interest in it, and I would like to make it perfectly clear that the messages which we have had from the Secretary and Mr. Stassen from the Near East on their recent trip, give us no reason at all to retreat or retract in any way from the presentation which we have made in this statement

The Secretary when he testified spoke in part as follows:

We believe that the area can best be treated as a whole and that it is not realistic to think of the building of defense within the area against possible Soviet aggression as long as the area is torn by conflict.

And he also said that

We hope that with the discretion which would be allowed us if this legislation is passed in the form proposed, to initiate a program for the entire area which would include among other things the prospect of peace between Israel and the Arab states and that that would provide a foundation upon which a more dependable defense structure could be erected than under present conditions.

Now this program is obviously closely allied to the program of military aid about which Mr. Jernegan spoke. He has furnished part of the political background. Therefore, I will not repeat that.

I would point out that what is new from the legislative point of view is the proposal that we should consider the Near East as a whole and not single out in the legislation by name an individual state for special treatment.

You will recall that previous sections of the law had labeled aid to be rendered to Israel on such terms and conditions as the President directed, whereas aid to the neighbors of Israel either had to be related to the resettlement of the Arab refugees or to the regulations of the technical cooperation program, which were, as has been pointed out, in many senses restrictive regulation. We think it is in the interests of the United States to be able to treat these neighboring countries on a like basis and that the friends, the special friends of Israel have a real interest also in seeing that this bill is supported or in supporting this bill because I do not think it is in Israel's interest to be singled out for special treatment. In the long run Israel is going to have to survive as a part of the Near East. Special treatment of Israel, special reference to Israel in legislation creates special resistances. It is a political minus and not a political plus.

Mr. JAVITS. I think there is a very sharp difference in two things that you said: Special treatment and special reference. I am inclined to agree with the latter and not with the former, for this reason: The basis upon which the committee acted, as I recall it, was an equal refugee situation. The Israel problem, its continuing problem is one of refugees just as the Arab refugee problem persists, and I think when we did what we did with respect to the Israel provision we were looking at it in that light. I believe Dr. Judd sponsored that amendment in terms of refugee assistance, equally refugee assistance to resettle the Palestine-Arab and Israeli refugees.

However, as against the special mention of a country and the problem, this is a fact. It was specially mentioned. Therefore, I have always felt that I would like to see the area treated as a unit. I have said publicly on many occasions that Israel has to live in the Near East and as the Near East prospers and gets somewhere, Israel will get somewhere.

I am rather hopeful and I think many Americans feel the same way. that we can very greatly help the Near East toward economic and

social development. I would like to ask if it is the aim of the common fund to integrate the area insofar as possible economically, I think that is sound. It may be interesting for you to know if I may be permitted to refer to it, Mr. Chairman, when I was last in Israel which is now 2 years ago, I was invited to make a speech over the Israeli radio, the national radio, which caused quite a good deal of comment in which I urged that all possible Israeli projects have an open end valve at the end so they could eventually be connected with Arab projects. It may have been called to the State Department's attention. I said just about what you are saying now. I like the idea of economic integration and I have always preached the idea that economics may be a bridge to Arab-Israel peace quicker than diplomatic negotiation. I do trust, however, that the fund will not be used as a means of pressure in political terms but rather will be used to help the area as an economic unit with the feeling that the political benefits will then come, even though they may seem to be indirect. In other words, I do not like to see a fellow going down there with a satchel full of money and saying, "Look. If you sign here, you get some money; if you don't, you may starve." Do you see what I mean?

Mr. GARDINER. I understand. I would continue my statement with the observation that while I stand by every word that I said when I spoke before, that I think when you come to allot funds you will have to use a different basic criteria in Israel than you would in the Arab States. You cannot use funds as a weapon of political pressure. You cannot use starvation as a political weapon.

On the other hand, it might well be that there would be certain projects which were feasible if considered on an area basis from which you otherwise would choose to withdraw and there might be conflicting projects in a closely packed neighborhood which you would wish not to see financed if actions on both sides of the border were clearly uneconomic. If we were paying a bill on both sides, it could be a smaller bill if people got together and worked out their resources on a unitary basis.

I would like now, if I may, sir, to address my remarks to the distinction between the requirements of the Arab States and Israel. I agree with Mr. Javits that there are very different types of need.

