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Washington Report on Middle East Affairs, March 1990, Page 11


Rethinking Foreign Aid?

By Dennis J. Wamsted

The $3 billion earmarked for economic and military aid to Israel each year since the mid-1980s has seldom, if ever, been questioned publicly by members of Congress. Indeed, even though the foreign aid budget has dropped from about $20 billion in 1985 to roughly $16 billion in the current fiscal year, pressure from the American Israel Public Affairs Committee (AIPAC) and other pro-Israel groups has ensured that aid to Israel remained untouched. Now, however, Senate Minority Leader Robert Dole (R-KS) has floated a proposal that could dramatically reshape the US foreign aid program.

Dole's proposal, first made public in an op-ed article in The New York Times and subsequently restated on the floor of the Senate, would reduce by five percent the earmarked accounts in the US foreign aid budget, raising roughly $400 million that would then be reallocated to the newly emerging democracies in Eastern Europe. The proposed restructuring would hit Israel the hardest, chopping its aid total by $150 million. Aid to the four other largest recipients of US aid—Egypt, the Philippines, Turkey and Pakistan—would be cut by $180 million, with the remaining funds coming from the smaller earmarked accounts in the aid program.

AIPAC Backlash

The Kansas Republican's proposal was lambasted by AIPAC only hours after it was first released, and a number of pro-Israel congressmen joined in the condemnations. Instead of reducing aid to Israel to bolster the Eastern European countries, AIPAC suggested in a statement, Congress should increase the size of the foreign. aid budget. "We believe it should not be at the expense of other vital US policy objectives. We should not hurt our existing vulnerable democratic allies in the process of helping potential democracies. Instead, we should look toward strengthening the tools of diplomacy by increasing the foreign assistance account."

Congressional Comment

AIPAC's approach was echoed by a number of its usual congressional supporters, who argued that while a reassessment of the foreign aid budget may be needed, Israel should be excluded from any such reappraisal. "I would be opposed to forcing such a cut on Israel and Egypt, and I urge the administration to do the same," commented Sen. Claiborne Pell (D-RI), the chairman of the Senate Foreign Relations Committee. "I would agree that we should reassess the need for military assistance to many countries for which the rationale has been a presumed Communist threat directed from Moscow," added Pell, who faces a tough re-election campaign this fall against popular Republican Rep. Claudine Schneider (R-RI). "Such a reassessment, however, is not relevant in the case of Israel. . ."

Sen. Patrick Leahy (D-VT), the chairman of the Senate Appropriations Foreign Operations Subcommittee, was similarly disingenuous, promising to hold hearings to reassess the US foreign aid program while shielding Israel from any possible cuts. "As far as I am concerned, every program in the fiscal 1991 foreign aid appropriation will be reviewed. No program will be exempt from scrutiny. If any program level cannot be fully justified ... it will be subject to reconsideration," Leahy told his Senate colleagues. "At the same time, while everything in the foreign aid program is open to debate, I cannot support any action which would break existing commitments the US government has made to allies and friends," Leahy continued. "In particular, absent the most compelling justification, I will oppose any attempt to change the aid allocations Congress made in the current foreign aid appropriation."

The sharpest critique of Dole's proposal came not from his Senate colleagues, but instead was issued by Rep. Charles Schumer (D-NY), who is Jewish and represents one of the few majority-Jewish congressional districts in the US. "I read his [Dole's] remarks with great interest, and I must say that both on the substance as well on the tone, they were wrong-headed," Schumer wrote in a statement printed in the Congressional Record. "On the substance, what Senator Dole suggested is that we cut foreign aid from five countries by five percent and send the money to Eastern Europe. The trouble is that those five countries need the aid more than ever...

"Finally, as to the tone of Senator Dole's article, I cannot help but take offense at it ... When he criticizes Israel's supporters for not being more concerned with America, this smacks of accusations of un-American loyalties in the days when ... Jews were accused of being loyal only to Israel ... I would hope that he would rethink his proposal and clarify his comments."

Dole's Rebuttal

This predictable congressional outcry was dismissed by Sen. Dole in a speech defending his proposal on the Senate floor. First, the Kansas Republican rebuked those who called for an increase in the overall foreign aid budget, instead of cutting aid to existing recipients. "We have almost incomprehensible federal deficits," Dole said. "And it is going to get worse—much worse—in the next couple of years. Overall, we are just not going to have large amounts of new money to put into foreign aid. That is a fact.

Dole also criticized those who would willingly cut aid programs to other countries, but not Israel. "As a matter of fairness, and simple arithmetic—to get enough money so that you can address the real needs that exist—I don't believe you should exclude, or fence, any large recipient country from the cuts." On a related issue, Dole chided those congressmen who argued against his across-the-board cut only because they said it would not raise enough money to help the Eastern European countries significantly. "I simply do not buy the argument from some critics that $400 million is meaningless," Dole said. "That is like saying a proposal which would house 25 percent of the homeless makes no sense, since 75 percent would still be on the streets...

"So I strongly believe an across-the-board five percent cut in fiscal year 1990 must be part of the answer. Maybe it is two percent, maybe it is one percent, maybe it is four percent. Maybe it is in economic aid. Maybe it is in military aid," Dole concluded.

