348. Information Memorandum From the President’s Special Assistant (Rostow) to President Johnson1

Mr. President:

I forward this working level information on the history of Phantom financing-about which you will no doubt be hearing from Abe Feinberg, etc.

Abe Feinberg came in yesterday to complain again that Clifford is offering only $60 million in credit to the Israelis in a sale of fifty aircraft, whereas the Iranians received $100 million in credit in a sale of thirty-two.2

I have reported Feinberg’s view to Clifford; but it seems clear that only the President’s intervention is likely to alter the Defense Department terms-if you wish to do so.

I pointed out to Feinberg that Eshkol had told you he would be delighted to pay cash on the barrel-head.3 Abe acknowledges this but says the Israeli foreign exchange position has deteriorated and Israel should not now be treated worse than rich Iran.4

  1. Source: Johnson Library, National Security File, Country File, Israel, Vol. XI, Cables and Memos, 12/68–1/69. Secret. A handwritten notation indicates that the memorandum was received at 2:25 p.m.
  2. Feinberg sent a memorandum to Jim Jones on December 11 outlining the Israeli case for better credit terms. Feinberg asked Jones to show the memorandum to the President. (Ibid., Files of Harold H. Saunders, Israel Arms, 10/1/68–1/20/69)
  3. In a December 9 memorandum to Rostow, Saunders put the total cost of the purchase at $275–300 million. (Ibid., Memos to the President, Walt W. Rostow, Vol. 109, 12/1-9/68)
  4. There are two handwritten notes by Jim Jones under Rostow’s signature. One reads: “Jones told A.K.” A.K. was Arthur Krim, a lawyer and president of United Artists corporation, and a Democratic Party fundraiser and adviser to the President on politics and Middle East policy. The other note indicates what Jones told Krim, which apparently was President Johnson’s reaction to Rostow’s memorandum: “A.K.-Everybody mad-suppose to be cash. May blow whole deal.”