I wanted to make Chase’s presence more visible and effective, but we were late in arriving and encountered serious obstacles everywhere. Tough legal restrictions prevented direct branching by foreign banks in almost all the oil-producing states of the Persian Gulf. And hard-line Socialist governments in Egypt, Iraq, Syria, and Libya were actively hostile to foreign investment and foreign banks. While it was possible to do business with these governments, it was not easy, and with the exception of Egypt, we soon terminated our relationships with them.
For the region as a whole, however, it was the conflict between Arabs and Israelis that posed the greatest obstacle and the greatest potential danger to Chase, particularly because of our determination to do business with both sides. Inevitably, I became involved in the complex politics of the region, both as an agent for change and an object of controversy.
CHASE AND ISRAEL
Even at the time of my 1953 trip, Arab-Israeli enmity was an intractable reality. The leaders of the frontline Arab nations—Syria, Lebanon, Jordan, Iraq, and Egypt—refused to recognize Israel and vowed to “drive the Zionists into the sea.” While the 1947–48 conflict ensured Israel’s survival, it also created a quarter of a million Palestinian Arab refugees, most of whom eked out a marginal existence in camps run by the United Nations Relief and Works Agency for Palestine Refugees (UNRWA) in the Near East in Lebanon, Jordan’s West Bank, and Egypt’s Gaza Strip. Peggy and I visited two of these camps in southern Lebanon in 1962 and were appalled at the atrocious conditions under which the refugees lived, with little or no prospect that the situation would improve.
On the other hand, the Jewish people, after the horrors of Hitler’s Holocaust, now had a nation of their own. The Jews had a powerful moral claim on the conscience of the world, one that had a particularly strong resonance in the United States. The American commitment, which began with President Harry S. Truman’s solid support for the creation of the Israeli state in 1948, gradually strengthened and expanded over the years. It is a great tragedy that an equitable division of land between the Palestinians and Israelis was not accomplished at the most opportune moment in 1948. Sadly, because of the failure to resolve this issue, the world has had to live with the consequences ever since.
Initially, Chase’s business with Israel was quite limited. We had a correspondent relationship with the Israeli central bank and a small number of private banks, but the flow of business was limited, largely because the Socialists who dominated Israel’s government for almost thirty years were not especially welcoming to foreign banks. However, one financial connection was of great significance for both Chase and Israel. In 1951 the Israeli government selected Chase as the American fiscal agent for Israeli bonds. The sale of these bonds produced a huge flow of funds critical to Israel’s economic development. Chase handled the interest payments on these bonds and provided other custodial services for a fee, a business that turned out to be quite profitable and also strengthened our relationship with Jewish organizations in the United States.
Chase’s business with Israel, many Arab governments, and the major oil companies grew significantly in the 1960s. We attempted to walk a tightrope of commercial neutrality in the region, but from time to time we would hear complaints from the Arab world that we were contributing to the well-being of the Zionist state and should refrain from doing so.
BOYCOTT
In May 1964, Chase received a letter from Anwar Ali, the governor of SAMA. The letter was blunt and to the point.
The Commissioner General of the Israeli Boycott Office of the Arab League has received information from certain banks that your bank is the headquarters for promoting the sale of Israeli bonds in all the states of the world and that your bank is the financial agent of the Israeli bonds and it performs all the technical services required of the issuance of these bonds. Your bank is also responsible for the appointment of the foreign banks which work as your correspondents for these bonds in foreign countries.
Furthermore, it has been alleged that your bank gave El Al Israeli Airlines Ltd. a loan for the purchase of its requirements for its aircraft and spare parts; thus you are clearly supporting the Israeli economy. The above two actions will subject you to two of the principles of the Israel boycott, any one of which will lead to stoppage of dealings with you.
I am to express the sincere hope that the Chase Manhattan Bank, in view of its important relationship with us and other Arab countries, will extend its maximum cooperation in avoiding any action which may be construed as jeopardizing its existing happy relationships with our group of countries.
A few weeks later the thirteen Arab League countries voted “to ban dealings with the Chase as from the first of January 1965.” Anwar Ali informed us that the “ban can be obviated if your bank should cancel its financial agency for the Israeli loan bonds and all relationship with these bonds and undertake not to extend any further loans in future to any person or institution in Israel.”
If the Arab states carried out this threat, we would have had to close our Beirut branch, and approximately $250 million in deposits (mostly from SAMA) would be withdrawn. To make matters worse, ARAMCO, the Arabian American Oil Company, a consortium made up of Standard Oil of New Jersey, Mobil, Chevron, and Texaco, which held the exclusive rights to develop Saudi Arabia’s oil reserves, informed us that unless an acceptable solution could be found, they would be forced to stop doing business with us as well. Chase stood to lose tens of millions of dollars in deposits and earnings.
Fortunately, this worst-case scenario never materialized. Both Saudi Arabia and Egypt were responsive to the argument that in serving as a banker for Israel we were simply discharging our responsibilities as an impartial and apolitical international bank. In the end these two influential countries refused to accept the economic consequences a boycott would inflict on them as well. In addition, the U.S. government acted forcefully to defend us, and the threat of a general Arab boycott subsided.
