The Middle East, 1976

    Front Cover
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    Table of Contents
        Page iii
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    Letter of transmittal
        Page v
        Page vi
    The Middle East: 1976
        Page 1
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    Appendix A
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    Appendix B
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    Back Cover
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94th Congress }
2d Session j


COMMITTEE PRINT


THE MIDDLE EAS'


A REPORr ct

BY

SENATOR ADLAI E. STEVENSON :

TO THE

COMMITTEE ON BANKING, HOUSING
AND URBAN AFFAIRS

UNITED STATES SENATE

ON HIS

STUDY MISSION TO THE MIDDLE EAST
CONDUCTED BETWEEN FEBRUARY 10
AND FEBRUARY 25, 1976


APRIL 1976


Printed for the use of the Committee on Banking, HIousing
and Urban Affairs


U.S. GOVERNMENT PRINTING 01-1ICE
69-241 WASHINGTON : 1976


















1


~ '-.


C I ON BANING-





COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS


WILLIAM PROXMIRE, Wisconsin, Chairman


JOHN SPARKMAN, Alabama
HARRISON A. WILLIAMS, JR., New Jersey
THOMAS J. McINTYRE, New Hampshire
ALAN CRANSTON, California
ADLAI E. STEVENSON, Illinois
JOSEPH R. BIDEN, JR., Delaware
ROBERT MORGAN, North Carolina


JOHN TOWER, Texas
EDWARD W. BROOKE, Massachusetts
BOB PACKWOOD, Oregon
JESSE HELMS, North Carolina
JAKE GARN, Utah


KENNETH A. MCLEAN, Staff Director
ANTHONY T. CLUFF, Minority Staff Director



SUBCOMMITTEE ON INTERNATIONAL FINANCE
ADLAI E. STEVENSON, Illinois, Chairman


WILLIAM PROXMIRE, Wisconsin
HARRISON A. WILLIAMS, JR., New Jersey
THOMAS J. McINTYRE, New Hampshire
ALAN CRANSTON, California
JOSEPH R. BIDEN, JR., Delaware


BOB PACKWOOD, Oregon
JOHN TOWER, Texas
JESSE HELMS, North Carolina
JAKE GARN, Utah


STANLEY J. MARCUSS, Counsel

(II)



























CONTENTS


Page
Letter of Transmittal ---------------------------------------------- v
I. Some common denominators---------------------------------- 1
II. Egypt------------------------- ------------------------- 3
III. Saudi Arabia. ------------------------------------------------ 5
IV. Syria----- ----------------------------------------------(
V. Iraq------------------------------------------------------- 10
VI. Ir. an-------------------------------------------------------- 11
VII. Israel and the Palestinians------------------------------------ 15
VIII. Some conclusions ------------------------------------------- 19
Appendix A-----------------___------------------------------------- 22
Appendix B------------------------------------------------------ 23
(ji)



















Digitized by the Internet Archive
in 2013













http://archive.org/details/middle7600unit












LETTER OF TRANSMITTAL


... SENATE,
W17ashington, l.C., Ap,,l 5, 7.9,6".
Ho1-. WILLIAM PROXMIRE,
Chtairmaii., Setate Committee on Banrkingq, HfOuiUg (a1 Uban A[a,'rs,
IVashington, D.C.
DEAR MNIR. CHAIRMAN: There is tran'smitted(l herewith a report of
a study mission to the Mliddle East conducted between 1Feb'u'ari 11
and February 25, 1976, by the undersigned, a iiemnber of the (CoI-
mittee on Banking, Housing, and Urban Azair>, and (-h airman of
the Subcommittee on International Finanuce.
The most significant purpose of the mnissiol was to obtain an as- -
ment of political attitudes in the Middle Ea.-t an(d of pfopect for a
settlement of disputes in an area of the wortli whicl is of par1ticilail'
interest to the Committee becatiue of it, quantuin leap in eoomic,
power during the past several years.
During the two-week journey I visited thle capit als of Egypt,
Saudi Arabia, Syria, Lebanon, Iraq, Iran, anl(d1 i-alc. \iit1 oilI, one
exception I was received in these countries within niarked( frienmi e-
I am grateful for this, as I amn for the fraknes of tlie onvx e> lIdt
exchanges with leading officials.
I would also like to express my thanks to the Foreign Service Ol>ceri-,
both in the Department of State and at our Diiplomaitic Mi-ions
in the countries visited, Nwho helped me unstinlinxly within their 11ime.
energy, and expertise. Without this, support, it would not !have b1een
remotely possible to crowd so mniuclt direct count act, with gov(men'lt
leaders into so short a time. Tl(ey do tleir wor witl infectioii- en-
thusiasmi, even under the most trvin" of cir(cu-1'tan(ces. Tile _M't iddle
East, in parts of which living condition are dificu! a'ld ii''1
dangerous, has attracted sonie of the very best ofIK'': -: in t}le iFore'u':!
Service.
I was fortunate to be accompanied on thii, trip b William A. Buaell,
a member of my Senate staff and former Foreig1 Service O flict,'. Ii h
was of inestimable help) in making the nwc -" a' ... ,i:'eli<. keepL i ng
notes, and preparing this Report.
I hope that this Report will be iln,1pful to imemnderi- of lthe (o muit ce
and to the Congress in their con-ideratioln of legislalin aff',cting *,\
tumultuous area of the world of tdie gravest- iImiportl :,ce to ou' (oVNwi
security and well-being.
ADL I E. STEVE-NOzX.














THE MIDDLE EAST: 1976


REPORT BY SENATOR ADLAI E. STEVENSON ON His TRIP TO THE
MIDDLE EAST, FEBRUARY 1() TO FEBIRUARY 25, 1976
One returns from anl intensive journey to the Mliddlle East within tile
uneasy feeling of having obtained fewer answ ers than additional qies-
tions. The mniissioii had several objectives:
(1) To discuss with Middle Eastern officials U.S. aliti-bovcott and
foreign investment legislation reported by the Comilmit tee oln Bankimng,
Housing and Urban Affairs. A me-ace to lbe imjparted to Aral) Gov-
ernments was that, wliile we wish to expand foreign investilwent in 1the'
U.S. and our trading relation,- witli their counttrie, interference
in the relationships between one Aminerican firm and totlier (e.g
the tertiary boycott) is an unacceptable itiruilon into outr (dolsiwlie
affairs.
(2) To obtain the views of Middle Eastern leaders on world energy
problems, including nuclear energy as well as hvdro-carbons,. and the
enormous transfers of national income re-ultilng from oil price il-
creases. This inquiry led into such areas as- OPEC oil pricing, le
possible neglect of natural gas resources, and thle dallgei'rs- of ituclear
proliferation.
(3) To gain an appreciation of changes in the strategic e(Juation
brought about by expanding Soviet influence in Africa, the Middle
East, and South Asia, and the translation of billion> in petro-dollars
into modern weapons--particularly in the Gulf States.
(4) Finally, and most urgently, to obtain an asses-isment of political
attitudes in the Middle East bearing upon prospects for a long-termni
settlement of the Arab-Israeli conflict. Thi- is an area of the world in
which U.S. interests are important and the dangers to world peace
are more extreme than anywhere else. Without a broad( understanding
of the motivation and objectives of Arab, as well as Israeli leadership,
the Congre-,s is ill equipped to pass judgmnient on expenl- ive foreignri
military and developmental aid programs and oni political commit-
ments of serious consequence to all Americans.
Because of unique ties, the tiny, behlea ,uered, coni,-,-eoils state of
Israel has enjoyed a generation of unquestioning suI)port from the
United States. Cultural affinity, resulting from coiiunon European
roots and a shared dedication to democratic principles of government
have made Israel one of the world's best known niiations to Americans.
But we do not know the Arab world. Until war, the oil embargo,
and dizzying increases in the price of oil forced the Arab world upon
the American consciousness, many either ignored Arab) aspirati on-
or dismissed them as uniformly malign.
SOME COMMON DENOrMINATlOS
In terms of economic and social development, of political o, .n7-
tion, and of national policy objee tives there seem to be no two :Middle
East countries alike. The cities of enormou-lv wealthlv Saudi Aila)ia
(1)







