April/May 1994, Page 74
Middle East History: It Happened in April
Sen. Byrd Revealed Total U.S. Aid to Israel in 1992
By Donald Neff
It was two years ago, April 1, 1992, when Democratic Senator Robert C. Byrd of West Virginia detailed for the first time on the Senate floor the vast array of aid and special benefits that Israel receives from the United States. Although Israel has emerged as the largest recipient of U.S. aid and other special favors, Byrd's carefully prepared speech was the first and only-major delineation of the increasingly complex and costly relations America has with Israel. No other senator or congressman or executive branch official has ever reported to the American people the full details of aid and assistance that the United States provides to Israel. Despite the often astonishing revelations provided by Byrd, his remarks were generally ignored by the media.
Yet his remarks were as dramatic as the figures he cited and would have made headlines about any other country. To take just three: "Beyond the massive economic and military aid, however, in our so-called strategic relations with Israel, we have served as a protector almost in the same sense as the government of the United States would protect one of our 50 states."
At another point, he said: "We should wake up to the reality which has been slow to dawn on many, including our own Pentagon, that the Cold War is over and the real threat to stability in the Middle East lies in the tension between Israel and its Arab neighbors. And that tension only increases as a result of the continued expansion by Israel of settlements in the occupied territories. " He also said: "We have poured foreign aid into Israel for decades at rates and terms given to no other nation on earth. And we are the only nation to have done so."
To support the latter statement, Byrd revealed that between 1949 and 1991, total U.S. aid to Israel amounted to $53 billion, equal to 13 percent of all U.S. economic and military foreign aid given during that period. Since the 1979 Egyptian-Israeli peace treaty, the amount totaled $40.1 billion, equal to 21.5 percent of all U.S. aid, including all multilateral as well as bilateral aid. By contrast, the Marshall Plan to rebuild Western Europe after World War II cost only some $12 billion. 2 Starting in 1985, all aid was converted from loans to cash grants, meaning that since then Israel has not had to pay back any money except interest on pre-1985 loans. In 1987, formal economic and military aid to Israel settled into a yearly grant of $3 billion. But it has routinely exceeded that. Byrd noted that in 1979 the aid total was $4.9 billion. In 1985 it reached $4.1 billion and in 1991 nearly $4 billion. But, added Byrd, "Despite this unmatched foreign aid program, this is only part of the story. Israel derives many other benefits, both direct and indirect, from its special relationship with the United States."
Byrd reported that in addition to Israel's regular economic and military aid, it also received funds in 1991 and 1992 under such programs as the American Schools and Hospitals Grant Program, representing $2.7 million for 1991; $7 million for Arab-Israeli cooperative programs, of which approximately half is spent in Israel; $42 million for joint research and development on the Arrow anti-tactical ballistic missile follow-on program. This amount was increased to $60 million in the fiscal year 1992 Defense Appropriations Act; also, authority was given Israel to use up to $475 million of its military aid in Israel instead of spending it in the United States.
Byrd observed that "although the president has the authority to allow countries to engage in non-United States procurement in certain limited cases, Israel is the only country that receives specific legislative authority and a designated dollar amount for such procurement; moreover, priority over every other country, except Turkey, to receive excess defense articles; additionally a major new petroleum reserve of 4.5 million barrels, worth $180 million, which is available for Israel's use in the case of an emergency; furthermore, $15 million to improve military facilities at the Israeli port of Haifa in 1991 and another $2 million in 1992 to study the costs of further improving the facilities to allow for full-scale maintenance and support of an aircraft carrier battle group; in addition thereto, specific inclusion in the Overseas Workload Program, allowing Israel to bid on contracts for the repair, maintenance, or overhaul of United States equipment overseas; and additionally $1 million in investment insurance in Israel, provided by the Overseas Private Investment Corporation."
Byrd added that there were additional large sums of aid provided Israel in times of crisis: "In 1990, the United States responded to the increased immigration of Soviet and Ethiopian Jews by providing $400 million in housing loan guarantees. The United States also rushed to provide additional assistance during the Persian Gulf war. Early in the war, President Bush used his emergency authority ... to transfer Israel two Patriot missile batteries valued at $117 million. The Congress appropriated an additional $650 million economic assistance grant, allowed the use of $200 million of Economic Support Fund money for the purchase of military equipment, and earmarked $300 million for the prepositioning in Israel of United States defense equipment that can be used by Israel in an emergency. Congress also authorized the president to transfer another $700 million in United States military equipment to Israel."
Byrd observed that in addition to such aid there were other legislative initiatives that provide continuing benefits to Israel. These included:
"Immediate transfer each year of the $1.2 billion Economic Support Fund grant and the $1.8 billion military assistance grant. Thus, our grants to Israel are turned into interest-bearing assets for Israel while our own budget deficit is increased, resulting in higher interest charges to us. This immediate transfer created approximately $86 million in interest income for Israel in fiscal year 1991. Such an arrangement has been in place for the Economic Support Fun d since 1982 and was extended to military aid in fiscal year 1991 and applies to no other country; moreover, debt restructuring that took place in the late 1980s allowed Israel to lower interest payments by an estimated $150 million annually; additionally, the fair pricing initiative within the Foreign Military Sales Program that allows Israel to avoid certain administrative fees normally charged on foreign military sales. This benefit saved Israel an estimated $60 million in 1991.
