The repercussions of this conflict reverberate everywhere in the region to the great detriment of the rights of the people in the area, but remarkably, also to the detriment of the US’s long-term interests.
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Feeding the Cuckoo
Feeding the Cuckoo
By Paul de Rooij
Since Sept. 11, Americans have thought of themselves
as the target of terrorists, emanating mainly from the Middle East. It
may thus surprise them to learn that their own actions are in large part responsible
for their problems and resentment in the Middle East. In particular, we
argue that the massive aid flows and armaments transfers to Israel are largely
responsible for the problems between Israelis and Palestinians today.
The repercussions of this conflict reverberate everywhere in the region to the
great detriment of the rights of the people in the area, but remarkably, also
to the detriment of the US's long-term interests.
Americans by nature tend to look closely at their
government's expenditures, to trim the fat wherever they can find it - welfare,
social security, health care, education- all except when it comes to Israel.
A valuable exercise for any American would be to examine the huge handouts given
to Israel, which may reveal shocking facts and motivate them to a take closer
look at what is done in their name. Here is a quick overview of US aid
flows to Israel.
There are open and upfront economic and military handouts,
and the table below lists the official numbers. Economists say that in
the presence of inflation, a dollar yesterday is worth more than a dollar today,
and an adjustment must be made to obtain meaningful comparable figures over
time. It is highly desirable to express the aid flows in constant 2001
dollars, so that these figures mean something to us today. Inexplicably,
this simple and standard transformation is never done pertaining aid flows to
Israel - an omission that understates the aid flows. Now, adjusting
the data and expressing it in 2001 constant dollars shows that the visible aid
flows to Israel were $35.7bn over the past decade, and $143bn since 1967 [note
1] - the date after which US aid to Israel really took off. The latter
stands in stark contrast with the unadjusted $83bn US aid since 1967 that is
usually quoted.
|
USD Billion
|
USD Billion
|
(1) + (2)
|
Inflation
|
Constant 2001 USD
|
Year
|
Military
|
Economic
|
Total BN
|
Adjustment
|
Total BN
|
1992
|
1.80
|
1.30
|
3.10
|
1.26
|
3.91
|
1993
|
1.80
|
1.30
|
3.10
|
1.23
|
3.80
|
1994
|
1.80
|
1.30
|
3.10
|
1.20
|
3.70
|
1995
|
1.80
|
1.30
|
3.10
|
1.16
|
3.61
|
1996
|
1.80
|
1.35
|
3.15
|
1.13
|
3.55
|
1997
|
1.80
|
1.33
|
3.13
|
1.10
|
3.46
|
1998
|
1.80
|
1.28
|
3.08
|
1.09
|
3.35
|
1999
|
1.86
|
1.15
|
3.01
|
1.06
|
3.20
|
2000
|
3.12
|
1.01
|
4.13
|
1.03
|
4.25
|
2001
|
1.98
|
0.90
|
2.88
|
1.00
|
2.88
|
Total
|
|
|
31.78
|
|
35.70
|
Inflation adjustment derived from the CPI-U index
|
|
Col(5) = Col(3) * Inflation Adjustment
|
|
|
Now, one must put that into perspective. Take
the Jewish population of Israel (5.24m) the primary beneficiaries of
the aid, and one obtains a $540 per capita benefit just for 2001 four
times as much as the touted Tax Cut of 2001 to Americans! [Note 3]
Now, if the hard-working American families ever find this out, what can one
suppose they would think of it? NB: The calculable aid flows to Israel
constitute about 40% of the USs foreign aid budget (depending on how loans
are accounted).
Up to now we have only dealt with the aid flows that
are visible to all Americans - the government's audit agency, the GAO, will
have no problem computing such numbers. But in addition, one must now
account for the long list of hidden subsidies.
The biggest unofficial additional subsidy comes in
the form of US loans to Israel subsequently forgiven by an act of Congress.
That is, every year Congressmen engage in an ingratiation-frenzy to show that
they are friends of Israel, and this often entails forgiving loans.
