CAB129-78 — Page 8

SECRET

C.P. (55) 152

14th October, 1955

Printed for the Cabinet. October 1955

CABINET

Page 8

Copy No. 7.5

MIDDLE EAST OIL

NOTE BY THE SECRETARY OF STATE FOR FOREIGN AFFAIRS

The attached report by officials shows that, if United Kingdom fuel needs during the next twenty years are to be met, our imports of oil must be trebled. The Middle East is the only source. British oil companies own investments there valued at £600 millions, and by their sales of oil abroad earn enough foreign exchange to cover the total cost of our oil transactions, including imports.

2. There is a serious danger that the Middle East will slip away from us. The Egyptians, the Saudi Arabians and now the Russians are making great efforts to undermine our position, and spending large sums of money.

3. Apart from the sums spent to fulfil our treaty obligations to Jordan and our contribution to United Nations Works and Relief Agency (Palestine refugees), Her Majesty's Government's total expenditure in the area is at present less than £21 millions a year.

4. Although the defence of our position depends primarily on the solution of major political problems, our prospects could be considerably improved by an increase in Government expenditure. A great deal could be done even within the range of £1 million a year.

5. I therefore ask my colleagues to endorse the principle in the conclusion of this report that our position in the Middle East is vital to the economy of the United Kingdom' and that Her Majesty's Government should be prepared to spend in the area on a scale more closely related to our essential interests there. The report recommends that a working party should be set up to make urgent recommendations for action in the light of this general principle.

H. M.

Foreign Office, S.W. 1,

13th October, 1955.

48912

Page 8

Page 8

Ө