Israel Explains Inability to Permit U.S. to Sell Israeli Currency

A spokesman for the Israel Embassy here today explained why the Government of Israel could not agree to the request of the U.S. Government, to make available a total of $500, 000 of American-held Israel currency, accruing from the sale to Israel of American surplus foods, to be used by the U.S. for resale to American tourists going to Israel.

The spokesman stated that a basic reason for Israel’s inability to concede this request during the negotiations was that Israel’s foreign exchange control regulations provide that all exchange transactions with private individuals must be handled through commercial banks.

“However,” the spokesman stated, “the Government of Israel was fully understanding of the spirit and motivation of the U.S. request, and met this request through certain modifications of its agreement with the U.S. Government. These modifications, in effect, enable the U.S. to finance certain activities in U.S.-held currency and not in dollars, with consequent easement of the U.S. dollar outflow. Thus, these modifications would alleviate the position more than the request to make available Israel currency to the value of $500, 000 for sale to American tourists.”

The spokesman gave the following examples of these modifications which were introduced into the 1962 agreement between the U.S. and Israel. In the first place, the previous agreement had made it possible for the U.S. to use its Israel-held currency to pay only for transportation and travel expenses for those U.S. officials who travel to Israel under the Agricultural Trade Development and Assistance Act.

U.S. CAN USE ALMOST $1,000, 000 IN ISRAEL CURRENCY

“Israel has now agreed that such funds can be used without restriction to finance travel and transportation expenses of all U.S. Government personnel traveling to and from Israel and, in addition, such funds may be used for all U.S. Government personnel, without restriction, traveling through Israel to any destination,” the spokesman said.

“Further,” the spokesman pointed out, “the Israel Government had offered to the Government of the U.S. that certain services and contracts undertaken in Israel by industrial establishments on behalf of the U.S. could be paid in U.S.-held Israel currency and not in dollars. This offer by the Israel Government to the U.S. could, if utilized, enable considerable dollar savings.”

A further instance of Israel’s response to the spirit of the U.S. request concerns the question of U.S. expenditures on marketing research in agriculture. In previous agreements, the U.S. Government could utilize approximately $500, 000 worth of U.S.-held Israel currency and convert it into currencies of third countries for the purpose of financing agricultural marketing research outside Israel, which is of interest to the U.S. In the new agreement, this facility is considerably expanded, and the U.S. is now in a position to convert almost $1, 000, 000 to U.S.-held Israel currency into foreign currencies for this purpose.

In addition, the amount of U. S. -held Israel currency available for conversion into other currencies to finance international educational exchange activities has been increased by $100,000. “The net effect of all these modifications,” the spokesman concluded, “was that Israel had proved herself fully responsive to the spirit and motivation of the U.S. request.”