Foreign Relations of the United States, 1947, The Near East and Africa, Volume V

867N.01/5–2847

Memorandum by the Jewish Agency for Palestine¹

Washington, May 28, 1947.

United States Government Financing of Palestinian Development

1. The Jewish Agency for Palestine suggests that a constructive resolution of the Palestine problem would be facilitated if, during the next three or four months, confidential exploratory conversations on the financial implications of a Palestinian settlement were to take place between the appropriate officers of the United States Government and the representatives of the Jewish Agency. The Agency contemplates presenting its ideas, in the first instance, to the officers of the Department of State and of the Export-Import Bank. It requests guidance from the State Department on whether other Agencies of the United States Government should also be consulted at this stage.

2. In proposing confidential exploratory financial conversations at this time, the Agency’s objectives are, first, to facilitate the working-out of a just settlement of the Palestine problem through the United Nations and, second, to assure that this settlement is followed by such substantial immediate economic growth as would render the settlement really definitive and firm. It is clear that an equitable settlement will be rendered much more attainable if the Government of the United States indicates its readiness to support such a settlement by participating in practical development financing. It is further clear that the political solution has its maximum chance to make a positive contribution to the peace, security and welfare of the Middle East if it begins to operate in the constructive atmosphere of large-scale development activity.

3. In the course of the next months, the Jewish Agency shall be presenting, to the special committee of the United Nations Assembly, comprehensive plans for the economic development of Palestine. In part, insofar as they deal with irrigation and agricultural development, these plans have profited from the participation of the distinguished American engineers who were responsible for designing—and, in part, constructing and operating—such projects as TVA, Boulder, and Grand Coulee. We believe that the rest of our economic planning is equally firmly based, in practical businesslike terms. We are taking steps to assure that these plans are reviewed carefully by American economists with the widest experience in economic planning and international finance.

We would like to present all these plans also to the responsible officers of the United States Government during the next few months.

4. On June 14, 1946, the American members of the Executive of the Jewish Agency sent President Truman a letter outlining the Agency’s plans for the absorption of 100,000 immigrants. On July 6, 1946, this outline was expanded on the financial side in a memorandum to Mr. Henry F. Grady, then Chairman of the Cabinet Committee on Palestine. President Truman was so gracious as to compliment the members of the Agency on the workmanlike character of the plans submitted; the President also expressed his sympathy with the general proposals which the Agency then outlined. These plans and proposals (though they have been modified in some particulars) are substantially as relevant today as they were a year ago. (Copies of the Agency letter and memorandum and of the White House press release on the matter are attached for convenience in reference.²)

5. The financial requirements of a definitive settlement which weigh most heavily in the Jewish Agency’s plans are naturally those connected most directly with the capital needed to absorb Jewish immigrants into productive, self-sustaining livelihoods. The Agency is concerned also, however, with the capital needed to raise the productivity of our Arab neighbors in Palestine. As the Agency has repeatedly emphasized, in its submissions to the United States Government as well as to other bodies, the capital that needs to be employed productively in Palestinian development, for these purposes, far surpasses available Jewish resources.

6. Moreover, the Jewish Agency suggests that it would be advisable to present the United States Government not only its general plans but also much more particular projects in the financing of which the Export-Import Bank could appropriately participate. The Agency’s representatives will be prepared to discuss these projects in all relevant detail. We would like such projects to be subjected to searching scrutiny because we are confident that they qualify as sound investments.

7. The Agency turns first to the Export-Import Bank as a public lending body operating in the international sphere for the following reasons: (a) The Congress and Executive of the United States Government have declared their support for the objective of large-scale Jewish immigration and settlement in Palestine; (b) Many of the development projects that we envisage in Palestine are specially dependent on materials, equipment and engineering talent that the United States is particularly suited to supply; and (c) We do not yet have the status requisite for a direct approach to the International Bank for Reconstruction and Development. Nevertheless we do intend to have a preliminary exchange of views with the International Bank. For the longer run, we look to the International Bank to play a perhaps even larger role in our development financing than that of the Export-Import Bank.

8. In a statesmanlike effort to break the deadlock over the implementation of the proposals of the Anglo-American Committee of Inquiry, President Truman generously announced that the United States Government was prepared to meet the cost of transporting 100,000 Jews from Europe to Palestine and caring for them in transit. It would be extremely helpful if the Jewish Agency could have the State Department’s assurance that this offer still stands. Firm evidence of United States continued willingness to transport displaced Jews from Europe to Palestine would contribute to the likelihood of a constructive general settlement and would enable corresponding Jewish Agency funds to be budgeted for other urgent needs.

Jewish people the world over—and particularly in the United States—are now contributing on a most generous scale to aid in the rehabilitation of their less fortunate brethren and in their resettlement in Palestine. Reparations and UNRRA assistance were counted upon to lighten our burden in these respects, but these sources of funds have hitherto made only a minor contribution to our needs. The Jewish Agency would like to explore with the State Department the problem of funds for transitional care and maintenance—particularly the maintenance of orphaned children. The relief and rehabilitation requirements that we face far surpass the unaided resources of world Jewry.

9. Our highest hopes for the exploratory conversations which we suggest would be realized if the United States Government were prepared to make a public announcement about their progress at the time when such an announcement could be most helpful in achieving a general settlement. If the United States Government were then in a position to announce that it was prepared immediately—given a political settlement—to participate to the extent of $75 million or $100 million in the financing of the first stage of sound, businesslike development work in Palestine, a great constructive contribution will have been made to the resolution of an unnecessarily tangled and embittered situation. Our ultimate requirements of international public development financing will be very much larger than this, but such an amount loaned from the United States would aid greatly to assure a successful beginning on our large development tasks.

Eliezer Kaplan

Treasurer, Jewish Agency for Palestine

1. Transmitted to Mr. Henderson by Eliahu Epstein, Director of the Washington Office of the Jewish Agency, on May 28, with a request for the views and decision of the Department on the subjects raised.
2. Letter of June 14 not printed; for press release of July 2, 1946, see Foreign Relations, 1946, vol. vii, p. 642.