Aid Bill Helps Israel, Egypt

By Dennis J. Wamsted

Just prior to its month-long summer recess, Congress approved a Senate House conference report authorizing U.S. foreign aid at the $12.7 billion level for each of the next two fiscal years (FY 1986 and 1987), with Israel receiving approximately one-third of both U.S. world-wide foreign military sales and economic support funds. Republican and Democratic leaders in both the House and Senate hailed the bill's passage—the first such bill passed in four years—as an example of congressional responsibility and bipartisanship. Senate Majority Leader Robert Dole (R-KS), noting the difficulty Congress was encountering in its efforts to pass other important legislation, expressed his hope that "the spirit of cooperation embodied in the passage of this bill will show us the way on other equally important matters." Others, such as the chairman of the Senate Foreign Relations Committee, Richard Lugar (R-IN), stated that after a four-year legislative stalemate, the bill's passage would "help restore the foreign aid authorization process to its rightful place in Congress' role in foreign policy." The bill, entitled the "International Security and Development Cooperation Act of 1985," includes a host of provisions—some expected, some not—dealing with U.S. aid and arms sales to the Middle East, regional trade issues and anti-terrorism efforts, to name just a few.

Israel, Egypt Also Get 1985 Supplements

Congress also gave final approval to a supplemental appropriations measure for the current fiscal year (FY 1985) prior to the beginning of its August recess. This bill, as originally outlined in the July 15th Washington Report, includes $250 million in economic aid for Jordan, as well as emergency funds for the government of Israel and Egypt. Details of these two important measures are summarized below.

The primary beneficiaries of both the FY 1986 and 1987 authorization and the FY 1985 supplemental were Israel and, to a considerably lesser extent, Egypt. The FY 1985 supplemental allocated $1.5 billion for Israel and $500 million for Egypt in Economic Support Funds (ESF), both in the form of cash grant transfers. In something of a defeat for Israel's supporters on Capitol Hill, the conference deleted an amendment—originally included in the Senate's supplemental proposal—that would have required the Administration to disburse at least $750 million of Israel's ESF monies within 30 days. Instead, the conference adopted language urging the Administration "....to move quickly to disburse funds that Israel needs to meet its most urgent economic needs ... on a responsible and timely basis."

Israel's Economic Support 31.5 Percent of World Total

Of the $3.8 billion allocated in ESF monies in the FY 1986 and 1987 authorization, $1.2 billion—or slightly more than 31.5 percent of the total—was authorized for Israel. [The figures here, and below, are for each year individually, i.e., the total for the two years is $7.6 billion overall ESF monies and $2.4 billion in ESF monies for Israel.] As has become standard in recent years, the entire sum will be in the form of a cash grant transfer. In addition, the conference adopted language requiring that this aid be transferred on an expedited basis "in the first 30 days of the respective fiscal year."

Israel did even better in terms of its Foreign Military Sales (FMS) credits. Congress authorized $1.8 billion in FMS credits—or 33.5 percent of the total for Israel in both FY 1986 and 1987; a $400 million increase from the level in last year's continuing resolution. In addition, in keeping with recent tradition, all of the FMS credits authorized to Israel for the next two years are in grant form.

Minimum of $400 Million Available for Lavi Production

Of this $1.8 billion FMS total, Congress authorized "up to $150 million" for Israel to spend on research and development (R&D) in the United States for its Lavi fighter program, and "not less than $250 million" for Israel to spend in Israel for "defense articles and defense services for the Lavi program." Traditionally, FMS credits are authorized with the proviso that they be spent in the United States on U.S. goods. Although this $400 million total, is, at least at first glance, the same as last year's figure, the phrase "not less than" raises some troubling questions.

