A Conservative Estimate of Total Direct
U.S. Aid to Israel: $108 Billion
by Shirl McArthur
Washington Report on Middle East Affairs (WRMEA), 15/09/07
Because of the uncertainties and ambiguities associated with U.S. aid to Israel, arriving at a precise figure for total direct U.S. aid to Israel probably is not possible. Parts of it are buried in the budgets of other government agencies—mostly the Defense Department (DOD)—or in a form not easily quantifiable—such as the early disbursement of aid, allowing Israel a direct gain and the U.S. Treasury a direct loss of interest on the unspent money. Given these caveats, the Washington Report on Middle East Affairs (WRMEA) conservatively estimates cumulative total direct U.S. aid to Israel at $107.961 billion.
It is important to emphasize that the following analysis will attempt to give a conservative, defensible accounting of U.S. direct aid to Israel, not of Israel’s cost to the U.S. or the American taxpayer, nor of the benefit to Israel of U.S. aid. The distinction is important, because the indirect or consequential costs to the American taxpayer as a result of Washington’s blind support for Israel exceed by many times the amount of direct U.S. aid to Israel. Some of these “indirect or consequential” costs would include the costs to U.S. manufacturers of the Arab boycott, the costs to U.S. companies and consumers of the Arab oil embargo and consequent soaring oil prices as a result of U.S. support for Israel in the 1973 war, and the costs of U.S. unilateral economic sanctions on Iran, Iraq, Libya and Syria. (For a discussion of these larger costs, see “The Costs to American Taxpayers of the Israeli-Palestinian Conflict: $3 Trillion,” by the late Thomas R. Stauffer, June 2003 Washington Report, p. 20.)
Perhaps the greatest consequential costs (and not included in Stauffer’s $3 trillion estimate) are those resulting from the 2003 invasion and subsequent occupation of Iraq, which is almost universally believed in the Arab world to have been undertaken for the benefit of Israel—hundreds of billions of dollars, 2,500-plus U.S. and allied fatalities and untold tens of thousands of Iraqi fatalities, and reduced Arab travel and investment in the U.S. and purchases of U.S. goods and services by Arab countries.
Among the real benefits to Israel that are not direct costs to the U.S. taxpayer are the cash transfer of economic and military aid, in-country purchases of a portion of military aid, and loan guarantees. The U.S. gives Israel all of its economic and military aid directly in cash, with no accounting required of how the funds are used. Furthermore, Israel can spend 26.3 percent of the military aid in Israel, clearly a subsidy to the Israeli defense industry at the expense of American defense contractors. Other countries receiving U.S. military aid generally have to spend 100 percent of it in the U.S. Also in contrast with other countries receiving military aid, who must purchase through the DOD, Israel deals directly with U.S. companies.
A further benefit to Israel are U.S. government loan guarantees. While they have not (yet) cost the U.S. any money, they are listed as “contingent liabilities”—that is, should Israel default they would become liabilities to the U.S. However, they have unquestionably been of tangible financial benefit to Israel, because they have enabled Israel to get commercial loans at special terms and favorable interest rates. The major loan guarantees have been $600 million for housing between 1972 and 1990; $9.2 billion for Soviet Jewish resettlement between 1992 and 1997; about $5 billion for refinancing military loans commercially; and $9 billion in loan guarantees included in the FY ‘03 supplemental appropriations.
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