appear strikingly poorer than those of Syria, yet the Saudi per capital
income is twenty times as high. Some are stridently, militantly anti-
communist, while others call themselves Arab-Socialist and accept the
Soviet embrace. Enmity between some, such as Iraq and Syria, is as
deep--eated as between Arabs and Israelis.
It is possible, however, to pick up common threads. Middle Eastern
governments show every indication of wanting improved relations
with the United States. Iraq was an exception, but even Iraq is eager
to expand trade. (A partial list of persons called upon during the trip
is in Appendix A to this report.)
These governments are interested first and foremost in internal
development and profess to seek the peaceful environment necessary
to make this development possible. The degree to which they are
willing to compromise in the search for an enduring peace is another
story.
All set the highest value on American technology and are prepared
to pay a premium price for the best in planning development projects.
The market potential for American goods and services is enormous.
All Arab governments insist upon the right to employ the boycott
as a "nonviolent" instrument of warfare against Israel. Most make
threatening noises over the possible effect on U.S. exports to Arab
markets of certain U.S. legislation now pending. However, boycott
standards are variously applied. Description of the legislation seemed
to correct the misconceptions of many officials over the intent and
scope of the legislation.
With few exceptions, Middle Eastern leaders dealt apprehensively
with the question of Soviet intentions in the Middle East. They give
the impression that fear of Soviet imperalism is related to the growing
assumption that the United States, traumatized by the Vietnam ex-
perience, will move only with caution and perhaps not at all to counter
aggre-sive Soviet moves. The Angolan affair was mentioned repeatedly
in this connection.
With respect to Israel, the common Arab denominator is elusive.
Understandably, countries with territorial grievances such as Syria
for its loss of the Golan Heights in 1967, put the recovery of these
territories first on their list of priorities. The level of militancy is in
some degree related to geographic proximity to Israel, although the
most implacably hostile sentiments were heard expressed in Iraq
which has no common border. All were united, however, in the view
that no final settlement of the Arab-Israeli conflict could be conidlered
which did not include provision for the Palestinians. Furthermore,
there is near-universal opinion that the step-by-step approach to a
Middle Eastern settlementt is a dead letter. The Sinai Accord-while it
may have brought a breathing spell-moved the conflicting parties
further away from, rather than clo-er to, a final settlement. There is
albo widespread agreement, particularly outside of Egypt, that it
liad cost Evypt its prestig', and leadership in the Arab world, and that
Sadat has placed himself in an extremely difficult position by putting
all his eggs in the Americain basket. Some sources expresed doubt
over his survival.
Communication in the Middle East often proceeds on separate
public and private planes. The former is frequently shaped by motives
which have little to do with the communication of truth. A public







discourse, highly vo(-a] and p)itclled to internal expe(liencies, awakens
external hostilities which become progire-ivvelv more imniiine to
reason. The rhetoric of the Middle East, some of it heard in the U.S.,
enlarges for all its passionate participants an already laj-g, and
dangerous conflict. An outsider is struck by the convergence of
interests recognized in private and concealed in public. A peaceful
resolution of the differences in the Middle East will require the inter-
ce-sion of outside influences uninflamed by imagined, as well as real,
differences.
A review of conversations with Middle Eastern leaders and impres-
sions otherwise gained over the years, country by country, will give
an idea of the diversity of problems and the complicated bilaniicing
act which U.S. policy must comprehend in order to maintain sound
relations with each party and help move the situation from the
common interests of all toward peace. A discussion of the Palestinian
issue, based upon conversations with PLO leaders in Damascus and
Beirut and subsequently with the Israelis, will be found below under
a separate heading; conclusions follow at the end.
Egypt
It was disappointing not to see P ( -ident Anwar Sadat, ill with tihe
flu, to hear directly from him the catalogue of problems which other
Egyptian officials say he faces. In accepting the last provisional Sinai
Accord and throwing in his lot with Secretary Kissinger's step-by-step
approach to a Middle Eastern solution, Sadat burned his bridges not
only with the Soviet Union but with Syria and other Arab states at
the radical end of the spectrum. While there is said to be considerable
public support from his war-weary people, Sadat will have to show
that tangible economic benefits will flow---aniJd soon-from his new
policies.
At 38 million, Egypt has the larg -4t population, doubled since 1947,
of any Arab country and inadequate r,-ources with which to feed,
house, and clothe its people. Faced with a serious shortage of consumers
goods in early 1974, the country plunged into short-term, high-interest
debt of over $1.5 billion which matured in late 1975. Despite outside
help, including large ca-h grants from some oil-rich Middle Eastern
governments, a serious liquidity problem persists.
The only encouraging aspect of the economic picture is fuel. With
the return of its Sinai fields, Egypt now enjoys an equilibrium of
imported and exported petroleum products and hopes to be p)rod(ucing
crude at the rate of a million barrels a day by 19S0. Red S( :i or
Mediterranean littoral exploration rights have been granted to a
number of American companies.
E. ypt will be dependent upon outside sources in thle inmiediate
future not only for economic but foir military Tsistan:he. Thei latter
may al-o be critical to the survival of Sadats mlo(lerate goverlneilt.
His shift in course has (drawn tie opposition of a number of disparate
elements of Egyptian society: the extreme left, including the former
Egyptian Commniunist Party; the Nasserits in ch. _. of tlhe mis-
managed public sector of thle economy ho fear the competition of
Sadat's "open door" approach to economic dvelopiyent; and( the
Moslem traditionalists who reutird Sadat's policies- as anti-[lIiiic.
However, none of these elements could pull off a coup witoliut uppI. rt
from the military officers. It is within the military sector that the
69-241-76--1







greate4 (Ldanger lie-,. An army without functioning tanks and an air
force without flyable aircraft does not make for a contented officer
corp-. The air force is virtually grounded, with such .\IGs as are
-erviceeible only flying six hours a month. The Soviet Union has
provided no major equipment since May of last year and has refused to
continue with the maintentince of engines for the .IIG 21's and 23's.
A ineasiire of Egyptian depei-ation is the unsuccessful effort to negoti-
ate a maintenance contract with India and to puL(rchae engines from
the People's Republic of China. (The PRO was reputed( to be willing
to gie Egypt 20 engine-; only, refusing s-iles on grounds that it is
to give. Egypt 20 -e ongr un s ha i i
contrary to PRO policy to sell arms abroad.) Egypt is now seeking to
purchase in the West engines which can be adapted to the MIGs.
The United States is under pressure to sell E&'ypt military hard-
ware for which Sauidi Aribia will put up the cash. Congress has already
been approached by the Department of State concerning a request
for the sale of six C-130's. This is only a beginning. The Egyptians
have also expre,-;sed interest in F-5-E's, Tow missiles and naval
equipment. Such requests can be expected to touch off a debate
similar to the one stirred by the Hawk Mi-i-ilc contract with Jordan.
Some influential Egyptians are outspokenly bitter over the position
in which Sadat's acquiescence to U.S. policy objectives has placed
their country. One such is a former leading editor who fell out with
Sadat over the two Sinai Accords. Some of his charges are sophist,,
but they are echoed in the Arab world, although not published in
Egypt.
Here are some examples:
(1) Egyptian status and authority among the Arab countries ha;
been reduced. Ecypt is looked upon as having been "bought" by the
United States. Critics cite as proof Egypt's refu-.'il-at U.S. urging-
to vote for the MPLA as repre-entative of Angola at the January
OAU meeting. (Senior Egyptian officials are privately unhappy over
this move, maintaining that it dealt a severe blow to their claims to
African leadership.)
(2) The new relationship with the United States, taken together
with economic policies which have encouraged the growth of the
private sector, is a course which risk-; revolution. On the one hand,
neither U.S. Government assistance nor U.S. private investment will
be of a magnitude to trickle down to the majority of the people. On
the other, the new economic policies are of benefit to a small number
of upper class Egyptians, and corruption is on the increase. The
political consequences of disappointed expectations are worrisome.
(3) The United States cannot be counted upon for arms deliveries
on a ,czile to match the I-raeli build-up. Even if Egypt got F-5-E's,
they would be no match for the F-4's already in the Israeli Air Force.
This situation will create a dangerous imbalance.
(4) Rather than the Sinai Accords, an effort should have been made
to arrive at an overall settlement with the participation of the Soviet
Union and all affected Arab countries, particularly Syria. A provisional
agreement affecting Syria's interests without Syria's participation was
a gi 've error.
(5) The great powers mis-ed a chance for a settlement in the after-
math of the October War. There was a *-ignifi-rant change in the
psychologicil climate on both sides. bI-rdel w\i. no lontier -addled with
a sense of superiority, and the Arab world lo-t its sens-e of inferiority.





