Foreign Relations of the United States, 1958–1960, Arab-Israeli Dispute; United Arab Republic; North Africa, Volume XIII

42. Memorandum of a Conversation, Department of State, Washington, October 17, 1958, 1:45 p.m.¹

Washington, October 17, 1958, 1:45 p.m.

PARTICIPANTS

• Mr. Abba Eban, Ambassador of Israel
• Mr. Yaacov Herzog, Minister, Embassy of Israel
• Mr. Avraham Salmon, Economic Counselor, Embassy of Israel
• NEA—William M. Rountree
• NE—William L. Hamilton

Following a brief discussion of weapons and other military equipment, the discussion turned to the possibility of increasing economic aid to Israel. Ambassador Eban had raised this as an alternative in a previous conversation when it was disclosed to him that we are not prepared to give arms to Israel or assist in the procurement or the financing of military equipment from other sources.²

Mr. Rountree recapitulated concessions already made to Israel which he characterized as being substantial. These included the one hundred 106-mm anti-tank recoilless rifles with a credit of $1,000,000 for their purchase; the consent to licensing various categories of ammunition; multi-barrel machine guns for anti-aircraft defenses; and 1,000 conventional machine guns. To these he could now add our consent to the licensing of the requested S–58 Sikorsky helicopters. The related question of our consent to Sikorsky supplying a specific military configuration depended on what modifications of the basic type the Israelis have in mind, but he anticipated no difficulty on this point.

With reference to Israel’s suggestion of economic aid level adjustments, Mr. Rountree dismissed the situation by categories as follows:

(1) Special Assistance Funds are all but completely committed and the possibility of increasing Israel’s allotment is very remote.

(2) As for Development Loan Funds, Mr. Rountree said that applications on file, which the United States Government views with favor, already exceed the available lending authority. There is, therefore, no prospect for DLF help to Israel at the present time. Some thought has been given to asking Congress after the first of the year for supplementary appropriations which if authorized would permit the consideration of applications from Israel.

(3) Mr. Rountree said he personally had assumed PL 480 held out the best possibility of assistance but his study had revealed several complications such as the involvement of numerous government agencies and procedural issues far beyond those present in the Israel program itself. Removing the normal marketing requirement has been suggested, but this is a concept we wish to preserve. It is his personal hope, Mr. Rountree said, that we can provide some relief through PL 480 but he felt this is a question on which the Secretary would want to consult Mr. Dillon when the latter returns from his present trip.³ Nevertheless, the door is not closed.

Mr. Eban expressed appreciation, not only for the concessions already made, but the spirit in which the Israel problem had been approached. He noted that while the helicopters are very important, every concession of this kind has its counterpart of anxiety in the economic field.

The Ambassador stated that the negotiations with the United Kingdom on the Centurion tanks are not going very well. The British had only recently asked the Israelis how they expect to pay and inquired as to the results of their discussion of their financial problems with the United States. He said it had been made clear to the British that consummation of the Centurion transaction is dependent on Israel’s being able to afford the tanks, weighing Israel’s need for them against over-all national requirements. The British had been told, he said, that Israel’s negotiation with the United States was not directly related to the tank transaction. The Ambassador observed that Israel’s improved relationship with the British is of great importance and Israel would not like to fail to benefit for lack of the economic strength necessary to hold up its end.

Ambassador Eban pressed hard for an estimate of how much assistance Israel might expect if means are found under PL 480, Mr. Rountree said that he did not know what, if anything, would be possible. It was his impression that if we were to eliminate the normal marketing requirements completely, Israel might find itself with something like $12,000,000 in foreign exchange to divert from commodity purchases. However, there is no possibility of such a decision, and he doubted that any modifications we might make would amount to half that sum.

Ambassador Eban said the Embassy’s economists had some proposals on types of commodities with which we might assist Israel under PL 480 to provide meaningful releases of foreign exchange. They could also suggest some development loan fund projects. Mr. Rountree said that such suggestions could provide a useful reference in our own studies.

The Israelis said they would be grateful if a firmer estimate of possible assistance would be available before Mrs. Meir leaves the United States early next week. Mr. Rountree replied that this would be very difficult in view of Mr. Dillon’s absence which, he believed, would continue through October 26.

1. Source: Department of State, Central Files, 784A.5–MSP/10–1758. Secret. Drafted by Hamilton on October 21 and initialed by Rountree. A briefing paper for the meeting, October 17, is ibid. A summary of the conversation was transmitted to Tel Aviv in telegram 310, October 18. (Ibid., 784A.56/10–1858) Following the discussion of the arms request, Eban and Rountree talked briefly about the situations in Tunisia and Iraq. A memorandum of this part of the conversation is ibid., 780.00/10–1758.
2. See Document 39.
3. Dillon was in Geneva for the 13th session of GATT.