Monday, May 12

THE STRATEGIC FUNCTIONS OF U.S. AID TO ISRAEL


Click on the link below to get speacial report!

Congressional Research Report on Israel:
US Foreign Assistance by Clyde Mark (213K pdf file)

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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