343. Memorandum From the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Rountree) to the Deputy Under Secretary of State for Economic Affairs (Dillon)1


  • Additional Economic Aid to Israel out of Fiscal 1957 Funds


The Israel Finance Minister raised with you on June 202 the question of special assistance to Israel out of remaining fiscal year 1957 funds.

I understand that there are funds yet available for this purpose. I further recognize that Israel faces a very real and difficult short-term foreign exchange problem. However, the problem arises in considerable part from the military campaign against Egypt, and immigration. Both of these Israel policies are opposed to ours. I can not help but feel that the granting of emergency aid to Israel in the present context would prejudice our overall interests in the area.

My reasons include the following:

A special gesture in behalf of Israel at this time could not be kept secret. Its publication in the Near East would almost certainly be interpreted as a further reward for Israel’s having withdrawn its forces from Sinai and Gaza.
Area repercussions of this nature would be exploited by Arab states unfriendly towards us (i.e., Syria and Egypt) to embarrass Arab states friendly to us (i.e., Jordan, Lebanon, Iraq and Saudi Arabia). Such a gesture on our part to Israel at this time would also greatly complicate our efforts to make progress in delicate situations such as the Gulf of Aqaba, Jordan, and the effort to strengthen Arab resistence to Nasser.
There is no political advantage to be gained from Israel by extending emergency aid at this time and in this context. Our thinking has been that in fiscal year 1958 any additional aid to Israel to meet its more pressing needs should be linked to a political gesture favorable to us on Israel’s part, particularly with regard to the Palestine Arab refugee situation.

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That we inform the Israelis we have looked into the matter of additional fiscal year 1957 funds and find that it does not appear to be a practical possibility.3

  1. Source: Department of State, Central Files, 784A.5–MSP/6–2057. Confidential. Drafted by Bergus.
  2. See the memorandum of conversation, supra.
  3. A handwritten inscription on the source text by Dillon reads: “Agree. C.D.D. Suggest NEA so inform the Israelis. C.D.D.”