Summary of 1967 Aid Package For Israel
(April 7, 1967)
This memorandum summarizes the aid package to Israel agreed upon by the State and Defense Departments.
SUBJECT
Israeli Aid Package
State and Defense now agree on a package./2/ It doesn't give the Israelis
everything they asked for and runs lower than last year. However, on
all but one item, I think they'd have to admit we've been as responsive
as possible given our limitations.
/2/An April 4 memorandum from Katzenbach to the President with the
recommendations summarized here is attached.
Katzenbach recommends about $48 million (Israel's requests total $76
million). We've tried to be as generous as possible in balance of payments
type aid because Eshkol faces unemployment after deliberately slowing
economic growth to shake out uncompetitive industry, narrow Israel's
trade imbalance and get ready for association with the Common Market.
The package includes:
--$23.5 million in PL 480 (feedgrains, oil, maybe tobacco, no wheat).
Agriculture is thinking of 75% dollar sale. Last year dollar sale was
only 25%. I'd go only to 50% this year.
--$9 million in credit for tank and Hawk missile spares. Defense opposes
credit for normal maintenance items, but would make an exception to
beef up the package. I recommend this inconspicuous military help.
--$5 million in covert aid for Israel's anti-Communist African programs.
This is a private request from Eshkol to help with his budget and doubles
last year's program. [2 lines of source text not declassified]/3/
/3/A handwritten note, apparently in Johnson's hand, reads: "[less
than 1 line of source text not declassified]."
--About $10 million in Ex-Im loans. We can't assign an exact price
tag yet because we don't have details on the project. But we'd invite
the Israelis to submit a fertilizer project to Ex-Im instead of to AID./4/
/4/A handwritten note, apparently in Johnson's hand, reads: "No
development loans."
--We'd offer to accept Israeli bids on AID off-shore procurement for
12 months. Though the price tag is relatively small, this is important
in helping put unemployed Israelis to work. Defense is also increasing
procurement in Israel. Eshkol's Finance Minister has made a strong pitch
for this.
--We'd give the Israelis Hawk missile capability to do all their own
maintenance. This costs us nothing but cuts them in on some classified
data.
The attached charts shows where this would put us in relation to past
years. Since last year's plane sale was unusually high, I think we can
justify this FY 1967 level. We still have the desalting project to talk
out, and to emphasize that I recommend we move quickly in naming Bunker's
successor.
Katzenbach recommends we turn them down on two items:
--They asked for $20 million in Development Loans on top of the $6
million you authorized last fall from an old loan. Israel is doing so
well that it ought to be using Ex-Im rather than the softer AID loans.
Congress is grumbling about adding Israel to the list when it's trying
to limit the number of countries receiving aid. Last year we split their
request of $20 million and offered $10 million each from AID and Ex-Im.
I think this is the year to get out of AID lending and refer them entirely
to Ex-Im. They'll gripe, but this is reasonable.
--Far tougher to turn down is their request for 200 Armed Personnel
Carriers ($7.4 million). Harman tells us informally that Eshkol is personally
interested and that a turndown will trigger a violent reaction from
Jerusalem--and by implication from Israel's friends here.
I agree with State and Defense that we can't give these via grant.
A grant would amount to starting a Military Assistance Program in Israel,
since all previous deals have been credit or commercial sales. This
would be a major change in our policy not to be a major arms supplier
in the Middle East.
The real issue is whether to offer a credit sale instead. We understand
informally they'd settle for that. Katzenbach earlier recommended that
we sell 100. Now he agrees with Defense to recommend against supplying
APC's on any terms. The argument:
--We ought to keep the brakes on the Middle East arms race. When we
completed the Israeli aircraft deal in March 1965, we told Nasser that
sale completed a round of escalation. We said we didn't foresee further
sales soon unless the Soviets made more. As far as we know, they haven't,
and our December sale to Jordan was too small to affect the balance.
--We don't want to become Israel's sole military supplier, but Israel
is trying to maneuver us into that position. In our aircraft deal, we
made them agree they'd continue to look to Europe for most of their
equipment. Good APC's--unlike the aircraft--are available in Europe
at reasonable prices. Israel has 1,000 old ones, and selling even 100
opens the door to our modernizing the whole line.
--We should be tough as long as they play coy on their nuclear position.
Eshkol has invited our technicians to visit Dimona on 22 April./5/ It
will be more than a year since our last visit. Only when they report
will we know whether we should use all our leverage to make them agree
to visits every six months.
/5/Telegram 3020 from Tel Aviv, March 23, reported the invitation.
(National Archives and Records Administration, RG 59, Central Files
1967-69, AE 11-2 ISR)
--We don't think Israel needs APC's urgently. The 1,000 in operation
are World War II vintage and will have to be replaced in five years
or so. But the Israelis do a remarkable job of keeping equipment running,
and the JCS feels that immediate modernization is not essential.
--We shouldn't compensate the Israelis for our Jordan package since
that resulted directly from their attack. They won't take seriously
our counsel of restraint if we reward them now.
The strongest argument for a turndown in my book is trying to get a
grip on the Middle East arms race. The only approach that could work
is an understanding with the USSR to stop big shipments. We've probed
before, and the Soviets have shown little interest. But in the context
of persuading the Israelis to sign the Non-Proliferation Treaty, they
might show more. This is a long shot. But if you decide you can stand
the heat, a pause in sales might be worth a try. We could stand up to
Israel's friends confident that we're not just stalling. If by fall,
the NPT has come to naught, then we'd reconsider.
I've double-checked with Katzenbach, and he doesn't feel we'd be reneging
on a commitment to refuse the APC's. Even so, if you approve a turndown,
the way we couch our answer will be important. The spirit of our response
should be more "not now" than a flat "no."
My suggestion is to have Katzenbach give them our answer. I can background
Abe Feinberg, but the official request came through Katzenbach, and
I think we ought to try building him as our sympathetic but firm spokesman
to the Israelis. The key problem in US-Israeli relations is that the
Israelis like to think they have a special relationship with us, while
the State and Defense professionals treat them and the Arabs with the
same cool even-handedness. Katzenbach should be warmer and more candid,
yet still keep this in official channels.
Walt
Approve your formulation for refusing APC's
We ought to sell 100
See me/6/
/6/None of these options is checked.
Source: Johnson Library, National Security File, Country File, Israel,
Israeli Aid, 5/67. Secret; Sensitive. Received at 7:30 p.m. Rostow's
handwritten note on the memorandum reads: "Howard & Hal: Hold--but
for your guidance. Walt." None of the approval or disapproval lines
is checked, but handwritten numbers appear in the margin. A table dated
April 18, attached to Document 406, shows the President's initial decisions,
which accord with the marginal notations. (Johnson Library, National
Security File, Country File, Israel, Vol. VI) For his final decisions,
see footnote 6, Document 416.
Sources: Foreign
Relations of the United States, 1964-1968, V. 18, Arab-Israeli
Dispute 1964-1967. DC: GPO,
2000. |