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Foreign Relations of the United States

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United States Department of State / Foreign relations of the United States, 1951. The Near East and Africa

The Near and Middle East: multilateral relations,   pp. 1-342 PDF (132.2 MB)

Page 69

A. Conclusions
  1. Present economic policies are in general successful in Greece and
Turkey, but it is now desirable that increased emphasis be given to
support of the military effort and to short-term economic goals and
economic self-sufficiency rather than long-term projects.
  2. In Iran, the approach to economic assistance through loans has
not been successful, either through the International Bank or the
Export-Import Bank. A real need for economic assistance still exists.
  3. In the Near East, the government budgets and foreign exchange
needs are in general balanced, and private capital is accumulating.
Grant economic assistance is needed, however, in varying degrees in
all of the Arab countries, if the internal economic level is to be raised,
because of (a) extraordinary expenditures for military requirements;
(b) genuine capital needs in both the government and private sectors;
(c) the present failure of capital to direct itself into enterprises for
public benefit; (d) and the need for acceleration through United States
technical assistance and administration of development projects, which
can only be insured through United States grant assistance. There can,
moreover, in many countries result a more general benefit to the
economy through United States influence in governmental budget
and financial policy, etcetera, as a result of the influence gained through
this assistance.
   4. The question of grants-versus-loans hinges not only on ability of
 the individual country to repay, but on urgency of need, psychological
 background, and the possibility of the country meeting banking re-
 quirements, both in presentation and administration. Loans are avail-
 able in larger quantities; they serve to make demands more realistic;
 and they assure more careful use. However, some Arab states and
 Iran have difficulty in meeting banking requirements, and delays
 occur which result in disillusionment. Loans give less leverage to assure
 general objectives with the country concerned and do not generate
 counterpart to achieve specific objectives.
    5. Loan assistance should in general be given first priority where
 the project and country qualify and the time factor is not important.
 Loans should in many cases fit well into a background of grants,
 which can get under way quickly and can provide more favorable
 bases for the loans. Any tendency to resist loans so as to obtain grants
 should be opposed.
    6. Reactions by and between states as to what they may consider
  inequitable distribution of grants can be minimized by a regional ap-
  proach which conceals country allocations. Allocations might then be

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