174. Memorandum From Harold Saunders of the National Security Council Staff to President Johnson 1

SUBJECT

  • George Woods' Proposal on Israeli Desalting

In short, George proposes (Tab A)2 that we stop thinking for the moment in terms of a large 100–150 million-gallon-per-day (MGD) desalter and concentrate on a 40 MGD plant. He fully shares your goal of becoming able over the next 10–15 years to desalt seawater on a large scale, and he believes we should push ahead with this plant “as a matter of priority.” He has two main reasons for recommending a smaller plant than we initially considered:

1.
He believes that the next logical step in developing the technology of large-scale desalting would be to build a 40 MGD plant. This would be enough larger (more than 5 times) than present plants to provide an important test of new technology at reasonable cost (about $58 million). We would gain almost as much in technological knowledge as we would from the $100 million plus that would be needed at a minimum from us to help build the $250 million larger plant.
2.
Taking this smaller bite, he feels, is the only way to cut through the highly emotional argument we've had for several years between the crusaders and those who don't believe the time is ripe yet for a $100–250 million leap of faith. Everyone—except possibly AEC—believes this has been George's main contribution.

To simplify our financial problem, George believes we should concentrate on desalting and get away from the idea of financing an Israeli electric power plant as part of a dual purpose water and power plant. The Israelis will be building new power plants right along to meet increasing demand for electricity. He doesn't see why they shouldn't provide the steam from one of these power plants as part of their contribution while we concentrate on the desalter to turn that steam into water.

Therefore, George proposes we take the necessary steps to get Congressional authorization for Interior to spend up to $40 million on this plant. In addition to the steam from the power plant, Israel would provide $18 million using a loan from the World Bank or some other [Page 311]such loan agency. While the cost of water would still be very high, George believes the total Israeli contribution would not exceed the actual value of the water to Israel. Since the power plant would cost around $20 million, this would add up roughly to a 50–50 split between us.

Walt asked Secretary Rusk to pull together the views of State, AID, Interior and AEC on George's proposal (Tab B).3 With some variations, I think it is fair to say that each of them but AEC would go along with George's general proposal that we try to move ahead with a smaller plant and that you put it in your legislative program.

AEC has no objection to going as far as George proposes but objects (especially Jim Ramey) strenuously to:

  • —George's strong words about “abandoning” or “holding in abeyance” the plan for a big dual purpose plant. They believe it is important to preserve the idea that this is just the first step toward a later expansion into a larger plant. Secretary Udall goes along with presenting this to the Congress as Phase I of a larger project, but he would say that Israel must fund later expansion by itself. George says he didn't mean to close any doors—just to re-focus for a moment.
  • —George's unwillingness to insist that the plant use nuclear fuel. His investigations persuade him that there's no economic advantage to nuclear over fossil fuel and that, if we ask Israelis to provide the steam-producing plant, the choice of fuel ought to be theirs. AEC believes we have a strong interest in nuclear desalting. AEC further feels we should keep our strings on that Israeli decision to be sure they buy US nuclear equipment with safeguards. AEC believes it could justify a contribution of $10–15 million to the power (not desalting) plant if it were nuclear and if our own California plant doesn't go ahead. Secretary Udall believes we should leave the choice of fuel open. (The Israelis, like the rest of us, would like to leave the choice of fuel open until they can decide what is most economical.)
  • —George's judgment that it's “not possible at this time to obtain financing in the amount [$244 million]4 on the terms which would be necessary.” AEC feels there would be “extensive Congressional support” for a big nuclear desalting plant because of the sympathetic attitude of the Joint Committee on Atomic Energy which would review the proposal along with the two Interior Committees. George's proposal for an Interior contribution would only go before the two Interior Committees which would be less cordial.

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On this last point, Secreatry Udall thinks the Senate Interior Committee would be receptive but is less sure about the House. However, he points out that the FY 1970 expenditure would be only $5 million and remaining costs would be spread over five years. Only about $1 million of the FY 1970 figure would be needed for Israeli planning. The rest would go for testing some promising new technology which should go into the Israeli plant. Interior should proceed with this testing in any case, and that would cost about $4 million. AID feels Congress might see even $40 million as “just another aid spigot” and thinks Israel should foot even more of the bill than George recommends. State recommends that we pick up about $30 million of the $40 million, leaving the rest to Israel.

