![[Skip to Page Content]](graphics/skip_sliver.jpg){kind=small}
|
       |
 
 |
U.S. Aid to Israel
Economic Assistance Since its creation in 1948, Israel has been very much dependent on foreign sources of economic assistance. For such assistance to be forthcoming, the Israeli leaders offered the services of their state to those powers whose interests in the Middle East were seen as vital. The importance of the world Jewry to Israel’s survival as a source of new immigrants and financial aid, furthermore, necessitated the tightening of the Zionist grip over Jewish organizations worldwide. Great Britain, France and, to some extent, West Germany provided the military assistance Israel needed during the 1950s and most of the 1960s. Economic assistance, on the other hand, was provided primarily by West Germany and the numerous American and European Jewish organizations. In addition, direct investment by foreigners in Israel’s economy and the sale of Israel Bonds in the U.S. and Europe have been and continue to be a steady source of financial aid to Israel. In September 1952, negotiations, which were conducted in secrecy between the Germans and Israelis, were concluded, and a $1.1 billion reparation deal was signed.12 In 1960, the German government extended to Israel a $500 million, 10-year loan at a concessionary rate of interest. Germans and German institutions, moreover, began in 1959 to buy Israel Bonds and to invest directly in the Israeli economy. In addition, German arms deliveries, which started secretly in 1959 via France, accelerated in the 1960s. In 1962, for example, the German Government allocated $60 million in military aid to Israel, and this was followed in 1963 by a $20 million deal to provide Israel with American-made tanks.13 Shimon Peres acknowledged Germany’s military aid to Israel by saying, “America gave us money, France—arms for money, Germany—arms without money.”14 Assaf Razin, professor of economics at Tel Aviv University, said that in the 1950s and 1960s “Germany reparations were the primary source of aid to Israel—payments of German reparations to individuals continue to this day.”15 Estimates of such payments, which are being made regularly to some 200,000 Jews, range between $850-900 million a year. By the early 1970s, however, West German financial aid began to decline while Israel’s need for foreign capital continued to rise. As a result, the U.S. Government and the American Jewish community were forced to provide the massive assistance needed to maintain Israel’s economic viability. The occupation of the West Bank, the Gaza Strip, the Golan Heights and the Sinai also helped meet some of Israel’s financial needs, providing it with a captive export market, a free source of oil and a pool of cheap labor. Israel, moreover, began to receive hundreds of millions of dollars a year from taxes paid and tourism generated by the occupied territories. Meron Benvenisti, former deputy mayor of Jerusalem, estimated the occupation tax paid by West Bankers to the Israeli occupying authorities between 1967 and 1986 at “a conservative figure of $700 million.”16 The New York Times stated on January 5, 1986 that “the Israeli occupation has been beneficial [for Israel], providing a protected market for Israeli goods and a pool of cheap labor. Yet, the occupation does not constitute even a fiscal burden on the Israeli treasury. On the contrary, Palestinians contribute large sums of money to Israeli expenditure.”17 From 1949 through 1965, U.S. official aid to Israel averaged about $63 million per year, over 95 percent of which was in the form of economic development assistance and food aid. Between 1966 and 1970, average annual aid increased to about $102 million per year, but economic assistance declined to about $27 million per year. In 1971, economic assistance changed from specific programs, such as agricultural development, to the Commodity Import Program, which was terminated in 1979. By the mid-1970s, it became evident that Israel could no longer meet its balance of payments and budget deficits with foreign financial aid alone. Consequently, it began to rely more heavily on borrowed capital from foreign sources and on U.S. financial assistance. For example, U.S. economic assistance, which averaged about $90 million per year between 1972 and 1974, averaged $670 million per year between 1975 and 1978. In 1979, U.S. economic assistance approached $800 million and became, to a large extent, unconditional direct cash transfer for budgetary support.18 Since 1985, annual economic aid has reached $1.2 billion per year. In 1976, Israel became the largest annual recipient of U.S. aid, and, as of 1981, all U.S. economic assistance to Israel has become an outright grant that need not be repaid. [Table 2—see PDF version--provides detailed information concerning U.S. economic assistance to Israel since 1949.] In addition to the above, Israel has been receiving substantial amounts of financial aid and other forms of direct economic assistance from the U.S. government. In 1978, for example, the government Accounting Office (GAO) found hundreds of millions of dollars transferred to Israel via other channels not included in the annual foreign aid appropriations bills. Such transfers included the financing of a water desalination project in Israel and three U.S.-Israeli research foundations costing $155 million.19
Next Page
|
 |
Special Reports:
|
Printer Friendly Version of this Article