Israeli Aid Package
The attached table/2/ reviews where we stand. Three issues remain. You may want to discuss the APC's with Secretaries Rusk and McNamara Thursday/3/ afternoon. Whatever you decide, I recommend you hold them until after 28 April when we'll have a report on this weekend's inspection of the Dimona nuclear plant.
/2/Not printed; see footnote 1, Document 401.
I. Armed Personnel Carriers. Secretaries McNamara (Tab A)/4/ and Katzenbach (Tab B)/5/ have reconsidered and still recommend against. Their arguments boil down to:
/5/Katzenbach's April 17 memorandum to the President is not printed.
A. Uneasiness about fueling any arms race. Congress is concerned. Our India-Pak decision tried to restrain that buildup, and we've kept our Middle East programs to the minimum. APC's would not seriously affect the arms balance, but no one wants to start another round of sales. In the context of the Non-Proliferation talks, we may even try for tacit Soviet agreement to hold down arms shipments to the Middle East. This sale wouldn't upset that effort, but our skirts would be cleaner without it.
B. Concern over too close a military relationship while Israel's nuclear intentions are in doubt. Our intelligence people suspect--on uncertain evidence--that Israel may be building a separation plant. Our inspection team will visit Dimona this weekend for the first time in over a year. With the NPT ahead of us, we may need a clear expression of Israel's position. We can't bargain with APC's, but we could hold them until we're sure our inspection team gets full cooperation.
Our dilemma is that foreign policy interests argue against a sale now, but the Israelis will treat a "no" as a broken promise. Israel could do without APC's this year, but Eshkol believes that we promised something in return for their keeping quiet on our Jordan package last December.
If we go ahead, Secretary Katzenbach recommends we minimize repercussions by selling only 100. He suggests stretching delivery through 1970, but after our airlift to Jordan, I'm afraid that won't work. In any case, we must control publicity and timing. Defense tentatively concludes that Israel could set up an assembly line using some US-supplied parts, but Secretary Katzenbach believes this would make our relationship too close.
You may want to hear argument before deciding. On foreign policy grounds alone, I would recommend telling the Israelis we can't sell APC's now, but would reconsider next year. But if you want to go ahead, I recommend 75-100 now and promising to discuss assembly in Israel.
Hold APC's until after 28 April; go ahead with the rest of the package now
I want to move on 100 APC's and assembly; ask for a scenario/6/
I'm willing to say "not now"
/6/The first option is revised in Johnson's handwriting to read: "Hold APC's and package until after 28 April." The second option is checked.
II. Amount and terms of PL 480. Secretary Katzenbach recommended $23.5 million because Agriculture judged that Israel will need less than it asked for. Your figure was $28 million--the full Israeli request. One way to avoid rushing more scarce grain than needed would be to negotiate $23.5 million now but say we'll go up to $28 million if Israel needs more.
In view of Congressional pressure to tighten terms, Secretary Katzenbach recommended 75% dollar sale at about 4.5% interest (last year 25% at 2.5%). Normally, we would figure on moving to 50% dollar sale at maybe 3.5% as an appropriate transitional step. You initially preferred last year's terms, but you may want to consider slight hardening this year to put us on a better footing with Congress.
$23.5 million now; will amend up to $28 million/7/
/7/This option and the "2.5% interest" option are checked.
Up to $28 million now
25% dollar sale--2.5% interest
50% dollar sale--3.5% interest
75% dollar sale--4.5% interest
III. Moving on Bunker's successor might improve the package. Bob Bowie is a good possibility, but we might ask Douglas Dillon again.
See if Dillon is available
Sound out Feinberg on Bowie/8/
Give me other names
/8/This option is checked.
Source: Johnson Library, National Security File, Country File, Israel, Israeli Aid, 5/67. Secret; Exdis. Filed with an April 18 covering memorandum from Rostow to the President recommending that he hold the APCs--and if politically feasible, the whole package--until April 28. The covering memorandum bears Johnson's handwritten note: "Put on my desk & have available when Feinberg appt is ready. L."