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Joel Bainerman

End American Aid to Israel?

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U.S. government aid to Israel is in dispute now as never before. In part, this has to do with the perception that Israel's security needs have diminished, what with the end of Soviet help for Israel's enemies and with advances in the peace process. It also results from the budget pressures that are causing U.S. politicians to cut back on a variety of long-established and popular programs. The new Congress's skepticism toward welfare applies not just to the indigent in urban America but also to foreign states.

Israeli leaders have sought reassurance that these factors will not lead to a reduction in aid. When Israel's Prime Minister Yitzhak Rabin was in the United States to address the American Israel Public Affairs Committee (AIPAC) Policy Conference in May 1995, he won a pledge from President Bill Clinton to "protect bilateral assistance to Israel."1 And while Senate Foreign Relations Committee chairman Jesse Helms (Republican of North Carolina) condemns foreign aid in general, he makes an exception for aid to Israel.

But another dynamic is also at work. A number of important voices among those concerned about Israel's welfare are saying that perpetual U.S. financial aid to Israel may not be a good thing. In January 1994, Yossi Beilin, Israel's deputy foreign minister, told a gathering of the Women's International Zionist Organization that Israel may no longer need diaspora Jewry's contributions: "If our economic situation is better than in many of your countries, how can we go on asking for your charity?"2 Zalman Shoval, a former Israeli ambassador to the United States and a leading figure in the Likud party, recently told an American audience that Israel should suggest through its own initiative that the United States gradually phase out civilian economic aid. This skepticism is a positive development, in part because it goes beyond the old, sterile points raised by those trying to hurt Israel by denying it assistance; and in part because it returns the issue of aid to a practical discussion of benefits and losses.

While aid flows into Israel from many countries other than the United States, for simplicity's sake we will look only at the American case, including both its governmental and private dimensions.

THE AID RELATIONSHIP

U.S. government aid. From 1948 to 1993, U.S. military and economic aid to Israel amounted to approximately $37 billion, of which $26 billion was in grants and $11 billion in loans.3 In 1994, Israel received $1.8 billion in military credits and $1.2 billion in economic aid, or 26 percent of the $11.5 billion total U.S. foreign aid bill.4 To put this in perspective, in fiscal year 1995, Egypt, the other major aid recipient, received $2.2 billion, of which $1.3 billion was military aid and $0.9 billion was economic aid.

Israel began receiving large amounts of economic assistance in the mid-1970s, when the United States started financing arms purchases through loans rather than the cash sales that had been the norm up until that point. Aid took a large leap upwards after Israel agreed to withdrawals in the Sinai: after the Camp David agreement with Egypt, an arrangement was informally but effectively codified into a fixed $3 billion a year (inflation has reduced the real value of this aid by about half since 1979).

U.S. military and economic aid each have rather distinct motivation and procedures. During the cold war, the U.S. government sent military aid primarily to countries where it had military bases (such as Greece, Turkey, Portugal, and the Philippines), or to countries facing Soviet-backed enemies, be they internal (for example, El Salvador) or external (including Israel). With the end of the cold war, the rationale for military aid has become less clear.

Economic aid has a variety of purposes, including disaster and hunger relief, promotion of democracy and market reforms, and support for Middle East peace. Most economic aid pays for projects either carried out directly by U.S. government agencies (usually the Agency for International Development) or by international and nongovernmental agencies to which the United States makes cash payments (for example, the World Bank). A small part of the money is paid out in cash to the recipient governments; confusingly, some of these cash payments at times have been included as military aid and some as economic aid, though in reality all are more similar to economic aid.

Israel is the only country to receive nearly all of its economic aid in the form of a cash payment. Until recently, that cash payment was more or less equal to the amount of debt service the Israeli government owed the U.S. government. As the debt has declined from the high levels incurred when Israel had such a large weapons-purchase bill and paid for those weapons with loans, the cash aid has become larger than the debt service due.

Diaspora Jewish aid. American Jews and other nongovernment sources provided $17 billion to Israel in the forty-five years between its founding and 1993. Jews in the diaspora also send aid to Israeli institutions, such as the Jewish Agency, universities, hospitals, and other nonprofit organizations. According to Bank of Israel and Jewish Agency statistics, diaspora Jewry donated $1.4 billion to Israeli nonprofit organizations in 1994,5 of which American Jews contributed some two-thirds. Diaspora Jews also provide loans to the Israeli government, mostly in the form of Israel Bonds.

You can read the rest of the article here:

http://www.joelbainerman.com/articles/end_american.asp

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U.S. government aid to Israel is in dispute now as never before. In part, this has to do with the perception that Israel's security needs have diminished, what with the end of Soviet help for Israel's enemies and with advances in the peace process. It also results from the budget pressures that are causing U.S. politicians to cut back on a variety of long-established and popular programs. The new Congress's skepticism toward welfare applies not just to the indigent in urban America but also to foreign states.

