423. Memorandum From the Regional Director for Near East and South Asia, International Cooperation Administration (Bell), to the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Rountree)1
SUBJECT
- Housing in Israel
Our Mission to Israel has recently raised the perennial problem regarding the appropriateness of having Israel use MSP or PL 480 local currencies to finance housing projects. While there can be no quarrel with the Department’s policy prohibiting the use of American aid funds in any manner that can be deemed an encouragement to immigration—and in general the construction of houses falls within this category—it is my definite feeling that like [as] in most things, there can and in certain cases should be exceptions to the rule.
For the past year or so, U.S. aid programs to Israel have been geared toward an accelerated industrial development program with a view to the earliest possible achievement of economic independence— assuming this can ever be achieved. In order to assist such an objective, it is clearly essential that not only must new industries be created, but these must be set up where best adapted; in a great many instances this is in virgin areas where no housing facilities exist. Thus investors, who often have sufficient capital for initial plant and equipment outlays, are precluded from their intended operations, not being in a position to provide housing for their workmen, staffs and families.
It can be, of course, argued that the housing problem is one for the GOI to resolve, but it is also a well-known fact that their resources are limited, and that they often elect to use their investment funds for what they consider to be higher priority objectives. The result, of course, is to retard essentially needed industrial development, which as pointed out above defeats—at least momentarily—U.S. objectives.
In light of the above, I believe it is entirely possible to reconcile the Department’s policy with economic expediency by lifting the present restrictions on U.S. owned local currencies to finance the construction of housing, when it is definitely established that:
- 1.
- Such construction will only be undertaken in clearly defined areas where industrial development is to be undertaken and where housing facilities are non-existent.
- 2.
- Such houses as may be built with U.S. owned funds will be reserved exclusively for the use of labor and administrative staffs of industries falling within the Israeli “priority” industrial development program and which have been recognized by the Embassy and USOM as being essential.
- 3.
- Any housing built with U.S. owned local currencies shall be made available exclusively to Israelis having resided at least one year in Israel.
I believe firmly that acceptance of the above suggestions will provide a very definite impetus to the industrial development program presently favored by the Department and ICA, without in any way encouraging increased immigration. I hope you will concur.2
- Source: Department of State, Central Files, 784A.5–MSP/12–1157. Confidential.↩
- In a memorandum to Bell dated January 10, 1958, Rountree responded: “I appreciate the care with which you have formulated the criteria you have suggested and the imaginative approach to the problem exhibited. The position still is, however, that we are not in agreement with Israel’s policy of unrestricted immigration and that aid for housing, whether for immediate use by immigrants or not, is considered as relevant to our continuing to make clear to the Israelis our views on this matter. It is because of this over-riding consideration that I do not find it possible to agree at this time to the release of local currencies for industrial housing as you suggest.” (Ibid., 784A.5–MSP/12–1157)↩