.
will be on leave the week of 14-18
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FOLD. HERE TO RETURN TO SZNZER
_ ,11 Aug 67i
bate 02/0 /02CIALREP7Og0038 ftla01-0031W01-6