Msa Fund Diversion for Iran May Cause Sharp Cut in Israel Aid

Israel may suffer a severe cut in mutual security assistance owing to the diversion of Near Eastern economic aid to Iran, it was revealed today by the Foreign Operations Administration.

An inquiry made with the Administration disclosed the fact that $25,000,000 of the emergency $45,000,000 grant for Iran announced by President Eisenhower on September 5 will be taken from funds Israel expected to share with the Arab states.

A spokesman for the FOA said today that $25,000,000 would come from the $147,000,000 total provided in the new Mutual Security Act for economic aid to Israel, the Arab states, Iran, and certain African territories. The exact amount for Israel and the Arab states was never specified, but it had been assumed they would share what was left after Iran and the African territories were taken care of.

Israel will also be affected by another grant made Sept. 3 of $23,400,000 in technical assistance to Iran. An estimated $10,000,000 of this amount would come from the $147,000,000 total Near Eastern appropriation. Therefore, these two deductions in favor of Iran, plus the amount for Africa, would leave Israel and the Arab states about $100,000,000 to share between them.

ISRAEL AID MAY BE CUT TO FIFTY MILLION DOLLARS

Congressional testimony on the Mutual Security Act in question clearly indicated that Israel could expect aid on the level of the two previous years. In the fiscal year 1952, Israel received $63,500,000 and in the fiscal year 1953, Israel received $70,200,000. A breakdown on the basis of the approximately $100,000,000 which would appear to be left to be shared equally by Israel and the Arab states out of the 1954 fiscal appropriation would theoretically give Israel not more than $50,000,000.

It was pointed out unofficially in government circles that Israel had not been promised any definite amount and that distribution of funds available for the Near East would be made according to the national security requirements of the United States. Today, Iran is considered to be the big trouble spot.

Significantly, the remaining $20,000,000 of the Iranian appropriation of $45,000,000 came from a $100,000,000 special MSA fund provided for the President for special security grants. Nor more than $20,000,000 of this fund may be given to any one country. Should the President consider Israel and the Arab states to be in a security emergency like that of Iran, he could appropriate from this fund for those states. However, government officials expressed the sentiment that neither Israel nor the Arab states had any right to expect any specified sum because Near Eastern aid funds are to be allocated subject to the most imminent threats to security in the states of the area.