U.S. Financial Aid To Israel: Figures, Facts, and Impact

Washington Report on Middle East Affairs

UPDATES:

• FY ’14 “Omnibus” Appropriations Bill Includes Middle East Funds, Conditions
• Find out how much money your representative has taken from pro-Israel PACs

Special Reports:

• Congress Watch: A Conservative Total for U.S. Aid to Israel: More Than $123 Billion

• Congressional Research Report on Israel: US Foreign Assistance by Clyde Mark(213K pdf file)
• U.S. Aid To Israel: The Strategic Functions
• U.S. Aid to Israel: What U.S. Taxpayer Should Know
• U.S. Aid to Israel: Interpreting the ‘Strategic Relationship‘
• The Cost of Israel to U.S. Taxpayers: True Lies About U.S. Aid to Israel

THE STRATEGIC FUNCTIONS OF U.S. AID TO ISRAEL

By Stephen Zunes

Dr. Zunes is an assistant professor in the Department of Politics at the University of San Francisco.

Since 1992, the U.S. has offered Israel an additional $2 billion annually in loan guarantees. Congressional researchers have disclosed that between 1974 and 1989, $16.4 billion in U.S. military loans were converted to grants and that this was the understanding from the beginning. Indeed, all past U.S. loans to Israel have eventually been forgiven by Congress, which has undoubtedly helped Israel’s often-touted claim that they have never defaulted on a U.S. government loan. U.S. policy since 1984 has been that economic assistance to Israel must equal or exceed Israel’s annual debt repayment to the United States. Unlike other countries, which receive aid in quarterly installments, aid to Israel since 1982 has been given in a lump sum at the beginning of the fiscal year, leaving the U.S. government to borrow from future revenues. Israel even lends some of this money back through U.S. treasury bills and collects the additional interest.

In addition, there is the more than $1.5 billion in private U.S. funds that go to Israel annually in the form of $1 billion in private tax-deductible donations and $500 million in Israeli bonds. The ability of Americans to make what amounts to tax-deductible contributions to a foreign government, made possible through a number of Jewish charities, does not exist with any other country. Nor do these figures include short- and long-term commercial loans from U.S. banks, which have been as high as $1 billion annually in recent years.

Total U.S. aid to Israel is approximately one-third of the American foreign-aid budget, even though Israel comprises just .001 percent of the world’s population and already has one of the world’s higher per capita incomes. Indeed, Israel’s GNP is higher than the combined GNP of Egypt, Lebanon, Syria, Jordan, the West Bank and Gaza. With a per capita income of about $14,000, Israel ranks as the sixteenth wealthiest country in the world; Israelis enjoy a higher per capita income than oil-rich Saudi Arabia and are only slightly less well-off than most Western European countries.

AID does not term economic aid to Israel as development assistance, but instead uses the term “economic support funding.” Given Israel’s relative prosperity, U.S. aid to Israel is becoming increasingly controversial. In 1994, Yossi Beilen, deputy foreign minister of Israel and a Knesset member, told the Women’s International Zionist organization, “If our economic situation is better than in many of your countries, how can we go on asking for your charity?” ❑

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U.S. Aid to Israel: What U.S. Taxpayer Should Know

by Tom Malthaner

This morning as I was walking down Shuhada Street in Hebron, I saw graffiti marking the newly painted storefronts and awnings. Although three months past schedule and 100 percent over budget, the renovation of Shuhada Street was finally completed this week. The project manager said the reason for the delay and cost overruns was the sabotage of the project by the Israeli settlers of the Beit Hadassah settlement complex in Hebron. They broke the street lights, stoned project workers, shot out the windows of bulldozers and other heavy equipment with pellet guns, broke paving stones before they were laid and now have defaced again the homes and shops of Palestinians with graffiti. The settlers did not want Shuhada St. opened to Palestinian traffic as was agreed to under Oslo 2. This renovation project is paid for by USAID funds and it makes me angry that my tax dollars have paid for improvements that have been destroyed by the settlers.

Most Americans are not aware how much of their tax revenue our government sends to Israel. For the fiscal year ending in September 30, 1997, the U.S. has given Israel $6.72 billion: $6.194 billion falls under Israel’s foreign aid allotment and $526 million comes from agencies such as the Department of Commerce, the U.S. Information Agency and the Pentagon. The $6.72 billion figure does not include loan guarantees and annual compound interest totalling $3.122 billion the U.S. pays on money borrowed to give to Israel. It does not include the cost to U.S. taxpayers of IRS tax exemptions that donors can claim when they donate money to Israeli charities. (Donors claim approximately $1 billion in Federal tax deductions annually. This ultimately costs other U.S. tax payers $280 million to $390 million.)

When grant, loans, interest and tax deductions are added together for the fiscal year ending in September 30, 1997, our special relationship with Israel cost U.S. taxpayers over $10 billion.

Since 1949 the U.S. has given Israel a total of $83.205 billion. The interest costs borne by U.S. tax payers on behalf of Israel are $49.937 billion, thus making the total amount of aid given to Israel since 1949 $133.132 billion. This may mean that U.S. government has given more federal aid to the average Israeli citizen in a given year than it has given to the average American citizen.

I am angry when I see Israeli settlers from Hebron destroy improvements made to Shuhada Street with my tax money. Also, it angers me that my government is giving over $10 billion to a country that is more prosperous than most of the other countries in the world and uses much of its money for strengthening its military and the oppression of the Palestinian people. ❑

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“U.S. Aid to Israel: Interpreting the ‘Strategic Relationship”‘

by Stephen Zunes

“The U.S. aid relationship with Israel is unlike any other in the world,” said Stephen Zunes during a January 26 CPAP presentation. “In sheer volume, the amount is the most generous foreign aid program ever between any two countries,” added Zunes, associate professor of Politics and chair of the Peace and Justice Studies Program at the University of San Francisco.

