In my opinion, here is another fine
example of domestic political expedience triumphing over economic
rationality. Of course, money isn't everything, but one also has to ask:
what will we ultimately have to show for our national "investment?" And why do
our politicians persist in throwing good money after bad when it is so
obviously counterproductive? Might this be an example of the special interest
influence we were discussing a few days ago in the "median voter"
thread?
~Alypius
http://www.csmonitor.com/2002/1209/p16s01-wmgn.html
Since 1973, Israel has cost the United States about
$1.6 trillion
By David R. Francis |
Staff writer of The Christian Science Monitor
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 for years.
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, says
Stauffer.
• The US has already guaranteed $10 billion in commercial
loans to Israel, and $600 billion in "housing loans." 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
taxpayers.
• 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.
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