4FOREIGN RELATIONS, 19 5 0,VOLLUME I


   There is no immediate prospect of any substantial flow of private
 capital into the Philippines and it would appear that the economy is
 not strong enough to support loans for the minimum development
 required to achieve viability. With grant funds available for this pur-
 pose over the next few years, it is considered that public loan capi-
 tal and private equity capital could then start to flow into the Philip-
 pines to support the type of development required for long-term
 stability.
   New Zealand: New Zealand is not a member of the International
 Bank and will probably need Eximbank 'assistance to expand produc-
 tive capacity. Aid to New Zealand is aid in the common defense effort.
   Near East: This area because of its location for international
 transportation and its oil production is of vital importance to the
 U.S.
   Iran is 'more insistently under the pressure of Soviet proximity and
interest than perhaps 'any other country. There is ferment and un-
rest in the neighboring Arab States. Immigration into Israel of Jews
presently residing in Moslem States continues unabated -and with it
heavy economic burdens for the State of Israel. In addition there
remain several hundreds of thousands of unsettled Arab refugees from
the war between the Arab States and Israel.
   The U.S. is already committed to assist in the resettlement of Arab
refugees. In the case of Iran, it is desirable that the U.S. render effec-
tive assistance as tangible evidence to the government and the people
of American interest in the preservation of the country's independence
and to strengthen both the 'ability and the will to resist Soviet aggres-
sion and communist subversion. It is necessary in the Arab States to
provide assistance that will give some forward momentum to these
static economies. In the case of Israel, it is in the U.S. interest that
this
new State receive the technical and financial aid which it will need to
cope with its many difficult problems and discharge its international
responsibilities.
  In addition to aid for the settlement of Arab refugees, the grant aid
scheduled for this area is intended to cover the cost of an enlarged
program of technical assistance and associated supplies and equipment,
ranging from specific projects at the village level for the improvement
of health, sanitation and education facilities, training in agricultural
techniques and the provision of seed, toolss and fertilizer, to broad
survey and diagnostic missions.
  Loan assistance is provided for capital investment projects in Israel,
Iran, Lebanon, Saudi Arabia and possibly Egypt. (It may become
necessary to iincrease the grant component ,for the Near East area if
Iran is unable to secure loan assistance for necessary development
projects.)


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