Economist tallies swelling cost of Israel to US (CHRISTIAN SCIENCE MONITOR) By David R. Francis 12/09/02)
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Since 1973, Israel has cost the United States about $1.6 trillion. If
divided by today´s population, that is more than $5,700 per person.
This is an estimate by Thomas Stauffer, a consulting economist in
Washington. For decades, his analyses of the Middle East scene have
made him a frequent thorn in the side of the Israel lobby.
For the first time in many years, Mr. Stauffer has tallied the total
cost to the US of its backing of Israel in its drawn-out, violent
dispute with the Palestinians. So far, he figures, the bill adds up
to more than twice the cost of the Vietnam War.
And now Israel wants more. In a meeting at the White House late last
month, Israeli officials made a pitch for $4 billion in additional
military aid to defray the rising costs of dealing with the intifada
and suicide bombings. They also asked for more than $8 billion in
loan guarantees to help the country´s recession-bound economy.
Considering Israel´s deep economic troubles, Stauffer doubts the
Israel bonds covered by the loan guarantees will ever be repaid. The
bonds are likely to be structured so they don´t pay interest until
they reach maturity. If Stauffer is right, the US would end up paying
both principal and interest, perhaps 10 years out.
Israel´s request could be part of a supplemental spending bill that´s
likely to be passed early next year, perhaps wrapped in with the cost
of a war with Iraq.
Israel is the largest recipient of US foreign aid. It is already due
to get $2.04 billion in military assistance and $720 million in
economic aid in fiscal 2003. It has been getting $3 billion a year
Adjusting the official aid to 2001 dollars in purchasing power,
Israel has been given $240 billion since 1973, Stauffer reckons. In
addition, the US has given Egypt $117 billion and Jordan $22 billion
in foreign aid in return for signing peace treaties with Israel.
"Consequently, politically, if not administratively, those outlays
are part of the total package of support for Israel," argues Stauffer
in a lecture on the total costs of US Middle East policy,
commissioned by the US Army War College, for a recent conference at
the University of Maine.
These foreign-aid costs are well known. Many Americans would probably
say it is money well spent to support a beleagured democracy of some
strategic interest. But Stauffer wonders if Americans are aware of
the full bill for supporting Israel since some costs, if not hidden,
are little known.
One huge cost is not secret. It is the higher cost of oil and other
economic damage to the US after Israel-Arab wars.
In 1973, for instance, Arab nations attacked Israel in an attempt to
win back territories Israel had conquered in the 1967 war. President
Nixon resupplied Israel with US arms, triggering the Arab oil embargo
against the US.
That shortfall in oil deliveries kicked off a deep recession. The US
lost $420 billion (in 2001 dollars) of output as a result, Stauffer
calculates. And a boost in oil prices cost another $450 billion.
Afraid that Arab nations might use their oil clout again, the US set
up a Strategic Petroleum Reserve. That has since cost,
conservatively, $134 billion, Stauffer reckons.
Other US help includes:
US Jewish charities and organizations have remitted grants or
bought Israel bonds worth $50 billion to $60 billion. Though private
in origin, the money is "a net drain" on the United States economy,
The US has already guaranteed $10 billion in commercial loans to
Israel, and $600 million in "housing loans." (See editor´s note
below.) Stauffer expects the US Treasury to cover these.
The US has given $2.5 billion to support Israel´s Lavi fighter and
Arrow missile projects.
Israel buys discounted, serviceable "excess" US military equipment.
Stauffer says these discounts amount to "several billion dollars"
over recent years.
Israel uses roughly 40 percent of its $1.8 billion per year in
military aid, ostensibly earmarked for purchase of US weapons, to buy
Israeli-made hardware. It also has won the right to require the
Defense Department or US defense contractors to buy Israeli-made
equipment or subsystems, paying 50 to 60 cents on every defense
dollar the US gives to Israel.
US help, financial and technical, has enabled Israel to become a
major weapons supplier. Weapons make up almost half of Israel´s
manufactured exports. US defense contractors often resent the buy-
Israel requirements and the extra competition subsidized by US
US policy and trade sanctions reduce US exports to the Middle East
about $5 billion a year, costing 70,000 or so American jobs, Stauffer
estimates. Not requiring Israel to use its US aid to buy American
goods, as is usual in foreign aid, costs another 125,000 jobs.
Israel has blocked some major US arms sales, such as F-15 fighter
aircraft to Saudi Arabia in the mid-1980s. That cost $40 billion over
10 years, says Stauffer.
Stauffer´s list will be controversial. He´s been assisted in this
research by a number of mostly retired military or diplomatic
officials who do not go public for fear of being labeled anti-Semitic
if they criticize America´s policies toward Israel.
Editor´s note: A previous version of this story incorrectly reported
the amount of housing loans guaranteed by the US. (Copyright © 2002
The Christian Science Monitor 12/09/02)
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