In his memoir, Envoy to the Middle World: Adventures in Diplomacy (1969) Ambassador George McGhee recounts an incident relating to early Israeli control over U.S. Middle East policy. In June 1949 McGhee, then in charge of Palestinian refugee affairs, invited the Israeli ambassador, Eliyahu Eilat, to lunch to inform him of a decision by President Truman to withhold $49 million of an Export Import Bank payment unless the Israeli government complied with a proposal to accept the repatriation of 200,000 Palestinian refugees. The Israelis refused and Truman immediately withdrew his proposal to sanction Israel.
As authors George W. Ball and Douglas B. Ball recount in The Passionate Attachment: Americas Involvement with Israel, 1947 to the Present (1992), the context of the incident was that the Truman administration, distressed by Israels refusal to make concessions on the issues of territory and repatriation of Arab refugees at the Lausanne Conference (April 1949) , decided to confront Israel. Truman went so far as to write a letter to Ben Gurion in which he warned that the U.S. would have to reevaluate its relations unless concessions were forthcoming. Israel rejected Truman's demands. (pp. 34-41)
Here is McGhees description of the incident from his memoir.
On May 2, , my office prepared a memorandum for Secretary Acheson for a meeting with the President which, among other recommendations, suggested consideration of holding up the remainder of the $100 million Export-Import Bank of Washington (Ex-Im Bank) loan to Israel, which was $49 million, to put pressure on Israel to take at least 200,000 refugees. I do not know whether the Secretary raised the issue with the President at that time. On June 10, following rejection by Israel on May 29 of our latest proposal on refugees, a memorandum was sent to the President which among other recommendations urged that the Ex-Im Bank, should be immediately informed that it would be desirable to old up the allocation of the $49 million as yet unallocated of the $100 million earmarked for loan to Israel. [ Department of State, Foreign Relations, Vol VI, p. 1110].
I was advised by the Department that this recommendation had been approved and that I should inform the Israeli Ambassador. I asked the Ambassador to lunch with me at the Metropolitan Club and put our decision to him in the most tactful and objective way I could. In light of the costly military demands made on Israel to defend itself against the Arabs, whose enmity arose mainly from the failure of Israel to carry out the U.N. resolution on the refugees, Israel would not be able to make effective use of the Ex-Im Bank loan unless this issue was defused by Israels taking at least 200,000 refugees.
The Ambassador looked me straight in the eye and said, in essence, that I wouldnt get by with this move, that he would stop it. There was other conversation, but I had got the point. Within an hour of my return to my office I received a message from the White House that the President wished to dissociate himself from any withholding of the Ex-Im Bank loan. I knew of the Presidents sympathy for Israel, but I had never before realized how swiftly the supporters of Israel could act if challenged. (p. 37)
End of selection from George McGhee
It's not unlikely that Clark Clifford, a principal political adviser on the White House staff, and David Niles (described by one writer as an out-and-out Zionist, who was included in the Presidents circle of political advisers) were decisive in in reversing Trumans decision. Its remarkable that Ambassador Eilat had a much more accurate assessment of their power over the President than did George McGhee. RB