Israeli leaders have sought reassurance that these factors will not lead to a reduction in aid. When Israel's Prime Minister Yitzhak Rabin was in the United States to address the American Israel Public Affairs Committee (AIPAC) Policy Conference in May 1995, he won a pledge from President Bill Clinton to "protect bilateral assistance to Israel."1 And while Senate Foreign Relations Committee chairman Jesse Helms (Republican of North Carolina) condemns foreign aid in general, he makes an exception for aid to Israel.

But another dynamic is also at work. A number of important voices among those concerned about Israel's welfare are saying that perpetual U.S. financial aid to Israel may not be a good thing. In January 1994, Yossi Beilin, Israel's deputy foreign minister, told a gathering of the Women's International Zionist Organization that Israel may no longer need diaspora Jewry's contributions: "If our economic situation is better than in many of your countries, how can we go on asking for your charity?"2 Zalman Shoval, a former Israeli ambassador to the United States and a leading figure in the Likud party, recently told an American audience that Israel should suggest through its own initiative that the United States gradually phase out civilian economic aid. This skepticism is a positive development, in part because it goes beyond the old, sterile points raised by those trying to hurt Israel by denying it assistance; and in part because it returns the issue of aid to a practical discussion of benefits and losses.

While aid flows into Israel from many countries other than the United States, for simplicity's sake we will look only at the American case, including both its governmental and private dimensions.

THE AID RELATIONSHIP

U.S. government aid. From 1948 to 1993, U.S. military and economic aid to Israel amounted to approximately $37 billion, of which $26 billion was in grants and $11 billion in loans.3 In 1994, Israel received $1.8 billion in military credits and $1.2 billion in economic aid, or 26 percent of the $11.5 billion total U.S. foreign aid bill.4 To put this in perspective, in fiscal year 1995, Egypt, the other major aid recipient, received $2.2 billion, of which $1.3 billion was military aid and $0.9 billion was economic aid.

Israel began receiving large amounts of economic assistance in the mid-1970s, when the United States started financing arms purchases through loans rather than the cash sales that had been the norm up until that point. Aid took a large leap upwards after Israel agreed to withdrawals in the Sinai: after the Camp David agreement with Egypt, an arrangement was informally but effectively codified into a fixed $3 billion a year (inflation has reduced the real value of this aid by about half since 1979).

U.S. military and economic aid each have rather distinct motivation and procedures. During the cold war, the U.S. government sent military aid primarily to countries where it had military bases (such as Greece, Turkey, Portugal, and the Philippines), or to countries facing Soviet-backed enemies, be they internal (for example, El Salvador) or external (including Israel). With the end of the cold war, the rationale for military aid has become less clear.

Economic aid has a variety of purposes, including disaster and hunger relief, promotion of democracy and market reforms, and support for Middle East peace. Most economic aid pays for projects either carried out directly by U.S. government agencies (usually the Agency for International Development) or by international and nongovernmental agencies to which the United States makes cash payments (for example, the World Bank). A small part of the money is paid out in cash to the recipient governments; confusingly, some of these cash payments at times have been included as military aid and some as economic aid, though in reality all are more similar to economic aid.

Israel is the only country to receive nearly all of its economic aid in the form of a cash payment. Until recently, that cash payment was more or less equal to the amount of debt service the Israeli government owed the U.S. government. As the debt has declined from the high levels incurred when Israel had such a large weapons-purchase bill and paid for those weapons with loans, the cash aid has become larger than the debt service due.

Diaspora Jewish aid. American Jews and other nongovernment sources provided $17 billion to Israel in the forty-five years between its founding and 1993. Jews in the diaspora also send aid to Israeli institutions, such as the Jewish Agency, universities, hospitals, and other nonprofit organizations. According to Bank of Israel and Jewish Agency statistics, diaspora Jewry donated $1.4 billion to Israeli nonprofit organizations in 1994,5 of which American Jews contributed some two-thirds. Diaspora Jews also provide loans to the Israeli government, mostly in the form of Israel Bonds.

You can read the rest of the article here:

http://www.joelbainerman.com/articles/end_american.asp

Joel,

A very interesting post.

One of the reasons that US aid to Israel is being re-examined may be that the US simply won't be able to afford it much longer. The US economy is stretched to breaking point at the moment. The price of oil, the cost of wars being waged to protect that oil, huge foreign debt and competition from rapidly emerging economies like China and India are all factors seriously threatening America's global philanthropic role. Billions in aid to a small, reasonably prosperous, distant ally may have to be given a lower priority. It might be hard to justify to the American public.

Your figures regarding aid from the diaspora are interesting. I wasn't aware that the amounts were so high--nearly half that of US Government aid. If US Government aid is reduced, then this is the logical group to take up the slack, IMO.

BTW, what is your opinion of the claims made by Dr. Francisco Gil-White, that examination of the US-Israel relationship shows that the US supports the PLO more strongly than it does Israel? Do you agree with this claim? It was the subject of a recent debate on the Forum. (see thread below).

http://educationforum.ipbhost.com/index.ph...topic=6577&st=0

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