csua.org/u/8us -> www.jewishvirtuallibrary.org/jsource/US-Israel/foreign_aid.html
US Aid To Israel by Mitchell Bard "It is my responsibility to see that our policy in Israel fits in with our policy throughout the world; second, it is my desire to help build in Palestine a strong, prosperous, free and independent democratic state. It must be large enough, free enough, and strong enough to make its people self-supporting and secure," President Truman said in a speech October 28, 1948.
President Truman responded by approving a $135 million Export-Import Bank loan and the sale of surplus commodities to Israel. In those early years of Israel's statehood (also today), US aid was seen as a means of promoting peace. In 1951, Congress voted to help Israel cope with the economic burdens imposed by the influx of Jewish refugees from the displaced persons camps in Europe and from the ghettos of the Arab countries. Arabs then complained the US was neglecting them, though they had no interest in or use for American aid then. Oil-rich Iraq and Saudi Arabia did not need US economic assistance, and Jordan was, until the late 1950s, the ward of Great Britain.
Also, the United States was by far the biggest contributor of aid to the Palestinians through UNRWA, a status that continues to the present. US aid to Israel from then until 1985 consisted largely of loans, which Israel repaid, and surplus commodities, which Israel bought.
As a result, Israel had to go deeply into debt to finance its economic development and arms procurement. The decision to convert military aid to grants that year was based on the prevailing view in Congress that without a strong Israel, war in the Middle East was more likely, and that the US would face higher direct expenditures in such an eventuality. Israel has received more direct aid from the United States since World War II than any other country, but the amounts for the first half of this period were relatively small. Between 1949 and 1973, the US provided Israel with an average of about $122 million a year, a total of $31 billion (and actually more than $1 billion of that was loans for military equipment in 1971-73) . Prior to 1971, Israel received a total of only $277 million in military aid, all in the form of loans as credit sales. By comparison, the Arab states received nearly three times as much aid before 1971, $44 billion, or $170 million per year. Moreover, unlike Israel, which receives nearly all its aid from the United States, Arab nations have gotten assistance from Asia, Eastern Europe, the Soviet Union and the European Community. Congress first designated a specific amount of aid for Israel (an "earmark") in 1971. Meeting Israel's Special Needs Since 1974, Israel has received nearly $80 billion in assistance, including three special aid packages.
Israel-Egypt peace treaty and Israel's withdrawal from the Sinai. The redeployment of Israeli forces and rebuilding of air bases in the Negev cost $5 billion. To partially compensate for this sacrifice, Israel received $3 billion ($22 billion of which was in the form of high-interest loans) in US aid in 1979. The second special package was approved in 1985, following a severe economic crisis in Israel, which sent inflation rates soaring as high as 445 percent. The most recent extraordinary package was approved in 1996 to help Israel fight terrorism. Israel is to receive a total of $100 million, divided equally between fiscal years 1996 and 1997. Regular Economic and Military Assistance Israel's economic aid changed from the Commodity Import Program (CIP), which provides funds to foreign nations for the purchase of US commodities, to a direct cash transfer in 1979. In return, Israel provided the Agency for International Development with assurances that the dollar level of Israel's non-defense imports from the US would exceed the level of economic assistance granted Israel in any given year. Thus, Israel guaranteed that US suppliers would not be disadvantaged by the termination of Israel's CIP Program. Starting with fiscal year 1987, Israel annually received $12 billion in all grant economic aid and $18 billion in all grant military assistance. In 1998, Israel offered to voluntarily reduce its dependence on US economic aid. According to an agreement reached with the Clinton Administration and Congress, the $12 billion economic aid package will be reduced by $120 million each year so that it will be phased out in ten years. Half of the annual savings in economic assistance each year ($60 million) will be added to Israel's military aid package in recognition of its increased security needs. For several years, most of Israel's economic aid went to pay off old debts. In 1984, foreign aid legislation included the Cranston Amendment (named after its Senate sponsor), which said the US would provide Israel with economic assistance "not less than" the amount Israel owes the United States in annual debt service payments. The Cranston Amendment was left out of the FY1999 and subsequent appropriations bills. At that time Israel received $12 billion in ESF and owed only $328 million in debt service so the amendment was no longer needed.
Foreign Military Financing (FMF) can be spent in Israel for military procurement. From FY1988 to FY 1990, Israel was allowed to use $400 million in Israel. From FY1991 to FY1998, the amount was increased to $475 million. As US military aid to Israel increased, according to the agreement to cut economic aid, the amout set aside for defense purchases in Israel has increased (but the percentage has remained roughly the same). The remaining 74 percent of FMF is spent in the United States to generate profits and jobs. More than 1,000 companies in 47 states, the District of Columbia and Puerto Rico have signed contracts worth billions of dollars through this program.
Even while cutting aid to Israel (which still was budgeted at $21 billion for military aid and $600 million for economic assistance), Congress included a number of provisions in the aid bill viewed as favorable to Israel, including a provision that bars federal assistance to a future Palestinian state until the current Palestinian leadership is replaced, and that state demonstrates a commitment to peaceful coexistence with Israel, and takes measures to combat terrorism. The setbacks were also temporary as the Administration approved a supplementary aid request in 2003 that included $1 billion in FMF and $9 billion in loan guarantees to aid Israel's economic recovery and compensate for the cost of military preparations associated with the war in Iraq. One quarter of the FMF is a cash grant and three quarters will be spent in the United States. The loan guarantees are spread over three years and must be spent within Israel's pre-June 1967 borders.
settlements in the territories will be deducted from the loan amount, along with all fees and subsidies. Altogether, since 1949, Israel has received more than $90 billion in assistance.
loan guarantees (spread over five years) approved in 1992, and a variety of other smaller assistance-related accounts, such as refugee resettlement ($80 million annually from 1992-1998 and then reduced to $70 million in FY1999 and $60 million in FY2000 because of declining numbers of refugees) and cooperative development programs (a total of $186 million since 1981).
Arrow missile (for which Israel has received more than $1 billion in grants since 1986), which are provided through the Defense budget. President Bush requested $60 million for the Arrow for FY2003 and $136 million in FY2004. The United States also has provided $53 million for the Boost Phase Intercept program and $139 million for the Tactical High Energy Laser program under development in Israel to complement the Arrow. Though the totals are impressive, the value of assistance to Israel has been eroded by inflation. While aid levels remained constant in total dollars from 1987 until 1999, the real value steadily declined. On the other side of the coin, Israel does receive aid on more favorable terms than other nations. For example, all economic aid is given directly to the Israeli government rather than allocated under a specific program. Israel is not required to provide an accountin...
|
http://csua.com/feed/