The Staggering Cost of Israel to Americans

 

If Americans Knew

April 18, 2013 Israel has a population of approximately 7.7 million, or a million fewer than the state of New Jersey. It is among the world's most affluent nations, with a per capita income similar to that of the European Union.[1] Israel's unemployment rate of 6.3% is much better than America's 8.2%,[2] and Israel's net trade, earnings, and payments is ranked 146th in the world while the US sits at a dismal 193rd.[3] Yet, Israel receives more of America’s foreign aid budget than any other nation.[4] The US has, in fact, given more aid to Israel than it has to all the countries of sub-Saharan Africa, Latin America, and the Caribbean combined—which have a total population of over a billion people.[5] This report was produced by If Americans Knew analysts, particularly Pamela Olson, a President's Scholar at Stanford University 1998-2002 with a major in physics, a minor in political science, and author of a book based on her three years in the West Bank. Olson previously worked as a research analyst at the Institute for Defense Analysis. The report updates the 1998 work by Richard Curtiss, "The Cost of Israel to U.S. Taxpayers," published in the Washington Report on Middle East Affairs. Mr. Curtiss, following military service in World War II, served for 30 years as a career Foreign Service Officer. He received the U.S. Information Agency's Superior Honor Award and the Edward R. Murrow award for excellence in Public Diplomacy, USIA's highest professional recognition. And foreign aid is just one component of the staggering cost of our alliance with Israel. Given the tremendous costs, it is critical to examine why we lavish so much aid on Israel, and whether it is worth Americans' hard-earned tax dollars. But first, let's take a look at what our alliance with Israel truly costs. Before the Iraq War in 2003 Direct Foreign Aid According to the Congressional Research Service , the amount of official US aid to Israel since its founding in 1948 tops $115 billion, and in the past few decades it has been on the order of $3 billion per year.[6] (In 2013, for example, this amounted to over $8.5 million every single day.) But this money is only part of the story. For one thing, Israel gets all of its aid money at the start of each year, rather than in quarterly installments like other countries.[7] This is significant: It means that Israel can start earning interest on the money right away – interest paid by the US since Israel invests these funds in US Treasury notes. In addition, because the US government operates at a deficit, it must borrow money in order to give it to Israel and then pay interest on it all year. Together these cost US taxpayers more than $100 million every year. Israel is also the only recipient of US military aid that is allowed to use a significant portion annually to purchase products made by Israeli companies instead of US companies. (The costs to Americans caused by this unique perk are discussed below.) In addition, the US gives roughly $1.6 billion per year to Egypt and Jordan in aid packages arranged largely in exchange for peace treaties with Israel. The treaties don’t include justice for Palestinians, and are therefore deeply unpopular with the local populations.[8] On top of this, the US gives more than $400 million to the Palestinian Authority each year,[9] much of it used to rebuild infrastructure destroyed by Israel and to bolster an economy stifled by the Israeli occupation.[10] This would be unnecessary if Israel were to end the occupation and allow the Palestinians to build a functioning and self-sustaining economy. Yet, there’s still much more to the story, because parts of US aid to Israel are buried in the budgets of various US agencies, mostly the Department of Defense. For example, since at least 2006, the American Defense budget has included between $130 and $235 million per year for missile defense programs in Israel.[11] In all, direct US disbursements to Israel are higher than to any other country, even though Israelis only make up 0.1% of the world’s population. On average, Israelis receive 7,000 times more US foreign aid per capita than other people throughout the world, despite the fact that Israel is one of the world’s more affluent nations.[12] And that number rises significantly when one considers disbursements to Egypt, Jordan, and the Palestinian Authority and Defense spending on behalf of Israel. Additional Ad hoc support for Israel Dr. Thomas Stauffer, a Harvard economist and Middle East studies professor who twice served in the Executive Office of the President, wrote a comprehensive report about all components of the relationship with Israel’s cost to American taxpayers for the Washington Report on Middle East Affairs in 2003. He wrote: "Another element is ad hoc support for Israel, which is not part of the formal foreign aid programs. No comprehensive compilation of US support for Israel has been publicly released. Additional known items include loan guarantees... special contracts for Israeli firms, legal and illegal[13] transfers of marketable US military technology, de facto exemption from US trade protection provisions, and discounted sales or free transfers of 'surplus' US military equipment. An unquantifiable element is the trade and other aid given to Romania and Russia to facilitate Jewish migration to Israel; this has accumulated to many billions of dollars."[14] Israel has often used its privileged access to US military technology against both the US government and US corporate interests. According to the Associated Press in 2002, "In France, Turkey, The Netherlands and Finland, Israeli companies have edged such U.S. firms as Raytheon, Northrop Grumman and General Atomics out of arms deals worth hundreds of millions of dollars in recent years. The irony, experts say, is that tens of billions of U.S. tax dollars and transfers of American military technology helped create and nurture Israel's industry, in effect subsidizing a foreign competitor." The AP article quoted a vice president at the Aerospace Industries Association of America, who bluntly said, "We give them money to build stuff for themselves and the U.S. taxpayer gets nothing in return."[15] Meanwhile, according to the Christian Science Monitor , Israel has also "blocked some major US arms sales, such as F-15 fighter aircraft to Saudi Arabia in the mid-1980s. That cost $40 billion over 10 years."[16] Even worse, Israeli weapons "buttress the arsenals of nations such as China that the United States considers strategic competitors, alarming US military planners," the Associated Press article went on to report. "[In 2001] US surveillance planes flying along China's coast were threatened by Chinese fighter jets armed with Israeli missiles... Had Chinese fighter pilots been given the order to fire, they could have brought down the US planes with Israeli Python III missiles... US defense chiefs say Israel sold China the missiles without informing the United States."[17] Lost jobs, trade, and standing One of the most devastating indirect costs of the US alliance with Israel was the Arab oil boycott of 1973. The Arab states imposed the boycott in protest of US support of Israel during the 1973 war, in which Arab countries attacked Israel to try to reclaim lands Israel had invaded and occupied in 1967. "Washington's intervention triggered the Arab oil embargo which cost the U.S. doubly: first, due to the oil shortfall, the US lost about $300 billion to $600 billion in GDP; and, second, the US was saddled with another $450 billion in higher oil import costs," wrote Stauffer in the Washington Report on Middle East Affairs.[18] Then there's the cost in lost jobs. "US policy and trade sanctions reduce US exports to the Middle East about $5 billion a year, costing 70,000 or so American jobs," Stauffer estimates. "Not requiring Israel to use its US aid to buy American goods, as is usual in foreign aid, costs another 125,000 jobs."[19] But perhaps the most damaging cost to the US has been its loss of standing in the Arab and Muslim worlds, where US largesse towards Israel as it commits human rights violations[20] provokes deep resentment. "To many of the world's Muslims, it places the US taxpayer on the Israeli side of its conflicts with Arabs," observed the Associated Press article.[21] According to Harvard professor Stephen Walt, "The 9/11 Commission reported that 9/11 plotter Khalid Sheikh Mohammed's 'animus toward the United States stemmed not from his experiences there as a student, but rather from his violent disagreement with US foreign policy favoring Israel.' Other anti-American terrorists—such as Ramzi Yousef, who led the 1993 bombing of the World Trade Center—have offered similar explanations for their anger toward the United States."[22] There are many more potential categories of costs that are even more difficult to quantify. All in all, Stauffer estimates that Israel cost the US about $1.6 trillion between 1973 and 2003 alone—more than twice the cost of the Vietnam war.[23] Costs since Stauffer's study in 2003

Read On...