State proposes in effect entering into a quiet negotiation with the Israelis, conditioned upon their agreement to (a) call off their pressure campaign; (b) preserve secrecy; (c) agree not to move to West Bank while we're talking; and (d) cooperate in nuclear inspection. This is a tall order, but a good opening bid.
The negotiations are envisaged as lasting several months, and ending up either in a UAR-Israel arms limitation agreement plus security guarantee, or in a nuclear limitation security arrangement with Israel alone.
The form of guarantee envisaged (Tab C) is an executive agreement or Presidential letter rather than a treaty, essentially to avoid Congressional problems. It of course falls far short of demands in BG's latest letter, especially BG's clear idea that alliance means US arms aid.
Tab D is the proposed interim letter to Nasser calming him down. I think it falls far short of what's needed and will try a redo.
This whole problem area is so fraught with risk that we ought to make haste as slowly as we can. If we can get the Israelis to lay off public agitation in return for opening a private dialogue this should buy us time to feel out what they'll accept and what we can get in return. Given the Hawk/refugee episode of last year, we want to avoid giving if possible before we've taped down the quid pro quos./5/
R. W. Komer