The News Behind The News
October 29, 2000
The Burden of Aid
Since 1975, Israel has received more than $100 billion in U.S. aid. It continues to receive $3 billion a year. It is currently seeking extra aid to compensate for its pullback from Lebanon. It wants billions more for any peace agreements with Syria and/or the Palestinian Authority.
But some Israelis, as the Journal’s correspondent Steven J. Glain writes, say that the strings attached aren’t worth the money. Much of the money must be spent on U.S. arms, not locally-produced arms, harming Israeli firms and costing local jobs. U.S. aid prevents Israel from selling arms in competition with U.S. manufacturers. Israel was also compelled to cancel the early-warning aircraft Phalcon sale to China, a deal worth up to $1 billion.
Other Israelis says that Israel’s high per capita income permits the country to get by without U.S. aid. Some argue that Israel is a high-tech powerhouse and no longer needs to beg on the doorstep of the U.S. Congress.
Mr. Glain is correct in everything he writes. U.S. aid indeed hamstrings Israeli defense contractors. U.S. aid hinders overseas sales of Israeli arms. Israel has high per capita income compared with all its surrounding Arab rivals. But, it should be noted, opponents of U.S. aid are a small circle of generals, defense contractors, and some outsider economists, who stand to gain directly from termination of U.S. aid.
This circle represents a very small portion of the Israeli population that dares openly to question the benefits of U.S. aid. To question aid is national heresy. Any reduction in aid, its proponents argue, weakens U.S.-Israel ties and helps Israel’s Arab enemies—even if aid has harmful economic, strategic, and political consequences.
The Chinese say that a journey of a thousand miles begins with a single step. For more than a decade, IASPS has published numerous studies demonstrating that Israel’s economic slowdown after 1975 coincided with the onset of large-scale U.S. aid, accompanied by other sources of free money. These figures are documented in the annual Statistical Abstract of Israel’s Central Bureau of Statistics. It is important to recall that former Prime Minister Benjamin Netanyahu, in a historic speech to the U.S. Congress, promised that he would reduce Israel’s request for aid by 10% a year. Not a penny was reduced during his administration.
As 2000 comes to close, who can say that years of aid have strengthened Israel? If that were so, Israel would now be basking in the sun of a comprehensive Middle East peace with full security.
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