1.
THE SPEY/PHANTOM
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(Previous Reference: OPD (66) 33rd Meeting, Item 2)
The Committee considered the problems being encountered in the development of the Rolls Royce Spey engine and the Ferranti navigation/ attack system.
The Committee's discussion is recorded separately.
ཊ༽
IMPLICATIONS OF THE MIDDLE EAST SITUATION
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The Committee had before then a note by the Secretaries (OPD (67) 71)
covering a report by officials on the implications of the Middle East situation for the United Kingdom balance of payments and oil supplies.
THE FOREIGN SECRETARY said that for the first six months the cost
of the Middle East crisis to the United Kingdom balance of payments
was expected to be of the order of £20 million a month with an "overhang"
of some £30 million as things gradually returned to normal. If the
orisis continued beyond the end of the year the balance of payments
loss was likely to be only slightly less. Perhaps two-thirds of the
total cost to the balance of payments was on oil purchases and freights
and in large part these increases stemmed directly from the closure
of the Suez Canal. The situation had been aggravated by the loss
of Nigerian oil supplies. The remainder of the loss was due to other
factors including a decline in exports to Arab countries, some loss of dry cargo shipping earnings and an increase in remittances to Israel.
An interdepartmental working party had been established to consider
ways of improving the security of the United Kingdom's oil supplies,
including the possibility of reducing dependence on the Suez Canal.
The situation had not changed appreciably in recent weeks and
for planning purposes we should not assume that the Suez Canal would
reopen before mid-1968. We were seeking to improve relations with the United Arab Republic (UAR) and following up his own conversations
in New York with the Foreign Minister of the UAR, Mr. Mahmoud Riad,
Sir Harold Beeley would be leaving in a few days time for preliminary
talks in Cairo. The object was to restore diplomatic relations between
the two countries and to establish personal contact with President Nasser
and enlist in our interest his influence in the rest of the Arab world.
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