884A.00 TA/12–1852: Telegram
No. 532
The Ambassador in Israel (Davis) to the Department of State
priority
992. Pursuant proposal Embtel 966,1 I called on FonMin Sharett this morning accompanied by McDaniel to emphasize as instructed by Deptel 5792 inadvisability endeavor meet debt payments from US aid funds and Dept’s feeling responsibility take steps meet debt problem lies with IG. Avriel and Bendor also were present. I said I knew from our earlier conversations FonMin held view that aid program shld not be disturbed, and he readily agreed that debt management is responsibility of IG and that aid funds shld not be requested for settlement of old debts. As to latter point, however, he said he had always stressed by conversations with US officials importance attached to finding some means of refunding unmanageable short term debt. In reply stated I knew IG agreement that [Page 1081] simple refunding without basic fiscal reforms wld not only fail to solve problem but wld constitute real danger for future. Mentioning that work of IG in effecting reforms in fiscal procedure is being followed with great interest, added that our specialists in such matters wld appreciate info re IG’s plans for meeting sit if there is delay in receiving Ger reparation payments and/or any shortfall in other sources of fon exchange income.
- Telegram 966 from Tel Aviv, Dec. 16 (884A.00 TA/12–1552) stated that the Embassy and TCA Mission would soon convey to the Israeli Foreign Minister the substance of the Department’s telegram 579 of Dec. 11. (884A.10/11–2652) The latter telegram stated the Department’s belief that the Israeli Government must assume responsibility for meeting its debt problem, and that it was inadvisable for Israel to seek further TCA funds to meet its debt payments.↩
- Dated Dec. 11; see footnote 1 above.↩