It is difficult to determine the sums involved, but this practice explains why
Israel is overjoyed to obtain loans these will eventually be forgiven
in any case. As Stephen Zunes stated,
all past U.S. loans
to Israel have eventually been forgiven by Congress, which has undoubtedly helped
Israels often-touted claim that they have never defaulted on a U.S. government
loan. [note 2]
A few years ago Israelis bombed Lebanon with American-made
F16 fighters. What was remarkable about this is that the bombs used were
'on loan from the US.' It is rather odd to lend anyone a bomb. There
are deeply disturbing implications that an American owned bomb is thrown on
Lebanese people by a third party, but we'll avoid this discussion. The
explanation for this odd arrangement is that the Pentagon budget is being used
to subsidize Israel. Thus, the Pentagon procures the bombs, and then they
are shipped on loan to Israel. This amounts to a clear additional subsidy,
especially if those bombs are never seen again. The extent of this underhand
subsidy can't be calculated. There are also questions about the 'pre-positioned'
armaments to be used by the US military; Israelis can use these at any time.
The Pentagon budget often includes R&D programs
developed by Israeli defense contractors. Once again, this is a direct
subsidy of Israeli industry. While one may ask whether the Pentagon obtains
any benefit from, an even more pertinent question is whether US defense technology
is compromised by this practice.
In fact, Israel receives all the latest military gadgets.
Usually these weapons don't carry a price tag, and it is difficult to determine
how much was spent on the military transfers. It is easy for the US government
to manipulate these figures to 'under invoice' military transfers to Israel
- again, hiding the true cost from the US taxpayer. Certainly, Israelis
won't accept the $10,000 military toilet seat, but maybe will take it for $0.50.
Egypt, the second largest US foreign aid beneficiary,
receives the disbursements on a quarterly basis, and hundreds of American bureaucrats
oversee the use of the funds. In contrast, the disbursement of aid to
Israel is done in a lump sum once a year, and the funds disappear into the general
kitty with no American auditor in sight. The additional cost to American
taxpayers of disbursing the aid once a year equates to $250m per year.
Every so often, an American president will state that
aid to Israel will be made conditional on it not being spent in the Occupied
Territories. However, once the aid is handed over to Israel, then there
is absolutely no control over it. Israelis can always disingenuously claim
that the funds for the settlements come from other accounts American's gullibility
is always taken for granted.
Countries in Northern Africa have on occasion requested
USAID technicians for various projects. Sometimes the technician showing
up for the project is an Israeli contractor, or the aid recipient is asked to
contact the Israeli company directly. This is an odd practice, and no
other nationals are used in a similar fashion. Once again, what is at
play is an indirect subsidy to Israel using the foreign aid budget.
Israel has on several occasions obtained 'US loan
guarantees' on huge loans that Israel placed in various markets. If Israel
doesn't default on those loans, then the cost to the taxpayer will be zero.
However, the general accounting practice is to allot for the possibility of
default, and thus costing a portion of those loan guarantees. In the case
of Israel, such a standard practice isn't implemented.
The implications of the loan guarantees are also enormous.
In the early 1990s, Israel received guarantees on loans of $10bn, and it is
currently lobbying for another batch of $10bn loans guaranteed by the US taxpayer.
If in the future the US decides to become more assertive and perhaps reduce
its economic aid to Israel, then Israel could default on its loans a
likely possibility. The US would be left with massive bills to cover the
loan guarantees. The loan guarantees further tie in US policy to Israeli
whims, and therefore they should be rejected.
For the same reasons one has to be wary of the loan
guarantees one also has to be wary of the huge issuance of 'Israel bonds' in
American markets. Often such bonds enter the pension funds of ordinary
Americans, and thus future of Israeli and US policy impinge on the welfare of
ordinary Americans. Scrutiny of the policy pertaining to the inclusion
of such bonds in pension funds is something ordinary Americans should be concerned
about.
