Page 77
On 18th October the Cabinet decided that a Working Party should be set up with the following terms of reference:
66
With a view to safeguarding the free flow of oil supplies from the Middle East, to consider urgently-
(a) what further action Her Majesty's Government should take; including
action which involves increased expenditure;
(b) what action the oil companies should be urged to take;
and to make early recommendations, if necessary in the form of interim reports."
The Working Party's first Interim Report has been considered by the Middle East Oil Committee and is attached.
2. In considering this report, Ministers will no doubt wish to see it in perspective against the background of recent events in the Middle East. The recent Russian diplomatic offensive there, with the threat which it implies not only to our oil supplies but also to the peace of the area, raises issues of high political strategy which are outside the province of the Committee and are in any case being urgently considered elsewhere. This offensive has also prompted proposals for the supply of arms to certain countries, which are also being considered separately.
3. In due course it will be necessary to consider our longer term policy towards securing our essential supplies of oil from the Middle East. It is recommended that this study should be undertaken in the first instance by the Working Party; consultation will be necessary with the British oil companies, and with the State Department.
4. In the meantime it is necessary to initiate new measures designed to maintain and increase our influence in the Middle East. The value of these measures depends, of course, upon our real strength, both economic and military. They cannot be expected to secure our oil supplies by themselves. Although the full impact of such measures would not develop for two or three years, the evidence which they would give of increased British activity and self-confidence would have some impact upon the immediate situation. It is with measures of this kind that the Working Party's Interim Report is concerned.
5. The Working Party's Report recommends in the main an intensification of our present efforts in the Middle East. It has not been able in the time available, to go into every proposal in detail, but those proposals ((a) to (f) below) for which it asks specific approval have all been the subject of detailed examination in the past with H.M. Missions overseas, and with the home Departments concerned.
6. The Working Party's recommendations can be summarised as follows:-
(a) An increase in technical assistance
(b) A gift of lorries to the Ruler of Muscat to enable him
to ensure the security of oil operations there
(c) The establishment of a British boys' school in the
Lebanon, £120,000 (capital)
(d) Improvements in the conditions of service of Her Majesty's Foreign Service in the Middle East and in the equipment and buildings of H.M. Missions, £225,000 (capital over 3 years)
(e) A substantial increase in our information effort,
£75,000 (capital expenditure)
(ƒ) An increase in the activities of the British Council (including £175,000 capital spread over the first 3 years)
£26,000 a year
£25,000
£10,000 a year
£26,000
£45,000 (recurrent ex- penditure)
£54,000 a year
£300,000 a year
In addition there are other proposals requiring further increased trade promotion activity, assistance to medical work, help in technical
Page 77
study including
Page 77
102A
1023
2
Pagfucation and the possibility of adding an additional Labiataefandlan Off
Attaché to the Middle East establishment.
The total cost of all the above proposals would be of the order of £700,000 a year of which about £200,000 a year would be capital expenditure.
7. For budgetary purposes, the expenditure on the above proposals would fall in the main under the heading of ordinary Foreign Office expenditure, except for (e) and (f), which come under Overseas Information " expenditure. The latter covers work by the Information Services of the three overseas Departments, the B.B.C., and the British Council. The present world-wide expenditure under this heading is just under £10 millions, and the Departments had been discussing with the Treasury, before the Middle East Oil Working Party was set up, increases for next year covering the whole world. The Treasury consider that the allocation of any additional funds for overseas information work should be looked at as a whole and that the Middle East should not be considered in isolation. The necessary study of the Working Party's proposals in the wider setting of overseas expenditure on information work generally need not involve serious delay, since decisions on the general scale of overseas information expenditure in 1956-57 must in any case be reached in the next few weeks. The Committee wish, however, to draw the attention of Ministers to the fact that, unless some overall increase in information expenditure above what was previously contemplated is authorised, such study can only result in the sacrifice either of an important part of the Working Party's proposals, or of other activities elsewhere in the world. The Committee also wish to point out that, of the British Council's projects, approximately two-thirds of the expenditure proposed relate to the establishment and strengthening of schools run under British Council auspices, the subsidisation of British teachers in schools and universities, and the bringing of influential individuals to this country.
8. A further point to which the Middle East Oil Committee wish to draw the attention of Ministers is the statement by the British Council that, if they are to undertake the expansion of work proposed in the Working Party's report, they will have to close down in some ten to fifteen other countries where they now operate unless they are authorised to offer permanent employment in order to recruit new staff. This raises the whole question of the future of the British Council.
9. The Committee submit that Ministers should approve the Working Party's recommendations summarised in paragraph 6 above on the understanding that:
(i) items (a), (b) and (c) be put in hand forthwith (£36,000 per annum plus
£145,000 capital expenditure);
(ii) item (d) be proceeded with forthwith subject to day-to-day details being settled between the Department concerned and the Treasury in the usual way (£71,000 per annum plus £225,000 capital expenditure over three years); (iii) items (e) and (f), which are of equal urgency, should also be put into effect without delay, subject to the decision of Ministers on the points mentioned in paragraphs 7 and 8 above, namely, (1) whether there is to be an increase specifically devoted to the Middle East in the total overseas information expenditure, and (2) the future of the British Council (£380,000 per annum including £250,000 capital expenditure spread over the first three years).