Israeli Assistance and Your Talk with Abe Feinberg tomorrow, Thursday at 12:30
1. Your talk with Abe coincides with the arrival here of State-DOD recommended response to recent Israeli assistance requests./2/
/2/A March 8 memorandum from Rostow to the President states that Feinberg came in that day after his return from Israel to report "a strong feeling in Israel that we are shifting our policy away from them." Feinberg urged U.S. responsiveness on the Israeli requests, especially by granting or allowing the Israelis to purchase 200 armored personnel carriers and by providing credit for Hawk missile and Patton tank spare parts. (Ibid.)
2. Abe has reported that exaggerated Israeli publicity on our shipments to Jordan, pressures from Syria, and economic recession resulting from overenthusiastic anti-inflationary measures have left the Israeli Government nervous and discouraged.
3. You may wish to consider the following factors in assessing what we ought to do for them this year:
(a) Their December raid on Samu precipitated our emergency military assistance to Jordan, costing us about $9 million this FY for defensive military equipment. The Joint Chiefs hold this has not changed the military balance in the area. In sum, the Israelis do not have much of a claim on us for the steps we took to help sustain Hussein after their raid nearly brought him down. However, Nick and Arthur told the Jewish community leaders we would take our increased commitment to Jordan into account "in giving sympathetic consideration to Israeli requests for assistance." While we made no commitment to match exactly for Israel what their action at Samu forced us to in Jordan, Arthur, under continuing pressure in New York, feels strongly we should do nearly that.
(b) Israel has not yet given us permission to visit the nuclear plant at Dimona. Our last visit was in April, although we had an informal understanding that visits would be allowed every six months.
(c) They have not yet replied to your letter of May 21, 1965 to Eshkol urging acceptance of IAEA safeguards.
(d) We have already increased our textile import quota by some 60%, a concession worth $2.5 million in Israeli foreign exchange earnings.
4. State and DOD have recommended the restricted package (items (c) to (f), below). Items (a) and (b) are fall-backs suggested by State. Nick recommends that no package be agreed until firm arrangements have been made for the next inspection of Dimona.
(a) Sell 100 Armoured Personnel Carriers on commercial credit. (The Israelis asked for grant assistance for 200 APC's. DOD recommends against supplying any APC's now, but State believes half their request, on a sales basis, would be tolerable, and could be justified as improving their border patrol capability. Value roughly $3.7 million.)
(b) Provide standard DOD credit for Hawk and Patton tank spares. (DOD opposes, since we do not usually provide credit for spares, but an exception in this case is recommended as an inconspicuous way to help on the military side. Value roughly $14 million.)
(c) "Fifth echelon" maintenance facilities for the Hawk missile system. (State and DOD recommend this.)
(d) Encourage an Ex-Im loan for a fertilizer plant. (The Israelis asked for a $20-million development loan, but they are too well-off to qualify for a DL.)
(e) Permission to bid on potash and phosphate fertilizer sales to South Korea and Vietnam. (AID reluctantly approves.)
(f) PL 480--$19 million of a commodity mix, without wheat, payment 75% in dollars, 25% local currency. (They asked for $35 million. State and Agriculture recommend.)
5. An important question is how we communicate this package, if it meets with your approval. Ideally, it would be best to tell Feinberg none of these details, but reserve them for official discussions with Ambassador Harman. If possible, it would be best simply to hear him out sympathetically, indicate that our careful studies are nearing conclusion, and remind him of some of the steps Israel has not taken to be helpful to us. But if you feel it necessary to tell him something, you could indicate that some APC's will be available on terms to be discussed with the Israeli Government, and that the matter of spares will also be discussed.
State's documents are attached,/3/ but they are so complicated that we have not referred to them in this memo.
/3/Two March 15 memoranda from Katzenbach to the President are filed with Rostow's memorandum. One set forth recommendations with Department of Defense and AID concurrence. The other suggested a fallback position if the President wished to be more responsive to Israel's requests. It also stated that the Israeli Government had not responded to the latest request for a Dimona inspection, that Eshkol had not replied to Johnson's letter of May 21, 1965 (Document 218), urging Israeli acceptance of IAEA safeguards, and that Israeli officials had not been forthcoming about their missile development program. It recommended no response to Israel's current aid requests at least until arrangements had been made for the next Dimona inspection.
Source: Johnson Library, National Security File, Country File, Israel, Israeli Aid, 5/67. Secret. Johnson's handwritten note on the memorandum reads: "Put on my desk & get chart on our Israel aid by years. L."