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41. The creation of an Economic Committee under the Pact will develop and strengthen the economic and financial resources of the Middle East region and I am convinced that the Pact will ultimately provide a most useful machinery to forward the economic and social welfare not only of the countries who are members of the Pact but also of all the Arab States. It is particularly important, as you will agree, to raise the standard of living of the peoples of the Middle East and to give their peoples hope and confidence for the future. It is our belief that, if the benefits of increasing prosperity in the Middle East can be more widely spread, the dangers will be diminished. Already two of the countries concerned, Iraq and Persia, are devoting a large part of their increasing oil revenues to economic development. In Iraq the proportion is as high as 70%. In Persia plans are being made on similar lines. This is in contrast with Saudi Arabia whose vast oil revenues are being dissipated in expenditure on luxuries and on subversion and propaganda throughout the Middle East. The effects of development expenditure are beginning to be felt. We intend to give the countries concerned such assistance as we can with technical advice and the provision of experts. In Egypt, we intend to help with the construction and finance of the High Aswan Dam. This is a project of vital importance to the future of Egypt. It is a vast undertak- ing, which will require a combined effort by the principal Western Powers. Its construction by the West would be a proof to the Arab world that we are sincerely concerned with their economic welfare.
5. Perhaps I may give you a short outline of the reasons which led us to accede to the Pact. At the end of the war our position in the Middle East was based on our pre-war Treaties with Egypt and Iraq. In the new circumstances we wished to base our relations with Middle East countries on the concept of partnership between equal and sovereign states and we hoped that the countries of the area would themselves. join together for their common security, since division and weakness in the area, as we found in Europe, encourage the Communists to sow the seeds of distrust and disunion. We were therefore glad to sign new agreements with Egypt and Iraq based on our new concept. The new treaty which Iraq concluded with Turkey afforded us the opportunity of replacing the Anglo/Iraqi treaty by a new relationship of joint partnership in a common effort to defend the area against Communist infiltration and subversion.
6. I share your regret at the present division in the Arab world. But this division existed before the Bagdad Pact. Egypt is jealous for her leadership of the Arab world and there is long standing rivalry between the Hashemite and Saudi dynasties. It was our hope that any defence organisation would embrace all the Arab States but unfortunately Egypt felt bound to oppose the initiative Iraq had taken in concluding a Pact with Turkey. Her opposition has been based publicly not on a distaste for pacts as such, but on a claim that the Bagdad Pact would weaken Iraq in her resolution against Israel. But I can assure you that it is our aim to heal the divisions in the Arab world that now exist and you will have noticed that the Pact is open to accession by other Arab countries.
7。 We are also doing our utmost to secure a settlement of the major problem in the Middle East - the Arab/Israel dispute. I am convinced that the only way to get this is for each of the parties to this dispute to accept the other's starting-point and seek a compromise between the two. This was the purpose of my Guildhall speech. I did not attempt to specify what concessions should be made by either side. I merely analysed the situation, and pointed out that if negotiations are to have a chance both sides must move from the fixed positions which they have taken up.
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18.