Borrowing Money For Israel: Annual Interest Alone Exceeds $3 Billion

By Frank Collins

The double dip recession has now become so grave that the
American people are demanding that President George
Bush direct his attention to the sorry state of the domestic
economy. Foreign aid, notoriously unpopular with the US
public in recent years, has become doubly so in this period
of economic distress.

Even if Congress fails to react to the disquiet about foreign
aid, it is likely that the bloated US grants to Israel in particular
will no longer be exempt from public scrutiny and that they
will be looked upon as a bad congressional choice between
responding to domestic fiscal needs and yielding to AIPAC,
the Israeli lobby.

Part of the taxpayers' resentment against the practices of the
federal government has been sparked by the manner in which
Congress appropriates money, particularly foreign aid. Foreign
aid generally is allocated through "continuing resolutions,
" without a ''yes" or ''no" vote on particulars. Key committee
members then allocate 40 percent of the worldwide total of
US bilateral foreign aid to Israel and Egypt. Aid to Egypt
climbed to roughly two-thirds of that to Israel as a result of
the US-brokered peace agreement between the two countries.

Grants for foreign aid are especially noteworthy because they
amount to giving away borrowed money. The case of Israel
over the last 40 years is the most astonishing. Every dollar
given to Israel has been money borrowed by the US Treasury
from private lenders, domestic and foreign. As the Treasury
debts are interest-bearing, the Treasury has' had to borrow
more money year by year to pay the interest on the outstanding
debts incurred by the grants to Israel, plus interest on the
earlier interest.

By the end of the fiscal year 1990, such US borrowings, starting
with a modest grant to Israel of $ 100,000 in 1951, totaled
$32.111 billion for the grants themselves, and an additional
$21.351 billion in accumulated interest, for a total of $59.565 billion.

In FY 1991, annual interest alone on that $59.565 billion cost
$3.246 billion at the average Treasury rate of 5.45 percent.
Thus the grants made to Israel for FY 1991, officially reported
as $5.256 billion, actually cost US taxpayers $8.502 billion in
FY 1991, when the $3.246 billion in interest is included.

This lopsided situation will continue in FY 1992, when $3.491
billion in interest will be added to the cost of the FY 1992 grant
of $3 billion, which already has been paid to Israel in the first
month of the fiscal year. This FY 1992 outlay, general details
of which are summarized in the table below, does not include
any part of the $10 billion in US loan guarantees requested by
Israel, consideration of which was deferred for 120 days at the
request of President Bush last September.

If the deficit financing of subsidies to Israel were to continue
for 10 more years at the $3 billion minimum rate per year and
at five percent interest, the total debt undertaken by the
United States would be $155 billion and the annual interest
payment after 10 years would be $10.7 billion, more than
three times the annual grant of $3 billion. This is an annual
total of almost $14 billion, or more than $3,000 per year per
Israeli. With this prospect, it is clear that borrowing
ever-increasing amounts of money to give to Israel on an
annual basis for the indefinite future will be unacceptable
to the American public.

Frank Collins is a free-lance journalist
specializing in the Middle East.

For related articles in this feature on

USA : how much money do they give Israel click here