This memorandum explains the various options of proceeding forward with the Israeli arms deal. The special assistant to President Johnson discusses the unclear nuclear situation of the the Israelis, and also outlines future plans for U.S/-Israel relations.
/2/The President met with Feinberg from noon to 12:40 p.m. on April 20 prior to the latter's departure for Israel. (Ibid., President's Daily Diary)
I have sent you a separate memo on the Israeli aid package./3/ I recommend you not give Abe any answers until you have discussed this with Secretaries Rusk and McNamara. Your options on timing are:
1. Hold the whole package until after we get the report on our Dimona inspection about 28 April.
2. Release everything in the package except your decision on APC's until we're sure the Israelis have cooperated fully with our inspection team.
3. Release the whole package now.
The main reason for holding off is to demonstrate that you're serious about nuclear non-proliferation. Even this year's whole aid package wouldn't be enough to bargain with on this life-or-death issue (as Israel sees it). However, as we approach the time when we may need to press Israel to sign the NPT, we must consider how much leverage we need to hold in reserve. So far the Israelis have succeeded in keeping this apart from the rest of our relationship.
The only counter big enough to sway Eshkol, I suspect, will be the US-Israeli relationship itself. By purely foreign policy standards, we should be drawing back a little now to signal how seriously we take this issue. I realize this creates a domestic dilemma, but I should think the Jewish community itself with its liberal tendencies would be strongly attracted to the NPT.
Israel has never leveled with us on its nuclear intent. Our intelligence people have scattered--but as yet unconfirmed--evidence that Israel is quietly but steadily placing itself in a position to produce nuclear weapons on short notice. We also know that Israel is investing large sums in a French built surface-to-surface missile designed to carry a nuclear warhead. I must emphasize that we do not know exactly what Israel is doing or what its position on the NPT will be. But we know enough to be seriously concerned. Therefore, it may be wise to take special care with each step this year.
Washington, April 20, 1967, 10:10 a.m.
Hal Saunders and I have staffed out the paper done by Dave Ginsburg./5/ I wanted you to have, as he did them during the night, Hal's direct comments on the paper/6/--including their flavor. Hal is an extremely well-balanced analyst of the Middle East.
/5/Reference is evidently to an unsigned and undated memorandum for the President on the subject "1968--American Jewry and Israel," attached but not printed.
/6/An April 20 memorandum from Saunders to Rostow with his comments is attached but not printed.
I would divide my own comments in two parts: first, the items in David's paper which we had planned already to support or could support; second, our security relations with Israel.
1. This is the position with respect to David's non-military proposals:
--Food purchases: already provided for.
--Development loans: EX-IM is the proper source, given Israel's level of income and foreign exchange position; but there is no reason why Linder cannot be very generous.
--Stimulating Israeli fertilizer exports: provided for in our package.
--Repayment in commodities: a new proposal now being staffed out. It seems possible to me, especially if Israel would make the deal proposed by David in the first part of paragraph 16 (p. 17)./7/
/7/The proposal was for Israel to retain from $150 to $250 million of its foreign exchange reserves in the United States in order to ease the U.S. balance-of-payments difficulties.
--Exports to the U.S.: DOD is pressing this as hard as it can; perhaps Bob McNamara could press it a little harder.
--Desalinization: This should go forward urgently: Jack Valenti would be fine but, as with Eric Johnston, he might need to put himself in the position to approach the Arabs with some kind of parallel project in order not to damage his moving picture interests in the Middle East. Such an approach was not ruled out in the Bunker terms of reference; but it may be more important for Jack than for Ellsworth. Katzenbach proposes Bowie; but Dillon and others are possibilities.
--An American University in Israel: Without intimate knowledge, Hal's marginal comment on page 15 seems wise; namely, that it is unlikely we could create a new institution up to high existing Israeli standards; but we might increase our already substantial support for Israeli institutions now in being. Nevertheless, an "American University" in Israel might be looked at afresh.
--Visits to Israel by high-level U.S. officials and a visit to the U.S. by Eshkol seem manageable.
2. Security problems.
a. In general David's paper does not recognize something which the Israeli government does recognize even if sometimes reluctantly; namely, the U.S. has legitimate interests throughout the Middle East and the maintenance of those interests is, by and large, in the long-run interest of Israel, because, where our influence is strong, we strengthen the hand of Arab moderates. It is odd that as thoughtful a man as David should not have made this point.
b. Our critical problem with Israel is that they have wanted the advantage of a U.S. guarantee but have simultaneously wanted to maintain a military establishment which could be effective if the U.S. guarantee did not operate in a crisis. The technical reason for the Israel position is their anxiety about a quick Arab strike against them--from the air or on the ground--which we might be too slow to deal with. It is this ambiguity which has, quite understandably, in some ways led them to build up their military establishment in ways which made it easier for the Russians to have their offers of military aid accepted in the Middle East. The APC question relates to this. Bob McNamara and others think that APC purchases from the U.S. might open up another round of Soviet military credit sales to the Arabs in the Middle East. I am not sure that is necessarily so if the APC's are moved in on a clear replacement basis. There is another problem with certain members of Congress who have resisted our being an active part of the Middle East arms race.
c. The nuclear question. This is critical for large U.S. interests. We have been able to live with this ambiguous Israeli defense policy in terms of conventional weapons. Should they wish to have both a national nuclear capability and U.S. guarantees, we would be in an almost impossible position. Moreover, if they insisted on it, it might well destroy the possibilities of a non-proliferation treaty throughout the world. Therefore, we must develop a much deeper understanding with them on the nuclear question if we are to proceed with a policy of being, quite openly and without apology, their friends.
Source: Johnson Library, National Security File, Country File, Israel, Vol. VI. Secret; Exdis.