320.2 AA/12–2951: Circular telegram
The Secretary of State to Certain Diplomatic and Consular Offices 1
557. Financing Palestine refugee program requiring according present plans $250 million three-year period ending June 30, 1954, poses serious problems.
It is in best interests US and UN secure as broad participation as possible in contribs this fund.
Both Israel and Arab states have expressed interest in success of program.
Possible source financing is Israel. Statements have already been made by Israeli auths indicating Israel may contribute in settlement Arab claims compensation.
Fol suggestion has been made and we understand is now being studied in Israel circles re possibility using for refugees revenues which wld indirectly accrue Israel from operation Haifa refinery.
Israeli Govt officials calculate that if Haifa were operated 100% capacity, Israeli Govt wld benefit to extent $7 to $9 million annually, and Israel’s petroleum imports, if made from Middle East sources and moved to Haifa either via pipeline or via Suez, rather than South American sources, wld cost annually $12–$15 million less.
Dept wld appreciate comments del and missions concerned re advisability encouraging this suggestion to run Haifa full capacity on Middle East oil with Israel agreeing devote full calculated savings $20–$25 million annually or very substantial fraction this saving to refugee fund for period continuing until compensation as finally determined by UN auths had been paid in full. Iraq wld benefit by receiving increased oil royalties and might find it difficult reject this plan with its obvious benefits directed to rehabilitation of Arab refugees. Savings to Israel would accrue after refugees had been compensated and then wld depend on willingness Arabs continue permit oil flow Haifa.
- Drafted by Mr. Gardiner; cleared with NE, UNE, and UNP: repeated to London, Paris for GADel, Tel Aviv, Baghdad, Cairo, Tehran, Jidda, Beirut, Amman, and Damascus.↩