I had learned a valuable lesson from this tense and worrisome time: If Chase was to survive future crises, I needed to develop a better relationship with the leaders of the Arab world.
NASSER
In the 1960s, if one wanted to have influence on politics in the Arab world, Gamal Abdel Nasser was the man to meet. Although many in the United States considered him a dangerous rabble-rouser, in his own region Nasser was a respected and charismatic figure, the prophet of a new Arab nation who refused to compromise with the “Western imperialists.” Nasser had stood his ground during the Suez Crisis of 1956, first nationalizing the waterway and then weathering a British-French-Israeli invasion aimed at toppling him from power.
Nasser emerged from the Suez crisis as a hero. He consolidated power in Egypt and then stepped forward as the leader of the radical, modernizing forces within the Arab world. Millions throughout the Arab world listened to Nasser’s weekly broadcasts over Radio Cairo, where he exuberantly outlined his colorful, if somewhat vague, vision of a Pan-Arab Socialist utopia, and attacked the traditionalist regimes of the Gulf.
Eugene Black, who had joined the Chase board in the early 1960s, felt the Anglo-American refusal to finance the Aswan High Dam at the time of the Suez Crisis had been a disaster and had driven a reluctant Nasser into the arms of the Soviets. Gene insisted Nasser was much more flexible and less hostile to the West than his public pronouncements suggested. He believed contacts with Western businessmen would help persuade Nasser to adopt a more moderate position, and, in the wake of our brush with the Arab boycott, encouraged me to meet him.
Gene arranged my first meeting with Nasser in December 1965, and we met in his modestly furnished office in a small, nondescript building not far from the Cairo airport. Photos of Nasser with foreign government leaders crammed every available inch of space on his desk and surrounding tables and bookshelves. Included among them were autographed photos of Nikita Khrushchev, Zhou Enlai, Jawaharlal Nehru, and Josip Broz Tito, the latter two leaders with Nasser of the Non-Aligned Movement.
Most of the others were from third world or at least Socialist countries. I do not recall any from Western Europe and none from the United States.
Nasser and I candidly discussed the Middle East situation, during which he passionately denounced unconditional U.S. support for Israel. Despite his obvious displeasure with U.S. policy, he said he would welcome my keeping in touch with him through the Egyptian ambassador in Washington. I reported this to the State Department, but the Johnson administration was consumed by the expanding Vietnam War and was either unwilling or unable to consider implementing a more balanced policy in the Middle East. I had the feeling that Washington hoped the Middle East would not boil over while it focused on more urgent matters. That was wishful thinking.
AFTERMATH OF WAR
The situation in the Middle East worsened after the 1967 Six-Day War. Israel’s decisive preemptive strike crippled Arab military forces almost before they got out of their barracks. The Israeli army seized the Sinai Peninsula and the Gaza Strip from Egypt, the Golan Heights from Syria, and East Jerusalem and all of the West Bank from Jordan. Arab leaders who had boasted for years that they would destroy the Israelis were humiliated, and their reaction was sharp and immediate. They viewed our military resupply of Israel during the fighting as a hostile act and immediately severed diplomatic relations with the United States.
Soon after the fighting ended, Charles Malik, a former foreign minister of Lebanon and former president of the U.N. General Assembly, called on me at Chase. Malik was a man of impeccable integrity, and I respected him greatly. He told me the Arabs were very angry with the United States because we had acquiesced in Israel’s occupation of Arab land and seemed unconcerned about the hundreds of thousands of new Palestinian refugees caused by the war. Malik said Americans claimed to have deep humanitarian sympathies, but most Arabs perceived us as concerned only about Israel.
Malik’s visit forced me to think about the war’s impact on the people of the Middle East, in particular the refugees. I called James Linen, the publisher of Time magazine, and Arthur K. Watson, who ran IBM World Trade Corporation and chaired the International Chamber of Commerce, and told them of Malik’s visit. They agreed something needed to be done to show there was concern and sympathy in the United States for the new Palestinian refugees.
Since the U.S. government’s hands were tied by the break in diplomatic relations, we had to act on our own. We established Near East Emergency Donations (NEED), and persuaded former President Eisenhower to serve as honorary chairman. We enlisted the support of a number of prominent Jewish leaders, including Edgar Bronfman, the chairman of Seagrams, to demonstrate that our effort was broad-based and nonideological.
We raised almost $8 million in just over four months, most of it from the major American oil companies. I contributed $250,000 to the effort, which the Rockefeller Brothers Fund matched on behalf of the other members of my family. We turned over the funds to UNRWA for distribution.
Early the following year I toured the refugee camps in Jordan to see firsthand what the conditions were. One camp stood forlornly on the bleak, treeless slopes above the Jordan River valley. It was mid-winter when I arrived by helicopter from Amman, and a cold, bitter wind was blowing from the north. The ground was muddy from melting snow. There were no permanent structures, only floorless tents standing in a sea of mud. More than one thousand people lived there without adequate sanitation or running water, and barely enough food to sustain them. I vividly remember a small child sitting in the bright sun wearing a white hooded jacket. She never moved, even when the crowd shoved past her. These people were living in sight of their former villages on the West Bank but had not been allowed to return. There was a sense of hopelessness about them, but also a deep anger.
