State Dept. to Reinstate Grant Aid for Israel, Undersecretary Indicates

C. Douglas Dillon, Undersecretary of State for Economic Affairs, has indicated to the Senate Foreign Relations Committee that the State Department would probably reinstate grant aid for Israel He made it clear that the Department would be acting because of “psychological” considerations rather than for economic reasons.

The Dillon statements on the grant issue were revealed today, when the Senate Committee made available the record of Dillon’s latest testimony at a hearing previously designated as secret. Mr. Dillon said: “From an economic point of view, strictly the point of view of economics, we can do for the State of Israel everything that we feel is required by economics under the Development Loan Fund and Public Law 480 (surplus food sales), and a grant program in addition is not strictly necessary.”

The Undersecretary of State told the Senate Committee that the grant program for Israel had ‘assumed a greatly enlarged psychological importance, both in certain quarters in this country and also abroad. There was some feeling that the fact that this was omitted, that we had lessened our interest in the problems affecting Israel. Because that is a new element in the situation, we will make an attemp to reinstate a modest, as it always has been, grant program.”

Mr. Dillon said that, in some places, a misunderstanding arose that, since Israel was left out of the grant program, “there was some diminishment of our interest in the State of Israel. politically and otherwise.” He told the committee: “There is no such diminish-ment, and this is a new development which we had not expected when the program was formulated, this political and psychological fact, so we intend to make every effort to use the flexibility in the program to see if, when we administer it, if we can’t reinstate some sort of grant program for Israel to counter that situation.”

SEN. MORSE OBTAINS COMMITMENT FROM STATE DEPT. ON ISRAEL AID

Sen, Wayne Morse, Oregon Democrat. raised the Israel issue and said there had been considerable criticism of the State Department. He said: “A charge has been made that it does show, apparently, a psycholgical attitude of unfair discrimination against Israel, and I wanted to give you this opportunity to nip that one in the bud.” Sen. Morse sought to obtain a clear commitment from Mr. Dillon to reinstate Israel.

The commitment he obtained was stated by Undersecretary Dillon as follows: “We will make every effort, when it comes to the time to actually put this program into operator to remedy this psychological and political feeling that there was some intent, which is not the case, to show a lack of interest in the State of Israel, and we will make an attempt to institute a grant program under the special assistance category.”

The initiative in obtaining the commitment on Israel came from Sen. Morse, and it was the Oregon Senator who pursued the matter at the hearing. In tracing the Israel aid situation, Mr. Dillon conceded that, in the program previously put before the Senate committee, “there were no funds listed in special assistance for Israel.”

Mr. Dillon explained that Israel was dropped because “last winter, when the budget was prepared, there was great pressure to hold it to as low a figure as possible, and it was our feeling economically, which I think is the fact fully justified, that the assistance that Israel requires could be given to her from an economic point of view equally well through public development loan funds.”

Sen. Russell B. Long, Louisiana Democrat, told Undersecretary Dillon; “I just don’t know of any country with a comparative size . . . that this country has done a fraction as much for on a per capita basis as we have done for Israel.” Sen. Long estimated U. S. assistance to Israel totalled one billion dollars. Mr Dillon said this estimate was “very true” but pointed out that “there were large private funds.”

Sen. Long said he was distressed “to find that some would contend that we are mistreating Israel when we have actually, I suppose, on a per capita basis, managed to have done about eight, nine, or ten times as much as we have done for the others on the

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