In searching for a reasonable compromise, I would stand with George in saying that the fuel is an Israeli decision, but I would be a little less emphatic in “abandoning” the goal of a larger plant. I don't believe we are ready to commit ourselves yet, but I don't see why we shouldn't be quite honest in saying we're neither opening nor closing that door at this stage.

We asked both Don Hornig and Charlie Zwick to look at this package:

  • —Don feels that desalting technology has reached a stage where it's time to test a prototype of a large plant. He believes the 40 MGD size George proposes is reasonable. Given the apparently indefinite delay in building the large plant in California, he thinks it's sensible to try the experiment in Israel. He accepts George's recommendation that we concentrate on the desalter and let Israel provide the power plant to produce the necessary steam. He does not believe we should commit ourselves to future expansion of the Israeli project.
  • —Charlie suggests that you let this decision ride. He questions the need to spend tight resources on a large experimental plant where the economic benefits are uncertain, especially when we are straining to keep your budget down. If a large desalting demonstration is to be undertaken, he would prefer that it be done in the US where technological access to the plant is assured over time. He specifically questions the Israeli site in view of the risk of building and operating the plant in a war zone. He feels that AEC funds should not be used to put AEC in the “foreign aid” business on the scale contemplated by AEC.

For these reasons, Charlie feels that if we go ahead with the Israeli project the contribution be limited to $30 million, and like foreign aid, we should require that procurement, construction, and operation contracts be limited to US sources. Charlie agrees with Don that we should not commit ourselves to future expansion of the Israeli project. Charlie also agrees with Woods that we would get as much technology [Page 313]out of the 40 MGD plant as out of the big dual-purpose-plant—and at substantially less cost.

Yesterday, I had a visit from Yaacov Herzog—Eshkol's chief assistant whom you met at the Ranch—and General Ben Artzi—George Woods' Israeli counterpart. George has shared his thinking with them informally to see whether he was being realistic. Yesterday, Herzog gave me the following message for you in Eshkol's name: Eshkol deeply appreciates your continued attention to this project, even in the closing days of your Administration. He thinks Woods' proposal is quite reasonable, and he would be prepared to discuss details of how to proceed. Herzog felt it would be helpful if you were to include this in your legislative program.

The issues are:

1. Whether you wish to put George's proposal in your legislative program. The advantage in doing so would be to put yourself on record with a proposal for a feasible next step (a) in desalting and (b) in a program which you launched with Israel in 1964. The disadvantage is that the Congress may well disregard this proposal, leaving it in worse shape than if it had been left to a riper time. I personally feel that, after four years of pushing this, we should have a concrete proposal from President Johnson on the record.

Put it in the program5

No

Call me

2. Whether, if you put it in your program, you would seek authorization for a US contribution of the full $40 million George suggests or press the Israelis to pay even part of the desalting research costs and go for only $30 million. In either case, only about $5 million would need to be appropriated in FY 1970. The argument for the full $40 million is that Israel would build the entire power plant (roughly $20 million plus more than $1.5 million yearly for fuel) and assume the $18 million loan in addition as its fair contribution. This would be about a 50–50 split between us. The argument for $30 million is that Israel too will profit in future plants from the results of the research and should contribute to the desalter too.

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$40 million6

$30 million

Call me

3. Whether, if you go ahead, you make clear that nuclear fuel must be used. The only people pushing for this are the AEC. George and the rest of us think it makes sense just to leave the door open. Ben Artzi yesterday said he'd like the door left open until they can make studies to determine the most economical approach.

Leave door open on fuel7

Nuclear

Call me

My own feeling is that, uncertain as our judgments are, we should go ahead with a plant like this soon. However, I recognize that there are still political questions to be considered and that we would probably not wish to begin construction if another war seemed likely. But these are questions for the next Administration. The main issue is whether you wish to propose this first step now or leave the issue entirely to the next team.

Hal
  1. Source: Johnson Library, National Security File, Subject File, Desalting Projects, Vol. II. Confidential; Exdis.
  2. Not found attached. See footnote 3, Document 173.
  3. Not found attached. For a discussion of their positions, see Document 173.
  4. Brackets in the source text.
  5. This option was checked.
  6. This option was checked. A handwritten note: “approved by the President 24 Dec. 1968” appears in the left margin.
  7. This option was checked.