100. Action Memorandum From the President’s Special Assistant (Rostow) to President Johnson1

SUBJECT

  • Concessions on Israel’s PL 480 Agreement?

Negotiations on Israel’s PL 480 agreement begin Tuesday. The Israelis have made one final low-key pitch for concessions. I report it because it was made on instruction but I would be inclined to stick to our present position, because I think we can do so without creating a problem and because we’re already making a major concession in having any PL 480 program at all for Israel.

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You will recall that, in approving the $27 million Israeli food sale, you decided that Israel should move this year to 100% dollar sale. The alternative was 75% dollar and 25% local currency. All of your advisers recommended a 100% dollar sale, and I recall your agreeing strongly that Israel “shouldn’t be begging.”

A less significant element in the normal terms for this kind of agreement is a 5% downpayment (in this case $1.35 million). We do waive this in some cases (India, Pakistan, Indonesia, Congo, Ceylon, Ghana, Guinea) and reduce it in others (Morocco, Tunisia, Sudan). No one sees any economic reason not to require the full 5% from Israel.

Saturday, Eppie Evron “on instructions” from his Finance Minister asked us to reconsider reducing the dollar requirements to 75% and waiving the downpayment. He admitted, in making this pitch to Hal Saunders, that they weren’t going to make a federal case of this. He acted like someone dutifully carrying out orders, knowing that the decision had been made.

The one reason for making any concession would be to give them the sense that we’re not being completely uncompromising. Eppie points out that they’re already making the $200 million shift in reserves Eshkol promised and buying $50 million in commodities here for cash.

All of your advisers are inclined to resist this final effort. But if you want to give a little I would recommend sticking to 100% dollar sale—the important issue-but reducing the downpayment requirement from 5% to 2.5%. This would be purely a gesture since the amount involved would be only $675,000.2

Stick to approved terms3

Reduce downpayment to 2.5%

Walt
  1. Source: Johnson Library, National Security File, Country File, Israel, Vol. IX, Cables and Memos, 3/68-5/68. Confidential. A handwritten notation indicates the memorandum was received at 12:46 p.m.
  2. The details of the P.L. 480 agreement were agreed upon in negotiating sessions between Israeli Embassy and Department of State officials on March 5 and March 12. Records of these negotiations are in the National Archives and Records Administration, RG 59, Central Files 1967-69, AID (US) 15-4 ISR. Rostow secured President Johnson’s approval on March 12 of an agreement that included 50,000 additional tons of feedgrain, bringing the value of the agreement to $30.2 million. (Johnson Library, National Security File, Country File, Israel, Vol. IX, Cables and Memos, 3/68-5/68)
  3. President Johnson checked this option.