50. Memorandum of a Conversation, Department of State, Washington, November 26, 1958, 3:30 p.m.1
SUBJECT
- Economic Assistance for Israel
PARTICIPANTS
- The Secretary
- Mr. Abba Eban, Ambassador, Embassy of Israel
- Mr. Yaacov Herzog, Minister, Embassy of Israel
- Mr. William M. RountreeNEA
- Mr. William L. HamiltonNE
During a conversation on another subject, Ambassador Eban outlined very briefly plans for economic assistance applications which he said Israel would be submitting in the near future. He expressed gratitude for recent United States favorable adjustments in the size and character of the PL 480 program for Israel. However, Israel is still in financial stress because of extraordinary arms requirements.
The Ambassador noted that his government is having difficulty financing the arms offered by other countries. Israel is going ahead with the purchase of about sixty Centurion tanks from Great Britain, but for financial reasons, would have to slow the pace of its acquisition of a great many other items now available.
He said Israel’s next approach would be in the field of Development Loan Funds. It is his understanding, he said, that no funds are available from existing appropriations. However, if more money were to be appropriated in the next calendar year, Israel would present plans for projects totaling some $35 million with the hope that a larger amount of United States financing might be available than the $15 million allocated to Israel in FY 1958.
The Ambassador also indicated Israel’s desire to discuss in the near future its hope for Export-Import Bank assistance for Jordan River development. It was his understanding that the recent U.S. agreement with Jordan on the Yarmouk diversion contained two restrictions, i.e., that it would generate no demilitarized zone problems, and the water taken would be within the technical limitations of the Johnston plan. Israel is prepared to accept these restrictions for a project of its own. He said his Government attaches importance to the principle of simultaneity in development of the Jordan by the two governments interested.
The Secretary replied he did not want to sound a note of discouragement for Israel, but that circumstances were imposing increasingly severe limitations on the extent to which United States could meet, without impairing its own economy, the demands made upon it by other governments. Nevertheless, there was no question but that United States would continue to be a source of economic strength to many governments including Israel.