America's Economic Strings with Israel

The Bigger Picture
Published on April 15th 2010 in Metro Éireann By Charles Laffiteau
I closed last week’s column by saying that America’s diplomatic support for Israel pales in comparison to America’s monetary support of Israel. So today I will describe how extensive this monetary support has been and what it is projected to be for the next ten years. I am highlighting this aspect of American support for Israel because I hope President Obama will use these financial strings to encourage Israel to change its behavior.
In the 60 years between 1949 and 2009 the United States provided more than $106 billion (or just under $2 billion a year) in economic and military assistance to Israel. Furthermore, the current long range 10 year Congressional budget forecast estimates America will continue to give Israel more than $3 billion annually for at least the next 10 years and probably well beyond that. But since Israel is a developed country with higher per capita income levels than many EU member states, would Israel really be that susceptible to US financial pressure? Well, read on.
A 2005 briefing report by the non-partisan Congressional Research Service for the U.S. Congress says; “Israel is not economically self-sufficient, and relies on foreign assistance and borrowing to maintain its economy. Since 1985, the United States has provided $3 billion in grants annually to Israel. Since 1976, Israel has been the largest annual recipient of U.S. foreign assistance, and is the largest cumulative recipient since World War II. In addition to U.S. assistance, it is estimated that Israel receives about $1 billion annually through U.S. philanthropy, an equal amount through short and long- term commercial loans, and around $1 billion a year in Israel Bonds proceeds.” That’s a total of $6 billion a year!
This briefing for Congress also notes some of the other monetary benefits America provides Israel, which are difficult to quantify but are nonetheless financially lucrative for the Israeli government. The report notes that “U.S. aid to Israel has some unique aspects, such as loans with repayment waived, or a pledge to provide Israel with economic assistance equal to the amount Israel owes the United States for previous loans. Israel also receives special benefits that may not be available to other countries, such as the use of U.S. military assistance for research and development in the United States, the use of U.S. military assistance for military purchases in Israel, or receiving all its assistance in the first 30 days of the fiscal year rather than in 3 or 4 installments as other countries do.”
Sounds like some very unique special benefits if you ask me. Loans that I don’t have to repay? I can always get new loans from you equal to what I owe you? Wow! Wouldn’t you like to get loans terms like this from your bank? I know I sure would.
Furthermore, although America’s annual economic aid has been declining in recent years; America’s military aid to Israel has been growing faster than the economic aid has fallen. The net effect is that money Israel would have spent on its military needs has been offset by American military aid, allowing Israel to spend those unspent military funds on other things.
Now maybe I’m wrong to think this way, but given Israel’s historic and ongoing dependence on American economic and military financial aid, I think this is an area where President Obama could bring pressure to bear on Israel. But even if I am right about this the question remains whether President Obama would be willing to do this and if so whether the US Congress would support Obama if he decided to put restrictions on Israel’s financial aid.
These are open questions because Israel has two wealthy and politically well connected lobbying organizations that work to advance Israeli interests in the US. The American Israel Public Affairs Committee (AIPAC) directly lobbies the US Congress, while the Conference of Presidents of Major American Jewish Organizations lobbies both the President and Congress on behalf of Jews living in the US, Israel and the rest of the world. But both of these groups are also under increasing pressure from some of their members to put an end to their slavish support of whatever Israel’s positions are until Israel demonstrates an urgency to reach a peace agreement.
Recognizing that there are practical limits to US economic, military and political power, President Obama abandoned the previous administration’s unilateral military approach in favour of a multilateral diplomatic approach to countering al Qaeda inspired Islamic terrorism as soon as he took office. But President Obama also knew that repairing America’s image in the Muslim world require quiet diplomacy and patience judging the progress of his geo-political initiatives.
Chief among these was a new diplomatic push to resolve the Arab-Israeli conflict. Obama put George Mitchell in charge of the Middle East peace negotiations because of Mitchell’s previous success dealing with pseudo-religious political conflict in Northern Ireland. Obama knew that getting both sides to agree to a resolution of the Israeli-Palestinian conflict would be very difficult because as former US Middle East adviser, Aaron Miller says “In an existential conflict driven by memory, identity, religion and national trauma, the Israeli and Palestinian capacities to absorb and inflict pain are limitless.” But Miller also notes the other reason why it is so important that this conflict be resolved writing that, “In a post-9/11 era, the cause of Palestine drives recruits to al-Qaeda and helps generate lethal levels of anti-Americanism.”
That’s why I believe it is essential for President Obama to find a way to pressure Israel to stop building settlements as a first step to resolve the Israeli-Palestinian conflict, if he wants to dry up the source of anti-American terrorism; the Islamic world's frustration with US support of Israel at the expense of the Palestinians. I believe the best way to pressure Israel is to condition America’s financial support on a halt to building new settlements. This would also answer my question; Is Obama both willing and able to transform America’s angry words into actions?