No strings attached

Three years ago journalist/author and former New York Times ME bureau chief Chris Hedges published an article bearing the provocative title "A Declaration of Independence from Israel." Originally the article formed the core of a lecture he gave at the Nassau Club in Princeton. Since then the article has been "replayed" several times.

Hedges' opening remark - "Israel, without the United States, would probably not exist," overstates Israel's dependence on American aid. After rereading the article I 'm convinced that Hedges has a very big axe to grind with Israel. The US aid programme to Israel is his main target in a many-tiered critique advocating its termination.

"Furthermore," he claims, "Israel came perilously close to extinction during the Yom Kippur War in 1973."

Hedges intimates that in retrospect the US airlift of military hardware to Israel carried out at a critical stage in that war was a mistake! "The intervention (airlift), enraged the Arab world, triggered the OPEC oil embargo and for a time wreaked havoc on Western economies. This was perhaps the most dramatic example of the sustained life-support system the United States has provided to the Jewish state."

Reviewing US aid to Israel Hedges complains that, "Israel has reaped tremendous rewards from this alliance. It has been given more than $140 billion in U.S. direct economic and military assistance. It receives about $3 billion in direct assistance annually; roughly one-fifth of the U.S. Foreign aid budget."

Further lamenting the situation he was one of the first to use the "apartheid state" epithet. "Israel is reaping economic as well as political rewards from its lock-down apartheid state. In the 'gated community' market it has begun to sell systems and techniques that allow the nation to cope with terrorism. Israel, in 2006, exported $3.4 billion in defense products -- well over a billion dollars more than it received in American military aid. Israel has grown into the fourth largest arms dealer in the world. Most of this growth has come in the so-called homeland security sector."

Well maybe the arms dealer vocation has some negative connotations, but homeland security supplier is certainly a worthy calling.

Israel is one of the most innovative weapons and defence systems producers in the world.

I've borrowed a verse from Rudyard Kipling with my own interpretation to explain Israeli innovation:

It is not learning, grace nor gear,
Nor easy meat and drink,
But bitter pinch of pain and fear
That makes creation think.

However, as Hedges implies there would be less need for homeland security if it weren't for Israel's dependency on the US, "the US has a terrorism problem in good part because it is so closely allied with Israel, not the other way around."

Chris Hedges presents a very selective one sided picture of US – Israel relations.
American foreign policy analyst Mitchell Bard provides a completer accounting of US aid to Israel.

"Soon after Israel's war of independence President Truman approved a $135 million Export-Import Bank loan and the sale of surplus commodities to Israel.

At that time and today too U.S. 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 U.S. was neglecting them, though they had no interest in or use for American aid then.

In 1951, Syria rejected offers of U.S. aid. Oil-rich Iraq and Saudi Arabia did not need U.S. economic assistance, and Jordan was, until the late 1950s, the ward of Great Britain. After 1957, when the United States assumed responsibility for supporting Jordan and resumed economic aid to Egypt, assistance to the Arab states soared. Also, the United States was by far the biggest contributor of aid to the Palestinians through UNRWA, a status that continues to the present.

U.S. economic grants to Israel ended in 1959. U.S. aid to Israel from then until 1985 consisted largely of loans, which Israel repaid, and surplus commodities, which Israel bought. Israel began buying arms from the United States in 1962, but did not receive any grant military assistance until after the1973 Yom Kippur War. 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 U.S. would face higher direct expenditures in such an eventuality. "

Bard points out that Israel 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 U.S. provided Israel with an average of about $122 million a year, a total of $3.1 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. The bulk of the economic aid was also lent to Israel. By comparison, the Arab states received nearly three times as much aid before 1971, $4.4 billion, or $170 million per year. Moreover, unlike Israel, which receives nearly all its aid from the United States, Arab nations got assistance from Asia, Eastern Europe, the Soviet Union and the European Community.

Since 1974, Israel has received nearly $100 billion in assistance, including three special aid packages. The first followed the signing of the 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 ($2.2 billion of which was in the form of high-interest loans) in U.S. 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 $1.5 billion in emergency assistance-disbursed in two installments, in 1985 and 1986-was provided as part of Israel's economic stabilization program, which was implemented under the guidance of the U.S.-Israel Joint Economic Development Group (JEDG).

An extraordinary package was approved in 1996 to help Israel fight terrorism. A total of $100 million, divided equally between fiscal years 1996 and 1997.

Israel's economic aid changed from the Commodity Import Program (CIP), which provides funds to foreign nations for the purchase of U.S. 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 U.S. would exceed the level of economic assistance granted Israel in any given year. Thus, Israel guaranteed that U.S. suppliers would not be disadvantaged by the termination of Israel's CIP Program.

Starting with fiscal year 1987, Israel received annually $1.2 billion in all grant economic aid and $1.8 billion in all grant military assistance. In 1998, Israel offered to voluntarily reduce its dependence on U.S. economic aid. According to an agreement reached with the Clinton Administration and Congress, the $1.2 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. In 2005, Israel received $360 million in economic aid and $2.22 billion in military aid. In 2006, economic aid was reduced to $240 million and military aid was increased to $2.28 billion."

Bard concludes, "Since 1949, Israel has received more than $106 billion in assistance. …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."

Deuteronomy instructs - "Give generously to him and do so without a grudging heart …" Just the same gifts, grants and loans often have strings attached.

Right now when our government is eager to enjoy US benevolence without the imposed restraints journalist Avi Strenger tells Tom Friedman "Take your money back." I don't think he meant the total accrued sum to date, but more in the vein of – 'we can manage without your conditionally tied gifts.'