5
3

(6) Egypt's loss of central auitloritv in the Arai xvoldl la rt- in a dispersal of authority to Iimanyv celiters. This lead to daniivl i.
instability.
Some of these views are echoed by> senior Egyptian(1 ofNicials wvlo
share the consensus that step-by-step tiplomacv is dead; its past
successes are questionable; and the future of lie ioderae SadIat
g0overnlllent rests not only iupoli material support froll Olie Uii(ted(
States but upon continued ilmoileiintuii towards a Middle East settle-
ment, including provision for the Palestinians as well a substantial
territorial adjustment. If Sadait and his governilneit should fall from
power, the return of Egypt to thie Soviet orbit is more likely thani not.
Saudi Arabia
Of all Middle Eastern countries Saudi Arabia pi .-enis t lie iiost
striking internal contrasts. Paradox is everywhere. Economic in dica-
tors boggle the mind. In 1974 the per capital Gross Donme.tic Product
was nearly $7,000 and the annual growth rate 196 percent; but no
Westerner, -(e'-ing the market squares of Rivadh or Jidda for tlie
first time, can e-'ape the impression of extreme poverty. The infra-
structure is simply not able to absorb the tens of billions of dollars inl
oil revenues overnight, witness the forty-odd merchant sliip)s waiting
at anchor in the Red Sea off Jidda for utip to five months to unload.
Saudi Arabia is one of the most nioderate of Arab states, in its
approach to the Arab-Israeli conflict. It provides, usually in the form
of cash grants, the financial underpinning without which Egypt
another moderate Arab state, would collapse into economic ruin.
Yet in no Middle Eastern state will one find a more (ldeterniineld
exception-free application of the boycott against Israel.
Politically, Saudi Arabia does not even make a pretense to ldeinocra-
cv. There are no elections, no political parties, no legislature. The five
and a half million Saudi people -an estimate which may or imay not
include a million or more Yemeni labore- are ruled by a Royal
Family of several thousand membern. But a medieval political system
does not prevent Saudi Arabia from maintaining its closest foreign
ties with the Western democracies, particularly thie United Stattes.
The American connection has been close since thie establishment of
the desert kingdom in the 1930's, the Saudi> having chosen the Uniited
States as a preferred commercial partner over Westerm European
countries with the taint of past imperitalist behavior ill the MidIdle
East. The connection is, however, undergoing somne -strai at p-ek.tIt
Intimations by senior U.S. officials, in the wake of the 197- oil emii-
bargo, that a military occupation of areas of the Persian tGulf wa a
policy option were not denied quickly or emiphatically enough to sulit
the Saudis. Congressional action cutting g off deliveries- to "'lTrkev of
arms already purchased and the debatee oni the sale of Ilak lui?-iles
to Jordan raise doubts over Amierican reliablilitv as ati anrrm supplier.
Cases such as that brought against the Bechltel C(orporation aid anlti-
boycott legislation pending before thle Co('lgl -, have led soie >audi
officials to believe that they are thlie priin cipal targleL of -sui lea-'ure.
Since they regard themselves as the most staunchly pro-I.. and alnti-
communist of Arab governments, they resent this aind tend to exagger-
ate the scope and purpose of the legislation.
That Saudi Arabia is ecoiiomicallv inpertant to tlie Uit ed State--
is incontestable, and a case can be iiiade for its role in thie d irategic







balance. For all the ballyhoo over Operation Independence, projections
indicate that the United States will be more, not less, dependent upon
foreign oil imports in 1980. Where is it to come from? Iran and other
major producers are at or close to peak capacity, at least in light crude
oil. Only Saudi Arabia, with perhaps a-; much as 50 percent of the
world's reserves, will be able to meet U.S. needs and those of Western
Europe. Saudi Arabia is in a unique position among major oil pro-
ducers. It literally cannot spend all of its income-in comparison to
Iran, for example, which, partly because of falling demand for heavy
crude, ha- overcommitted itself and is in budgetary difficulty. A
consideration of approximate figures gives an idea of the power the
Saudis can wield in the oil market. They are pumping approximately
12 million barrels a day, well below an estimated pre-ent capacity of
17 million a day. During the embargo of 1973 they cut to 7 million a
day with easily sustainable losses in revenue. Some estimate that they
could comfortably maintain a handsome economic growth rate on
3 million barrels a day.
Since for some years to come it will be virtually impossible for
Siudi Arabia to spend its oil earnings on internal development, it is
an encouraging prospect for the U.S. balance of payments that no
Saudi official expre,-ed concern over the present investment climate
in the United States,. Without favorable U.S. investment opportunities,
the Saudis will be tempted in the future to yield to pressures from other
oil producers, reduce oil production and invest "in the ground." After
recent hearings in the Senate Committee on Banking, Housing and
Urban Affairs, it was possible to assure Arab officials that the U.S.
had no intention of altering its traditional open door policy toward
foreign investment. One of the highest-placed said he had every ex-
pectation of Saudi increased investment in the U.S. We should con-
tinue to :arfeguard industries. e sential to national security from foreign
control and maintain an open door to foreign investment. It is en-
coliraging that, increa singly, Arab dollars are being held there in
longer-turni instruments. This expression of confidence is welcome,
since it indicates a continued flow of Saudi capital and oil to meet
U.S. needs. Legislation now pending to require stricter monitoring of
foreign investment should not be constructed as hostile to such in-
vestment. It is worth noting here that expanded Arab investment in
the United States is not aglaiiit the intere-ts of Israel.
As a market for U.S. exports, Saudi Arabia is no less important.
Development projects over the next five years could generate import
requirements of nearly $100 billion. (Although it is doubtful that
this much could be absorbed if pre.,ent rates are a measure.) The U.S.
Corps of Engineers, which has been a feature of the Saudi development
scene for decades, is now acting as middleman for construction con-
tracts of $4 billion. It li;is been asked to take on an additional $11
billion.
It should be noted here that the role played by the Corps of Engi-
neers ives a ,ize'ding picture of the military -ales figures. A transac-
tion in which the Corps of Engineers serves as contracting agent is
procc-,,ed under legislation governing Foreign Military Sales.. In the
C:]-, of seven letters of offer now outstanding (March, 1976) with a
total value of $1.25 billion, two are Corps of Engineers port construc-
tion projects totalling $900 million. The much smaller share, $:350 mil-
lion, is for tank-, APC's, and other equipment to mechanize two






Saudi infantry brigades. The ratio of initrastri'cture land ttraiing o
hardware is generally of this order in Saudi imilitary lw u'cl aM-(' Jo)i
the United States.
Much has been written about the spectre of an escalation armsi
race in the Persian Gulf area, to which the Unitedl States had nlade
by far the most significant contribution. There are (dancers ill i tis
development. Long overdue is the review provided for bv tlie Ii1erma-
tional Security Assistance and Arms; Export Control Act of 19176 to
tssure that arms sales are consistent with foreign policy goals. Saulldi
Arabia is militantly anti-communist and anti-Soviet. As one of tihe
more moderate of thie Arab states, Saudi Arabia's effort to no(lernize
armed forces which do not seem excessively- large (e.g., an Armniv of
45,000), appears to be in keeping with U.S. lopes for stability in the
arez,. (The share taken by national defense in the current five-Vear
budget projection is approximately 16 percent.) There is a dilelimuna
here for U.S. policy. Saudi Arabia does provide support to states and
movements such as the PLO which are liostile to Israel. Therefore, any
Saudi arms buildup in excess of its own needs should be regarded wit\
suspicion and subjected to appropriate control.
To return to the boycott issue, discussion with Saudi officials suggest
there may be some distance between principle and practice in the
administration of the boycott regulations of the Arab League. Officials
insist the boycott is not applied to firms which trade with Israel,
but only to those which aid Israel. By aid is meant participation in
development projects, the establishments of producing subsidiaries
in Israel, or participation by members of corporate boards or manage-
ment in Israel fund drives. Tlhe Saudis vehemently deny that the boy-
cott has anything to do with race, religion, or ethnic background.
However, it was pointed out to Saudi officials that in practice the
system of blacklisting appeared to be much more arbitrary than
claimed. Furthermore, the Saudis were told, the application of the
tertiary boycott was an instrusion into the domestic affairs of the
United States which no self respecting nation could accept. One
Saudi official suggested pointedly that legislation making compliance
with a tertiary boycott illegal could interfere with contracts for petro-
chemical contracts of up to $17 billion. He was reminded that at soiie
point in the relations between nations, principle must rise above
making a quick buck.
The same official maintained that the best way to end the boycott
was to achieve a just and lasting peace in the Middle East. "Thlat is
why we help Egypt and urge the PLO to be moderate", he said. Thee
sentiments were expressed by several S4nudi lead.er- at the highest
level, who alluded to changing trends in Arab policy. One said that
Arab states are now prepared to accept the existence of the State
of Israel, although they are not, for tactical purposes, prepared to
announce this formally. Like others at the moderate end of the spec-
trum, the Saudis fear that continued stalemate will play into the
hands of the Soviet Union and lead to increa-ed Soviet presence.
prestige, and influence in the area. Saudi suspicions of Soviet designs
run deep. A leading official expre-,-d his endorsement of all U.S.
efforts, specifically including the expansion of naval facilities on
Diego Garcia, to offset the growth of Soviet naval and military power
in the Indian Ocean and on the Ilorn of Africa.








Syria
The ,..ip-e of E,_rypt by the Sinai Accords and the civil conflict.
in Lebanon, temporarily halted at the time of the visit to Dama-cus
by Syrian mediation and the movement into Lebanon of 6,000 Syria-
lbaed troops of the Palestine Liberation Army, have thrust Syria
into a large role in .\IidIdle Eastern politics. The Syrian strongman,
Ilafaz As-ad, Pre-ident since the last abrupt change in government
in 1970, holds many of the cards in the game at the moment. Qlle--
tion- of war or peace will depend upon how he plays them during
the coming months.
-Will he agree to a renewal of the UNDOF mandate, due to
expire at the end of May, retaining a U.N. force in the Golan
Heights buffer zone? Mo-t observers believe he will play out
another cliff-banger in hope- of extracting further political
conce-ions. This tactic, in October 1974, helped win admission
of the Palestinian i-,ue to U.X. debate. Some think he may
simply remain silent on the UNDOF, neither approving nor
ordering the force out. This would increase tension and might
lead to partial mobilization. Such mobilization would be more
costly to Israel, where the calling up of reserves from the labor
force is a -_evere strain on the economy, than to underemployed
Syria. However, the Israelis have shown in the past that they
will not long endure mobilization and a war of attrition without
striking a decisive military blow. The Syrians do not want a
resumption of full-scale war, for which they are unprepared,
particularly since Egypt might sit on the sidelines.
-Will Assad, who at times exudes an almost imperial confidence,
take any action towards the realization of the dream of a Greater
Syria in union with Jordan? If there is no final solution in Lebanon
other than partition, can it be ruled out that the Moslem half
would be attached to Syria, leaving a small, rump Christian
Arab state to survive as best it could? Unlikely, unpleasant, but
not unthinkable. Such a uniting could pose new dangers to Israeli
security.
-What will be his relationship with King Hussein? Summit
mrneetings, the announcement of an intention to establish a com-
mon diplomatic service, and rumors of a joint military command
have given rise to speculation that the two leaders may be
planning a deal to restore Hussein's authority as spokesman for
the Pale-tinians and might even propose to the Israelis a return
to a Jordan-administered West Bank. This prospect is unsettling
to the PLO leadership.
-What will be Assad's continuing relationship with the PLO? Will
he in-ist upon a primary role for the PLO's Saiqa faction at the
expense of Arafat's al Fatah? (The Saiqa, ideologically aligned
with the governing Syrian Ba'ath Party, is drawn from the
estimated half-million Palestinians resident in Syria.)
The man who must answer these questions is a tough, capable
leader who, in conversation, is more articulate than one would expect
from his taciturn reputation. His priorities are unmistakable. No
peace, no final settlementt without a complete Israeli withdrawal from
all territories occupied in 1967. No Sinai-type accord, about which he
is outspokenly bitter. While he remains a champion of the rights of