We have filed with the committee classified documents which we would like to remain classified as long as possible, indicating the basis for the request for $140 million.

(Discussion off the record.)

Mr. GARDINER. Now, that proposal is on file with the staff, and I believe it has been submitted to the members. In approaching that calculation, we have done what we have done in prior years, we have endeavored to make as good a calculation as possible of the prospective expenditures and revenues of Israel on foreign exchange account for the ensuing fiscal year.

(Discussion off the record.)

Mr. GARDINER. What may be discouraging to you in this forecast is the fact that comparatively little progress appears to be in sight, insofar as the export trade of Israel is concerned, and there I think we ought to be very frank and clear with each other.

You will note there is an estimate of $60 million for exports of commodities from Israel during fiscal year 1954, which compares

with $45 million for fiscal 1953. That by no means tell the whole story.

In order to achieve an export surplus of $60 million-I beg your pardon-commodity exports of $60 million-it is necessary for Israel to import approximately $36 million worth of materials to fabricate. That by no means tells the whole story.

Mr. JAVITS. Could we get some document on that?

Mr. GARDINER. I am sorry; I thought you had them.

Mr. WESTPHAL. F-2 is a digest and does not include the figures from which he is speaking.

Mr. JAVITS. As long as we know we have not got it, we will listen closely.

Mr. GARDINER. The facts are, to enable Israel to achieve an export total of $60 million, you have not only to import $36 million in materials to fabricate, but you also have in the account, which does not appear directly, other expenses of the export industry, such as fuel and capital expenditures, which reduce the actual benefit of those exports, even more. Now, I have been asked for, by committees, a prophecy as to when Israel may become a viable state. We have had very careful studies made by economists who have looked closely into the Israeli problem with that point in mind. I think a fair answer still is, "I do not know."

On the other hand, we have some reason to feel that if what one means by a viable state is a state that can support itself with assistance from its sources of private income abroad, rather than United States grants, there is a prospect, if Israel continues to put her house in order, of viability within 5 or 6 years' time-viability in terms of no more requirement for United States grant. That, I think, is the most hopeful forecast that I could put conscientiously on the Israeli picture, the economic side of the Israeli picture. They would have considerable gains if there were no Arab boycott. They would save some money on fuel and benefit from more tourist trade and other elements in the local economy. It would result in a pickup of income if there was no longer this border tension or border strife.

I am afraid that you are going to have to be faced with consideration of Israel's needs for several more years.

I would think that until the economy of Israel has become more predominantly agricultural-and the Israelis are well aware of this prob lem-until they have people tilling the fields as intensively as the Arabs used to till those fields, they are going to be very badly off economically.

They will tell you of great possibilities of development in the mineral field. They hope to strike supplies of oil. They may find such development, they may find oil, but until that day comes, I think that the path for Israel is increasing agricultural production as they bring into utility once more a good many hundreds of thousands of acres formerly cultivated by the Arabs, many of which are now still unused. Mr. SMITH. Why do we not get at first problems first, Mr. Gardiner, in this area? The first and basic problem that confronts the world is the refugee problem. Yet we talk all around it. We just do not want to come to grips with it.

Mr. GARDINER. I would come directly to it, but we have a complex problem, sir, and I think unless we take one item at a time, I just

cannot handle it properly. I would like to come to the refugee problem, sir.

Mr. SMITH. You said a moment ago that one of Israel's problems was this matter of tension between the Arabs and that it is generated as a result of the refugee problem.

Mr. GARDINER. I quite agree, sir, it is hopelessly intertwined with the refugee problem.

Mr. SMITH. I will be glad to hear what you have to say on it a little later.

Mr. VORYS. Could I interrupt, Mr. Chairman?

Chairman CHIPERFIELD. Mr. Vorys.

Mr. VORYS. We had quite a blowup here sometime ago when we just had nothing to work on. A lot of us get things through our eyes better than our ears. Whether it was as a result of that, or not, we were furnished with figures and charts that we could all look at and know what it was about.

Now, I have 1 of the 4 copies of this thing which was sent up here and it is cast in a form different from anything we have had. I do not know how the committee feels but I wonder if it would be asking too much to get an analysis of Israel's economy and expenditures that we could all look at, something that would be comparable to the information we have gotten for all the other countries on the planet who are getting any such amount.

