Foreign Relations of the United States, 1964–1968, Volume XXXIV, Energy Diplomacy and Global Issues

141. Memorandum From Robert W. Komer of the National Security Council Staff to the President’s Special Assistant for National Security Affairs (Bundy)¹

Washington, September 21, 1965.

Mac—

A Middle Course on Desalting. This issue needs resolving soon, because First International Conference on Desalting opens here 3 October. Of course LBJ doesn’t have to move then; he can get just as much of a splash by moving later.

My sympathies are with Schultze, Hornig, State, AID, Treasury, etc. that this is all premature. Yet if the President wants to push ahead with a big initiative, I see a middle road.

The real argument is over the proposed $3–500 million authorization request for “soft” financing abroad (the Udall/Seaborg report says this means loans repayable in dollars or local currency, or even grants) over a five-year period. Actual appropriations would be requested annually as needed.

So this doesn’t mean we’d waste $3–500 million right away on uneconomic plants. We wouldn’t even go up for the authorization till 1966, and could hold off any big appropriations till later in the 1966–70 period. We could also (a) eliminate the repayment in local currency and grant feature or make it only a specified small percentage, say 10%, of the total and earmark it solely for feasibility studies; (c) include an interest requirement equal to the Treasury rate; (d) say that we wouldn’t go for an appropriation till FY 68—the year after the authorization; and finally (e) make clear that we would not use this money for uneconomic projects.

We could even include a provision requiring joint financing where a recipient’s financial resources so permit. And we could include a feature allowing local currency loans or grants from PL 480 proceeds (this could permit us to lend Israel, for example, up to $50 million or so in Israeli pounds).

All this would also give us some money to go ahead with Israel when ready, which would please our Zionist friends without committing us much beyond what is already in the cards. And as a program not specifically addressed to Israel, it helps protect our Arab flank (though we’d have to build an Arab plant too sooner or later).

Ergo, it seems to me that we might be able to have our cake and eat it too on this one.

Bob K.

1. Source: Johnson Library, National Security File, Subject File, International Atomic Energy Agency. Confidential. Copies were sent to Schultze, Hornig, Rowen, and Charles Johnson.