the Palestinians, his objectives for theml are undefined. His obl)jectives
on the Golan are unequivocal. In any future multilateral negotiations
towards an ov most obdurate of the Arab leaders. However, lie does- not exclude
acceptance of an Israeli State, provided his stern conditions can )e
met. His explicit condition is implementation of Security Council
Resolution 242. His interpretation of that Resolution requires Isrtaeli
withdrawal from all occupied territories and implicitly recognizes
Isrnel.
Syria's relations with the United States have improved considerably
since the shuttle diplomacy of 1974 thawed the post '67 deep) freeze.
A fully functioning Embassy was re-establihed in Damascus in June.
1974. Syrians, for whom even talking to Americans hlad been a sin,
now seem to be enjoying the renewed association. Syrinn leaders in
the economic area hope for an expansion of U.S. trade. A dramatic
increase in the past year was largely owing to the sale of Boeing
aircraft. The U.S. ranks far behind major Western European countries
ina exports to Syria; France holds the lion's share.
The Deputy Prime Minister for Economic Affairs, Mohainmad
Hydar, claims to have sought participation of American oil companies
in Syrian oil exploration and production for nearly two years but
has signed contracts with only one small company. The Syrian oil
industry, now pumping only 200,000 barrels a day, is expected to
grow. Syria with a small, exportable surplus has recently applied for
OPEC membership.
Syria's relations with the Soviet Union are the subject of contro-
versy. The armed forr,., are Soviet-equipped and Soviet-trained. The
number of Soviet military technicians serving in Syria is estimated
at 3,000. (Cuban units, despite reports to the contrary, have long since
departed.) The Soviet Union has underwritten massive development
projects such as the Eupl.'ates Dam. On the other hand, Syrian
officials cll their country an Arab Socialist State and insist that
Arabs are culturally and historically opposed to conmmnism. The
Baathists in Syria seem more willing to subordinate a vague ideologyv
to the imperatives of development than in iraq. While ready to admit
that the Soviet Union has consistently attempted to expand its
influence in Syria, they claim this will not be permitted, pointing
out the diminishing number of commiunis-ts under A "sad's rule. Thev
argue that conimunists fare better in other Arab countries than in
Syria. Said one, "No regime in Lebanon could punmi>h comnuni-4sts
the way we punish them here."
Even taking such statements with a ,'.aii of salt, a broadening of
relations with Syria is in the interes-t of the United States througli
increased commercial activity and the continuation of a modest-4 aid
program. Such a policy is reminiscent of the special l Polish relation-
ship" and other moves in Eastern Europe designed to provide proud
nations with an alternative to total dependence upon the Soviet
Union. The Syrians, like most, seek development and national identity.
They will not willingly submit to foreign influence and, unlike some,
take a pragmatic approach to economic relations with the West.
As for the plight of the estimated 4,500 Jews remaining in Syria,
the chief form of discrimination is the denial of permission to emigrate.
(They may travel abroad only with a pledge to return and the posting







of bond, are restricted in domestic travel and carry identity cards
classifying them a-; Jew-.) The Syrian Government, like others, takes-;
the p.-ition that, to whatever country he may say he wise; to emi-
grate, a Syrian Jew may wind up as an immigrant to Israel. The Arab
Government will not aid their enemy and they expect other nations,
including the Soviet Union, to collaborate. There seems little likelihood
that the Syrian Government will moderate this position until a Middle
Ea 4ern settlement is achieved, which would be a boon to Israel and
to Jews residing in Arab countries and others. The Syrians, like the
Israelis, do not wage war with "moderation."
Iraq
Although there had been hints from non-Iraqi Arab sources that
Iraq might be softening some of its hard-line positions and was perhaps
ready to see an improvement of political relations with the United
State>, there was no evidence of this in Baghdad. A visiting Senator
is received with elaborate courtesies, such as a motorcycle escort and
chauffered government automobile, but with chilly formality and not
at the highest level. The be-;t that can be said for prospects for im-
proved relations is that the Iraqis are encouraging an expansion of
trade with the United States. U.S. exports to Iraq have grown from
a mere $23.3 million in 1972 to $284 million in 1974, advancing Iraq
to fourth place among Arab markets for American goods and services.
Several American engineering and aviation companies are resident
in Iraq.
The United States and Iraq do not have diplomatic relations. A
tlhee-American officer U.S. Interests Section attached to the Belgian
Embassy struggles to keep pace with the burgeoning commercial
activity. This staff, like other diplomatic offices in Baghdad, functions
under unpleasant conditions. To such physical hardship as summer
temperatures which are claimed to be the highest of any capital in
the world are added practices reminiscent of Balkan Communist
countries during the Stalinist darkness of the 1950's. Recreational or
business travel outside the city limits of Baghdad is by permission
only-sometimes granted only after weeks of delay. The brutal
interrogation of the local employees of diplomatic missions is not
uncommon. In general, life in Baghdad is pervaded by an atmosphere
of suspicion and distrust.
Economically, Iraq has a high potential. With a population of 11
million, water, arable land, and the largest oil reserves of any Middle
Eastern country outside of Saudi Arabia, it may someday be a rich
country. Crude oil production already stands at over two million
barrels a day. But it is a country not easily governed, and the suscepti-
bility of previous governments to overthrow by a succession of military
coups d'etat has made the present regime subject to a paranoia which
is not conducive to orderly growth. Fractious minorities and region-
alism contribute to instability. The Kurdish rebellion has finally been
stopped after an Iraqi-Iranian agreement ending Iranian support to
the Kurds. Tens of thousands of Kurds are now believed to have been
deported from the northern mountains to camps in the southern
desert plains.
The Kurdish issue is an emotional one with Iraqi officials and may
have as much to do with U.S.-Iraqi estrangement as does the Arab-
Israeli conflict. Iraqis speak with bitterness about past CIA support








to the Kurds, de(-crilb)ed by American reports as having been directed(
by President Nixon in re-ponse to a personal reque-st by the Slhah of
Iran. One senior Iraqi official asked sar.astically, "Are you suree your
government is no longer thinking of overthrowing our governmentt"
Another minority, the Iraqi Jews, are believed to be suffering from
discrimination and ill treatment, but details are sparse. Iraqi ofli(cials-.
with whom this issue was raised, claim that "only a few hundredW"
remaini of the approximately 150,000 Jews resident in Iraq before
1948. The property of those deported is "in custodyx-," which pre-
sumably is tantamount to confiscation. In contrast to the practice in
Syria, however, some exit permits have been granted within the past
year, and the Iraqi Government has even invited departed Jews to
return, with the promise that they will be treated like Iraqi citizens.
There have apparently been no takers.
As far as Israel is concerned, Iraq takes by far the hardest line of
any Arab country visited. On the Palestinian question, Iraqis, more
so than other Arabs, sound less compromising than the Palestinian
leaders themselves. Senior Iraqi officials in private conversation make
such statements as "We see no reason for Israel to continue to exist",
and "Israel should be cut down to its right size; then they would
have to seek a peaceful solution".
Although there has been some improvement in relations with most
neighboring countries, the governing Ba'athll Party in Iraq and the
Ba'ath Party in Syria are still at sword's point, adding an ideological
quarrel to traditional friction over such matters of dispute as the
sharing of the waters of the Euphrates River. Such quarrels add to
Iraq's isolation from the main streami of Arab foreign policy. The
Iraqis are more ideological, less pragmatic, than others, but eager to
acquire political stability and national identity with the aid of imports
from the West.
Relations with the Soviet Union might be described as close but
uneasy. Heavily dependent upon Soviet weapons with which to equip
its forces, the government has had to deal gingerly with the Syrian
Communist Party, the only group with pretentious to political rivalry
to the Ba'athists. Iraq must be regarded, along with Syria and the
People's Democratic Republic of Yemen, as a Soviet foothold in the
Middle East. But unlike Syria, where there is room for U.S. diplomatic
maneuver, Iraq offers little prospect for a consequential increase
in American presence and influence in the near future. There is hope for
expanded commercial exchange which would require an increase in the
number of commercial officers for the overworked staff of the U.S.
Interests Section in Baghdad. The United States is nowhere near
holding its own in this lucrative market in competition with the
British, French, Germans and Japane-e.
Iran
U.S. ties with Iran, the most powerful country on the Persian Gulf,
have been extensive since the years immediately following World
War II. Steps taken then by President Truman are credited with
rescuing Iran from the encroachment of Soviet imperialism. A few-
figures will help to give proportion to the scope of American involve-
ment in Iran.
-U.S. business invest niment in Iran is well over $1 billion.
-Exports to Iran in 1974 were $1.3 billion; in 1975, an estimated
$3.2 billion. Two-thirds were civilian and one-third military.
69-241-76---2