Congressional Outlook

Dole's stature as minority leader and his past support for Israel ensure that his controversial proposal will not be dismissed out of hand. Still, it is unlikely that many other congressmen will publicly support the Kansas Republican's plan, particularly given that 1990 is an election year. Indeed, a counterproposal was introduced in the Senate at the end of January by three Democrats—Rhode Island's Pell, as well as Paul Simon of Illinois and Joseph Biden of Delaware—that would earmark $511 million for the emerging democracies in Eastern Europe and pay for the new funding by shifting money out of the defense budget. While such a federal funding shift may gain adherents in Congress, it is likely to be opposed by the administration, which sets the stage for some lively debate in the coming months.


Aid to Israel comes in many forms beyond the $3 billion that Congress annually approves in direct economic and military aid. In fact, as the US budget situation worsened in the 1980s, Congress increasingly looked at the fringes of the foreign aid budget, as well as into other federal budget accounts, in an effort to enhance Israel's take-home aid package without increasing the sums included in the "visible" portion of the foreign aid budget. Some, but by no means all, of these congressional schemes follow:

  1. Debt Refinancing—Since 1987, Congress has twice allowed Israel to refinance existing high-cost loans from the US government and obtain lower cost private-sector loans, guaranteed by the US government. These loan provisions have saved the Israeli government roughly $150 million a year, cost the US Treasury money in forfeited interest, and, in case of an Israeli default, may result in the US taxpayer ultimately paying off the loans to forestall an Israeli economic collapse.
  2. Fair Pricing—Since 1988, Congress has excluded research and development costs, overhead costs and several other charges from the cost of US weapons sold to Israel. This provision will save Israel an estimated $56 million in 1990 alone, while raising the cost borne by US taxpayers to purchase weapons for use domestically.
  3. Refugee Aid—The fiscal 1990 foreign aid bill includes $25 million for Israel to help pay for the resettlement of Soviet Jews. This will almost certainly be a continuing budget item and there is already talk by the Israelis of the need for an additional $400 million in fiscal 1991 to pay for what is expected to be a massive influx of Soviet Jews over the course of the year. Congress will likely consider some additional funding for this program during 1990.
  4. Israeli-Egyptian Projects—The fiscal 1990 foreign aid bill includes $7 million to pay for a number of agricultural and scientific projects that Israel and Egypt jointly operate.
  5. Miscellaneous Aid—The fiscal 1990 foreign aid budget includes approximately $7.5 million to subsidize a variety of Israeli programs in Third World countries, principally in black African countries where Israel is trying to re-establish diplomatic relations.

Dennis J. Wamsted is a free-lance writer specializing in Mideast affairs and the US Congress.


QUOTABLE-Senator Robert Dole

Senate Minority Leader Robert Dole (R-KS) suggested the unthinkable recently, calling for an across-the-board 5 percent reduction in the foreign aid now earmarked for the five largest recipients. Dole's proposal would cut US aid to Israel by $150 million, while cutting aid to the other four recipients—Egypt, the Philippines, Turkey and Pakistan—by $180 million. 7he money raised from this reduction would be used to bolster the fledgling democracies in Eastern Europe. Sen. Dole outlined his proposal in an article in the January 16, 1990, New York Times. Excerpts from the Kansas Republican's proposal are included below.

"Even from today's sometimes shortsighted perspective, it is safe to declare 1989 as one of the watershed years of the 20th century ...

"In fact, events have been moving so fast that, in some ways, we're all playing catch up in our own analyses and policy prescriptions. A little caution makes great sense in such a volatile environment.

"But this much is already clear: We do have an enormous opportunity to consolidate and expand freedom's gains and, at the same time, to enhance America's security and economic potential.

"Simply put, there is no better investment we can make in America in 1990 than finding ways to support the new democracies.

"That's the good news. The bad news is that supporting freedom is not free. It will cost bucks—big bucks. And we must find those bucks within the constraints of our own crushing budget deficits and a foreign aid budget that is already stretched to the breaking point...

"The immediate answer must include reallocation of what we are spending on foreign aid now.

"Let me make this point: I am certainly not suggesting abandoning or shortchanging our long-time friends around the world...

"What I am suggesting is to re-examine some of the huge aid programs in a few countries—the so-called earmarked countries—that take most of our current aid budget. Right now, the big five—Israel, Egypt, the Philippines, Turkey and Pakistan—receive more than two-thirds of our foreign aid.

"Does it make sense, at this historic moment, to provide these countries practically all of our aid at the cost of foreclosing dramatically promising aid initiatives in Eastern Europe or other important countries?...

"Consider this simple fact: A five percent cut in current aid programs for the big five would provide about $330 million—or enough to respond to the needs of new democracies such as Poland, Hungary, Panama and countless needy countries that under current allocations will receive not one penny of American aid.

"Perhaps an even larger across-the-board cut and reallocation would be warranted, as the democratic revolution gains momentum...

"No doubt, these proposed reallocations will raise a hue and cry...

"Can't those pressure groups that have turned some of our foreign aid programs virtually into 'entitlement programs' realize that making some minor adjustments in aid allocations can simultaneously serve the countries of their special interest, and serve America?...

"To me, it boils down to this: Are big gains for freedom worth a small cut in a few huge foreign aid programs? I say yes."