194. Memorandum From the Officer in Charge of Near Eastern Economic Affairs (Gay) to the Deputy Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Rountree)1
- Israel’s Application for an Exim Bank Loan
Messrs. Sherman and Salmon came in to describe Israel’s contemplated four-year agricultural development program with respect to which they have already approached the Exim Bank for a $75 million loan with which to purchase equipment in the United States. (Israel’s letter to the bank and statement of proposal attached.)2 Points emphasized in the exposition, given later in the day to Mr. FitzGerald of ICA, were (a) the tremendous upturn recently in the rate of immigration into Israel, particularly from North Africa, and its anticipated continuance and no efforts to restrict it, (b) the belief that this agricultural development program is the most economic means, e.g. in comparison to an immediate concentration on industrial build-up, for the expansion of the Israel economy and one which, by the end of the period, will improve Israel’s foreign exchange position through expansion of exports and contraction of imports by around $40 million and, (c) the fact that, although this program contemplates a sizeable extension of irrigation works, it impinges in no way upon the Jordan Valley proposal and will not lessen, in fact will increase, the need for the type of system envisaged under the Jordan Valley program.
Studies under final stages of preparation will presumably demonstrate that as a result of the proposed program, (a) water available for agriculture will be increased over 50 per cent, (b) irrigated area [Page 360] will be increased about 90 per cent, (c) value of agricultural production will be increased by 60 per cent and, (d) opportunity for settlement will be provided for over 10,000 families.
Mr. Sherman thought Ambassador Eban would wish to talk to the Secretary about this program in a few days. It may be that the intense desire of the Israeli Government for the earliest possible implementation of these plans which envisage a United States loan of $75 million out of the $85 million anticipated external cost could provide the Department with a useful leverage in dealing with Israel on other matters.