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U.S. Hopes to Reach Decision Soon on Further Aid to Israel

April 30, 1985
See Original Daily Bulletin From This Date

The State Department said today that it hopes to reach a decision soon on whether to provide Israel with the $1.5 billion in additional economic aid sought by the national unity government headed by Premier Shimon Peres.

But State Department deputy spokesman Edward Djerejian would not say whether the decision could come before Secretary of State George Shultz goes to Israel May 9. He said he could not put a “time frame” on it.

“We continue our close dialogue with the government of Israel” on how U.S. assistance can help Israel’s economic programs, Djerejian said. “We hope to be in a position soon to reach a decision.”

The Reagan Administration has approved $1.8 billion in military aid to Israel for the 1986 fiscal year, a $400 million increase, and $1.2 billion in economic aid, the entire $3 billion in grants. But the U.S. has refrained from approving additional economic funds sought by Israel because Shultz has maintained that Israel has not done enough to solve its economic problems.

The House, meanwhile, is scheduled to vote on the Foreign Assistance Bill tomorrow which includes its Foreign Affairs Committee’s recommendation that the additional $1.2 billion be included.


Djerejian refused to comment today on reports that Peres sent Shultz a letter outlining his economic program in an effort to meet U.S. conditions. In an Independence Day interview on Kol Israel Radio last week, Peres said his letter contained responses to 10 questions posed by Shultz. He said he had “no doubt” that the U.S. will provide the requested aid.

“In brief, my answer to Shultz is that we have a forecast regarding inflation for the duration of the package deal, and the forecast for the second quarter depends on whether or not we sign another package deal. I would prefer us to do that in the form of a national agreement, since I believe it is the most secure and the best way.”

He said that in a few weeks, “we will launch negotiations with the Histadrut and the employers on an agreement reached of their own free will to curtail inflation. Then we will be able to inform the Americans that we are moving ahead.”

Peres said that the Treasury believes that in June, the fourth and last month of the package deal, inflation which was 24.5 percent when the unity government took office last September, will be down to 4-6 percent. Peres cited inflation as the third step in four major efforts needed to solve Israel’s major economic problems. The first, he said, was to cut the government budget even more than it has been cut. “I think we must slash the subsidies and reduce expenditures in the service sector,” Peres said.

The second step he outlined was to control and limit imports while increasing exports. Finally, he said, Israel must resume economic growth and establish more industrial plants.

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