867N.01/6–746
Memorandum by the Director of the Office of Near Eastern and African Affairs (Henderson) to the Under Secretary of State (Acheson)
In accordance with your request, there are given below our views regarding the proposal of Mr. Robert Nathan to amend the Export-Import [Page 619] Bank Act for the purpose of financing Jewish settlement and general economic development in Palestine.59
- 1.
- The proposed amendment rests on certain assumptions, namely: that restrictions upon Jewish immigration into Palestine and land purchase will be removed; and that 100,000 Jewish displaced persons in Europe will be permitted to enter Palestine at once. These assumptions may turn out to be correct, or they may not. At all events, this question of finance, though important in itself, is only one of a considerable number of important questions relating to Palestine which should be considered and weighed together by the Cabinet Committee which is being organized. That Committee is, or soon will be, the proper body to determine, in consultation with the British, etc., the financial needs of Palestine and the extent to which and the manner in which the United States Government should assist. Enactment of this legislation at this time would jump the gun.
- 2.
- From the point of view of our relations with the Arab world, this legislation would have an extremely bad effect because of the recognition of the Jewish Agency as “an appropriate borrower” under the Act, The Jewish Agency, in theory, acts as the representative before the Government of Palestine of all Jews, Zionist and non-Zionist. It is so recognized under the Mandate, and, as Mr. Nathan points out, is authorized to develop the country’s natural resources under supervision of the Government. In fact, however, it is a Zionist-dominated organization and is regarded by the Arabs as the principal agency by which the Zionists are moving to achieve economic and political domination of Palestine. The Arabs would, therefore, regard such a provision as clinching evidence that the United States Government will back Zionist political aspirations in Palestine by its overwhelming economic and financial power. Moreover, the Arabs would jump to the conclusion, however unwarranted, that since no Arab borrowing agency is mentioned, they would receive no benefit, or that their benefits would be controlled by this Jewish organization. It is precisely because of the extreme care with which proposals of this sort must be considered, that the Cabinet Committee is being formed.
- 3.
- The Export-Import Bank is perfectly capable of deciding what organization or organizations are acceptable as borrowers. Its judgment in such a matter should not, as a matter of principle, be restricted in any way.
In conclusion, we would suggest that, if possible, Mr. Nathan’s proposal be turned over to the Cabinet Committee, when formed, for appropriate consideration. If an immediate decision is required, you might wish to inform Mr. Nathan orally that work on the report of [Page 620] the Anglo-American Committee of Inquiry will have to reach a somewhat more advanced stage before the Department will be able to take a position on legislation of this type.