Israel Minister Confers with State Dept. on Direct U.S. Grant Aid

Yaacov Herzog, Minister of the Israel Embassy, today conferred with William Rountree, Assistant Secretary of State for Near Eastern Affairs, on the special assistance grant issue.

Israel sources later said that State Department officials insisted there was no political motive to the termination of grant aid to Israel, and that the decision was based on economic considerations. These sources said the State Department officials held that economic considerations for ending the grant aid were based on Israel’s gross national product per capita, and the restrictive nature of the special assistance program.

While they gained an impression that the State Department might compensate for special assistance through other programs, Israel officials insisted that the special assistance grant program in question is vital to Israel’s economy.

The State Department agreed to study Israel’s economic arguments in this respect. The first economic discussions have already been held, based on a memorandum relating to Israel’s needs in the coming year, submitted last week by Ambassador Abba Eban. It is understood that the content of these economic discussions was reviewed in the talk between Mr. Herzog and Mr. Rountree today. These discussions are continuing on the economic level.

Congressional sources revealed today that an instruction to the State Department to reinstate Israel into the special assistance grant program may be written into the final report of the House Foreign Affairs Committee on the Mutual Security Bill. Important bi-partisan elements in the committee consider this as a means of impressing upon the executive department that the committee considers Israel entitled to participation in the economic grant aid program and to her fair share of benefits.

The move to write such an instruction embodying the conviction of the committee into the final report on the pending legislation is under active discussion and gaining momentum, it was made known.