Pentagon Says Israel Violated No Law in Receiving Defense Department Funds for Expenses Incurred in
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Pentagon Says Israel Violated No Law in Receiving Defense Department Funds for Expenses Incurred in

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The Department of Defense said today that it had paid the expenses of the Israeli arms purchasing mission in New York for 20 months for a total of nearly $3 million. The financing ended Aug. 9 at Israel’s request.

The Department affirmed that any government receiving U.S. military credits can receive funds for expenses and travel in the United States in connection with the purchase of American arms.

A Pentagon spokesman said that about 80 countries and foreign organizations, such as the North Atlantic Treaty Organization, have been eligible to use the funds since 1950. In addition, Assistant Defense Secretary Tom Ross said “all other countries” have the same privilege as Israel. He added he did not believe that any other country had asked to have its purchasing costs put on the basis Israel had.

The Defense Department was asked for a comment after a report that the Israeli mission had been receiving the funds was published by the Washington Post today. At the State Department, spokesman Hodding Carter said the “use of financing for procurement is permitted” and the State Department had authorized it “in general terms.”


The Jewish Telegraphic Agency was told that two factors distinguish the Israeli mission from the activities of other countries in the military purchases. One is that the Israelis reflected singular enterprise in setting up the mission. The second is that the Israelis established a credit arrangement with the U.S. under U.S. laws governing military sales.

Pentagon sources said the U.S. financed the expenses of the purchasing mission maintained by Israel. Of its 202 members, about half were American citizens and the remainder Israelis. The $2.8 million involved was estimated at $550,000 for communications, $500,000 for marketing research, engineering and quality control, $260,000 for U.S. legal services, $200,000 for computer services and $70,000 for U.S. travel by Israeli purchasing officials.

Lt. Gen. Howard M. Fish, director of the Defense Security Assistance Agency and the Pentagon’s top official on military sales, said that “it was a perfectly legitimate arrangement.” The mission’s administrative expense, he said, had been classified as a “defense service.” which can be financed under U.S. law. The expenses came from the loan made to Israel by the United States under its military aid program.

Speaking of the expenses paid by the U.S. as a loan, Fish said, “I don’t view that as taxpayers’ dollars. This is credit financing which Israel has to pay back with interest.” Since Israel also sells arms, Fish said he has “no indication” that the U.S. financing contributed to that Israeli activity.


Summarizing the matter for the JTA, the Pentagon spokesman said that, in fact, countries other than Israel have been using military credits for travel within the U.S. but the Israelis were more enterprising and saw “economic advantages” for them. “It is a matter of good business,” the spokesman said. The Israelis “made their credit dollars go a little further” than others. They arranged for their own shipping and other details which enabled them to reduce the costs of the equipment that finally reached Israel, the Pentagon spokesman said.

Israel ended the financing arrangement in a letter to the Pentagon earlier this month from Josie Ciechanover, the mission’s chief, who is presently out of the country. The Israeli Embassy said it “may” issue a statement later. A member of the Israeli arms purchasing mission in New York declined to comment to the JTA, saying that no one was authorized to comment in the absence of Ciechanover.

Since the matter involved Israel as a foreign government, the Pentagon refused to make public the invoices submitted by the Israeli mission to support its request for payment of expenses. A Pentagon source told the Jewish Telegraphic Agency that it had consulted with the Israeli Embassy about disclosure of the invoices and acceded to the Israeli request to withhold them since disclosure of such detailed information would be “prejudicial to the security interests” of the mission.

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