Total US aid to Israel -- its dimensions, implications
Boston — The United States has enormous financial leverage on Israel.
However, according to some economic experts, that leverage might not work in the short run to stop a campaign like Israel's push deep into Lebanon - even were the Reagan administration willing to work that lever.
Defense Secretary Caspar W. Weinberger has said the US has ''no control'' over Israel or its forces.
Some economists differ at least in degree. ''The problem,'' said Stanley Fischer, a Massachusetts Institute of Technology economics professor who tracks the Israeli economy, ''is that a cutoff of aid would not have much effect in the short run. But in six months the Israel economy would be hurting badly.''
Alexander Cukierman, a Tel Aviv University economist visiting Carnegie-Mellon University, Pittsburgh, made a similar comment: ''In the short run a cutoff of aid would not change the path of this particular military operation. It would bear a lot of influence in the longer run.''
Both economists are, in effect, saying that the threat of a cutoff of about $ 2.7 billion a year at present in military and economic aid might not stop Prime Minister Begin from a goal such as destruction of the military power of the Palestine Liberation Organization. And that it would take some months for that cutoff to have a serious economic impact on Israel.
''With Begin, it is very hard to know,'' said Mr. Cukierman. ''He's a very stubborn man. It (an aid cutoff) could just backfire in the short run.''
US assistance to Israel is equivalent to 12.85 percent of that nation's gross national product (GNP) of $21 billion, that is, its total output of goods and services. That aid amounts to some $675 per head per year for Israel's 4 million people, a substantial sum considering the nation's GNP per capita of about $5, 250.
''It is a lot of money,'' said an expert with the Agency for International Development (AID). ''It is clear we are not a trivial source of foreign exchange for Israel.''
From the American side, aid to Israel costs US taxpayers about $50 a year for a family of four.
In addition, Israel gets around $500 million a year from American Jewish organizations. In general, charity money which goes to foreign organizations is not deductible for American tax purposes. The Jewish organizations sending money to Israel are an exception. So the US government loses perhaps another $200 million to $300 million from this quirk in the tax regulations.
Another $600 million of Israeli bonds are sold abroad each year, mostly to members of the American Jewish community. Some of the bonds are redeemable only in Israeli currency.
A report on Israel's economy, issued in March by AID, noted that US military and economic assistance ''enables Israel to pay for weaponry, fuel, and other civilian imports . . wthout heavy reliance on high-cost commercial borrowing, depletion of its foreign exchange reserves, or economic depression.''
Moreover, the American contribution to Israel has been growing, despite the occasional conflict in policy views.
Military sales to Israel have increased considerably since the Camp David accord. It is now approximately $1.8 billion to $1.9 billion each year. Of this, the amount of debt incurred by the sales forgiven at the outset has jumped from some $500 million a year to $550 million in fiscal 1982.
Moreover, the remainder of the military sales is financed over 30 years, with a 10-year grace period in the repayment of principal, but interest charged at the cost of funds to the US Treasury.
The administration has requested economic aid to Israel of $785 billion for fiscal 1983. But in the Senate Foreign Relations Committee, Sen. Alan Cranston (D) of California has an amendment that would boost the aid to $910 billion. This is the amount of principal and interest Israel calculates it must repay in that year.
The aim is to establish, as a rule, that the US would pay back to itself whatever Israel owes each year on its almost $8 billion of debt to the US. In effect, if continued over several decades, that would amount to complete forgiveness of Israel's US debt. (Israel's total foreign debts are above $18 billion.) Any such change, however, would also have to move through the House of Representatives.
If Israel manages its economy reasonably in the future, one AID official reckoned, it might be able to service its debts without serious problems - as long as US aid continued about the same level as in the past.
Aid for Israel's economic development was around two-thirds in grants and one-third in loans until fiscal 1981 when it became totally grants. The old loans were granted on ''soft'' terms - 40 years to pay back at 2 percent interest for the first 10 years and 3 percent thereafter. Considering inflation, the cost of the loans - if ever repaid - will be minimal.
The military campaign in Lebanon, of course, has added to Israel's financial burdens. Some Israeli publications have put the cost so far at about $1 billion. Israel's government has approved a package of austerity moves, including tax hikes, to help pay the bill. If the war drags on, experts note, the cost will mount up. But so far, the war is regarded as ''limited'' compared with the 1973 Arab-Israel war.