Peace Dividend in Middle East Could Exceed Saving from End of Cold War

By John Asfour

The peace dividend from the end of the Cold War, if it materializes, may be less than benefits to the US taxpayer that could flow from a clean-cut victory in Middle East peace negotiations for US President George Bush's new world order. If the peace conferences now underway succeed under US and international prodding in finally achieving a settlement between Israel, the Palestinians and Israel's Arab neighbors, the US taxpayer could be the real winner.

Figures worked out from USAID and US Defense Department summaries of direct US aid resulting from Camp David agreements indicate that the actual savings could exceed more than $100 billion if Israelis, Palestinians, Syrians, Jordanians and the new Lebanese regime can be persuaded to start down the road to a real peace.

By contrast, Pentagon and outside economists estimate that for several years any peace dividend from the ending of the Cold War will be limited, perhaps only slowing the growth of the budget for defense. But if peace should come to the Middle East, immediate Middle East dividends would stem from cutting back heavy US government spending on Israel, Egypt and the deployments of military forces in or near the Persian/Arabian Gulf.

For Israel, American government savings would largely be on the military side, some $25 billion over the next decade. This would involve slimming down Israeli armed forces levels, but leaving Israel still with the fourth or fifth largest modern army in the world, retaining a two-to-one advantage in modern weaponry over any combined Arab force from the Arab confrontation states.

The peace dividend would increase considerably if Western countries, including the United States, lowered immigration barriers to Soviet Jews. The cost of settling them in Israel is approximately eight times the cost of settling them in the US or elsewhere.

Jordan might still require assistance, but nowhere near the level of emergency aid if the peace talks should relapse into confrontation again. Real peace that allows the Jordanian economy to bounce back strongly could reduce US aid to Jordan over a 10-year period by at least $5 billion.

Hobart Rowen, in a mid-November Washington Post column, suggested that a regional trading bloc, similar to the Benelux countries, might be a real incentive for peace which would also save US aid and involvement. Khaled Al-Hassan, the PLO foreign policy official now resident in London, has long held a vision of a trading bloc combining the manpower, technology and markets of Egypt, Israel and Palestine. Realization of that vision would likely mean huge savings for US taxpayers on aid to Egypt, perhaps as much as $10 billion over the next 10 years.

And finally, the peace dividend in the Middle East could mean the saving of at least $15 billion in American force deployments to the area, one of the most expensive regions in the world for maintenance of military forces.

The total savings over the 10 years would be one-third greater than simple addition would indicate, since all funding must be presumed to be over budget: Every dollar saved would reflect that much less interest costs. If the savings over the 10-year period averaged $7.5 billion a year, an additional $2.5 billion in interest costs would be saved each year.

How can the United States government get this dividend for American taxpayers? A simple five-point program:

Focus everything on the breakthrough at Madrid. Don't take no for an answer.
Offer Soviet Jews a choice now, and allow the 350,000 already registered at the American Embassy in Moscow to come in during the next two years or go to other countries that will admit them if they so desire.
Appeal over the heads of the rejectionist government in Israel to the Jewish public in the US and in Israel to campaign against a "Greater Israel.'' Only the US and the UN can offer credible peace guarantees to the 4 million Israelis, with or without the West Bank and Golan Heights.
Remind everyone this is a peace conference, not a platform for political propaganda. Cool the rhetoric and focus it on behalf of a peace settlement instead of Jewish settlements.
Keep reminding US taxpayers of the Middle East peace dividend. During last September's preliminary consideration by the Senate and House of the $10 billion US loan guarantee, congressional offices reported the highest level ever of mail on the Middle East. It was running 90 percent in most offices against the guarantees for Israel. And almost every letter against was individually drafted, not a part of campaigns by organizations opposed to the loans. The US taxpayers instinctively knew there had to be a peace dividend in a Middle East settlement. What they may not know now is how quickly it could begin.

Administration Holds Tough On Promised Loan Guarantees

The mid-November first appearance of Edward Djerejian, the new assistant secretary of state for Near Eastern and South Asian Affairs, before the House subcommittee on Europe and the Middle East was also the first chance congressional supporters of Israel had had to grill a Bush administration official since the Madrid peace conference. The hearing was crowded.

Djerejian, former US ambassador to Syria, proved to be a tough but courteous witness. Israel-firsters on the subcommittee must have gone away thinking that the administration has adopted Shamir's slogan: Never Give an Inch. "Ned" Djerejian, obviously under instruction, would only promise that the administration would "work with Congress" when the time came to take up the $10 billion in US loan guarantees requested by Israel. He would not make any concessions concerning what follows the 120-day delay requested by President Bush.

Subcommittee Chairman Lee Hamilton said Congress had agreed to the delay on six conditions: 1) The White House would not seek a further delay. 2) The administration would work with Congress on it. 3) The administration would find a way to minimize the impact on the budget, presumably by lowering or eliminating altogether the required 2.5 percent set aside for any guarantees. 4) The White House would support the guarantees in principle. 5) The extra costs to Israel of waiting the 120 days would be covered. 6) The administration would help Israel in getting loan guarantees from other countries.

While not making any concessions regarding loan guarantees, Djerejian offered a formal statement and for more than three hours answered questions about the peace talks.

Djerejian insisted that although all parties to the talks received confidential letters of assurance from the US, none contained secret assurances to one party of which other parties were unaware.

He also said that Syria was not being considered for removal from the list of states harboring terrorists, and no deals were being made as a result of the release of hostages and continued peace talks.

In answer to a question by Lee Hamilton, Djerejian said he knew of no apology from Israel after one of its ministers called President George Bush anti-Semitic and a liar. The Gulf states, and especially Saudi Arabia, were being very helpful on the peace talks, but it was difficult to conceive of a real Middle East peace until Saddam Hussain disappears from the scene.

Djerejian said the United States would continue to act as a catalyst, stating its views only when asked. The US also would work out of public view with the parties to help build trust and agreement among them.

John Asfour is a specialist in the political economies of Palestine and Israel.