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Johnson’s Foreign Aid Message to Congress Avcids Reference to Egypt

Administration sources sought today to portray Egypt in a more favorable light and indicated that assistance to the Nasser regime would probably be continued as President Johnson submitted his annual foreign aid message to Congress.

The new program outlined in the message contained no direct assistance for Israel. However, the message included a request for enactment of an investment tax credit which might encourage private investment in Israel and other developing countries.

President Johnson’s message carefully avoided all reference to Egypt and the abuse of the United States on the aid issue by President Nasser. No guidance was offered on American policy toward Egypt except by Administration sources who stated that very little technical assistance for Egypt was currently provided and that surplus commodities shipments were not covered in this particular legislative matter.

These sources explained that commodity shipments, valued at over $100,000,000 a year, are presently being shipped to Egypt under an agreement which expires next June 30. It is too early to say what American policy toward Egypt may be at that time, it was said, although the Administration feels the situation involving Egypt is changing in a favorable direction. Egypt came forward with offers to provide money, books, and housing to replace the U. S. Information Agency library burned in Cairo, these sources said.

U. S. INTENTIONS OF FUTURE AID TO EGYPT HELD ‘CLASSIFIED’

American intentions involving future aid to Egypt, in the program being drawn up for fiscal year 1966, are “classified.” The Administration said it was vital to American interests to maintain good relations with Egypt and continued aid was seen as the best available channel.

Administration officials defended the continuation of approximately $2,000,000 for technical assistance and training for Egyptians. Under this program Egyptian students are brought to the United States for training and are believed to gain a friendly attitude toward this country. Complaints have been made to the government, in the past, that some of these Arab students became unlawfully involved in domestic American political activity and were active in anti-Jewish and anti-Israel propaganda activities.

The situation in Egyptian-American relations was described by top Administration policy makers as changing almost daily. Therefore, under pressure from the State Department, the Administration is resisting the firm stand toward Nasser advocated by members of Congress of both parties.

Since the major portion of aid to Egypt is covered under Public Law 480- surplus agricultural commodities legislation–rather than the foreign aid bill now being transmitted, Congress is seeking a legislative means of severing such aid. The present aid bill, however, will provide for a debate on aid to Egypt and might bring an amendment cutting off even the relatively minor sums contained under technical assistance and training sections.

POSSIBILITY SEEN FOR PRIVATE IN VESTMENTS IN ISRAEL

The overall aid request took into account the attitude of Congress toward aid in general. The President pointed out that this year’s request was the smallest in the history of the aid program and $136,000,000 less than the sum requested last year.

It appeared that Israel might benefit under expanded authority requested in connection with steps to encourage private investment in developing lands. President Johnson asked Congress to enact an investment tax credit. He also requested expanded authority in connection with the investment guaranty program of the Foreign Assistance Act.

The President said, however, that “such measures to encourage the flow of capital to the developing world can do only part of the job. The less-developed countries must pursue policies that will create new opportunities for their own businessmen and a favor able climate for investors from abroad.”

He said private enterprise in developing nations was being encouraged through technical assistance for private enterprise; productivity centers and schools of business administration for training in management and new techniques; commodity loans to provide materials and parts for private business, loans to industrial development banks and agricultural credit banks, and loans to private business.

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