Eisenhower Reports to Congress on Effects of U.S. Aid to Israel

The effects of American aid to Israel on the economic situation of the country were outlined today by President Eisenhower in a report to Congress on the operation of the Mutual Security program throughout the world. The President said:

“United States aid under the Mutual Security program has been only a part of the worldwide assistance which Israel has received since its establishment, and the striking economic gains in the country have been produced primarily by the driving energies of the Israelis themselves. Nonetheless, our aid measures have formed a significant part of Israel’s progress and have contributed importantly toward the maintenance of the going national economy.

“United States development assistance and technical cooperation,” the President continued, “have played a major role in the tripling of the land area under irrigation since the state was founded, in the doubling of agricultural and industrial production and power-generating capacity, the reduction in the trade deficit by $75,000,000 in three years, and the settling of nearly 700,000 immigrants in permanent or semi-permanent quarters.

SAYS ISRAEL STILL FACES “TROUBLESOME” FINANCIAL SITUATION

“Despite its growing achievements, Israel continues to face a troublesome financial situation,” President Eisenhower noted. “Its trade deficit of over $200,000,000 and external debt of over $400,000,000 make it most difficult for it to pay from its own resources for the essential commodities and capital items needed to sustain an adequate rate of development.”

Touching upon Israel’s efforts to consolidate its foreign debts, President Eisenhower said that the Israel Government’s program to stabilize its foreign exchange and debt position had produced “measurable results” by the end of 1954. “The upward swing in its external indebtedness was brought to a halt, and much of its short-term debt was successfully refunded.” the President pointed out. “Increased industrial and agricultural production brought a substantial rise in export revenues and assisted the drive to reduce import requirements, particularly for food. As a result, Israel’s trade gap was appreciably narrowed in 1954, although it still was estimated at about $210,000,000.”

The President revealed in his report that in the period of July-December, 1954, there arrived in Pakistan and Iraq “the first United States shipments of weapons and supplies sent under recently initiated military assistance programs.” The shipments to Iraq were “mainly for its army establishment,” he said.

Discussing the Arab refugee resettlement project under consideration, President Eisenhower told of a proposal to irrigate land in the Sinai peninsula of Egypt. “An engineering report is being prepared under the auspices of the Egyptian Government and the UNRWA, and it is expected that the results of this report will be available early in 1955,” he recalled. The Sinai peninsula project would provide for the resettlement of some 50,000 refugees who would develop and cultivate the land, he estimated.

On the water development negotiations conducted by Ambassador Eric Johnston with Israel and the Arab states, President Eisenhower reported that “the principle of international sharing of the contested waters of the Jordan River has been accepted by the interested states, and they have expressed their willingness to cooperate in working out a mutually acceptable program.

“The proposed plan under study for development of the Jordan Valley provides for the irrigation of about 225,000 acres of land in the four countries of Syria, Lebanon, Jordan, and Israel, and contemplates the production of 1.4 million kilowatt hours of power annually. It is estimated that successful implementation of the plan would make possible the eventual settlement of about 200,000 refugees, “the Eisenhower report said.