It was the anger and desperation of the refugees that were the most enduring legacies of the Six-Day War. They fueled the radicalization of the Palestinians and the emergence of Yasser Arafat and his Palestine Liberation Organization (PLO). Before the war, the refugee problem had been manageable; afterward, the PLO emerged as a separate and strident political force with its distinct objectives, particularly the creation of an independent Palestinian state. Arafat and his followers were no longer content to allow Egypt and the other Arab states to carry on the struggle for them or, as they saw it, to sell them out when it was to their advantage to do so. Another element of instability had been introduced into the regional equation that would make a resolution of the Arab-Israeli conflict even more difficult to achieve.
A few days after visiting the refugee camp, we went on to Beirut. A ceremony had been arranged in which I would hand over a check from NEED in the amount of $1 million to Ian Michelmore, commissioner general of UNRWA. Still disturbed by the scenes I had witnessed, I put aside my prepared remarks and said:
When a group of private American citizens established NEED to provide emergency funds to aid the refugees, we were only partially aware of the character, scale, and intensity of the problem. Now some of us have seen it for ourselves, and we are conscious not only of the humanitarian challenge that it presents, but also of the urgency in finding a solution to the problem. These refugees, some of them in flight for the second time in twenty years, are victims of political conditions over which they have no control. Their plight is a rebuke to a world that is unable to find and implement a just solution to their problem. I am convinced that until this is solved, there will not soon be peace in the Middle East.
While NEED by itself could do little to relieve the enormous distress of the refugees, the effort at least demonstrated that there were American citizens who wanted to help. We also sent a message to both Arab leaders and American politicians of the urgent need to balance all the conflicting interests within the region before the situation deteriorated any further. Sadly, four decades later, such a balanced policy still remains beyond our grasp.
THE SEARCH FOR BALANCE
The new political conditions that emerged after the 1967 war made it imperative for me to maintain regular contact with Arab leaders. Doing that became more difficult, however, since a number of these nations had severed diplomatic relations with the United States, and the level of hostility toward the West had increased dramatically. Since most Arab political leaders could not or would not come to the United States, I began to travel to the Middle East much more, often twice a year.
Gene Black, who served as a financial advisor to the emir of Kuwait, encouraged me to improve my personal relationships with these Arab leaders. If they respected me and felt confidence in my fair-mindedness, he pointed out, they would be less likely to penalize the Chase for our Israeli business. NEED’s contributions to Palestinian refugees was a good case in point; my credibility with King Hussein of Jordan and other leaders had advanced greatly as a result of this effort.
Since I was one of relatively few Americans who had access to the senior leaders in the region, I soon found myself playing the role of a diplomatic go-between. Before each of my trips in the late 1960s and throughout the 1970s I called on U.S. government officials to learn about changes in U.S. Middle Eastern policy. I would meet with the same officials upon my return to inform them of what I had seen and heard.
A MESSAGE FROM NASSER
In the autumn of 1969, shortly before a bank trip to the Middle East, Egypt’s ambassador to the U.N. came to see me at Chase. He said Nasser wanted me to know that he had not had any “meaningful contact” with the United States and hoped I would see him while I was in the area.
I recognized Nasser’s request as a potentially significant opening. Diplomatic relations between the United States and Egypt had still not been restored, and efforts to bring the Israelis and Arabs to the bargaining table had been fruitless. I decided to fly to Washington and lay the matter before Henry Kissinger, Nixon’s national security advisor. I thought it important to have the administration’s approval for the meeting before I replied to Nasser.
I was not optimistic about the reception I would receive from the Nixon admi
nistration. Nixon was a strong supporter of Israel, and during the 1968 presidential campaign he had insisted that “the balance of power in the Middle East must be tipped in Israel’s favor” and pledged to support a “policy that would give Israel a technological military margin to more than offset her hostile neighbors’ numerical superiority.”
Once in office, however, Nixon proceeded more cautiously. Wrestling with the need to fully revise U.S. foreign policy, Nixon and Kissinger began to formulate the concepts that would be used to reshape the role of America in the world—détente with the Soviet Union, the opening of China, and the “Nixon Doctrine,” which called for smaller powers to carry the burden of defense against Communist expansion and subversion in their own regions. Both men were realists and committed to an objective, almost ruthless appraisal of American objectives and the means to achieve them. Thus, at an early point in the administration, as the process of Vietnamization of the Indo-China War began, a comprehensive review of U.S. foreign policy, including the Middle East, was also initiated. So the timing of my meeting with Henry was fortuitous.
Henry and I talked at some length about Nasser’s request. Henry admitted he knew little about the region but agreed that seeing Nasser might be useful. A few days later Henry called to say that both the White House and the State Department “thought it would be a constructive thing for our government” if I were to maintain “some kind of dialogue” with Nasser. He also asked me to brief President Nixon on my return.
Memoirs Page 35