Supporters of US Loan Guarantees for Israel Launch New Myths

By Nathan Jones

To refute mythmaking about the Arab-Israeli dispute in America's mainstream press, you seldom have to look much beyond that mainstream press. For example:

MYTH

"The $10 billion loan guarantee ... would cost US taxpayers at most several hundred million over five years."

—Columnist Leslie H. Gelb, New York Times, Sept. 16, 1991

"We have turned again to our American friends for some help, which in this case should not cost the American taxpayers anything. We asked that the United States guarantee bank loans to Israel, and with our perfect past performance in debt servicing, this is actually a mere formality."

—Ze'ev B. Begin, Likud member of Israel's Knesset subcommittee on national security policy, in the Los Angeles Times, Sept. 20, 1991

"Israeli officials, noting that Israel's credit rating is fairly good, say there would be no need for Washington to pay any money."

—Journalist Thomas Friedman, New York Times, Sept. 24, 1991

FACTS

"These guarantees make no economic sense for the United States, which is to start running a $400 billion deficit in October, or for Israel, one of the most heavily indebted nations per capita on earth. Standard and Poor's rating of Israel's unsecured debt is Triple B Minus, the market's way of saying the Israelis are in over their head, and US guarantors are moving into junk bond territory.

"The $10 billion for 1 million Jewish immigrants factors out to $40,000 for every family of four arriving in Israel, more than we provide our own immigrants. How can Israel ever repay? Indeed, the probability is high that we Americans will have to make good that enormous sum, plus fees and compound interest over 30 years."

—Columnist Patrick Buchanan, Sept. 18, 1991

"Congress gave Israel a sure-fire way of repaying its debt in the mid-1980s, when Israel was in deep economic trouble. Lawmakers directed that the US provide Israel with economic assistance equaling or exceeding its annual debt repayment to the US. The bottom line: Israel is using most of its $1.2 billion economic grant this year to repay debt that grew from US military loans, according to figures Israel supplied to the US this month.

"In fact, military loans have a way of becoming grants. From 1974 to 1989 ' Israel received a total of $16.4 billion in 'loans' that the US converted to 'grants,' according to congressional researchers. The money went out in the first place with the understanding that it wouldn't be repaid; it was categorized as loans because loans don't require oversight by US officials, while grants do, the researchers say.

"Loans don't require oversight by US officials, while grants do."

"Israel relies heavily upon foreign aid and borrowing to maintain its economy, according to congressional researchers. Since 1976, they say, Israel has been the largest annual recipient of US foreign assistance. Between 1949 and the present, the US has provided Israel with $53 billion in grants and loans."

—Journalist Edward T. Pound, Wall Street Journal, Sept. 19, 1991

"The controversy over Israel's request for $10 billion in United States loan guarantees has focused wide attention on a large-scale but little-understood US aid effort that since 1967 has totaled at least $77 billion—$16,500 for each Israeli citizen—when adjusted for inflation.

"US aid to Israel may actually be larger than that, since it consists not only of the well-known grants and loans that prop up the Israeli economy but also seldom-noticed indirect assistance... An administration official who insisted on anonymity said, 'it's really an aid industry,' in which no one keeps a full tally of the aid provided.

"Economic and military aid programs to Israel, without adjustment for inflation, totaled $47.8 billion from 1967 through last year, according to the figures from the Bank of Israel. Using the consumer price index in the United States, the aid to Israel would be $77 billion in 1991 dollars."

—New York Times reporter Keith Bradsher, International Herald Tribune, Sept. 15, 1991

MYTH

"After talks begin, it would not be surprising to see Prime Minister Shamir decide on his own to freeze settlement activity, just as Menachem Begin did during the Camp David negotiations."

—Columnist Leslie Gelb, New York Times, Sept. 16, 1991

"An attempt now to make a precedent of then-Prime Minister Menachem Begin's special gesture concerning Jewish settlements in 1978 should be treated rigorously, for that was a freeze on new settlements only for three months, and it was offered only after the accords had been signed."

—Ze'ev B. Begin, Likud member of the Israeli Knesset subcommittee on national security policy, Los Angeles Times, Sept. 20, 1991

FACTS

"President Carter came away from the [Camp David] negotiations believing Mr. Begin had agreed to a long-term freeze on settlements until a final plan on Palestinian autonomy had been reached. Mr. Begin was adamant that he only had agreed to a three month freeze."

—Journalist Dennis Hevesi, New York Times, Sept. 20, 1991

"On the West Bank settlements, we worked out language that no new Israeli settlements would be established after the signing of this framework and that the issue of additional settlements would be resolved during the negotiations. Begin later denied that he had agreed to this, and claimed that he had promised to stop building settlements only for a three month period. My notes are clear—the settlement freeze would continue until all negotiations were completed "

—Former President Jimmy Carter, Keeping Faith: Memoirs of a President, 1982

"Carter's conviction that Begin had double crossed him was never assuaged."

—Former US Ambassador to Israel Samuel Lewis, The Middle East: Ten Years After Camp David, 1988

"Whenever we seemed to be having some success with the Arabs, Begin would proclaim the establishment of another group of settlements, or make other provocative statements."

—Former President Jimmy Carter, Keeping Faith: Memoirs of a President, 1982