One often hears that Irving Moskowitz, the 'bingo
parlor' magnate, transfers funds from his California operations to pay for the
development of illegal settlements. In the process, he obtains various
US tax advantages because the funds putatively go to humanitarian projects.
Why should such funds disappear in Israel without paying the requisite US taxes?
At a time when the US gov't is clamping down on numerous humanitarian organizations
operating in the region, it would seem that projects in the illegally occupied
territories should also be off limits. Once again, it isn't possible to
verify the extent of this abuse.
Jordan recently obtained a preferential trade agreement
with the US. However, the agreement is often conditional on products being
produced in partnership with Israeli companies. This equates to a low
value added assembly in Jordan, and Israeli companies reaping the bulk of the
benefits. Nowhere else has such a conditionality been applied to US aid
or trade agreements. It costs the US because even more cheap products
pour into the US with lower tariffs. Although the agreement is meant to
aid Jordan, it also benefits Israel. The cost in terms of Jordanian resentment
is always ignored.
On several occasions, the disbursement of funds to
Israel has been delayed. As soon as this happens, Israelis will clamor
to receive the interest due for the days that the funds weren't in their possession,
a preposterous situation. Assume that you promise someone a handout on
a certain date, and if you delayed, would you pay interest on the handout?
Cuckoos make nice cooing sounds in the forests.
They also deposit their eggs amidst the nests of the sparrows. The cuckoo
chick is about three times larger than the sparrow chicks, and will often drive
them from the nest or starve them out. The mother sparrow will nearly
exhaust herself attempting to feed the demands of the cuckoo in its nest - a
parasite that it doesn't recognize as an alien in its midst, even when it is
bigger than the mother sparrow herself! The parasite gains control not
only of the nest, but also of the mother sparrow that frantically seeks to feed
the parasite.
Israel is America's cuckoo. Massive aid flows
go in ever increasing quantities to the cuckoo, and the negative aspects of
this are evident for all to see. It is increasingly dangerous for Americans
to set foot in the Middle East, the hostility directed at them originates primarily
from Israeli actions in the area. Few people forget that the bomb dropped
on them was US-made (maybe even US-owned), dropped by a US-made F16, piloted
by an Israeli pilot, and the whole thing made possible by US funds. We
all know that some Middle Eastern hostility has hit America's home soil.
Why Americans should subject themselves to the whims and demands of the cuckoo
remains as one of today's greatest mysteries. All the justifications proffered
for the aid flows ring increasingly hollow, and raise significant questions
on why this detrimental relationship continues.
It is only when Americans start adding up all the
handouts and adjusting them to inflation that perhaps they will realize that
its relationship with Israel is truly harmful. Americans may also start
costing the resentment and hatred that Israel has engendered to themselves.
A simple step to change the situation is to determine who is boss, who really
controls the US budget and its foreign policy. The nature of democracy
in America - and elsewhere - depends on this. The peace of the region,
and alas, peace in the rest of the world, depend on it too.
Paul de Rooij is an economist living in London.
He can be reached at proox@hotmail.com
All items referred to in this article can be found
in various issues of the Washington Report on Middle East Affairs.
Summary: www.wrmea.com/html/us_aid_to_israel.htm
Note 1: There are many issues arising when computing
such numbers, and on valid grounds, several can be justified. The primary
one will be how to account for loans given that most of them are subsequently
forgiven, it may be valid to equate them as actual transfers. A more accurate
measure would entail obtaining figures on loans that actually have to be repaid
figures we dont have. However, the numbers quoted as US aid
to Israel dont include the loans. The figure produced here from
1967 onwards equates the loans as economic aid assuming most of those
loans will never be repaid. NB: No adjustment was made for interest due
on loans.
Note 2: www.wrmea.com/html/us_aid_to_israel.htm
Note 3: The Tax Cut of 2001 amounted to about
$500 / family on average. Assuming a family of four on average, the Israeli
above board handout of 2001 was about four times this amount
and that
happens every year!
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