NASSER'S PROSPECTS FOR SURVIVAL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R00967A001200020012-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 19, 2016
• Document Release Date: November 1, 2006
• Sequence Number: 12
• Publication Date: June 15, 1967
• Content Type: MEMO

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C E N T R A L I N T E L L I G E N C E A G E N C Y
15 June 1967
SUBJECT: Nasser's Prospects for Survival
1. The loud demands in Egypt that Nasser continue in office,
even though they may have been partly engineered by the leadership,
had the intended effect of at least momentarily strengthening
Nasser's popularity. The immediate traumatic effects of the
staggering defeat impel the Egyptians to stick with Nasser and
seek other scapegoats. The widely believed allegation of US and
UK military involvement may offset the criticism which otherwise
would have been directed at Nasser for the defeat. In the UAR,
moreover, there is no obvious alternative to Nasser, nor do we
have any reliable indications of plotting among the top ranks
to replace him. We conclude that he is not likely to be replaced
at least within the next month or so.
GROUP 1
Excluded from automatic
S-E-C-R-E-T downgrading and
declassification
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2. Nonetheless, the military debacle has undoubtedly raised
serious doubts about Nasser's leadership in important segments of
the population and even diminished his authority among key figures
of the regime. Despite the grant of extensive personal powers
from the rubber stamp parliament, he may be forced to depend much
more than in the past on the consensus of his top associates.
The resignations of Abdul Hakim Amer and other senior officers
indicate disagreements and conflicts within the officer corps
and raise questions about the capability of the armed forces to
provide Nasser the kind of support on which his authority has
depended in the past. The wholesale changes in the military
command are probably designed at least in part to head off unrest
among the officers over Egypt's defeat. We know little of the
political attitudes in the officer corps, however, and are unable
to judge the extent of such unrest.
3. Over the longer term Nasser's chances for survival appear
more questionable. He probably will not be able to convert this
debacle into a positive political victory as he did in 1956. As
the extent of Egypt's humiliation becomes known, resentment against
him is likely to grow. We expect that at a minimum disillusionment
over Nasser's performance will probably manifest itself in greater
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discontent within Egypt than he has hitherto faced. If this unrest
becomes particularly strong within the military establishment it
might in time even lead to a coup. Nasser is undoubtedly well
aware of these dangers. For one thing he will seek to reequip
the armed forces and will hope that this will help ensure their
loyalty. He is also likely to seek to disarm his opposition by
adopting a tough stance in the political and diplomatic arenas in
an effort to identify his enemies with Israel and the West.
4. Nasser's longer range future will depend in some degree
on how the problems raised by the present situation are sorted
out. Unless he can appear to score political and diplomatic
successes against Israel and the West, his standing inside Eygpt
will weaken further. In seeking any settlement there are clear
limits to his freedom of maneuver. Any move by Nasser to come to
terms with the Israelis, for example, would run counter to his
efforts to recoup his stature among Arab nationalists generally,
and would thus tend to weaken him within Egypt. It would also
risk touching off a radical reaction within the Egyptian military,
particularly as Nasser's control may have been weakened by the
recent personnel changes.
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5. In the months ahead, the prevailing mood in the Arab
world is likely to be one of extreme frustration. Arab solidarity
will be severely strained under the pressures of self-interest
of individual Arab states, recriminations over failures, and
bickering over future tactics. Certain longstanding Arab con-
troversies, suppressed during the crisis with Israel, will be
resumed. These trends would of course add to Nasser's diffi-
culties in maintaining his leadership at home.
Economic Aspects of the Situation
6. The Egyptian economy has for some time been laboring
under a severe hard currency crisis. Inability to service the
foreign debt of over $2 billion* has made it almost impossible
for the UAR to borrow further sums abroad. The UAR's gold and
foreign exchange reserves dwindled to $138 million in March 1967,
as Cairo continued to sell gold to meet part of its obligations.
Defaults on payments due to the International Monetary Fund have
dimmed hopes for assistance from that source. These problems have
been aggravated by the UAR's relatively poor cotton crop this year,
with exports some $50 million less than normal.
