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U.S. to Grant No Funds for Israel Cultural Institutions This Year

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A special appropriation made by the United States Government last year for the use of Israeli pounds for scientific, educational and cultural grants to Israel “will not recur” this year, it was made clear in the budget for the new fiscal year submitted by President Eisenhower to Congress today.

The grant last year of $3, 525, 000 resulted in an issue of political patronage and criticism by members of Congress of the operations of Bernard Katzen, a New York lawyer, who was designated by Secretary of State John Foster Dulles to recommend distribution of the money.

As a result of the furor, the operation from which Israel benefitted–the Informational Media Guaranty Program–was placed in suspension for Israel. It underwent review in the State Department and U.S. Information Agency with the result that the new budget contains a commitment that the appropriation will not recur in the new fiscal year.

The $3, 25, 000 in Israeli pounds had accrued to the account of the U.S. Treasury through the IMG operations in Israel. The IMG program made it possible for Israel to import American books and periodicals for Israeli pounds. The American exporters were given dollars for the Israeli currency under the IMG arrangement. Accumulated pounds remained in Israel credited to the United States.

The United States agreed to give the pounds to Israel for purposes “in the international interest” of the United States. It was decided this money should be used for “educational, scientific and cultural activities. ” Mr. Katzen drew Congressional fire on grounds that, as a Republican Party political personage, he sought political advantage through distribution of the money. The State Department and USIA later suspended the program for Israel to study the matter. The reference found in the new budget is the first official publication of their conclusion.

The budget also reported at length on operations and plans of the U.S. Export-Bank but gave no hint whatsoever of the fate of Israel’s long-pending loan application for $75, 000, 000 for irrigation development.

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