-There aze ovr 1400 Defeze Department personnel in Iran,
including TAF training teams for U.S. military equipment and a
200-man Milit:iry Aid Adlvi-ory Group.
-Iran is the world's .e,-'ond larg-st exporter of oil. Although the
U.S. share in the Iranian oil mnarktiii" consortium (35%) is
not as large as that of the Western Europeans, a cricital 11% of
U.S. imported oil is from Iran. This source vwas particularly
signifirwant when Iran refused to join the Arab oil embargo in
1973.
-There are 15,000 Iranians studying in the United States.
In a count ry in which oil repre:ent-. 93 percent of export earnings and
75% of all budgetary expenditures, any pronounced fluctuation in oil
production schedules is bound to cause shock waves throughout the
economy. A recent fall in world demand has halved the lifting of
heavy crude: a million barrels a day in December, 1975 as compared
to 2.2 million in December, 1974. This drop has not been compensated
by an offsetting increase in light crude lifting. In December these
had risen only to 2.26 million barrels a day from 2.2 million the previous
yeair.
The Iranian Government has, as a consequence, been forced to
engage in serious belt-tightening, cutting back on some development
projects and the military program while running a current budget
deficit of $2 billion. Iranian officials are at odds with the consortium
over the drop in heavy crude liftings and are loathe to accept the argu-
ment that the drop in demand for crude is attributable to market
sensitivity to high prices and to continuing recession in the indus-
trialized countries-a recession to which high OPEC prices made no
small contribution. The Iranians charge the consortium with failure
to meet legal commitments. One very senior official insisted that the
oil majors should be shifting purchases of light crude from the Saudi
Arabians, who could not spend the money, to Iran, whose 33-million
population not only need the money but could spend it. (Less senior
officials expressed amusement at this line of reasoning, as they main-
tain that Iran is already pumping light crude at close to capacity.)
Iranians are well armed with defensive arguments in any discussion
of pricing policy. They cheerfully maintain that the establishment of
the $11.51 OPEC marker price was an act of wise and far-seeing
statesma;nhip for which the world should be duly thankful. The line of
reasoning can be summarized a.; follows: oil and natural gas are ex-
haustible resources. At present rates of depletion Iran's oil will not
last more than about 25 years. Oil and gas should not be squandered
in the production of energy. They are the basis of a petrochemical
industry for which there are no substitute raw materials. $11.51 a
barrel is close enough to the margin to encourage the substitution of
other sources of energy (coal, nuclear energy) and research into new
sources (solar, nuclear fusion). The Iranians insist that the contribu-
tion of rising energy costs to inflation has been greatly exaggerated.
The cost of energy as a co.t of production, they say, is only 10% for
cement, aluminum, and glass, as low as one percent for other import-
ant manufactures, and so on.
In sum, high oil prices are good for you, say the Iranians, despite
the evidence that they are the most important factor in the inflation
and recession of the la.-t several years. Significantly, there was no in-







dication from Iranian officials that thev were planning to press for
another round of price increases in the foresee!i )le future. 11j`iis ipr-
hllaps the result of the falling demand for heavy crude, which lias mna(le
the Iranians more open-minded about suppll)y and( demand factors.
They also conceded that more study was necessary in order to deter-
mine the effects of energy prices on rates of inflation and levels of indus-
trial activity.
Ambitions for a nuclear energy program in Iran flow naturally from
this line of reasoning. The original plan for 20 large nuclear power
plants, while it may be considerably scaled down by budgetary r-e(duc-
tions, is unequalled in any developing country. Such a program nat-
urally gives rise to concern over the dangers of nuclear proliferation
in an unstable area. Not far to the east another developing country,
India, only recently joined the Nuclear Club, frightening the world
with a "peaceful" nucleaIr explosion designed to do just that.
A discussion of the proliferation question with Iranian officials
is a measure of the difficulty of finding persuasive arguments against
it.
Question. Why not use natural gas for energy? You have an un-
marketable surplus and it would be cheaper.
Answer. Enormous quantities of gas will be required for the second-
arv recovery of oil and other internal needs. Besides, gas is not an
inexhaustible re-ource and it can be put to other valuable uses, such
as fertilizer manufacture.
Question. Is an expensive nuclear energy program justified in a
country in desperate need of roads, schools, hospitals and other
social infrastructure?
Answer. We must be the judge in such decisions. It takes twenty
years to develop an extensive nuclear energy prograi.i, not so much
because of construction lags but because of training requirements
to master the technology. We are running out of hydrocarbons and
must develop substitute energy sources. Fusion and solar energy
are years away. Fission is here. We have the funds to pay for it now.
Question,. Are you not concerned about nuclear proliferation?
Answer. Why is the United States so concerned about the Iranian
program? We have ratified the nuclear prolife :ition treaty and have
publicly announced that our program is related to energy only.
Besides, if we were interested in weapons we would not be buying
large light water reactors. This is too costly a method of producing
plutonium. If we were interested in weapons, we would buy a couple
of small heavv water reactors. If we cannot, expect an attitude of
confidence from the United States, we will have to turn to other
suppliers.
A balance will have to be struck betwecnri the legitimate aspirations
of an industrializing nation and the need for fool-proof nuclear
safeguards. Surely a case can be made, without offending the Iranians,
for extreme prudence on the part of American repr-entative- ne-
gotiating fuel contracts and other commercial nuclear agreements.
One important issue with which U.S. policy makers will have to deal
is the question of future regional reprocessing centers for nuclear
fuel. Our own domestic policies on reprocessing will need considerable
fleshing out before we can present to Iran or any other South Asian
or Middle Eastern country a serious proposal for a regional processing







center in that area. As it is now, the U.S. is pressing the Iranians to
airce in conjunction with reactor purchase to a regional reproce.,ing
proposal it c('annot define.
A still more contentious question in the security field is that of
conventional armaments. The United States is by no means the only
supplier of arms to Iran, but it is the principal supplier and the
.ource of the most expensive and sophisticated military hardware.
The Iraniin Air Force is 100% U.S.-origin.
Iran is the largest market anywhere for U.S. weaponry. Deliveries
and uncompleted contracts since January 1972 are on the order of
$10 billion, with nine billion more in purchases under active con-
sideration. Individual items include the most advanced aircraft in
the U.S. inventory, the F-14, and the Spruance class destroyer,
with a price tag inflation is pushing towards half a billion dollars a
copy.
Why F-14's? Why Spruance destroyers? Why the build-up of a
military force unequalled in the Middle East? There are ready answers
to be had at the highest level in Tehran:
-Russian imperialism leaves Iran no choice. Consider the sur-
rounding terrain. Iraq is armed with MIG 21's, 23's and possibly
25's.
-The Rus-ians are encouraging a secessionist movement in
Baluchistan which could create for Iran the dangers of irridentism
among the Baluchi population.
-Afghanistan is moving towards total Russian domination and
has claims to Pu-htunistan.
-Pakistan is a reliable friend but out-gunned ten to one by India.
Iranian officials .eemi to believe that it is only a question of time
before India ends up in the Communist camp.
Ru-a is acquiring political leverage which it can use in a
multitude of ways. It has established itself at UM Qasr at the
head of the Persian Gulf in Iraq, in South Yemen and at the
mouth of the Red Sea, Somalia, and elsewhere in Africa, estab-
lishing a ready noose around the vital oil supply area, while the
United States stumbles and equivocates over Angola.
-Iran is a great power, the strongest in the Middle East, and-
as a power which maintains correct relations with Israel and
most of the Arab states-a force for stability.
-Therefore why should the United States see a strongly armed
Iran as anything but a strategic advantage? And why should
the United States value Iran any less than it does its European
allies? The U.S. must depend not only on its Atlantic alliance
but also on regional sources of power.
Incontestably, Iran is playing an important role in the strategic
equation. It does indeed provide a counterbalance of pro-Western
.-trength in the Middle Eatern and South Asian area. Much is made
of the importance of controlling the sea lanes to assure the flow of
oil to the West in time of tension or actual conflict. Military experts
estimate that the Strait of Hormuz, between Iran and the Sultanate
of Oman, at the neck of the Persian Gulf bottle, could be effectively
blocked by the sinking of one large or two small tankers. It would be
hard to find any body of water more strategically important than
the Strait of Hormuz, through which passes well over half of all the
oil destined for Western Europe and Japan. It might have been men-






