Memorandum of Conversation, by the Secretary of State1


Subject: Developments Affecting Israel

Participants: The Secretary
Mr. Henry Morgenthau, Jr.2
ANE—Mr. Rockwell


Mr. Morgenthau called upon me at his request. He said that he was leaving within a week for Israel in connection with the fund-raising activities of the United Jewish Appeal and before his departure wished to exchange views with me.

Development of the Jordan Valley and Loan to Israel—Mr. Morgenthau expressed himself as being very interested in the peace and development of the Near East as a whole, and particularly in the development of the Jordan Valley. He said that he had heard that the negotiations between Israel and Jordan were going pretty well and wondered whether if peace were signed between these two countries it might not pave the way for a scheme of developing the whole Jordan Valley for the benefit of Israel and the Arab States bordering the river. Mr. Rockwell stated that in addition to the large amount of funds necessary for such a plan, the political agreement of all the states involved would be essential. Although talks were now going on between Israel and Jordan, there was a stalemate over the width of the corridor between Jordan and the Mediterranean, and political agreement between Israel and the Arab States would unfortunately probably not be reached in the near future. Mr. Rockwell added that the reports of the Clapp Mission3 suggested certain development projects which might be forerunners to a much larger scheme, and which might show all the Arab States the benefits to be obtained from cooperation for large scale development. Mr. Morgenthau said that he had not seen the second Clapp Report but would be most interested to read it. He was disappointed to learn that the second report did not envisage development projects in Israel, but seemed satisfied when it was explained that one of the primary factors in the selection of areas for development was the presence of Arab refugees.
Mr. Morgenthau then inquired whether I thought it would be possible for a United States Government loan to Israel and Jordan to be arranged in order to put an Israeli-Jordan development scheme into [Page 672] effect. He was certain Mr. Ben-Gurion would ask him this. I said that as he knew, the President was very much interested in the development of the Near East, particularly in the Tigris-Euphrates project, but that a political settlement in the area was first necessary. I did not know how such development might be carried out—perhaps it could be done through the United Nations. I said that the Department was now concentrating on United States participation in the program envisaged in the Clapp Reports, and on the Point Four Program. Mr. Rockwell mentioned the fact that Israel had not yet exhausted the $100,000,000 credit made available by the Export-Import Bank.
Mr. Morgenthau then inquired whether I thought that if peace were restored in the Near East it would be possible for the United States Government to contribute to large scale development schemes in the area. I said that I thought such projects, if bankable, would probably be of great interest to such agencies as the World Bank, but that I could not say more at the present time.
Mr. Morgenthau asked whether this Government would have any objection to efforts by the Israeli Government to raise money in this country by such means as the sale of Israeli Government bonds. I said that I saw no objection whatsoever to such a procedure.
Haifa Refinery—Mr. Morgenthau inquired whether any progress had been made on the question of reopening the Haifa Refinery.4
I explained the background on this, saying that I had on several occasions discussed the matter with Mr. Bevin,5 and added that at the present time a stalemate seemed to exist in view of the Iraqi refusal to permit oil to run through the pipeline. Mr. Morgenthau referred to Prime Minister Ben-Gurion’s previous offer to permit all the output of the pipeline to leave Israel for Europe over a period of several months if the pipeline could be opened.
Shipment of Arms to Egypt by Great Britain—Mr. Morgenthau commented that Britain seemed to be taking a helpful attitude in the Near East by pressing the Iraqis to open the pipeline and by encouraging negotiations between Israel and Jordan. For this reason he found it odd that the British were now shipping arms and heavy military equipment to Egypt, an action which did not contribute to the stability in the Near East because the Israelis felt obliged to spend large sums for armaments in order to keep up. Mr. Morgenthau felt that it would strengthen the stability of the Near East if the British, at least for the present, would cease shipping arms to Egypt.
I outlined to Mr. Morgenthau the background of the British position, pointing out the treaty obligations of Great Britain to Egypt [Page 673] and the other Arab States and the criticism to which Mr. Bevin had been subjected because of failure to ship arms to Egypt as soon as the Palestine war was over. The Egyptians had particularly referred to the fact that they had received no arms while the Palestine embargo was on but that Israel had received large quantities from other sources, such as Czechoslovakia. I said that I felt that I could understand Mr. Bevin’s situation, and that we must realize that Egypt probably played an important role in the British plans for overall defense of Near Eastern security.
Mr. Rockwell stated that the Department had been keeping a close watch on developments affecting Palestine and that no information had as yet been received which would lead to the conclusion that Egypt or any other of the Arab States had any serious intention or immediate plans for renewing hostilities. He added that the Department understood that plans for the delivery of heavy equipment to Egypt called for this delivery to take place over a period of three or four years. We thought that Egypt had so far received from Great Britain mostly light equipment.
Mr. Morgenthau asked whether the Department thought that Egypt was planning to attack Israel and I said that we did not think so. Mr. Morgenthau said that Israel certainly did not plan to attack Egypt, and Mr. Rockwell and I agreed. Mr. Morgenthau commented that it was unfortunate that mutual suspicion was causing good money to be spent for unproductive purposes.
Jerusalem—I stated to Mr. Morgenthau that we had found very unfortunate the action taken by the Arab-Catholic-Slav bloc in the United Nations concerning Jerusalem. We felt that the resolution which was passed was unworkable. Although we thought the proposal of the Palestine Conciliation Commission was somewhat complicated, we felt that it provided the basis for a satisfactory settlement and believed that it should be possible to work out such a settlement, taking the Commission’s proposal as a starting point. One of the difficulties in arriving at an agreed solution was the rather unconciliatory attitude taken by the Israeli and Jordanian authorities, both in the United Nations and outside. I said that the Vatican had now strengthened its bargaining position, but that I thought that the Vatican realized that the resolution was a bargaining position and not something which could easily be put into effect. Under the circumstances, we hoped that the Israelis would resume their conversations with the Vatican. We do not think it would be difficult to work out a system of United Nations custodianship for the Holy Places, with Israel and Jordan administration of their respective areas of the city. I said that I had explained all this to Mr. Sharett when he was last here, but that I thought Mr. Morgenthau would be interested in having this Government’s [Page 674] point of view on the Jerusalem question. He said that he was most interested and while in Israel would bear in mind what I had said.

Mr. Morgenthau then inquired whether the Department thought that the Israeli Diplomatic Mission in Washington was doing a good job. I said that I thought Mr. Elath was a very good Ambassador. Mr. Morgenthau mentioned reports that Ambassador Elath was to be transferred to India. I said that I also had heard these.

Mr. Morgenthau then thanked me and took his departure.

Dean Acheson
  1. Drafted by Mr. Rockwell.
  2. Prominent American Zionist leader and former Secretary of the Treasury.
  3. The United Nations Economic Survey Mission for the Middle East, the Chairman of which was Gordon R. Clapp.
  4. For previous documentation on this subject, see Foreign Relations, 1949, vol. vi, pp. 91 ff. and pp. 594 ff.
  5. Ernest Bevin, British Secretary of State for Foreign Affairs.