Credit for Israeli Hawk Missile Purchase
As the military credit sales revolving fund got set to close out on June 30, Defense found that it had a little money left.
One place to use it would be to give Israel credit ($25 million, six years at 6%) for its already approved purchase of four Hawk missile batteries. Since this would involve Ex-Im money guaranteed by Defense ($6.5 million), a determination would be required, saying mainly that you believe the sale is in the national interest and that you have taken into account its effect on the local arms race. Both of these are true; this is a purely defensive weapon and we have a clear interest Israel's ability to defend itself.
The real question is whether we just toss off a $25 million credit for Israel with a flick of the pen without getting something for it. In view of the fact that we have to obligate this money by Sunday or lose it, I believe we should go ahead but make the most out of it by: (a) using it in the Congress to support our argument for the new credit sales bill (this was Nick Katzenbach's main reason for choosing to use this money on Israel); (b) letting our Jewish friends here know about it; and (c) asking both Luke Battle and Wally Barbour to call special attention to it among the Israelis as evidence of our continuing desire to help meet Israel's defense needs.
It would be hard to ask for anything more specific from the Israelis because they were prepared to pay cash, and they know why we're suddenly making this offer. Nevertheless they have a number of dollar repayments from previous purchases bunching up right now, and they will welcome the relief. If we eventually sell Phantoms and have to sell for cash, this would help them indirectly with that purchase. But this is more a matter of earning ourselves a little credit than of giving in on a vital issue.
I think this is basically a good gesture. It permits us to cite the additional Skyhawks we sold after the Eshkol visit and now this as evidence that even though we haven't sold the F-4's--we're right in there helping. It's a little easier to hold the line on Phantoms when we can show steady support in other fields.
Attached determination for your signature if you approve. we would need this before June 30 if we wish to go ahead.
Sources: Foreign Relations of the United States, 1964-1968, V. 20, Arab-Israeli Dispute 1967-1968. DC: GPO, 2001.