Israel is Still America’s Best Middle East Customer; Supplier Competition Grows

Israel, with a booming economy and rising production, continues to be America’s best customer in the Middle East, according to a report in the current issue of International Commerce, a weekly publication of the Department of Commerce. But the writer, John P. Edwards, of the Near East and South Asia division of the Bureau of International Commerce, warned that the U.S. is facing increased foreign competition as a supplier of Israel.

The competition comes mainly from Japan and Western Europe, he said. It resulted in a decline in the U.S. share of Israel’s market from 26 percent in 1967 to 22.7 percent in 1968,

“Israel has made no secret of its desire for strengthened economic and commercial ties with the EEC (European Economic Community) believing that it offers the best long-term market for Israeli products,” Mr. Edwards wrote. Israel’s imports from EEC countries rose from 24.2 percent in 1967 to 29.4 percent in 1968. “While the U.S. remains Israel’s largest individual country supplier, the maintenance of this position depends on increased efforts by U.S. business.” the writer said.

Reporting on the economic situation in Lebanon, Mr. Edwards said “tensions in the area have been compounded by related internal political struggles which have prevented the formation of a regular Cabinet for nearly two months. This situation has resulted in a sharp drop–estimated at up to 20 percent–in the number of American and European tourists visiting Lebanon so far this year…Tourism is one of the mainstays of the Lebanese economy, a major source of foreign exchange and a source of livelihood of many Lebanese–so the effect of the malaise is widespread.”

But Lebanon’s economy has benefited from the shut-down of the Suez Canal, Mr. Edwards reported. The port of Beirut handled about 35 percent more transit traffic in 1969 than it did in 1967 and the value of Lebanese-manufactured exports was up from about $32 million in 1967 to $45 million in 1968.

Egypt, according to a report by David E. Westley, is suffering from a shortage of foreign exchange, a slowdown in economic activity resulting from the 1967 war, a drop in agricultural output and a reduction in tourism. However, “improvement began last year. Along with a relatively substantial growth in the petroleum industry, some increase in investment expenditures helped stimulate the economy” while the loss of Suez Canal revenues was offset by subsidies from Saudi Arabia, Kuwait and Libya.

“After falling sharply following the 1967 war, the rate of U.S. sales to the United Arab Republic rebounded substantially as 1968 progressed, to reach a total for the year of $48.4 million…UAR exports were up in 1968. Higher export prices were realized for cotton and rice, petroleum exports rose sharply and a drop in domestic demand increased export availabilities,” the writer said.