Sharon's Quest for Aid: A Successful Failure

Why did Prime Minister Ariel Sharon meet with Congressional Leaders?

Simple.  To ask them to approve the $800 million in special aid promised by the Clinton Administration, which was predicated upon Israel’s withdrawal from Lebanon.  Sharon stated that Israel has heavy expenses and needs the funds.

Yes, indeed, Israel needs this $800 million.  It needs the $3-4 billion in regular annual U.S. aid.  It needs billions more in annual charitable gifts.  It needs as much free money as it can get.

Getting U.S. aid has been the official policy of the Israeli government for more than a quarter-century.  That policy remains intact with the new Sharon government.  Aid benefits the political classes and their allies in academia, the media, the bureaucracy, and the state-run economic sector.  The drawback is that aid blocks efforts at real economic reform that would open markets and limit the state.

To give but two examples:

(1) Globes reported on March 18, 2001, that the Ministry of Defense has listed in its budget NIS 1.6 billion (just under $400 million) in “expenses conditional upon revenue.”  These funds have already been spent and must now be financed.  And, the ministry wants another $500 million for expenses along the northern border and in the territories.

(2) Globes reported on March 22, 2001, that Israel Military Industries (IMI), a state-owned arms manufacturing enterprise, lost $48.8 million in 2000, adding to losses of $67.7 million in 1999.  These losses occurred after the government invested hundreds of millions of dollars in taxpayers’ money in an attempt to stem the losses.  The government needs funds to keep IMI solvent.

The list of needs is endless.  But the cause of the needs for more aid is the aid in the first place, which has enabled the government to prop up money-losing, state-owned enterprises, and feed hungry bureaucracies in every ministry, all the while blocking real free-market reforms.

If Sharon fails in his request for the $800 million, it will help his administration in the long run, even through he will be seen to have failed in the short run.  But if he succeeds, the situation in Israel will continue to deteriorate.