15

tioned, too, though it was not, that IsIael depended on Tilan for
50) of its oil even before last year's return of the Abii Rildeis field,
to Egypt. Presumably this percentage would now be still hii('er.
Any potential for interdicting oil supplies will carry with it a leverage
com"patrable to that which accompanies the most violent and explosive
means of interrupting human life and commerce. Arab pro(diwcer,
were the first to use the oil weaponl-but oil producers and consuiners
alike are dependent on its transportation, which is vulnerable by
land and sea.
It may be that the nations of this region are sensitive to Soviet
intervention because they understand that Rusian imperialism
preceded Russian communism. The new U.S. commitment to sell
food to the Soviet Union for five years irrespective of Russ-ian conduct
in the Middle East or anywhere else is disquieting', to say the 1, ;,t.
With the Saudis and Iranians, Russian Communism, as well as
Russian imperialism, is a source of anxiety. One disturbing aspect of
Iran's new status as a major military power is not so much what is
going on outside the country as what may be going on inside it.
Whatever may be -aid about its reliability as a staunch friend, Iran
is scarcely an example of a free and untrammeled democracy. One-
man rule has been so long-established in Iran that we are given to
speak of our relations as being "with the Shah", as if His Imperial
Highness, like the Saudi King, were the embodiment of the national
ethos, the national will, and the national body politic. The Iran which
is to emerge post-Shah is as murky a place as the world beyond the
Pillars of Hercules as seen by the ancient-. It is hard to believe that
this modern state with its western exposure and little legal outlet for
dissident expression can long endure without some sort of explosion.
And here, as elsewhere in the Middle East, it takes less than an ex-
plosion to turn over a government. Among the 15,000 Iranian students
in the United States there are bound to be many who have become
infected with fractious democratic ideas. It is disturbing that no one
seems to know what is behind the acts of terrorism which require
American government employees to ride about the streets of Iranian
cities protected by armor plating and bullet-proof gla-s. The Trznian
press ascribes all terrorism to Soviet or Iraqi meddling, perhaps
rightly, but without substantiation. Bullet-proof glass and special
security measures have become standard for senior Americ.:mn repre-
sentatives in other capitals visited, but there the potential assassins
and kidnappers are more easily classified.
These are the kind of cautionary thoughts which gave ri;e to the
legislation providing for tighter controls over military sales. Sutch
enormous weapons transactions, as in the case of those with Saudi
Arabia, must be in keeping with U.S. policy objectives which take
into account all of the risks of escalating armament in an explosive
area. It would appear that Iran's internal and regional -*.cnrity
requirements could be met with less sophisotcated weaponry more in
line with its human and financial I-our( -. The government appear
to be moving in that direction.
Isradel and the Palestinians
The Arab-Israeli conflict, like most, is the sum of its parts, thie mo--t
significant of which are: The Sinai,. the Golan Heights, tlhe West Bank
(plus Gaza), Jerusalem, and the Palestinians. The first--and least








contested-of these has been part i;dly resolved, although the wisdom
of taking the easiest step in isolation from the others is open to ques-
tion. Other territorial adjustments are at least theoretically feasible.
It should not be beyond the wit of man to devise a formula by which
Israel might withdraw to its pre-1967 frontiers with appropriate
adjustments, pr,,iodcd (the all-important prr',;dd) this could be done
on the ba-is of acceptable guarantees to Israeli security. The status of
Jerusal-em is thornier, although the placing of East Jerusalemn and its
Holy Pla-c% under some form of international administration is not
inconceivable.
But when one comes to the Palestinians, the imagination falter,.
They are the central problem of the Middle Eastern confrontation.
They will not go away. In trying to come to grips with the scope of the
Pale-4tinian i-.,ue, it is worth making some compari-ons with other
forced mass movements of people in the aftermath of World War II.
With the shifting of the borders of present-day Poland from East to
West, some tens of thousands of Poles were forced to evacuate their
homes in Lwow, Vilno and other formerly Polish cities and resettle
within Poland's new frontiers. At the same time a million or more
Germans trekked West at gunpoint from Sile.,ia, Pomerania, and
East Prussia to West Germany. The cost in human suffering was
enormous. The disposses-ed formed a voting block which prevented
any movement in the Eastern policy of the Federal Republic of
Germany for a generation. But by the end of a generation these
refugees were thoroughly integrated into their new surroundings, and
their children have not inherited enough bitterness to sustain an
irredentist or revanchist movement. As a "problem," the disposition
of these Central European refugees has ceased to exist.
This outcome, it must now be assumed, was what the Israelis must
have hoped would be the solution to the Palestinian Arab refugee
problem: they would simply be absorbed, digested and assimilated,
over time, by the countries to which they had fled. They were all
Arabs, after all, and had no cultural or linguistic barriers to scale.
For a number of reasons it did not work out that way. The extrcie
rural poverty of the surrounding Arab countries did not provide much
elbow room for new- agricultural settler,, and there was little or no
ind-htrial employment to offer. Most significantly, Israel's hostile
neighbors made it a policy to refuse to assimilate all the refugee-
and insisted that many be held in camps, where they were maintained
at a hand-to-mouth level of subsistence by the United Nations
Relief and Works Agency. (An exception was Jordan. Camps were
established, but many refugees were granted Jordanian citizen',hip.)
After more than a quarter of a century, over 650,000 of the estimated
three million who call them-elves Palestinians are still living in the-e
carmps, held hostage to the persistent intractibility of the Arab-
I-raeli di-pute. A visit to a Palestinian schooll is a chilling reminder
that the torch is being pa1-sed, undiminished, to the next generation.
Wall posters proc(hlim the glories of guerrilla warfare, cla:-room
-ongs are on themes of militant revenge, and textbooks dish out al
Fatahli doctrine along with the three R's.
The argument that innocent Palestinians are paying an inevitable
blood price for the -ins of the Arab leaders who tried to strangle the
infant state of Israel in its cradle, just as the refugees of Central
Europe paid for the sins of the Nazis who made war on the re-t of
Europe, is not without validity but is irrelevant to a solution of the







problem. The Palestinians are there. They are not going to go awy.
They consider themselves a nation. They are becoming inrel(a inglyv
well organized.
Most significantly, the Palestinian cause, which used to be generally
reg1rarded as a r,'.frugcree problem, has during the past year or two
acquired the status of a cause of nationhood and has attracted world-
wide attention, most of it sympathetic. There are several reasons for
this. First, the oil-rich Arab states are now providing the Palestinians
with a considerable amount of financial underpinning. Second, the
1973 war and subsequent oil embargo forced the ArJd world, Pales-
tinians included, upon the Western consciousness in a new and urgent
way. Third, a decision at the Rabat Arab Summit in 1974 deprived
King Hussein of his role as international spokesman for the Palestin-
ians and bestowed it upon the Palestine Liberation Organization.
The Palestinians are now represented by Palestinians. Fourth. the
Palestinian leadership appears, at least for the time being, to have
renounced terrorism as an instrument of policy, thereby winning
favor among those willing to forget the horror of Munich and Lod.
Fifth, the intervention of the Palestinian Liberation Army in Lebanon
has won for the Pahltiianlis a tenuous claim to greater authority.
Sixth, the 1973 war, although another Israeli victory, is played up in
most Arab quarters-particularly in Syria-as an Israeli defeat.
However it should be interpreted, it damaged Israel's reputation for
invincibility and convinced many, including staunch friends, that
time is no longer on the side of the Israelis and that Is aiel should be
seeking a permanent peace through concession to Arab claims, those
of the Palestinians included.
The third point above, the question of who repri-,nts the Palestin-
ians, is the subject of protracted debate. Most Israelis dismiss the
Palestinian Liberation Organization as a motley gang of terrorists.
quarreling incessantly among themselves, with its principal element,
al Fatah, owing its survival to the active support of the Soviet Union.
The President of the National Council of the PLO, Khalid ai
Fahoum, in an hour's conversation described PLO organization in
terms designed to establish its representative and democratic gciti-
macy. The present National Council, the Fifth, constituted in 1971,
has 187 members distributed as follows:
I. Fedayeen (Commando) Organizations (Elected from within the
organizations themselves):
Al Fatah (Arafat)-----------------------------------.--------
Saiqa (Syrian based) ---- ..--_-- ---------------------------- 12
Popular Front for the Liberation of Pailestine (Gcorge H aah) ---- 12
Democratic Popular Front for the Liberation of Palestine---------- . .
Arab Liberation Front (Backed by Iraq) -..---- -----------------
Popular Front General Command -----------------------------
II. Trade unions:
Palestinian Labor Union ..--- ---- --------------------------. 13
Teachers -----------_.-- --- --------------------------------- 7
University students -------- ----------------------------------- 7
W om men's associations ... -- -----.... ..---------------------------- 4
Engineers (representing over 27,000 Palestiniun 1engineers) --.-.-.--- 2
Jurists (judges and lawyers) --------- -------------------------- 2
Minor Syndicates (each) .-----------------------------------.. -- 1
III. Palestine Liberation Army: (Recp)res'entatives appointed by C(OI-
mander-in-Chief), 6.
IV. Independents: (The Independents make up the balance and are the
majority of the Council. According to Fahouni thy arc designated
either because of their superior educational background or ecase
of their influential position in the refugee camps.)






