884A.00 TA/7–2552: Telegram
No. 461
The Ambassador in Israel (Davis) to the Department of State
Niact
143. For Byroade. Fol agreed position result joint consultations among Amb, Fryer, Mikesell and McDaniel:
It is apparent from data thus far obtained Israel facing serious financial crisis which cld have most severe econ and polit repercussions. Present conditions are result complete disregard elemental financial principles and failure to establish system accounting controls.
We are convinced it wld be no kindness to Israel to accede to pressures to grant Israel request for emergency assistance. It is apparent from findings here that any assistance to Israel must be given only as part of coordinated program. Details of program to prevent recurring financial crises and further deterioration of financial position embodied in Mikesell interim report, including commitments in writing believed necessary from Israel Govt as condition for emergency financial assistance. Without such conditions financial assistance wld merely delay and increase severity inevitable insolvency, and wld defeat within Israel Govt and Amer Jewry working for financial reform. Owing to background of recurrent crises, we believe the financial burden of any solution in [Page 970] which US participates shld be shared by leaders of Amer Jewry and the creditors themselves.
In order assure effective implementation of agreements, it is imperative that TCA mission be supplied with one top-level financial expert, one general economist and a junior economist. Pending arrival these permanent staff additions, urge immediate temporary assignment of top-flight economist experienced in balance payments problems for arrival within ten days.
Fryer proposes return Washington earliest transportation, and Mikesell plans depart with interim report middle next week. Mikesell is having extreme difficulty obtaining essential data from Israelis on short-term debt position and foreign exchange budget. He has been promised basic info necessary for interim report by Saturday1 and he expects to have interim report completed early next week.
- July 26.↩