WRMEA, November 2011, Pages 22-23

Congress Watch

A Conservative Estimate of Total U.S. Aid To Israel: More Than $123 Billion

By Shirl McArthur

 table01A Conservative Estimate of Total U.S. Aid To Israel: More Than $123 Billion

The current estimate by the Washington Report on Middle East Affairs of cumulative total U.S. direct aid to Israel is $123.202 billion, updating the figure in our November 2008 issue. Because parts of U.S. aid to Israel are buried in the budgets of various U.S. agencies or in a form not easily quantified—such as the early disbursement of aid, giving Israel a direct benefit of interest income and the U.S. Treasury a corresponding loss—it is virtually impossible to arrive at an exact dollar amount.

Our latest estimate is a conservative, defensible accounting of U.S. direct aid to Israel. It does not include the indirect benefits to Israel resulting from U.S. aid, nor the substantial indirect or consequential cost to the U.S. as a result of its blind support for Israel. Most significantly, perhaps, it does not include the costs resulting from the U.S. invasion and occupation of Iraq—hundreds of billions of dollars, thousands of U.S. and allied casualties, and untold tens of thousands of Iraqi killed and wounded—which is widely believed in the Arab world, and by many Americans as well, to have been undertaken for the benefit of Israel.

Among the real benefits to Israel that are not counted as a direct cost to the U.S. taxpayer is the provision allowing Israel to spend 26.3 percent of each year's military aid in Israel rather than from American companies (no other recipient of U.S. military aid gets this benefit), which has resulted in an increasingly sophisticated Israeli defense industry. As a result, according to the Congressional Research Service (CRS), between 2001 and 2008 Israel was the seventh-largest arms exporter to the world, with total sales of $9.9 billion. Also in contrast with other countries receiving U.S. military aid, who must purchase through the Department of Defense (DOD), Israel deals directly with the U.S. companies, with no DOD review.

Loan Guarantees

Another indirect benefit to Israel is the loan guarantees that Washington has extended to Israel since 1972. While these have not yet cost the U.S., they have enabled Israel to borrow from commercial sources at more favorable terms and lower interest rates, since the U.S. guarantees payment of the loans should Israel default.

Most recently, the FY '03 war supplemental appropriations act authorized $9 billion in loan guarantees to Israel over three years. In FY '05 these were extended until FY '07, and in '06 they were extended again through FY '11, with a "carryover" provision that Israel may draw on unused U.S. guarantees through FY '12. CRS reported that Israel has not borrowed any funds against these guarantees since FY '05, speculating that it perhaps views the guarantees as a "last resort" option should their normal source of funds—unguaranteed local and international bond issuances—become too expensive.

Subsidies for Israel's Illegal Colonists And Colonies

A real benefit to Israel that represents another indirect, but unquantifiable, cost to the U.S. taxpayer is the private, tax-exempt money collected by charitable American Jewish groups and then sent to support Israel's colonists ("settlers") and colony-related causes in occupied Palestinian territories, including by groups designated by the U.S. as foreign terrorist organizations (see November 2007 Washington Report on Middle East Affairs, p. 30).

In July 2010, The New York Times published a lengthy article on these "charities," reporting that hundreds of millions of dollars have flowed to settlers and settlement-related causes, including to support settler extremists in Hebron and East Jerusalem. While most of the money appears to have gone to purposes that are legal under U.S. laws, theTimes reported, it added that these funds have "also paid for more legally questionable commodities: housing as well as guard dogs, bulletproof vests, rifle scopes and vehicles to secure outposts deep in occupied areas."

Since every tax-exempt dollar that goes to the colonies represents a loss of, conservatively, 20 cents to the U.S. Treasury, that means that the U.S. taxpayer has indirectly subsidized Israel's illegal colonies to the tune of tens of millions of dollars, or more.

Components of Israel Aid

Foreign Aid and DoD Appropriations Legislation Since FY 2007Foreign Aid and DoD Appropriations Legislation Since FY 2007

As with previous Washington Report on Middle East Affairs, estimates of U.S. aid to Israel, this report draws largely from CRS' latest report on "U.S. Foreign Aid to Israel," which uses available and verifiable numbers, primarily from the foreign operations appropriations bills. Table 1 on the facing page is based on the appendix to that report plus this magazine's reporting and research, especially for the columns showing DOD funds and interest income to Israel resulting from the early disbursement of aid.

Not counting the huge sums being spent in Iraq and Afghanistan over the past decade, Israel is the largest cumulative recipient of U.S. aid since World War II. The $3 billion or so per year that Israel receives from the U.S. amounts to about $500 per Israeli. The largest amounts have been military grants (Foreign Military Financing, or FMF) and economic grants (Economic Support Funds, or ESF). In August 2007 the U.S. and Israel agreed on a new, 10-year aid plan, beginning in FY '09 and calling for no ESF and incremental annual increases in FMF, reaching $3 billion by FY '11 and remaining at that level through FY '18.

Another ongoing item is so-called "migration and refugee assistance." This originally was intended to help Israel absorb Jewish refugees from the Soviet Union, but was expanded in 1985 to include "refugees resettling in Israel." In fact, however, Israel doesn't differentiate between refugees and other immigrants, so this money subsidizes all immigrants to Israel.

Israel also receives regular grants from the "American Schools and Hospitals Abroad" (ASHA) program.

A significant amount of aid to Israel comes from the DOD budget for so-called "joint defense projects"—although to date the Pentagon has shown little interest in these projects for its own use. Previous Washington Report on Middle East Affairs, estimates identified about $7.694 billion to Israel from the DOD budget through FY '08. To that has been added amounts for FYs '09, '10 and '11, as shown in Table 1. Of the $415 million shown for FY '11, the most significant amount is the $205 million appropriated to support Israel's "Iron Dome" short-range missile defense system.

A significant part of U.S. support for Israel's defense program is the deployment to Israel in 2008 of the X-Band radar system to detect incoming missiles. Since this system is U.S.-owned and -operated (meaning the constant presence on Israeli soil of U.S. troops and defense contractors), its costs are not reflected in these numbers.

Table 1 also shows a conservative estimate of Israel's interest income resulting from the early disbursement of U.S. aid. Assuming that Israel's aid money is drawn down over the course of each year, a 2 percent interest rate is applied to one-half of the aid for FY '09 and '10, and a 3 percent rate for FY '11.

The "All Other" column on Table 1 reflects information from the CRS report, plus this magazine's reporting and research, giving amounts from other U.S. departments and agencies. Our 2006 report uncovered $456.7 million in previously unreported grants and endowments, mostly to U.S.-Israeli scientific organizations. The two largest are the BIRD Foundation (research and development) and the BARD Fund (agricultural research). The BARD Fund gets about $500,000 a year from the Agriculture Department. In addition, in each of FY '09 and '10, Congress appropriated $2 million from the Energy Department for the U.S.-Israeli Energy Cooperation Program, and in FY '10 the Energy Department announced that it would contribute $3.3 million to the BIRD Foundation for clean energy projects.

For those who wish to look up more details, Table 2 above gives citations for the foreign aid and DOD appropriations bills for the past five years. 


Shirl McArthur, a retired U.S. foreign service officer, is a consultant based in the Washington, DC area.