The PLO Executive Committee, consisting of 14 members elected
at carh -e(mi-annual meeting of the National Council, lays down policy
guidelines and ratifies the budget. The Executive Committee elects
its chairman, now Ya;ser Arafat, from its own membership.
So much for what the PLO leadership says about its own organiza-
tion. It is scarcely a clo)ely knit group, since some of its better known
figure, such as George Habash, often break with the parent PLO on
important matters of policy. However, PLO critics who claim that
it is unrm'epre-entative of the Palestinians are unable to come up with a
substitute. The PLO may be distrusted, disowned and despised, but
it is a reality, if for no other reason than that it has no rival organization
among Pale.tinians. As long a; this reality persists, it will have to be
reckoned with in any future multilateral negotiating process.
Sin'-e the PLO, by the admission of its own leaders, does not speak
with one voice, Palestinian objectives are subject to broad definition.
The most demanding or maximalist among them want not only a
Pal-tinian state in the We-st Bank and in Gaza but also the establish-
ment of a binational "secular state" in Israel itself. This state would
be open to immigration by returning Palestinians who would enjoy
an equal share in the state's administration. Any Palestinians choosing
not to return to their homes would be compensated for lost property.
This solution would mean nothing more or less than the dissolution
of the State of Israel as it now exists. "Secular state" is shorthand for
the achievement by non-violent means of the objectives of those
militant Arabs who still shout that Israel must be swept into the sea.
More moderate shadings of Arab opinion are difficult to define. One
would hesitate to designate Yasser Arafat, al Fatah's leader and
chairman of the Executive Committee of the PLO, a moderate, since
his character has been stamped, in American public opinion, by his
guntoting appearance in New York. Let it suffice to report that in a
long conversation in Beirut he appeared to be making every effort
to represent himself as a reasonable man. If his statements are to be
taken at face value, alvays a risky assumption in this emotion-charged
area, he is at least less immoderate than others in the PLO. Leaders
of neighboring Arab state-, such as the Syrians, take tougher positions
than Arafat.
In one newpaper account (Appendix B) by an enterprising reporter
who evidently drew upon sources within the Executive Branch in
WaVliin1'ton, an approximatio-n was published of a suggestion by
Arafat during the convec-ation to break the impasse which prevents
the rn'-'imiption of a multilateral negotiating process. (The suggestion,
it was sub-equently learned, was not an altogether new idea.)
The details are not as significant as the reaction to this episode
from both sides. The Palectinian news agency, WAFA, denied the
report altogether. The Israelis were careful not to show the slightest
curiosity about it.
What does this incident say about the future of any such proposal
for the solution of the Palestinian problem? Arafat's representatives
evidently felt obliged to repudiate it because it was too moderate;
Arafat cannot afford to appear less tough than those who may be
challenging his leadership of the PLO.
The Israeli response is indicative of the apprehension with which
many regard the ascendency of the PLO in Arab affairs. It is not
difficult to understand this concern. The only Palestinian state on






the West Bank which would not pose a serious threat to the secuiritv
of the State of Isreal would be one limited to the present Arab
residents, preferably in some sort of union with Jordan and under
Hussein's control. In Jerusalem one hears sympathetic talk of the
friendly, peaceful, conservative Palestinians in Nablus, IHebron and
other West Bank cities and of the pleasant relationship they enjoy
with Israeli authorities. ("You'd be surprised at how few police we
have to keep there".)
With few exceptions, most moderate Israelis rule out any solution
other than a rever-ion of the 650,000 "tame" Arabs on the We-st
Bank to Jordanian control, with some form of semni-autonomous
status within a Jordanian-Palestinian state for Palestinians on both
the West and the East Banks of the Jordan. (West Bankers retain
Jordanian citizenship.) A good number of the 350,000 Palestinians in
Gaza might be prepared to link up with this entity in return for
Jordanian citizenship, as they are denied Egyptian citizenship.
Immigration would be restricted by the West Bankers themselves;
they would not be eager to grant elbow room to an enlarged population.
So runs this approach. MIany I-r;nelis now regret that their govern-
ment was not more receptive to offers from Hu--ein along these lines
during the 1967-74 period. Israeli obduracy is believed to be at
least partly responsible for Hussein's loss of authority among the
Palestinians and for the Arab decision at Rabat to pass his mantle
to the PLO.
It is now the Israeli position to have nothing whatever to (do with
the PLO and to refuse any consideration of an independent Palestinian
third state between Israel and Jordan. They fear such a state would
be a breeding ground for irredentism and Fedaveen military operations
designed to dismember Israel. They also fear public reprisals against
those who take a moderate line. It is ironic, but not unusual; a demo-
cratic government is hemmed in by the immoderate and passionate
sentiments of a minority. Israel's settlements in the West Bank and
Golan Heights are defended angrily in public-not at allin private.
So the Israeli leadership says giving the West Bank to the PiO)
would be an act of national suicide. It may be right. The tragedy i*
that continued stalemate over the Palestinian question will sooiwner o
later lead to another outbreak of full-scale war. As Israeli ana'lv-t
said, the military balance is shifting the wrong way. But war in thil
Middle East is ea-icer than peace.
Soic Conclusions
If there is a single message to be found in the foregoing observations,
drawn from a day, or two, or three in each of six Middle Ea-tern
capitals and Tehran, it is that there are no ready answers to any (of tle
policy questions in this politically complex, economically rich, anid
emotionally charged area of the world. Step-by-step d(iploniacy lia-s
run its course. The impasse has resumed. Each of thie parties a-sumes
that time is on its side. Each is probably wrong.
Both sides can lose should there be another round of fighliig, and
always lurking in the wings is the brutal threat of Great Power coin-
frontation. One of the end-products of step-by-step (liplomlacy I11-
been to raise the level of Americ;,n commitment in the area and to
limit the options as tension heightens. A continued impas-se favor.-







radical elements and increa-es the opportunity for Soviet exploitation
of a mounting cri-i-. A new constellation of forces, disturbing in its
implications, is emerging.
-President Sadat, a moderate, has lost his position of leadership
in the Arab world. If he and his government are to survive, he
will have to show concrete achievement as a result of the Sinai
gamble. His ties to the Soviet Union are cut. For some of his
needs he is relying upon the United States. If he fails, he will be
replaced by more radical leadership. Egypt's return to the Soviet
orbit will then become more likely.
-Syrian Pre.ident Hafez Assad( has been pushed into the ascendency
by the Sinai Accords. His sphere of influence now includes
Lebanon.
-The influence of King Hussein, another moderate, is correspond-
ingly diminished. He and Assad are currently engaged in coopera-
tive maneuvering the implications of which are not at all clear.
-The Pale-tinians are by general agreement the nub of the problem.
Although badly divided, they have steadily increa-ed in numbers,
economic and military strength, and seriou-n,.ss of purpose. They
cannot be left out of any Middle East settlement. Their lack of
unity is reflected in the lack of unity within the top ranks of the
PLO, but there is no organization other than the PLO with a
bro;,!dly recognized claim to repre-ent the Palestinian s.
-The rich Aral) state. of the Gulf can provide almost limitle's
financial support to any movement they choo-e and are now
capable of throwing military power onto the scales as well.
-bIrael, as always, bears heavy burdens, and looks to the United
States to assume over $1 billion of a $2 billion budget deficit by
writing off repayments for arms deliveries, a-; well as by maintain-
ing the flow of support through bond subscriptions and other
mas-.ive private efforts by the Jewish community. An Israeli
government with a precarious majority is too weak to prevent
certain actions by Is.raeli citizens which are highly provocative
to the Palestinians, such as the establishment of new settlements
on the West Bank. The Sinai Accords are unpopular in Israel,
and the government is accused of giving up Sinai oil and strategic
passes in exchange for Egyptian commitments, such as rights of
Suez Canal passage for Israeli cargoes, which can be revoked at
any time. Even the modest, indeed almost meaningless, proposal
that the United States, on Israel's behalf, sound out in neighbor-
ing capitals the possibility of a "termination of the state of
war" touched off a heated debate in the Israeli Cabinet.
Time is running out-again. It is widely believed the United States
is paralyzed by its election and Israel will be paralyzed by its own
elections in 1977. It would be tragic to let this happen. A new order of
statesmanship is required from both the Executive and the Legislative
Branches. For too long Congress has meddled or gone along without
any real understanding of Middle Eastern politics. Neither the United
States, nor Israel, nor any of the Arab states will be served by con-
tinued ignorance or the expediencies of election year politics.
A way must be found to harness the common interests of all of the
people of the Middle Ealt to the search for peace. All of them, Arabs
;s well a- Israeli", value national independence. All fear Soviet in-
fluence or, as some would p)ut it, Russian imperialism. All attach a