Michael Van Dusen, staff director for the House Foreign Affairs Subcommittee on Europe and the Middle East, said it was his interpretation that this phrasing established a floor, not a ceiling, on allowable expenditures; implying that, in fact, more than $250 million could be spent in Israel in the next two years and that, consequently, more than $400 million could be spent overall in the coming two fiscal years on Israel's Lavi fighter program. These monies have been authorized for Israel despite the widespread knowledge that, once built, the Lavi will compete directly with U.S.-built planes, particularly the F-16 and the F-20, in the arms export market.

Egypt Aid Totals $2.115 Billion

Although Egypt also fared well, it is still definitely the junior partner in the Camp David agreement. Congress authorized a total of $1.3 billion in FMS credits and $815 million in ESF monies for Egypt in both FY 1986 and 1987. Although both sums will be in grant form, only $115 million of Egypt's ESF monies will come as a cash transfer, and it will not be transferred on an "expedited" basis. This transfer was only authorized with the "understanding" that Egypt would adopt additional "reforms or development activities" to bolster its economy. Further, Congress adopted a provision noting its concern "about the less than normal relations between Egypt and Israel," stating: "it is the sense of the Congress that all U.S. foreign assistance to Egypt is provided in the expectation that the Egyptian government ... will continue to support and fulfill the provisions of the Camp David Accords..." Not surprisingly, nowhere in this provision was there any indication that perhaps Israel is also at least partially responsible for the poor state of present Egyptian-Israeli relations.

Restrictions on Jordan Weapons

Another expected provision included in the FY 1986 and 1987 authorization bill was a clause restricting the sale of sophisticated U.S. weaponry, particularly advanced U.S. fighter aircraft and antiaircraft missiles, to Jordan. The clause states the "sense of Congress" that the United States should not initiate any arms sales to Jordan "...unless Jordan is publicly committed to the recognition of Israel and to negotiate promptly and directly with Israel under the basic tenets of U.N. Security Resolutions 242 and 338." Further, the provision mandates that, if the Administration does propose a sale to Jordan, the president must certify that the Jordanian government is fulfilling the above criteria. Although Administration sources called this restriction an unwarranted restriction on the President's ability to conduct foreign policy, they added that, because of the ongoing, Jordanian-led Middle East peace initiative, they believed the President would be able to make the necessary certification.

The Libyan Trade Compromise

The House-Senate conferees agreed on a compromise proposal that will allow U.S. companies to continue doing business with the government of Libya, albeit on a limited basis. Earlier, following the TWA hijacking and the ensuing national outcry for a crackdown against those nations and individuals—notably Libya under the leadership of Muammar Qaddafi—perceived to support anti-U.S. terrorism, the House adopted an amendment to the foreign aid authorization bill calling upon the President to "...prohibit any goods or technology, including technical data or other information, subject to the jurisdiction of the United States or exported by any person subject to the jurisdiction of the United States, from being exported to Libya." The House proposal also would have banned all imports from Libya.

These proposals, had they been enacted, would have had a negative impact on a group of U.S. companies and subsidiaries involved in the Libyan government's ambitious Great Man-Made River (GMR) project. [This undertaking, whose first phase alone will cost approximately $3.3 billion, is intended to transport water from underground aquifers in Southern Libya northward to the coast for use primarily in a series of extensive agricultural irrigation endeavors.] In addition, such action would have further worsened the already record-high U.S. balance-of-trade deficit: Last year U.S. exports to Libya were valued at $200.2 million, while imports from Libya totaled just $9.7 million. The statute that Congress ultimately approved gives the President authority to ban imports from and exports to Libya, rather than actually requiring the President to take such action.

President Expected to Sign Bill

Administration sources have said that the White House can live with the restrictions in this compromise foreign aid measure, and it is expected that Reagan will sign the bill in the near future. Consequently, when Congress returns September 3 work can resume on the parallel foreign aid appropriations bill for the next two years. The appropriations measure, however, will not alter the authorization bill's provisions outlined above.

Dennis J. Wamsted, of Washington D.C., has lived and studied in the Middle East and writes frequently on it.