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Israel Dropped by U.S. from List of Countries Receiving Special Aid

Israel has been eliminated from the list of countries to receive grant-in-aid special assistance from the United States foreign aid program. Aid to Israel will now be confined to development loans and sale of surplus agricultural commodities at reduced prices.

The fact of Israel omission for the fiscal year 1960 emerged during hearings on the Administration’s proposed new program. It was confirmed today by the International Cooperation Administration. This development marks the first time since the grant program for Israel began in 1951 that Israel was eliminated.

The omission of Israel emerged during a hearing of the House Foreign Affairs Committee, the transcript of which became available today. Acting ICA director Leonard J. Saccio told the committee that the grant program benefitting Israel was terminated. He attributed the termination to Israel’s economic progress. He said that future aid to Israel would consist of permitting Israel to buy surplus food at low prices, and to obtain loans through the Development Loan Fund.

(King Hussein of Jordan succeeded in obtaining a U.S. commitment for $35,000,000 in economic aid and a grant of additional military equipment during his present visit to Washington, the Jordanian newspaper “Al Watan” disclosed today. The King’s visit was termed a complete success.)

Questions were raised by a number of committee members. Rep. James G. Fulton, Pennsylvania Republican, told Mr. Saccio that Israel was being sorely pressed militarily and economically and, with “the upsets that have been in that area recently, it is a little hard for me to understand why they, as a people so loyal to us, are being left out of these programs.”

Rep. Fulton said he was considering an amendment to restore Israel to the list of nations to receive grant aid. But Mr. Saccio said that, in his view, no such amendment was necessary, because “if a country reaches a situation where it is really in distress, it can be helped by the contingency fund.”

Other questions that sought to determine why Israel was eliminated by the Administration were asked by Rep. Wayne Hays, Ohio Democrat; Rep. Leonard Farbstein, New York Democrat; and Rep. Edna F. Kelly, New York Democrat.

Grant assistance to Israel reached a high $70,000,000 in the year 1953. It dropped to a low $7,500,000 in the fiscal year 1959.The Administration has sought gradually to transform it aid program to Israel from one of grants to loans through the Development Loan fund and other federally-approved loans. Also, a substantial amount of surplus foodstuffs were sold to Israel through the Department of Agriculture at bargain prices.

The grant in question was totally in the economic program. Israel has never received military grant-in-aid from the United States. The Arab States, however, have received military grant-in-aid–some from the United States, and others from the Soviet Union. Israel has stressed that it is dependent on the United States economic assistance because of the burden imposed on its economy by the need to divert its own funds for the purchase of military equipment for defense. Congress voted the first grant to Israel in 1951, to assist in the settlement of displaced persons and other immigrants.

A number of Arab states continue on the new list for the fiscal year 1960, from which Israel has been dropped, and will again receive economic aid grants. The total special assistance program for the fiscal year 1960 calls for expenditure of $271,800,000.

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