A Conservative Estimate of Total Direct U.S. Aid to Israel: Almost $114 Billion By Shirl McArthur TABLE 1: Direct U.S. Aid to Israel (millions of dollars) Year Total Military Grant Economic Grant Immigrant ASHA All Other 1949-1996 68,030.9 29,014.9 23,122.4 868.9 121.4 14,903.3 1997 3,132.1 1,800.0 1,200.0 80.0 2.1 50.0 1998 3,080.0 1,800.0 1,200.0 80.0 ? ? 1999 3,010.0 1,860.0 1,080.0 70.0 ? ? 2000 4,131.85 3,120.0 949.1 60.0 2.75 ? 2001 2,876.05 1,975.6 838.2 60.0 2.25 ? 2002 2,850.65 2,040.0 720.0 60.0 2.65 28.0 2003 3,745.15 3,086.4 596.1 59.6 3.05 ? 2004 2,687.25 2,147.3 477.2 49.7 3.15 9.9 2005 2,612.15 2,202.2 357.0 50.0 2.95 ? 2006 2,534.53 2,257.0 237.0 40.0 ? .53 2007 2,500.24 2,340.0 120.0 40.0 ? .24 2008 2,423.8 2,380.6 0.0 39.7 3.0 .5 Total 103,614.67 56,024.0 30,897.0 1,557.9 143.3 14,992.47 Notes: FY 2000 military grants include $1.2 billion for the Wye agreement and $1.92 billion in annual military aid. FY 2003 military aid included $1 billion from the supplemental appropriations bill. The economic grant was earmarked for $960 million for FY 2000 but was reduced to meet the 0.38% rescission. Final amounts for FY 2003 are reduced by 0.65% mandated rescission, the amounts for FY 2004 are reduced by 0.59%, and the amounts for FY 2008 are reduced by .81%. Sources: CRS Report RL33222: U.S. Foreign Aid to Israel, updated Jan. 2, 2008, plus the FY ’08 omnibus appropriations bill, H.R. 2764. This estimate of total U.S. direct aid to Israel updates the estimate given in the July 2006 issue of the Washington Report on Middle East Affairs. It is an estimate because arriving at an exact figure is not possible, since parts of U.S. aid to Israel are a) buried in the budgets of various U.S. agencies, mostly that of the Defense Department (DOD), or b) in a form not easily quantifiable, such as the early disbursement of aid, giving Israel a direct benefit in interest income and the U.S. Treasury a corresponding loss. Given these caveats, our current estimate of cumulative total direct aid to Israel is $113.8554 billion. It must be emphasized that this analysis is a conservative, defensible accounting of U.S. direct aid to Israel, NOT of Israel’s cost to the U.S. or the American taxpayer, nor of the benefits to Israel of U.S. aid. The distinction is important, because the indirect or consequential costs suffered by the U.S. as a result of its blind support for Israel exceed by many times the substantial amount of direct aid to Israel. (See, for example, the late Thomas R. Stauffer’s article in the June 2003 Washington Report, “The Costs to American Taxpayers of the Israeli-Palestinian Conflict: $3 Trillion.”) Especially, this computation does not include the costs resulting from the invasion and occupation of Iraq—hundreds of billions of dollars, 4,000-plus U.S. and allied fatalities, untold tens of thousands of Iraqi deaths, and many thousands of other U.S., allied, and Iraqi casualties—which is almost universally believed in the Arab world to have been undertaken for the benefit of Israel. Among other “indirect or consequential” costs would be the costs of U.S. unilateral economic sanctions on Iran, Iraq, Libya and Syria, the costs to U.S. manufacturers of the Arab boycott, and the costs to U.S. companies and consumers of the 1973 Arab oil embargo and consequent and subsequent soaring oil prices partially as a result of U.S. support for Israel. Among the real benefits to Israel that are not direct costs to the U.S. taxpayer are the early cash transfer of economic and military aid, in-country spending of a portion of military aid, and loan guarantees. The U.S. gives Israel all of its economic and military aid directly in cash during the first month of the fiscal year, with no accounting required of how the funds are used. Also, in contrast with other countries receiving military aid, who must purchase through the DOD, Israel deals directly with the U.S. companies, with no DOD review. Furthermore, Israel is allowed to spend 26.3 percent of each year’s military aid in Israel (no other recipient of U.S. military aid gets this benefit), which has resulted in an increasingly sophisticated Israeli defense industry. As a result, Israel has become a major world arms exporter; the Congressional Research Service (CRS) reports that in 2006 Israel was the world’s ninth leading supplier of arms worldwide, earning $4.4 billion from defense sales. Another benefit to Israel are U.S. government loan guarantees. The major loan guarantees have been $600 million for housing between 1972 and 1990; $9.2 billion for Soviet Jewish resettlement between 1992 and 1997; about $5 billion for refinancing military loans commercially; and $9 billion in loan guarantees authorized in FY ’03 and extended to FY ’10. Of that $9 billion, CRS reports that Israel has drawn $4.1 billion through FY ’07. These loans have not—yet—cost the U.S. any money; they are listed on the Treasury Department’s books as “contingent liabilities,” which would be liabilities to the U.S. should Israel default. However, they have been of substantial, tangible benefit to Israel, because they enable Israel to borrow commercially at special terms and favorable interest rates. Components of Israel Aid Israel is the largest cumulative recipient of U.S. aid since World War II (not counting the huge sums being spent in Iraq). The $3 billion or so per year that Israel receives from the U.S. amounts to about $500 per Israeli. Most of this money is earmarked in the annual Foreign Operations (foreign aid) appropriations bills, with the three major items being military grants (Foreign Military Financing, or FMF), economic grants (Economic Support Funds, or ESF), and “migration and refugee assistance.” (Refugee assistance originally was intended to help Israel absorb Jewish refugees from the Soviet Union, but this was expanded in 1985 to include all refugees resettling in Israel. In fact, Israel doesn’t differentiate between refugees and other immigrants, so this money is used for all immigrants to Israel.) Not earmarked but also included in congresssional appropriations bills is Israel’s portion of grants for American Schools and Hospitals Abroad (ASHA) and monies buried in the appropriations for other departments or agencies. These are mostly for so-called “U.S.-Israeli cooperative programs” in defense, agriculture, science, and hi-tech industries. Before 1998, Israel received annually $1.8 billion in military grants and $1.2 billion in economic grants. Then, beginning in FY ‘99, the two countries agreed to reduce economic grants to Israel by $120 million and increase military grants by $60 million annually over 10 years. FY ’08 is the last year of that agreement, with military grants reaching $2.4 billion (reduced by an across-the-board rescission), and zero economic grants. Then, in August 2007, U.S. and Israeli officials signed a memorandum of understanding for a new 10-year, $30 billion aid package whereby FMF will gradually increase, beginning with $2.55 billion in FY ’09, and average $3 billion per year over the 10-year period.
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