Including $1.2 billion in hard currency obligations to the
Free World.
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7. While to the best of our information the war itself has
done little damage to the country's agriculture and industry, it
has worsened Egypt's hard currency problems. The UAR is currently
suffering a loss of about $30 million per month -- about half of
its normal hard currency earnings. Closure of the Suez Canal
deprives Egypt of about one-third of its hard currency earnings.
When the Canal will be reopened is more a matter of political
decision than of physical obstruction. The Israelis have captured
UAR oil fields in Sinai which have been providing oil worth
$5 million a month in hard currency. Fields remaining under
Egyptian control, including the new El Morgan field, meet only
about 75 percent of the UAR's domestic oil needs. The UAR has
also lost tourist receipts amounting to about $5 million a month.
8. These losses from the war are in addition to the
approximately $25 million per month deficit Egypt has been
incurring on its hard currency account over the past year. This
shortage has been temporarily alleviated by grants of foreign
exchange from Communist China ($10 million) and Kuwait ($28 million).
Such sums should ease the impact of foreign exchange losses for at
least a month. The UAR probably will receive some additional
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loans and grants in the weeks ahead from both Arab and Communist
countries. Meanwhile, the UAR must face the problem of making some
provision for its hard currency debt funding of almost $250 million
due in 1967.
9. The war itself has not seriously affected the UAR's food
situation which was already tight. Soviet deliveries against a
pledge of 400,000 tons of wheat will begin arriving this month, and
Communist China has pledged 150,000 tons. In addition, Egypt's
current wheat crop of 1.6 million tons is now being harvested.
The domestic crop, plus scheduled imports, are probably enough
to meet the UAR's grain needs until December. The USSR could cover
Egypt's food needs for some time, especially in view of its bumper
crop in 1966, but the Soviets would be reluctant to assume a long-
term obligation in this respect.
10. By and large the Communist countries are not in a
position to provide the kind and quantity of goods the UAR now
gets from the West. The UAR still relies on the West for the
supply of machinery and spare parts for most of the old estab-
lished industries and most of its requirement for sophisticated
electrical equipment, chemicals, and fertilizers, all of which
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VW' 1qW
S-E-C-R-E-T
must be paid for in hard currency. Since industry accounts for
almost a third of GNP, an import curtailment from the West would
have severe and fairly immediate impact on the modern sector of
the economy.
11. If the Canal remains closed, if Israel retains control
of Sinai, and if Egypt receives no substantial financial aid,
economic difficulties will become considerably more onerous as
time progresses. These will be largely manifest in the cities,
where unemployment, shortages, and inflation will probably cause
some unrest. While these troubles in themselves would not be
likely to cause insurmountable problems of political control,
they could add substantially to any pressures within the regime
for a change of leadership.
12. It is clear from the above that Nasser's ability to
cope with his various economic, military, and diplomatic problems
depends heavily on the attitude of the USSR. We have no doubt
that Moscow is now bent on restoring its influence in the Middle
East. But it is by no means clear how far the USSR is prepared
to go, particularly in terms of financial and military aid, to
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bolster Nasser's personal leadership. It is likely that Moscow
is still reviewing the situation and is not yet prepared to make
major and long-range commitments. While we believe that the
USSR will decide to give Nasser substantial support, it may be
that Moscow will view his demands for diplomatic backing and
particularly for military and economic aid as excessive. The
Soviets would thus have an incentive to move Cairo back toward
normalization at least of its economic relations with the West.
This would give difficulties for Nasser at present, but he might
in time judge that he could move in this way and still survive
politically.
SHERMAN KENT
Chairman
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MEMORANDUM FOR: The Y a ctor
In preparing this Memorandum, ve had the
particular assistance of Ql ; representatives
of OCI and DDP/ME have expressed concurrence.
D1 rector
National least irag tes
1 June 1967
(DATE)
FORM
US10-101
MAY FORM
AUGN 54 'OI WHICH REPLACES
ED.
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