high priority to internal development. (Even the Iraqis took pains to
suggest that political and commercial relations are separable.) Con-
tinued hostilities are inconsistent with the aims of all states for
independence and their own national development. It is !ard to see
how anyone benefits from continued political instability in the Mi(Idle
East, except possibly the Soviet Union.
The views of respected authorities who regard the o)tio of war as
the only way out are deeply depressing. The ee a war as perhaps
better sooner rather than later because the level of potential violence
only increases as arms are perfected and(l stockpiled. Such a war would
according to this argument, bring the United States and the Soviet
Union so frighteningly close to the brink that they would accept the
alternative of enforcing a dictated peace upon the conflicting parties.
The attitudes of the Soviet Union are not a matter of public record.
It may see its interests as best served by continuing instability in the
Middle East. It may also see that such instability will inevitably lead
to a confrontation with the United States which would serve no one'
mnt ie-ts. Soviet performance should be viewed within the context of
detente. Its interests can be well served by, playing a constructive
role in the Middle East. It can enjoy the benefits of detente if it
begins in this part of the world to accept the responsibilities of detente.
One of the difficulties with the Sinai Accords was the virtuoso role of
the S,-oi, ,tarv of State which accompanied its formulation. Soviet
sensibilities, bruised then, could be assuaged by a role with the United
States in the formulation of a negotiating process and the principles
to govern an overall settlement.
It is an avenue which should be explored. If the Soviet Union
should agree to a joint search for a settlement in the Middle East,
it should be possible to develop an agreement on the general principles
of such a settlement and the multilateral process for real-cing it. If a
return to the Geneva Conference should be blocked by quarrels over
Palestinian representation, then the questions of representation might
be left to negotiation. But the other elements of a settlement, including
Israeli withdrawals and guarantees of territorial integrity, are capable
of rough definition in principles for negotiation.
All parties to the decades-long Middle Eastern conflict have some-
thing to gain from a negotiated solution, whether the objectives are
guaranteed national security, the lifting of embargoes, freedom of
trade and navigation, freedom of emigration, recovery of occupied
territory, a homeland, or unrestricted access to places of worship.
The United States, deeply and inextricably involved in the conflict
since the establishment of the State of Israel, has its own. stake in a
settlement-a much more important stake than oil or export markets.
Americans may not see the issues as those of life or (leatli, as they are
seen by the direct participants in the confrontation, but another
Arab-Israeli war risks the danr1er of war with the Soviet Union and
virtually assures a deprv-.sion in the West. This is the fatal direction
in which a continued Mid(ldle Eastern impasse leads us.












APPENDIX A


PARTIAL LIST OF OFFICIALS AND OTHERS SEEN
Egypt
Vice President Hosni Mobarek.
Foreign Minister Ismail Fahmi.
People's Assembly Speaker Sayed Marei.
Deputy Speaker Gamal Oteify.
Zakariyya Lutfi Gomaa', Chairman, Foreign Relations Committee.
Ali Hamdi al Gamal, Chief Editor, al Ahram.
Mousa Sabri, Chief Editor, al Akhbar.
Muhsin Muhammad, Chief Editor, al Gumhuriyya.
Muhamad Heykal, former Chief Editor, al Ahram.
Saudi Arabia
Crown Prince Fahd bin Abd al-Aziz Al-Sa'ud.
Ahmad Zaki Yamani, Minister of Petroleum and Mineral Resources.
Dr. Abd Ar-Rahman bin Abd al-Aziz Al ash-Shaykh, Minister of Agriculture
and Water.
Dr. Sulaiman Abd al-Aziz al-Solaim, Minister of Commerce.
Dr. Ghazi Abd ar-Rahman al-Qusaibi, Minister of Industry.
Syria
President Hafez al Assad.
Mohamad Hydar, Deputy Prime Minister for Economic Affairs.
Dr. Mohamad al-Imadi, Minister of Economy and Foreign Trade.
Dr. Adnan Mustafa, Minister of Petroleum and Natural Resources.
Amibass-ador Hamoud as-Shoufi, Department of American Affairs, Mini-try of
Foreign Affairs.
Haythain Kaylani, Director of International Organization Affairs, Mini-try of
Foreign Affairs.
Dr. Ahmad al-RajaI, Director of the Central Bureau of Statistics, Prime
Ministry.
General Jebrael Bitar, Syrian Army.
Mazin Zuwayn, Ministry of Foreign Affairs.
Iraq
Sadoun Hammadi, Minister of Foreign Affairs.
Tayib Abdul Karim, Miniister of Oil and Minerals.
Iran
His Imperial IHighness Shahan.-hah Mohammad Reza Pahlavi.
Abbas Ali Khalatbari. Minister of Foreign Affairs.
J.m Thiid Amouzegar, Interior Minister.
Dr. Akbar Etemad, Director for Atomic Energy.
Hassan Ali Achran, Governor, Central Bank.
Dr. Jafar Nadim, Under Secretary for International Organization Affairs,
Ministry of Foreign Affair-.
Israel
Yitzak Rabin, Prime MIinistor.
Yigal Alon, Deputy Prime Minister and Minister of Foreign A.\ffairs.
Shimon Peres, Mini-ter of Defense.
Gershom Schocken, Chief Editor, Haaretz.
David Ben-Dov, Deputy Director, North American Division, Ministry of
Foreign Affairs.
Professor Mordechai Abir, Hebre\-w Univ ersity.
Palestine Liberation Organi:ation (in Damascus and Beirut)
Khalid al Fahoum, President, National Council of the PLO (accompanied by
al Sittah, Member PLO Executive Committee).
Yasser Arafat, Chairman, Executive Committee.
Farouk Qaddoumi, Director of Political Department.
(22)













[From the Washington Post, Feb. 28, 1976]
APPI.NDrIX B
MIDEAST PROPOSAL OFFERED-ARAFAT URGES OCCUPIED-AREA BUFE'1:IR ZONiES
(By Don Oberdorfcr)
Palestine Liberation Organization leader Yasser Arafat h:i- proposed that
Israel create new United Nations buffer zones in two occupied Arab arn;i., as the
first step toward a Middle East peace conference and recognition of Israel's right
to exist.
The Arafat plan, which appears to be considerablly more moderate than the
formal position of Arab stall e-, was broached to Sen. Adlai E. Stevenson (D.-Ill.)
in a Beirut meeting during Stevenson's just-completed Middle East tour. After
the discussion, Stevenson took the plan to Ibrail and the United States.
According to Stev,,ii-on, there was little interest from Israel, which "rejects out
of hand any negotiation with the Palestine Liberation Organization [PLO] even
if it were on the best terms." U.S. officials studying Arafat's idea would not
comment on its merits or chances.
Previously, the PLO has not been willing to recognize Israel's right to exist.
Its traditional goal has been a secular st:tto of Christians, Jews and Moslems in
all of Palestine, including the present area of Israel. In recent months it has
hinted that it would settle for a separate Palestinian state alongside Israel.
Stevenson evidently did not ask Arafat about the ultimate future of the territory
to be placed under United Nations au-pice- in the plan he suggests.
Stevenson, in an interview, would only hint at the details of the Israeli "uni-
lateral signal" that Arafat suggested. Other sources said the plan was for Israel to
permit joint Israeli-United Nations administration of buffer zoiir-, contiguous to
Israel in the West Bank and Gaza, and turn over the remainder of those two
occupied areas to the United Nations.
If Israel makes this first move, Arafat indicated, the PLO would then recognize
Israel's right to exist, which could break the Israeli-PLO deadlock and lead to a
general peace conference at which the seemingly intractable issues of the Middle
East could be settled.
Stevenson declined to characterize Arafat's san,.-iion as a "hard proposal"
but called it "an offer." The PLO leader "wanted to get this around," the senator
said.


(2;)






24

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He added that he was told by Arafat and his aides that the plan is a new one.
Steven-ton said it had been broached previously by PLO leaders to Egyptian Presi-
dent Anwar Sadat.
Syrian President Hafez Assad, who is now crucial to diplohimnatic movement in
the Middle East, was reported by Stevenson to be "hard as nails" on complete
Israeli withdrawal from occupied areas as a precondition to negotiations. But
Stevenson .,aw the Syrian leader before niicting with Arafat. The senator quoted
Arafat as saying Syria would go along with his plan.
Officially, most of the Arab countries favor an independent Palestinian state
on the West Bank and Gaza as the solution to the knotty Palestinian problem.
St*vv(.'li-0i "aid, however, that privately -leadrs of some Arab countries have
doubts about a separate PLO-dominated Palestinian state.
In convwr-atitI during his trip, "officials in all Arab states except Iraq ac-
knowldgd privately the right of Israel to exist," Stevenson said. However, there
are preconditions, such as withdrawal to pre-1967 boundaries, he said. St(ven-
son visited Egypt, Saudi Arabia, Syria, Lebanon, Iraq, Iran and Israel during his
16-day trip, .-e.inrg high officials in every place.
Since his last jilir'li'y to the Middle lantt prior to the October 1973, war, "the
situation has deteriorated and become more complicated," the senator said. He
said war in the area is "a possibility" as early as late May, when the mandate ex-
pires for United Nations forces in the Golan Heights. Stevenson rated the chincit.s
for either a war or a general diplomatic set thlment at less than 50-50 during 1976,
how, '.,r.






25

In Egypt, Stevenson found the Sadat government so weakened that "the 1'.S. is
being pressured to provide financial and economic assistance and military sales
in order to save Sadat." Hie said Sadat has heart trouble and that his government's
stability is "very much in question."
One potential source of trouble is the Egyptian armed forces, which were
hurt by the breakdown in relations with the Soviet Union. Soviet Mlig engines
have burned out, limiting Egyptian air force officers to six hours of flying per
month, Stevenson reported. He said Peking has agrn-cd to give Egypt 20 engine>.

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