ISRAEL - oe 681.

intentions toward the Israeli Government and that I hoped very much
that they would before long have means of communicating with each
other directly. The announcement of the release of the Jewish DP’s_
in Cyprus would, I hoped, be helpful in clearing the atmosphere before
the elections. . . . I also mentioned the U.S. loan which the Export-
Import Bank has approved today.” (memorandum of conversation by
Mr. Satterthwaite, 501.BB Palestine/1-1949) oe :

The Export-Import Bank, on January 19, announced authorization
of a credit of $35 million to Israel to finance purchases in the United
States of equipment, materials, and services in connection with agri-
cultural projects and of a further credit of $65 million to finance
projects in the fields of communications, transportation, manutactur-
ing, housing, and public works. The latter group of credits was to be
available until December 31, 1949. The text of the Bank’s press release
on these credits is printed in Department of State Bulletin, Feb-
ruary 6, 1949, page 173. ee

4

501.BB Palestine/1—2849

The Acting Secretary of State to M r. Mark F. Ethridge .

TOP SECRET” _ ‘Wasnineron, January 19, 1949.
Sm: Before you depart for Palestine to assume your duties as
the American representative on the Palestine Conciliation Commis- —
sion, I am setting forth the following basic positions for your
guidance :+ | | | ,

A) A final settlement on all questions outstanding between the
parties in Palestine should be achieved by negotiation as set forth in
the General Assembly resolution of December 11, 1948. You should
do everything possible as a member of the Conciliation Commission to
assist. the parties to reach an agreement by this means. You should
consult the Department periodically during the course of these
negotiations. |

B) If it becomes necessary during the course of the negotiations
for you to express the views of this Government, you should bear in
mind that American policy is based on the following premises:

1. No modifications should be made in the boundaries of the
State of Israel as established by the General Assembly resolution
of November 29, 1947, without the full consent of the State of
Israel. | |

1Mr. Lovett had sent identical instructions to Mr. Keenan in a letter of Jan-
uary 5. The letter is filed under 501.BB Palestine/7-1949. >