Allon Expresses Hope for a Positive Solution to Dispute with the U.S. over the $550 M in Transitiona

Foreign Minister Yigal Allon expressed hope today for a “positive solution” to the dispute with the Ford Administration over the $550 million in additional foreign aid he said had been “promised” to Israel to cover the transitional quarter between fiscal years 1976 and 1977. “We are not interested in a confrontation” and neither is the U.S., Allon told a special session of the Knesset in reply to a Likud motion on the transitional aid issue.

At the same time, the Foreign Minister firmly rejected proposals by some Cabinet ministers that Israel forego the extra funding in order to avoid a rift with the White House. President Ford has said he would veto any foreign aid bill that contains transitional quarter funds for Israel and some 50 other countries.

Israel is “convinced of the justice of our case.” Allon declared and will continue to press it though “the legitimate ways open to us,” His remark was clearly a reference to Israel’s lobbying efforts through its friends in Congress which was sharply criticized last week by a “Western diplomatic source” subsequently revealed to be U.S. Ambassador Malcolm Toon.

Allon said that Secretary of State Henry A. Kissinger and other Administration officials had undertaken to both Israel and Congress that the Administration would not oppose the transitional quarter aid if Congress initiated it. But the Administration’s attitude changed last month, Allon said.

He stressed the importance of the extra money for Israel. Without it. the Treasury would be $613 million out of pocket for necessary arms purchases, he said, noting that even with transitional quarter funds the deficit would be $63 million. However, while indicating that Israel would fight for the additional funds, he said the issue should be seen in the broader context of U.S.-Israeli relations in which the areas of agreement outweighed by far the disputes that arose from time to time.

CABINET DIVIDED OVER ISSUE

The Cabinet was divided at its session yesterday over whether Israel should continue to press the issue. Two Independent Liberal Party ministers, Moshe Kol and Gideon Hausner, suggested that the government renounce the aid and urged their colleagues to consider the long-term repercussions of a rift with the White House. Kol, who is Minister of Tourism, and Hausner, a Minister-Without-Portfolio, proposed that Israel thank its friends on Capitol Hill who have fought for the additional aid but announce that it would do without the money even though badly needed for defense spending.

A majority of the Cabinet rejected such a gesture as too costly for Israel. The matter was not put to a formal vote. An official communique issued by the Cabinet following yesterday’s session spoke of the Ford Administration’s “promise” but at the same time sought to tone down the level of the dispute.

The communique and officials who briefed newsmen afterwards, stressed that the issue was between the Administration and Congress rather than between Washington and Jerusalem. One Cabinet minister expressed relief that Congress has postponed a final vote until after its Easter recess. “This will allow the issue to cool off,” he said.