Introduction

1. I understand that Mr. Saul Hayes and other representatives of the Canadian Jewish Congress will be having an interview at three o'clock on Friday January 21 at which they will discuss the subject of financial assistance by I.R.O. to Jewish immigrants entering Palestine.

2. At the last Executive Committee meeting in Rome December 7-13, there was a serious divergence of views between the United States and the United Kingdom on this subject, the United States pressing to have I.R.O. assume financial responsibility for these immigrants. A special meeting was called for January 25 to DEA/ with the matter.

Background

3. Very briefly, the background is as follows, Since May 18, 1948 the I.R.O., on the basis of an administrative decision, has refused to give financial assistance to the movement of immigrants into an area of hostilities such as Palestine. The Jewish Agency for Palestine and the American Joint Distribution Committee have moved large numbers of Jewish refugees into Palestine. In August the DirectorGeneral of I.R.O. announced that if the truce were followed by a genuine peace the I.R.O. would give favourable consideration to reimbursing the agencies for I.R.O. eligibles transported. The total of such eligibles moved between May 1 and September 30 is estimated at 44,395. The I.R.O. budget for 1948-1949 provided four million dollars for financing mass immigration movements to Palestine.

Present Position

4. The Canadian representative, Mr. J. Desy, is chairman of the Executive Committee. At the last meeting he worked, though unsuccessfully, to find some solution acceptable to both British and Americans. On January 12 we cabled him instructions that he was first, to attempt to obtain a postponement of the Executive Committee meeting, at least pending the outcome of the truce talks in Rhodes; second, if this was impossible, to work for a solution acceptable to both parties; third, if the matter was finally forced to a vote, to cast his vote against the assumption of responsibility by I.R.O., prefacing his action by a statement to the effect that the vote was based solely on present disturbed conditions in Palestine, which it is to be hoped are temporary, and that when these disturbed conditions have come to an end, Canada would be glad to vote in favour of I.R.O.'s assumption of responsibility.

5. Since these instructions were sent, it has become evident that a postponement of the Committee meeting will not be feasible. The U.S. is certain not to agree and in any case another very urgent problem-that of White Russian refugees in Shanghai-has been put on the agenda.

6. The State Department has made an appeal to the United Kingdom Government and to the Canadian Government (through our Ambassador in Washington) to reverse the present I.R.O. policy. We have been confidentially informed that the United Kingdom Government will not respond to this appeal.

7. The Director-General of I.R.O. and Mr. Desy informed us that with the exception of the United States members of the Executive Committee are opposed to a change of policy.

8. Articles appearing in the press during the last few days have indicated that the Jewish agencies are willing to go the limit in financing Jewish immigration into Palestine; that the Israeli Government is actively engaged in settling Jewish immigrants on land vacated by Arab refugees. The Israeli authorities have several times stated their intention to enter into agreements with Arab states for the exchange of Palestinian Arab refugees with Jewish residents of Arab lands who would be brought to Palestine and settled there permanently. It is Mr. Shertok's personal opinion that Arab refugees resettled in Arab countries should be compensated for property left in Israel, but in his .statement to Mrs. Ann O'Hare McCormick on January 16 he made it clear that his government was not yet committed to this principle.

9. We had hoped to avoid adverse comment from Canadian Jewish groups by having the issue postponed so that the Delegation would not have to take up a position. It is now probable, however, that unless Mr. D6sy's instructions are altered, he will have to vote against the assumption by the IRO of paramount responsibility for Jewish movements in Palestine.

E[SCOTT] R[EID]