He explored the strategic reasoning behind the aid, asserting that it parallels the “needs of American arms exporters” and the role “Israel could play in advancing U.S. strategic interests in the region.”

Although Israel is an “advanced, industrialized, technologically sophisticated country,” it “receives more U.S. aid per capita annually than the total annual [Gross Domestic Product] per capita of several Arab states.” Approximately a third of the entire U.S. foreign aid budget goes to Israel, “even though Israel comprises just…one-thousandth of the world’s total population, and already has one of the world’s higher per capita incomes.”

U.S. government officials argue that this money is necessary for “moral” reasons-some even say that Israel is a “democracy battling for its very survival.” If that were the real reason, however, aid should have been highest during Israel’s early years, and would have declined as Israel grew stronger. Yet “the pattern…has been just the opposite.” According to Zunes, “99 percent of all U.S. aid to Israel took place after the June 1967 war, when Israel found itself more powerful than any combination of Arab armies….”

The U.S. supports Israel’s dominance so it can serve as “a surrogate for American interests in this vital strategic region.” “Israel has helped defeat radical nationalist movements” and has been a “testing ground for U.S. made weaponry.” Moreover, the intelligence agencies of both countries have “collaborated,” and “Israel has funneled U.S. arms to third countries that the U.S. [could] not send arms to directly,…Iike South Africa, like the Contras, Guatemala under the military junta, [and] Iran.” Zunes cited an Israeli analyst who said: “‘It’s like Israel has just become another federal agency when it’s convenient to use and you want something done quietly.”‘ Although the strategic relationship between the United States and the Gulf Arab states in the region has been strengthening in recent years, these states “do not have the political stability, the technological sophistication, [or] the number of higher-trained armed forces personnel” as does Israel.

Matti Peled, former Israeli major general and Knesset member, told Zunes that he and most Israeli generals believe this aid is “little more than an American subsidy to U.S. arms manufacturers,” considering that the majority of military aid to Israel is used to buy weapons from the U.S. Moreover, arms to Israel create more demand for weaponry in Arab states. According to Zunes, “the Israelis announced back in 1991 that they supported the idea of a freeze in Middle East arms transfers, yet it was the United States that rejected it.”

In the fall of 1993-when many had high hopes for peace-78 senators wrote to former President Bill Clinton insisting that aid to Israel remain “at current levels.” Their “only reason” was the “massive procurement of sophisticated arms by Arab states.” The letter neglected to mention that 80 percent of those arms to Arab countries came from the U.S. “I’m not denying for a moment the power of AIPAC [the American Israel Public Affairs Committee], the pro-Israel lobby,” and other similar groups, Zunes said. Yet the “Aerospace Industry Association which promotes these massive arms shipments…is even more influential.” This association has given two times more money to campaigns than all of the pro-Israel groups combined. Its “force on Capitol Hill, in terms of lobbying, surpasses that of even AIPAC.” Zunes asserted that the “general thrust of U.S. policy would be pretty much the same even if AIPAC didn’t exist. We didn’t need a pro-Indonesia lobby to support Indonesia in its savage repression of East Timor all these years.” This is a complex issue, and Zunes said that he did not want to be “conspiratorial,” but he asked the audience to imagine what “Palestinian industriousness, Israeli technology, and Arabian oil money…would do to transform the Middle East…. [W]hat would that mean to American arms manufacturers? Oil companies? Pentagon planners?”

“An increasing number of Israelis are pointing out” that these funds are not in Israel’s best interest. Quoting Peled, Zunes said, “this aid pushes Israel ‘toward a posture of callous intransigence’ in terms of the peace process.” Moreover, for every dollar the U.S. sends in arms aid, Israel must spend two to three dollars to train people to use the weaponry, to buy parts, and in other ways make use of the aid. Even “main-stream Israeli economists are saying [it] is very harmful to the country’s future.”

The Israeli paper Yediot Aharonot described Israel as “‘the godfather’s messenger’ since [Israel] undertake[s] the ‘dirty work’ of a godfather who ‘always tries to appear to be the owner of some large, respectable business.”‘ Israeli satirist B. Michael refers to U.S. aid this way: “‘My master gives me food to eat and I bite those whom he tells me to bite. It’s called strategic cooperation.” ‘To challenge this strategic relationship, one cannot focus solely on the Israeli lobby but must also examine these “broader forces as well.” “Until we tackle this issue head-on,” it will be “very difficult to win” in other areas relating to Palestine.

“The results” of the short-term thinking behind U.S. policy “are tragic,” not just for the “immediate victims” but “eventually [for] Israel itself” and “American interests in the region.” The U.S. is sending enormous amounts of aid to the Middle East, and yet “we are less secure than ever”-both in terms of U.S. interests abroad and for individual Americans. Zunes referred to a “growing and increasing hostility [of] the average Arab toward the United States.” In the long term, said Zunes, “peace and stability and cooperation with the vast Arab world is far more important for U.S. interests than this alliance with Israel.”

This is not only an issue for those who are working for Palestinian rights, but it also “jeopardizes the entire agenda of those of us concerned about human rights, concerned about arms control, concerned about international law.” Zunes sees significant potential in “building a broad-based movement around it.”

The above text is based on remarks, delivered on. 26 January, 2001 by Stephen Zunes – Associate Professor of Politics and Chair of the Peace and Justice Studies Program at San Francisco University. ❑

http://www.wrmea.org/congress-u.s.-aid-to-israel/u.s.-financial-aid-to-israel-figures-facts-and-impact.html