Would that be possible?

Mr. GARDINER. I am sorry, Mr. Vorys. I was under the wrong impression. We had prepared statements and I assumed that an adequate number had been provided but apparently they were not. Chairman CHIPERFIELD. Whose job is that?

Mr. GARDINER. Well, it is the job of the State Department, sir. We had arranged to have these things mimeographed and sent to you. Some copies have been in the hands of the staff for 10 days at least.

Chairman CHIPERFIELD. The staff tells me five copies were received. Mr. GARDINER. Well, I am humiliated. I had hoped there would be enough for everyone.

Mr. WOOD. Are there extra copies downtown, Mr. Gardiner, which we could send for?

Mr. SMITH. Could we make them here in the office and save time? How long would it take to run these off?

Mrs. CHURCH. Is there a sample one available?

Mr. VORYS. I think our staff is also justified in not reproducing copies of confidential documents. They take pride in preserving security regulations.

Mr. JAVITS. Mr. Vorys, if they have four, can't we distribute them around in strategic places on the table?

Mr. VORYS. Well, I do not know; I cannot tell much from the one I have in front of me.

Mr. WOOD. We will immediately find out whether some can be shipped up from downtown.

Mr. VORYS. I realize Israel stands in a special status of all the countries on the planet including our own but it seems to me it does not stand in such a special status that we cannot get the routine facts that we are accustomed to getting on these countries that we are asked to help.

Mr. GARDINER. Well, I apologize, Mr. Vorys. We had intended to submit those facts and I thought we had adequate copies.

Mr. JUDD. Mr. Chairman, while they are working on that could I ask a question regarding this map?

Chairman CHIPERFIELD. Off the record.

(The then following remarks were not reported.)

Mr. JUDD. Am I right in understanding that the crosshatched areas are what the U. N. plan gave to Israel?

Mr. GARDINER. The U. N. gave this crosshatched area to Israel and the noncrosshatched part to the Arab States.

Mr. JUDD. The blue without the hatching is what the Israelites have seized that was not given to them?

Mr. GARDINER. That is land now occupied by Israel which was allotted to the Arab States under the U. N. partition plan.

Mr. JUDD. And the Israelis have taken that. Now, for example, that land up at the top, did they take that from Lebanon?

Mr. GARDINER. The original area of the Palestine mandate followed this outer line.

Mr. JUDD. If the U. N. plan had been followed completely that would have been a little island of Arabs, completely surrounded by Israel?

Mr. GARDINER. Yes. You will note there is a corridor there. This is known as Western Galilee, Mr. Judd.

Mr. JUDD. This is all occupied now by Israeli?

Mr. GARDINER. It is occupied and controlled by the Government of Israel. When you say it is all occupied by Israelis, I am not quite sure what you mean.

Mr. JUDD. It is under the control of the Israeli Government.
Mr. GARDINER. That is correct.

Mr. JUDD. If the agreement of the U. N. had been carried out completely, these blue areas would have been white like these two, is that correct?

Mr. GARDINER. Yes, those areas would have been white as would the robin's egg blue. The El Ouja area is a neutral zone and Gaza is definitely under Egyptian control. Arab Palestine is annexed to Jordan and the Jordanian Parliament now consists of 20 deputies from Arab Palestine and 20 from the East Bank.

Mr. JUDD. Was this by act of Jordan itself, a unilateral act?

Mr. GARDINER. Yes, it was. It is recognized de facto, it is a fact. Mr. JUDD. The same as the Israelis annexed these de facto, Jordan annexed that?

Mr. GARDINER. Here [indicating Israel-Jordan frontier on the map] the boundary lines are armistice lines. This represents the demilitarized zones.

Mr. JUDD. Are there any areas that were supposed under the plan to have gone to Israel, which the Arabs are controlling?

Mr. GARDINER. No, sir.

Mr. JAVITS. As I understand it, that Gaza strip, was it or was it not supposed to be part of Israel?

Mr. GARDINER. The Jewish area granted to the Jews under the U. N. General Assembly participation plan in November 1947 is indicated by this crosshatching. The Gaza strip was not supposed to be part of the Jewish area under the United Nations plan.