Stop Foreign Aid to Israel ?

Focusing on foreign aid for Israel allowed American Jews to "prove" their Zionism by euchering big bucks from Congress. It is demeaning to a country that claims to rule its own destiny to be a schnorrer on a permanent basis.
(Marshall Breger is a professor of law at the Columbus School of Law, Catholic University of America
Moment, page 30, April 1998/ Nisan 5758)

For some years commentators like myself have urged a significant cutback in U.S. foreign aid to Israel. First, Israel doesn’t need it. The International Monetary Fund no longer regards Israel as a "developing nation" and has removed it from that status. Its per capita income is already higher than that of Spain and Italy (both countries in the European Union). Second, it was going to happen anyway, if not this year, then next. Republican budget cutters hate foreign aid and vote for Israeli foreign aid with twisted arms and forced grins. Third, it is demeaning to a country that claims to rule its own destiny to be a schnorrer on a permanent basis.

Yet for many years support for foreign aid was the litmus test for the pro-Israel vote in Congress. The organized Jewish community, led by AIPAC, the pro-Israel lobby, graded members on their foreign aid vote. The more aid, the more pro-Israel - no matter what else the members of Congress said or did.

This artificial criterion not only inappropriately trashed many pro-Israel Republicans who were unhappy with foreign aid in principle, but may have focused the pro-Israel community on a "crutch" rather than a cure to Israel’s long-term fiscal insecurity. It allowed American Jews to "prove" their Zionism by euchring big bucks from Congress for the Jewish state.

This past January, Israel’s innovative Finance Minister Yaacov Neeman traveled to Washington to begin negotiations on phasing out the economic side of the Israel foreign aid account. If he succeeds, Neeman will redeem Prime Minister Netanyahu’s 1996 pledge to Congress to wean Israel away from the foreign aid trough. It’s about time.

As of now, Israel get $3 billion a year from the foreign aid account - $1.8 billion in military and $1.2 billion in economic assistance. Unlike most other aid recipients, Israel gets the money as a bloc grant - no strings attached - and receives it in a lump sum thirty days after the passage of each year’s foreign aid bill. Most of the economic assistance goes to pay debts derived from loans Israel took out in the 1970s to build Negev air fields as part of the Camp David pullback from the Sinai. Since 1948 Israel has received well over $55 billion in U.S. economic and military aid.

To some extent, Neeman’s visit was a form of accepting the inevitable. For the last few years, the pressure on the nonmilitary side of the foreign aid account has been intense. In the last few years, as foreign aid has been ratcheted downward, the Israel component has become even more difficult to sustain. Inflation has ravaged the $3 billion, which has eroded by about 30 percent since 1987. Further, for the last two years, $50 million of the foreign aid package was given to Israel with the understanding that it could be diverted to Jordan. And many believed that Israel’s "contribution" to Jordan would rise to $100 million next year.

Neeman is proposing that the estimated $200 million difference between the $1.2 billion in United States economic assistance and the estimated $1 billion in Israeli interest payments on United States loans be applied to paying off the debt principal on this loan. Once the debt is paid, in about ten years, the economic assistance would be halted, but until then, Congress would continue to appropriate the full $1.2 billion. Thus Israel could tell the United States that it wants to wean itself away from economic aid - as long as it could do so slowly.

Another approach is to reduce the $1.2 billion U.S. economic aid over ten years in equal increments of $120 million per year. Each year, half of this amount would be added to the $1.8 billion of U.S. military assistance, resulting in $2.4 billion of military aid for Israel ten years down the road. These sums would likely support Israeli and joint U.S.-Israeli projects such as the Arrow missile-killing missile and the Nautilus laser project. Much of it (Israel hopes) will be "shekel convertible" -a boon to Israeli defense contractors.

Under these plans, Israel would not be required to divert any foreign aid to Jordan. This is a mistake. It is also unwise to let the weaning process go on for as long as ten years. While it is understandable that Israel’s treasury would like to stave off the moment when the country stands alone until well into the next century (after all, it’s hard to give up "free" money), from an economic perspective Israel can stand alone right now. In any event it is unlikely that Congress will wait ten years.

For AIPAC, moving away from the "$3 billion" raises new problems and new opportunities. It can choose, erroneously, to try again for a litmus test driven by numbers - but now out of the military aid budget. Or American Jews and Congress can focus instead on developing the qualitative relationship between the United States and Israel - one often ignored when the test of loyalty was the size of the dollar sign.

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