Secretary’s Memoranda: Lot 53 D 444
Memorandum by the Secretary of State to the President 1
Subject: Approval of a program of economic aid of the order of $80,000,000 to Israel for 1953
The grant program for Fiscal Year 1952 for economic assistance to Israel has been established by legislative history in the sum of $64,590,–000. This balances mathematically funds available to the Arab states for technical and economic assistance added to our contribution to the United Nations for the relief and rehabilitation of the Arab refugees from Palestine.
In a Note to the Department dated November 19, 1951, the Israelis have requested assistance totalling $126 million for Fiscal Year 1953. This amount is part of a three-year program of investment looking to the ingathering of an additional 600,000 Jewish people. This program is considered excessive. Israel cannot hope to become viable economically with such numbers of new immigrants. Such a program would increase international tensions in the area.
Alternative programs of assistance have been submitted to the Bureau of the Budget by the Department, one approximating $27 million, and the other, $83 million.
The $27 million program represents an expanded concept of technical assistance, and is designed to balance mathematically bilateral programs of like amount proposed for the Arab states. This program is too small to achieve our objectives in Israel and to prevent collapse there; the requirements of Israel for foodstuffs alone are materially larger than anticipated when Israel’s needs were calculated last March, because of serious drought in 1951.
The $83 million program has been prepared following an analysis of the present financial situation of Israel and the prospects of Israel’s foreign exchange position in Fiscal Year 1953. This program is designed to absorb into the productive economy of Israel refugees already arrived and to permit a moderate rate of immigration.
Israel’s future as a self-sustaining state depends on reconciliation with the Arab states, and integration into the economy of the Near [Page 972] and Middle East. Aid to Israel involves considerations affecting both the United States and Israel in their relations with Israel’s Arab neighbors.
Israeli officials, citing the unabating hostility of the Arabs, feel they cannot adopt conciliatory policies towards them. On their part, the Arabs, taking into account the very substantial number of immigrants who have entered Israel since 1948 (approximately 600,000), and noting the frequently avowed policy of Israel to continue unrestricted immigration, are little disposed to come to terms with a neighbor who appears to be preparing for aggressive expansion. United States Government economic support of Israel, making possible the continuation of heavy immigration into Israel, causes grave doubts among the Arabs as to the sincerity of the Tripartite Declaration of May, 1950, which was intended to stabilize the present armistice frontiers. Arab doubts of the ability of Israel to maintain an expanded population within its present borders have a measure of validity.
United States assistance toward Israel can be squared with a policy looking toward improvement of United States relations with the Arabs, but only if the Arabs are convinced that Israel will be content with only moderate increases in its present population and will, therefore, have no reason to expand beyond the confines of the present armistice lines. The fact that the movement of refugees from displaced persons camps in Western Europe is now completed makes a policy of limited immigration into Israel reasonable. Israel’s current financial difficulties are largely the result of immigration policies conducted without reference to economic considerations, and of the Arab trade boycott.
In the Department’s view, a balanced judgment calls for a program of assistance approximately $80 million. Such a program should be conditional on understandings with Israeli authorities looking to slowing down in rates of immigration, and firm planning for a terminal date of United States aid, as well as policies of conciliation to the Arabs.
Recommendation:
I recommend that you approve inclusion in the budget of a program of economic assistance to Israel for Fiscal Year 1953 of the order of $80,000,000.
- Drafted by Mr. Gardiner; cleared with NE, TCA, E, S/MSA, A, and H.↩