Ford Administration Opposes New Boycott Legislation, Simon Says Confrontation to Be Avoided

The Ford Administration’s record on the Arab boycott against Israel was reviewed by a variety of supporters and defenders in statements to several Congressional committees today. The principal defender was Treasury Secretary William E. Simon, who told the House International Relations Committee that “no additional legislation is necessary or desirable at this time.” He said new legislation “would be detrimental to the totality of United States interests both here and in the Middle East.”

Simon said “We have had talks with Arab and Israeli leaders and with leaders of the American Jewish community on boycott issues and on ways to eliminate racial, religious and other discrimination.” In such talks, he said, “we have made the point that our basic goal must be to encourage progress toward peace. It is our considered judgement that confrontational policies will not move to remove the boycott and could undermine the delicate search for peace in that troubled region of the world. The Administration sought and continues to seek effective ways to eliminate this divisive policy and simultaneously achieve a just and lasting peace in the Middle East.”

Administration policy, particularly in the Commerce Department, came under sharp attack today from Rep. John Heinz III (R. Pa.), who assailed the Arab blacklist of American firms and individuals having dealings with Israel. He warned the committee that “we will invite Arab intimidation of every corporation, every religious and ethnic group and every individual in our country unless the list is fought now.”

VOLUNTARY MEASURES CALLED FAILURE

I Will Maslow, general counsel of the American Jewish Congress, and Seymour Graubard, national chairman of the Anti-Defamation League of B’nai B’rith, both testified before the House committee that the Administration policy of voluntary anti-boycott action had failed. They said that many businessmen would be willing to defy the Arab threats if they had laws on the books backing their stand.

Dr. Arthur F. Burns, Federal Reserve Board chairman, asserted yesterday that American banks had a major role in the boycott and that Congressional action was needed if diplomatic efforts failed to solve the problem. In a letter to a House Government Operations subcommittee, Dr. Burns said “it is clear to me that banks in the United States play a crucial role in giving effect to the Arab boycott in this country. Our banks are not only securing assurances for Arab importers that they are not buying goods of Israeli origin but they also serve as the instrumentality whereby United States citizens having unrelated dealings with Israel may be denied access to the Arab market.”

Widespread compliance by American banks with anti-Israel boycott demands was also acknowledged by Rauer Meyer, director of the Commerce Department’s Office of Export Administration, who reported yesterday that a department survey disclosed that 119 American banks received 10,443 restrictive requests covering 5190 transactions during a four-month period that ended last March.

In only 72 cases in each of the months, on an average, did the banks refuse to process the letters of credit or otherwise participate, Meyer said. He said that about 80 percent of the requests directed against Israel came from Saudi Arabia, the United Arab Emirates, Kuwait and Iraq. The rest came from other Middle Eastern countries. The banks complied with requests to participate in 4071 cases and declined in 288. The rest were decided by other parties or were cases in which the banks did not indicate how the requests were handled.

SCORES HORRIBLE PRACTICE

Meyer’s report to the House Government Operations subcommittee prompted its chairman. Rep. Benjamin S. Rosenthal (D.NY), to remark that this “horrible” practice further underlined the need for legislation prohibiting American participation in the Arab boycott. At present, federal law requires only that companies. including banks. report contracts containing boycott clauses to the Department of Commerce. President Ford issued a directive last November enjoining American companies from engaging in business transactions that could result in discrimination against American citizens.

Representatives of the Chemical Bank and the Morgan Guaranty Trust Co. told the subcommittee that while they did not approve of boycotts. laws forbidding even indirect participation by American companies would have serious adverse effects on trade with Middle Eastern countries. Proponents of strong anti-boycott laws argue that the Arabs badly need American products and technology and would disregard their own boycott rules if the U.S. took a tough stand.