2013 תשע“ג US Foreign Aid סיוע חוץ :to Israel של ארה“ב לישראל: A Reassessment הערכה מחדש נייר מדיניות Policy Paper גדעון ישראל Gideon Israel המכללה למדינאות The Jewish Statesmanship Center ת.ד. 18749 ירושלים P.O.Box 18749, Jerusalem טל' 077-5156011 פקס Tel. +972-77-5156011 077-5156014 http://www.statesmanship.org.il http://www.statesmanship.org.il/ © כל הזכויות שמורות All rights reserved © US Foreign Aid to Israel: A Reassessment Policy Paper Gideon Israel Table of Contents Abstract ........................................................................................ 5 Policy Paper Summary ................................................................. 6 Appendix 1 History of Aid ......................................................... 17 Appendix 2 Origins of the Aid ................................................... 26 Appendix 3 Examples of Pressure ............................................. 32 Appendix 4 Israel’s Dependence on America ............................ 47 Appendix 5 Linkage: Impact on US Aid to Israel's Enemies .... 50 Appendix 6 Congress and Foreign Policy ................................. 54 Appendix 7 US State Department and Israel ............................. 65 Appendix 8 US Financial Crisis ................................................ 70 Appendix 9 Recommendations .................................................. 75 Afterword ................................................................................... 86 Bibliography .............................................................................. 87 Policy Paper Summary in Hebrew ........................................... 102 Policy Paper | 5 Abstract This policy paper examines positive and negative aspects of the US foreign aid to Israel and offers recommendations for a restructuring and upgrading of the current aid package that it receives. The objective of restructuring the aid is to more accurately reflect the US-Israel relationship as it stands in 2012, and not as it was in the 1970s or 1980s. The current foreign aid package, conceived in 1984, has been in a stagnant framework since its inception, and does not reflect the current economic and military reality in which Israel finds itself in the year 2012. Israel’s military strength, economy, and abilities have improved drastically since 1984; thus its receiving aid in the present format and present conditions can be damaging to Israel’s image and political flexibility, and create unnecessary dependence. In the past, the aid was an integral part of the relationship, and something which could not be relinquished or restructured; but in the future, political support will be the most critical aspect of the relationship and the area in which Israel should focus its efforts. 6 | US Foreign Aid to Israel: A Reassessment Policy Paper Introduction The ongoing economic crisis in the US and turbulence in the Middle East, compounded by Israel having reached economic stability, create a situation where US foreign aid to Israel, particularly its current structure and relevance, needs to be reviewed. In this swiftly changing world, it is incumbent upon Israel to be aware that changes in the region and events affecting its allies – even ones that appear to be totally unrelated to Israel – must be followed closely with Israel initiating the appropriate shifts in its policies to strengthen its relationships with allies, and continue to protect itself against new enemies. The foundation of the US-Israel relationship is – and must continue to be – strategic cooperation and common interests, with friendship and moral commitments playing a supporting role (see Appendix 2). For this to happen, Israel must restructure the format of the foreign aid it currently receives from the US in a way which allows Congress to redefine its role in supporting the relationship and advancing the relationship to a more secure point, where both countries can enjoy a greater degree of independence which will ultimately draw them closer together. As the Cold War came to an end, Israel was faced with a situation similar to the situation it faces today. The global political map had changed significantly and no longer would Israel be needed to combat the spread of communism in the Middle East. Israel’s value to the US was debated in the public arena. Was Israel still an asset, or should the US distance itself from Israel? Yet, it was clear to some that as the Soviet Union crumbled, new threats, especially from the Middle East, would emerge and threaten America’s safety. Furthermore, there was a vast opportunity for Israel and the US to increase their joint cooperation. Thus, the early 90s became a period where US-Israel relations broadened and deepened through enhanced cooperation and training. The current storm in the Middle East presents a similar Policy Paper | 7 opportunity for Israel to initiate joint cooperation as it did in the early 90s and by doing so strengthen its relationship with the US. Background The recent upheavals in the Middle East have shown that the political map can change quickly. The political future of US allies in the Middle East – Egypt, Bahrain, Jordan and Saudi Arabia – is still unknown. Post-Mubarak Egypt will not necessarily be an ally of the US, and might even become an ally of its enemies, Russia or China. Bahrain, where the US’s 5th fleet, with more than 4,000 soldiers, docks, and from which it patrols the Persian Gulf, has been rocked by disorder and tumult which potentially threaten the pro- American Sunni monarchy and possibly even the Saudi ruling family in Riyadh. Jordan, another pro-West ally since the 1950s, is concerned about the possible demonstrations of a majority Palestinian population and its current government may be in jeopardy. Jordan has been viewed by the West and America as a stabilizing factor in the Middle East. In the past 40 years the US has already seen four major allies fall – Libya in 1969, Iran in 1979, Turkey aligning itself with Iran and the Muslim world, and most recently Egypt. In the future, the question is when – and not if – this will happen in Saudi Arabia, Jordan, and other US allies in the Middle East. The only stable government that the US can rely on in these turbulent times is Israel. With US armed forces being stretched by war in Afghanistan and a tired army that recently returned from Iraq, the advantage and importance of increase cooperation with Israel – which amplifies and augments the US’s strategic influence in the Middle East – is increased. The United States is currently in the midst of an economic recession, the severity of which has not been seen since the 1930s (see Appendix 8), with the unemployment rate at nearly 10 percent. Many state governments are staggering under significant deficits and many cities are bordering on bankruptcy. Consequently, states are being forced to cut basic programs and services to their citizens. The Federal Government 8 | US Foreign Aid to Israel: A Reassessment is staring at a total deficit of more than $15 trillion, which threatens the US’s standing in the world. The current Republican controlled House of Representatives continues to wrestle with the administration over government spending with no compromise in sight. While the administration has been fighting to maintain the foreign aid budget, including aid to Egypt, Lebanon and Israel, nothing is safe in the long term. The magnitude of this economic crisis requires more than just tightening the belt. The US will need to reevaluate all expenditures in light of their contribution to its interests worldwide and to national security, and no expenditure is guaranteed to survive the budget tightening axe. This reevaluation process will continue for many years to come as US government spending has truly gotten out of hand. Israel, as a US ally in a turbulent region, finds itself at a peculiar crossroads. On the one hand, the dangers to its security have increased with Iran and its proxies seemingly emerging as winners from the recent upheavals. On the other hand, its value to the Western world and the United States – as a military power in the region and a democratic stronghold – has increased. In the near future, it is likely to be the only country through which the West will retain a foothold in the Middle East. Given the current scenario, Israel is faced with two diametrically opposed options: to request more aid to combat the rising dangers in the region, or to present itself as the only address for increased strategic cooperation which can help secure Western influence and interests in the region. In 2011, Ehud Barak, then Israeli Defense Minister, declared that Israel needs to request increased military aid ($20 billion). This request - detached from reality and possibly harming Israel’s relationship with the US – ignores creative alternatives in place of military aid. Negative Effects Israel receives various forms of aid from the US (see Appendix 1). Policy Paper | 9 Recent US Aid to Israel Through the years, US aid to Israel has fluctuated, increasing in some areas and decreasing or ceasing in other areas. Aside from the advantages of foreign aid, it has created many negative effects (see Appendix 3). 1. Pressure has been applied to Israel in diplomatic, economic and defense areas. 2. Defense Industries – US aid limits Israel’s defense industry development opportunities and sales opportunities to other countries. 3. Israel spends 74% of US aid on supplies from US companies which do not always best address its needs. Furthermore, US aid encourages