"Since 1984, Israel has been allowed to use a portion of its foreign military financing credits for procurement of Israeli-made military items. Unlike other countries that receive United States military assistance, Israel does not have to spend all of those funds; to purchase United States equipment. In 1991, of a $1.8 billion military assistance grant, we allowed Israel to use $475 million to buy the output of its own defense industry instead of American-made products. Moreover, Israel was allowed to spend an additional $150 million of the 1991 grant for its own research and development in the United States"
Despite this massive amount of aid, Byrd charged that Israel showed no willingness to change its policies to make them comply with U.S. policy. This was particularly true in the case of Jewish settlements established in the Arab territories occupied by Israel in 1967. Byrd noted that every United States president since Lyndon B. Johnson has called for Israel to withdraw from the occupied territories. Said Byrd:
"The Congress has always supported this policy, and, in 1990, when the United States provided $400 million in housing loan guarantees, it was explicitly linked to the settlements so that none of the money could be spent in the occupied territories. Unfortunately, this linkage was not enough to influence Israeli policy in any way ... There is no restraint, as one might reasonably expect with the development of the peace process and the rising concerns from the United States over the settlement policy—no restraint whatsoever."
Byrd's conclusion was a wake-up call for both Israel and the Congress to reform the increasingly complex relations between the two countries:
"We have provided Israel with multibillion-dollar aid packages since 1974, and both the United States and Israel have very little progress to show for it. Israel has become dependent on both our economic and military assistance. Our aid has enabled Israel to maintain its enormous military capability, put off much needed economic reforms, and avoid making serious progress in solving its problems with its neighbors. Israel must, for its own good, start to stand on its own and cut itself free of a dependence that is really a road-block to progress, both economically and from the standpoint of achieving security, and it is a dependence that will have no end otherwise ... The United States must take steps to wean Israel from the pipeline of United States foreign aid .... Israel's dependency on the United States is too deep, and such an overly dependent situation inevitably breeds resentment on the part of the dependent entity."
"The United States must take steps to wean Israel from the pipeline of U.S. foreign aid."
Byrd's thoughtful comments had no influence on Congress. Five months later, on Oct. 1, Congress approved $10 billion in loan guarantees over five years to Israel and lavished on Israel even more special favors. Israel was allowed to use its U.S. economic aid to pay the administrative and other costs of the guarantees running into the millions of dollars.
Congress also agreed to guarantee 100 percent of the $10 billion loan, an unheard of concession. The usual practice to guarantee only a certain percentage of the principal and interest. Congress also reserved to itself the right to override any presidential suspension of the guarantees should Israel use them outside of its pre-June 5, 1967 frontiers, in effect eliminating any effort to link the guarantees to Israel's settlement program.
It further promised that America would "substantially increase" the amount of goods and services Israel could purchase inside Israel with U.S. aid. The same bill also gave to Israel $3 billion in economic and military aid, the same amount it has been receiving annually since 1987.3
Donald Neff is Author of Warriors trilogy on U.S.-Middle East relations. His books are available through the AET Book Club.
Ball, George W. and Douglas B. Ball, 7he Passionate Attachment: America's Involvement with Israel, 1947 to the Present, New York, W. W. Norton & Company, 1992.
Curtiss, Richard, Stealth PACs: Lobbying Congress for Control of U. S. Middle East Policy, Washington, DC, American Educational Trust, 1992.
EI-Khawas, Mohammed and Samir Abed-Rabbo, American Aid to Israel: Nature and Impact, Brattleboro, VT, Amana Books, 1984.
Findley, Paul, Deliberate Deceptions: Facing the Facts About the U.S.-Israeli Relationship, Brooklyn, NY, Lawrence Hill Books, 1993.
Tivnan, Edward, 7he Lobby: Jewish Political Power and American Foreign Policy, New York, Simon and Schuster, 1987.
1 Robert Byrd, Congressional Record-Senate, April 1, 1992. The text was reprinted in "Special Document, " Journal of Palestine Studies, Summer 1992; excerpts are in Findley, Deliberate Deceptions, Chapter 14 and the Washington Report, June 1992.
2 Robert Gibson, Los Angeles Times, July 20, 1981
3 Helen Dewar, The Washington Post, Oct. 2, 1992; Gene Bird, "How Israel Got the Loan Guarantees Opposed by 89 Percent of Americans," Washington Report on Middle East Affairs, November 1992. Text of the legislation is in Journal of Palestine Studies, "Documents and Source Material," Winter 1993, 158-60.