Foreign Relations of the United States, 1952–1954, The Near and Middle East, Volume IX, Part 1

884A.00 TA/6–2653:Telegram

No. 639
The Secretary of State to the Embassy in Israel

secret

Washington, July 15, 1953—12:32 p.m.

41. Joint State–DMS message. Reference Embtel 1965.¹

1. We are disturbed by implications Eshkol remarks, particularly re intention continue borrowing as much as possible. Would appreciate your comments as to (a) extent they represent considered views Israel Government generally, (b) relationship Avriel resignation, which seems most regrettable, to any change in climate official opinion. You may wish inquire Foreign Office whether policy expressed paragraph 5 (a) Israel Embassy’s note August 11, 1952² has been modified or abandoned.

2. We concur basic discussions on financial problems should take place Tel Aviv and are pointing out to Israel Embassy (a) while we are always prepared listen to Embassy any subject, if Israel Government wishes its views be promptly and fully considered in preparation recommendations on which Department and DMS primarily rely, it is essential that it initiate and concentrate financial-economic discussions Tel Aviv; (b) $6,000,000 emergency release was withheld until mission considered problem and made recommendations. You are authorized so inform Israel Government.

3. Re your comment prevention Israel default next fiscal year may require bulk of grant appropriation, we request you give priority attention to preparation estimate sum which would be required this purpose. USG does not consider itself committed guarantee IG against default, and you may inform Foreign Minister in your discretion that IG might make serious mistake if it assumes U.S. will henceforward act to prevent default. Department concurs Embassy observation that effects loss of 1954 program goods on economy must be carefully weighed against consequences default.

4. Stassen will inform Israel Ambassador that application Export-Import Bank loan for funding purposes would not receive U.S. Government support, as careful study Tel Aviv and here indicates such loan not appropriate for U.S. Government lending institution. Israel would accordingly be well advised seek private arrangements re debt.

5. As simultaneous notification Israel Foreign Office decision Para 4 might strengthen your position, you will be informed prior to actual notification here in order to make possible concurrent notification in your discretion. Suggest you consider possible advantages informing Foreign Office with Ministry Finance officials present rather than informing Eshkol group alone.

Dulles

1. Document 631.
2. Not printed.