Oliver North and Foreign Aid: Kid Gloves Toward Israel

By Dennis J. Wamsted

In his second day of testimony before the joint Congressional committee investigating the Iran-contra affair, Lt. Colonel Oliver North pointed an accusing finger at the Israeli government, detailing its role in originating, as well as supporting, the idea to divert the profits from the covert Iranian arms sales to aid the Nicaraguan contras. Not surprisingly, no one on the panel—whose Senate chairman is the staunchly pro-Israel Daniel Inouye (D-HI), who also happens to be chairman of the powerful Senate Appropriations Committee's Foreign Operations Subcommittee which controls foreign aid levels—wanted to hear what the Marine colonel had to say.

North Implicates Israel; Congress Yawns

North testified on July 8 that the proposal to aid the contras by diverting the profits made from selling US weapons to Iran was made "with the full knowledge and acquiescence and support, if not the original idea, of the Israeli intelligence service, if not the Israeli government." The idea to divert the profits, North testified, originated with Iranian middle-man Manucher Ghorbanifar, whom North believed to be an Israeli intelligence agent. Ghorbanifar, who served as principal contact between US officials and the Iranians throughout the period under investigation, suggested the diversion in January 1986 during a meeting in Europe attended by North, Ghorbanifar, and Amiram Nir, a former Israeli government official, North testified. (Nir served as an adviser on terrorism affairs to former Prime Minister Shimon Peres and current Prime Minister Yitzhak Shamir, and was the Israeli government's liaison with North from 1984 to 1986.) In addition, North told the panel that he had first learned of Ghorbanifar's alleged connection to Israeli intelligence from the late director of the US Central Intelligence Agency, William Casey, and other senior US intelligence officials. These sources "believed Mr. Ghorbanifar to be an Israeli intelligence agent," North testified.

North also told the panel that Nir, who has reportedly been stripped of his authority as the prime minister's terrorism advisor for lying to his own government about a meeting between himself and Ghorbanifar, was the first person to suggest inflating the costs of the US arms being sold to Iran, making possible the profit that could be redirected to aid the Nicaraguan contras. North then detailed the earlier involvement of two private Israeli arms dealers—Yaacov Nimrodi and Al Schwimmer (who also holds US citizenship). These two were involved in the first deals to Iran before reportedly being forced out of the operation by Israel's Nir at the end of 1985 following complaints from North and other US officials.

All of this fell on deaf ears. In June at the conclusion of the first set of hearings into the Iran-Contra affair, the joint panel's House chairman, Rep. Lee Hamilton (D-IN), who is also chairman of the House Foreign Affairs Subcommittee on Europe and the Middle East, lamented: "What these committees have heard is a depressing story. It is a story of not telling the truth to the Congress and to the American people." Ironically, North told the truth about how he was lured into the project, but no one was listening. Similarly, Hamilton had predicted that the current round of hearings would "bring out a lot of new information about the Iran case, I can assure you." The Indiana democrat was right: The recent hearings have shed a great deal of light on the entire messy affair. In particular, North's testimony, whether wanted or not, outlined the crucial role played by Israel in orchestrating, and almost certainly originating, the disastrous US attempt to trade arms for hostages. Unfortunately, nothing is likely to be done with this potentially damaging information—even though some two years later the US has suffered a near total loss of trust and credibility not only in the Middle East but among its European friends and other allies, and there still is little, if any, prospect of gaining the release of the American hostages being held by pro-Iranian forces either in Lebanon, or perhaps in Iran itself. As in the case of so many other revelations with the potential to damage Israel's standing in the US, it is likely that a concerted effort, with extensive congressional and administration support, will be launched by Israel's powerful US lobby to purify Israel's US image.

Whither the Foreign Aid Bill?

Slowly but surely a new foreign aid bill for at least the next, and perhaps the next two fiscal years is taking shape on Capitol Hill. However, whether actual foreign aid authorization and appropriations bills will ultimately be adopted by Congress remains to be seen. Only once in the past six years has the entire process—consideration and enactment of House and Senate authorization and appropriations bills, House-Senate conference reconciliation if necessary, and presidential approval—been officially completed. In general, US foreign aid has survived of late simply through the continuing resolution process, which carries programs into the next fiscal year at a funding level no higher than in the immediately prior year.

On the House side, a draft committee print is awaiting action by the full House Foreign Affairs Committee. A committee aide says the chairman, Rep. Dante Fascell (D-FL), is "determined" to enact an authorizing bill this year. Although admitting that no action has been scheduled to date, the staffer contends that this is not a problem; once the chairman decides to move, he says, a schedule will be drawn up.

Israel Benefits at Others' Expense

Whatever action is ultimately taken, the result will almost certainly protect Israel from the spending reductions imposed on other foreign aid recipients and on other non-military US government programs. For example, in the bill pending before the House Foreign Affairs Committee, Israel would receive its seemingly customary $3 billion in overall aid—$1.8 billion in foreign military sales (FMS) credits and $1.2 billion in economic support fund (ESF) monies. In keeping with recent tradition, the entire $3 billion is in the form of forgiven loans or direct cash grants. What makes this largesse toward a country with a maximum of four million people extraordinary is that it amounts to more than 33 percent of the entire proposed US foreign aid program for the coming fiscal year. Israelis constitute .0008 percent of the world's five billion people, yet that less than one-thousandth of the world's population would receive more than one-third of world-wide US foreign assistance.

Again in keeping with recent history, of the $1.8 in FMS credits, $450 million is earmarked for Israel's Lavi—despite US concerns that Israel cannot afford economically to build such an advanced fighter—or "another advanced fighter aircraft." (This addition gives the Israeli and US governments room to negotiate a compromise on the Lavi without running afoul of the pending foreign aid bill, according to committee staffers.) Of the $450 million, Israel would be obligated to spend $150 million in the US and would be permitted to spend the remaining $300 million in Israel. As for the ESF monies, instead of receiving periodic payments throughout the year, Israel would receive the entire cash grant at the beginning of the fiscal year, despite the additional cost this imposes on the US Treasury and taxpayer.

The only country to be treated even remotely like Israel is Egypt, and this preferential treatment stems directly from the 1979 Camp David peace treaty that the late Egyptian President Anwar Sadat signed with the Israeli government. LIke Israel, Egypt would receive its standard $2.15 billion under the plan pending in the House—$1.3 billion in FMS grants and $815 million in ESF monies. This total, the same amount Egypt has received in the past two fiscal years, is not nearly as generous as the aid directed toward Israel, however. Egypt, after all, has 40 million more citizens than does Israel.

Again, in keeping with past tradition, the FMS grants to Egypt will be in the form of forgiven loans. The ESF monies will be part cash grant, $115 million, and part tied aid, the remaining $700 million. Adding a carrot to its proposals, the House plan would permit additional cash transfers to Egypt if "significant progress" is made toward implementing a comprehensive economic reform program.

Although the exact form of the congressional foreign aid program remains undecided, it is highly unlikely that the levels of aid proposed for either Israel or Egypt will differ significantly from those outlined above. Further cuts, if they have to be made, will be drawn from already severely reduced foreign aid programs for other countries. Only as an absolute last resort would Congress even consider reducing aid to Israel and, by extension, Egypt.

Dennis J. Wamsted is a free-lance writer specializing in Congress and the Middle East.