1949 warned that Israel's extensive development program would make it dependent for the near future on large scale external financing through foreign capital investment, loans, and voluntary contributions. The NSC feared that even with American loans, Israel would be unable to achieve the development necessary to integrate an unlimited number of immigrants into the local economy. Unrestricted immigration might gradually force Israel to develop submarginal areas and to expand industrialization within the country. The Israeli government might ultimately be tempted to seek additional territory. To forestall such an event, the NSC suggested a massive economic development program for the entire Middle East through regional cooperation.( 76) Unfortunately, neither the NSC nor anyone else knew how to foster regional cooperation for economic development.
During the 1940s the states of the Arab East, regardless of their relative stage of development, sought American aid in breaking restrictive political and economic ties with Europe and advancing their socioeconomic welfare. Local elites hoped to accomplish these goals while solidifying their own wealth and power. Egypt, Iraq, Syria, and Lebanon had accumulated large sums of capital--primarily in the form of debts owed by Britain and France--during the war. Wartime restrictions and controls stimulated local industry and some infrastructural development. Yet internal and external political and economic problems plagued Arab development in the postwar period. Domestic instability, governmental inefficiency and corruption, blocked foreign balances, regional war, intense nationalism and xenophobia, and international monetary and trade policies all hindered development.( 77)
The United States supported Arab attempts at development planning and offered technical assistance. Imperial state leaders pushed for ending British and French trade and currency controls in order to allow American capital and consumer goods into the area. Policymakers emphasized the need to create conditions conducive to private American enterprise and capital. State Department officers encouraged a certain amount of indigenous economic planning so long as it reduced inefficient administration, focused on expanding primary goods production and extractive industries, and allowed moderate social reforms. Deviation from these policies meant violating free trade and comparative advantage, and this threatened America's goal of an integrated capitalist world-economy.
While favoring Arab economic development in principle, the United States gave little concrete support for such development. Policymakers contended that Arab economic growth would be a natural off-shoot of European reconstruction and the revival of multilateral trade. Officials in Egypt, Iraq, and Lebanon accepted this argument to a certain extent. But many criticized America's inertia in supplying capital and technical aid to the region. As one of the more developed states in the region--and the most willing to accept America's capitalist ideology and hegemony--Lebanon became an unofficial spokesman for its poor brethren. During the 1940s Lebanese officials, particularly at the UN, pointed to America's ineffective attempts at stimulating economic development solely