In particular Strenger was angered by the remarks Friedman made in a recent interview, "Friedman accused Israel of misusing American money precisely when the US needs it more than ever to boost US employment. Many foreign journalists believe that the Jewish People exists here only because of America’s money. When they are told that the Israeli economy’s scope is hundreds of billions of dollars a year and that US aid constitutes a miniscule portion of it, they refuse to believe it.

Of the $3 billion handed over by the US annually, only $690 million are transferred to Israel in practice. The rest – 75% of the aid – remains in the US and constitutes an indirect government subsidy to US arms manufacturers – Boeing, Lockheed, McDonnell Douglas etc. – thereby enhancing US employment. "

"Furthermore," stresses Strenger, "Israel’s acquisitions in the US are far greater than the American grant."

So what does he want us to give back? "I suggest," says Strenger, "that Israel renounce the small portion (25%) of US aid that flows directly to Israel, ensuring that all of the aid will be used for acquisitions at American plants and remain in the US to support American jobs."

I'm not sure if by voluntarily forgoing the direct aid we will manage to get rid of those awkward strings.

These restraints are more like subtle allusions than blatant threats. The current building freeze in the settlements and East Jerusalem demanded by President Obama doesn't have a forfeit corollary, nevertheless there are unmentioned implications.

David R. Francis who writes a weekly column in the Christian Science Monitor

claims the US can raise the pressure on Israel without cutting aid

Legally, US loan guarantees of up to $10 billion to Israel can't be used to finance Israeli settlement building there. In the mid-1990s and again in 2003, the US did shrink those guarantees a bit because of settlement building, presumably raising Israel's cost of borrowing.

Francis quotes from an interview with Eugene Bird, president of the Council for the National Interest, a group advocating a "more balanced" approach to Middle East affairs,

"US money does in effect finance settlements in the West Bank that house 400,000 settlers," says Bird, "though I never will be able to prove it," he confesses.

"So if President Obama wants to pressure Israel to stop expanding settlements, what can he do?" asks Francis, "He should not engage in a public fight,” says Stephen Walt, a Harvard University professor of international relations and coauthor of a book on the Israel lobby. “Rather,” he says, “Mr. Obama should use the bully pulpit to express displeasure, maybe calling the settlements ‘illegal.’

He should take diplomatic steps, such as voting for a United Nations resolution condemning the 42-year-old occupation; slow down or trim US purchases of Israeli military products (worth perhaps half a billion dollars a year); and limit loan guarantees.

One advantage of these measures: Congress would not need to be involved.” notes Stephan Walt."

Maybe, but I doubt if he will resort to the steps Walt mentions, especially if he wants a second term in the White House.

The US has a vested interest in Israel. It needs a foothold in the Middle East and Israel is by far the best option it has. Despite its impossible electoral system Israel is a stable democracy. It has a thriving economy and its army is the strongest military force in the region. The only shortcoming is that our neighbours don't like us and one of them who really doesn't qualify as a neighbour (Iran) continually threatens to annihilate us. Some analysts claim that this minor flaw can be rectified. All we have to do is end the Israel-Palestinian Conflict. This will pave the way for a general end of conflict status with all our neighbours enabling everyone to toe the line in dealing with the bad guy on the block (Iran). Of course this is easier said that done.

Reviewing US aid to Israel in Businessweek Celestine Bohlen says

"The problem with this kind of largess is that it muddies the picture, both for Israel and the U.S. The best thing for the relationship would be for the U.S. to cut Israel’s allowance.

Under that scenario, Israel could pay less heed to U.S. pressure and do what it thinks it must for its own national security. Many would argue that Prime Minister Benjamin Netanyahu is doing that anyway. The difference would be that the U.S. wouldn’t be there to help pay for it.

Housing blocks for Jews in East Jerusalem? Pursuit of terrorists in the Gaza Strip, even in southern Lebanon? A security fence that rings the whole country? If this strategy makes Israel feel more secure, maybe it should just pursue it and not complain about “restraints” imposed by the U.S.

Then Israel could start thinking seriously about what its defensible borders should look like, perhaps even question the logic and the cost of tying up its military protecting unsustainable settlements in the West Bank.

Once freed from its reputation as a stalking horse for the U.S., Israel could explore deeper relations with more moderate Arab states as a counterweight to Iran.

The advantages for the U.S. are obvious: It would save money at a time when the federal debt is zooming out of sight. The sums aren’t great -- a drop compared with the $1.4 trillion budget deficit in fiscal 2009 -- but it would take some of the sting out of Israel’s stubborn opposition to U.S. policies.

Severing the financial links could also correct the perception that the U.S., as Israel’s patron, can’t be an honest broker in the Middle East.

Earler this week economist Sever Plocker surveyed Israel’s current economic boom in Yediot Ahronot -
"Without you realising it, Israel is approaching yet another milestone en route to turning into a highly developed economy – our per capita GDP will reach the $30,000 mark this year, likely at the beginning of the summer. The overall gross domestic product, which is the economic value of all the goods and services produced in Israel, will reach roughly $230 billion. “

Considering all these bewildering billions a small chorus of Israelis is politely advocating a voluntary reduction in the US aid package. Maybe we can manage without it, however the US remains our main supplier of weapons and armaments. No matter how we procure them our preference for better weapons gives us an advantage over our enemies, but this dependency also has strings attached.

Have a good weekend.

Beni 8^th of April, 2010. .