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US Aid Cornucopia Flows to Israel

Americans argue about aid to Israel, now at $3 billion annually, but leaders in the White House and Congress defend its strategic value

By George D. Moffett IIIStaff writer of The Christian Science Monitor / June 21, 1991


ON May 15, 1948, leaders of the international Zionist movement hoisted a blue and white flag emblazoned with the Star of David and founded the state of Israel. Ten days later, after extending diplomatic recognition, President Harry Truman pledged $100 million to keep the nation alive. Earmarked for agricultural settlements, the loan was the first installment of what has become the most extensive program of bilateral aid in history. After 43 years it remains the most visible expression of the extraordinary commitment the United States has made to Israel's survival.

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Supporters of Israel say the US's enormous annual contributions are warranted because Israel plays a crucial role in advancing US foreign policy objectives in the Middle East and because US support is essential to the survival of the Jewish state.

Skeptics accuse the US of being overly indulgent with Israel at the expense of other, more needy foreign nations and of pressing problems at home.

As the debate goes on, the trend line of US aid to Israel inches up. From its modest beginnings in 1948, US financial assistance has reached the $50 billion mark, including loans and grants. Measured in real dollars, actual US grants to Israel since 1974 total nearly half the American contribution to 16 European nations under the Marshall Plan.

"It's off the charts," says one congressional expert on US foreign assistance. The principle component of US assistance to Israel is earmarked as amounts of economic aid ($1.2 billion) and military assistance ($1.8 billion), given partly to bolster the 1979 Camp David peace treaty between Israel and Egypt. The second largest US aid recipient, Egypt, receives $2 billion annually. What began as a reward for peacemaking is now viewed in Jerusalem, Cairo, and Washington as a virtual entitlement.

Beyond the basic $3 billion, US assistance to Israel has grown horizontally, outside the confines of the foreign aid budget.

According to a report issued last year by the Congressional Research Service (CRS), most of the extras flow from some of the 43 pieces of special legislation enacted over the years primarily to benefit the Jewish state.

'Cash advance' system

Alone among US aid recipients, for example, Israel receives its entire allotment of economic aid at the beginning of each fiscal year rather than in quarterly installments. The "cash advance" procedure was applied to military aid starting in 1984.

By investing its economic (Economic Support Fund) and military (Foreign Military Sales) aid in US Treasury bonds, Israel earns more than $100 million in annual interest. Meanwhile the US pays up to $110 million in interest on the money it has to borrow to make the advance payments possible, according to the White House Office of Management and Budget.

Israel also has the unique privilege of using a portion of its FMS funds to purchase tanks, missiles, and military vehicles produced in Israel. Historically, the US has insisted that all FMS funds be spent on US products so that American firms and workers will benefit. Draft foreign aid legislation for fiscal 1992 would raise Israel's "offshore" spending limit to $475 million. The US has also allowed Israel to invest a portion of its FMS allotment in research and development, another practice not normal l

y granted since Congress has sought to prevent foreign countries from developing weapons systems that would compete with US products.

Aid to Israel is also free of the strings attached by the US to foreign assistance to some other governments.