U.S. Suspends Economic Aid to Israel; Notifies Israel Government

The United States has officially notified Israel that economic assistance for the Jewish State is being suspended, according to government sources. Funds voted Israel by Congress for the fiscal year 1954 were never specifically listed by an exact amount but were estimated to be about $65,000,000.

The suspension was originally visualized in connection with the canal project near the Israel-Syrian frontier which the State Department viewed as a violation of armistice terms and a threat to peace. Notice of intent in the State Department action was given Israel about two weeks ago, sources here said today.

The question of the canal project was touched upon today by Israel Ambassador Abba Eban in the course of a talk he had in the State Department with Acting Deputy Under Secretary of State Robert Murphy. The Ambassador said he had not discussed the reported American suspension of economic assistance to Israel with Mr. Murphy.

Mr. Eban later told correspondents that Israel would welcome a discussion of the hydroelectric project near the Syrian border and a general discussion of the development of water resources. The project, he said, is not in conflict with any regional plan.

The major part of the talk was devoted to United Nations aspects of the Arab-Israel situation, Mr. Eban revealed. He said he had suggested a “balanced view” which would take into account Israel’s views of last week’s raid on Jordan as part of a general pattern of events. The “tragic and regrettable event of last week should not be isolated” from other events, the Ambassador declared.