Reply #63: Some facts on US aid to Israel [View All]

[JCMach1]

...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 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 annually received $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 is scheduled to be reduced to $240 million and military aid will increase to $2.28 billion.

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 U.S. 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 $1.2 billion in ESF and owed only $328 million in debt service so the amendment was no longer needed.

Roughly 26 percent of what Israel receives in 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 U.S. 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). In FY2004, the figure is $568 million. 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.

At the end of 1998, Israel requested an additional $1.2 billion in aid to fund moving troops and military installations out of the occupied territories as called for in the October 23, 1998, Wye agreement. Israel received $600 million of this in military aid in FY1999 and $300 million in each fiscal year 2000 and 2001 (see Wye funding table).

In February 2003, for the first time, Congress voted to cut aid to Israel against the wishes of the pro-Israel lobby and the government of Israel. The 0.65 percent deduction was not aimed at Israel; however, it was an across the board cut of all foreign aid programs for fiscal year 2003. The lobby and government also suffered a defeat when Congress deleted an administration request for an extra $200 million to help Israel fight terrorism. Even while cutting aid to Israel (which still was budgeted at $2.1 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. Each year, an amount equal to the funds Israel spends on settlements in the territories will be deducted from the loan amount, along with all fees and subsidies.

Altogether, since 1949, Israel has received nearly than $100 billion in assistance. This includes the three special allocations, the $10 billion in loan guarantees (spread over five years) approved in 1992, and a variety of other smaller assistance-related accounts, such as refugee resettlement (nearly $1.5 billion overall) and cooperative development programs (a total of $186 million since 1981).

The total does not include funds for joint military projects like the 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...

http://www.jewishvirtuallibrary.org/jsource/US-Israel/foreign_aid.html


Please note, I don't believe this list contains any items which are part of the blackops portion of th e security and defense budget. The totals will more than likely be higher.