Israel Seeks to Clarify Amendment to Mutual Security Act

Israel and U.S. Government economists are today seeking to clarify an amendment to the Mutual Security Act recently passed, which was adopted presumably to restrict Israel and other foreign governments from using MSA funds to “make payments on account of the principal or interest on any debt.”

This amendment was written into the Act following a question raised by Sen. Margaret Chase Smith, Maine Republican, about Israel’s employment of MSA funds. It was learned that at one time during Congressional consideration of the new MSA legislation, restrictions against use of MSA funds were much more sharply written than the final version. The amendment, highly-technical in nature, is found in section 105 of the Act. It specifies:

“None of the funds provided by this Act, nor any of the counterpart funds generated as a result of assistance under this or any other act, shall be used to make payments on account of the principal or interest on any debt of any foreign government, or on any loan made to such government by any other foreign government; nor shall any of these funds be expended for any purpose for which funds have been withdrawn by any recepient country to make payment on such debts:

“Provided, that after September 1, 1953, none of the funds herein appropriated shall be used to make up any deficit to the European Payments union for any nation of which a dependent area fails to comply with any treaty to which the United States and such dependent area are parties and said failure to comply has been adjudicated adversely to said nation in any court of competent jurisdiction, nor shall any of the counterpart funds generated as a result of assistance under this act be made available to such nation.”

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