Aid to Israel: The Countdown

The U.S. Administration and Congress will soon have to decide this question:

Should Israel, the undisputed superpower of the Middle East, continue getting one quarter of all U.S. foreign aid?

This is what Israel is still getting on the basis of a "continuing resolution" by Congress which allows Israel the same amount as last year: a total of $2.2 billion, divided between economic ($785 million) and military ($1.4 billion) aid. The resolution was passed after Congress failed to find the time to vote on a foreign aid bill before recessing for the November elections.

Some time before December 17, when the stopgap measure runs out, the House and Senate will either have to cope with an Administration requested foreign aid bill calling for $2.5 billion in aid for Israel—$300 million more than last year—or pass the whole issue over to the new Congress which begins its session in January.

Either way, many observers believe that Congress despite Israel's freewheeling war in Lebanon during which it has violated arms control agreements with the U.S.—will give Israel whatever the Administration recommends, and perhaps a little bit more.

Impact On Reagan Plan

As for the Administration, the upcoming weeks will require it to face up to a decision on aid to Israel which could have an enormous impact on the fate of its Middle East peace proposals of last September. Few analysts believe Israel will ever back off from its gradual, de facto annexation of the West Bank unless the U.S. does more than just talk to the Israelis about the virtues of withdrawing from it. At the same time, continuing to give large quantities of U.S. aid with no strings attached to the country which is not only the Middle East's superpower but has been rated as the fourth most heavily armed nation in the world is certain to send one more signal to the Arab countries that the U.S. is not really serious about following through on its plan.

A chart on page five shows how aid to Israel has built up over the years, amounting now to ten percent of the aid the U.S. has given to all the world's countries since 1948, when the Marshall Plan got started.

During this period aid to Israel has not only been given in growing amounts (it has reached a total of $25 billion) but also on progressively easier terms. Until a decade ago, most of the economic assistance was given in the form of loans, and the rest as "grants"—i.e., gifts. Then, the grant portion of the aid began rising, until it reached about two thirds of the total two years ago, at which time Congress and the Administration decided to give Israel all of its aid in the form of grants. But even the loans, which still have to be paid back, were not exactly a burden for Israel. The loans were payable over 40 years, at an interest rate of three percent—not counting an initial grace period" of 10 years when no principal would have to be repaid and the interest would be only two percent. Even at relatively low inflation rates in the U.S. during the 40 years ahead, payments will have shrunk to relatively insignificant amounts long before the loans fall due.

On the military assistance side, there didn't used to be any grants at all until 1974, when Israel was handed a gift of $1.5 billion to help it recover from its recent war with Egypt. Since then, it has been standard to "forgive" just over a third of the military assistance package. The remainder of the military assistance is financed over 30 years, with a 10-year grace period in the repayment of principal, and interest charged on the basis of the cost of the funds to the U.S. Treasury. This aid program has generally made it possible for Israel to get the most advanced weapons in the U.S. arsenal sometimes even before they have been issued to U.S. servicemen. The favorable terms also appear to have induced an "easy come, easy go" approach on the part of Israeli procurement officers, who very frequently request expedited delivery of weapons—thus adding significantly to their cost.

Although there has been some concern in Israel since the invasion of Lebanon over calls by some Americans for a cut in U.S. aid, Israel's leadership appears to have decided that offense is the best defense. In early October, officials called on the U.S. Ambassador in Tel Aviv and presented him with an aid request for the next fiscal year—i.e., the one beginning on October 1, 1983—which called for a 55 percent rise in economic aid (to $1.22 billion) and a 40 percent rise in military aid (to $1.96 billion).