A combination of grants and loans, since 1949, makes Israel the largest recipient of US economic assistance since World War II.
But despite a recent decision by the Bush administration to reduce a $9 billion loan guarantee package by $290 million, few foreign policy experts in Washington foresee a diminution in support anytime soon.
While some view the loan reduction as a rebuke of Israel’s failure to meet certain conditions of the American-led peace plan known as the road map, others doubt the move is anything more than a political gesture devoid of any long-term significance.
“I think it’s a joke, maybe to absorb some of the anger in the Arab world toward the United States,” said Dr Shukri Abid, a specialist on Arab-Israeli affairs and chairman of the language department at the Middle East Institute in Washington.
Whatever economic implications the penalty may have, it will not affect the substance of the US foreign aid policy with Israel, Abid said.
“I don’t believe this signals any shift in support from this country toward Israel,” he added. “Whatever Israel wants, it will get.”
The fact that the American Israel Public Affairs Committee (AIPAC), America’s most influential pro-Israel lobby group, did not issue a press statement criticising the reduction, indicates how lightly Israel’s staunchest US backers are taking the decision, according to MJ Rosenberg, director of policy analysis for Israel Policy Forum.
“If AIPAC doesn’t denounce it and if the usual suspects [in Congress] don’t scream and yell, then it’s insignificant,” Rosenberg said.
“Whatever Israel wants, it will get”
Dr Shukri Abid,
chairman, language department, Middle East Institute in Washington
This is not the first time an American president has threatened Israel with such punitive measures for its actions in the West Bank.
In 1991, President George Bush Sr withheld $10 billion in loan guarantees until the Israeli government agreed to attend the Madrid peace conference.
The decision angered a large segment of the American Jewish lobby and some say cost Bush a second term in the White House.
The loan guarantees are important to Israel, currently mired in a dire economic slump, because they facilitate cheaper access to international credit.
But they are not connected to the amount of US grant money given to Israel, $2.64 billion of which Congress appropriated for 2004.
However, just how much Israel still needs that money today, considering the fact that it boasts one of the strongest military forces in the region, is an open question.
In a recent book titled The Middle East Strategic Balance 2002-2003, the Jaffee Centre for Strategic Studies, an Israeli think tank, said that due to the acquisition of superior military hardware, the Israeli army had increased its edge over other countries in the Middle East.
Donald Neff, the author of several books on the Israeli-Palestinian conflict and a former Jerusalem bureau chief for Time magazine, said it was foolish to think Israel was still in need of military assistance, considering its abundance of high-tech weaponry.
Financial support for Israel has
led to US diplomats being targeted
“I certainly don’t think it’s necessary, period,” Neff said. “They are one of the world’s major seller of weapons... they’re doing very well. They don’t need it.”
Furthermore, the removal of Saddam Hussein in Iraq diminished the military threat to Israel in the region, according to another book by the Jaffee Center, “After the War in Iraq."
Yet, both the US House of Representatives and the Senate approved $2.16 billion in military aid for Israel next year.
A major reason for this, Rosenberg said, is that the United States wants to ensure that Israel will continue to be the most effective military power in the Middle East for years to come.
Part of this is because the US views Israel as a strategic partner in the region, but also because it wants to prevent a repeat of the 1973 war, during which Israel suffered heavy casualties after a surprise attack by Egypt and Syria, he continued.
“I think they learned the lesson of overconfidence,” he said, adding that he supported the US military aid.
The debate over Israel’s security needs aside, neither the Bush administration nor any future US president is likely to risk the domestic political consequences posed by taking a hard-line approach to relations with Israel, several experts said.
Although Rosenberg dismissed the notion that the relatively small number of American Jewish voters could dictate the outcome of a presidential election, he said an abrupt decrease in US assistance would spark fierce opposition in the Jewish community.
Some credit Bush Sr's electoral
defeat to blocking Israeli aid
“If there was a cut in aid everyone would rally behind Israel,” he said.
Even if Bush officials were to threaten Israel with a major funding cut, the Likud government would likely ignore them and the US Congress would never support the move, Neff said.
“I think the Israeli negotiators would laugh in their face,” he said. “I know damn well that Congress would never accept a slash in the budget. Even if the White House wanted to do something, I don’t think they could.”
Still, some believe should the Bush team produce a plan to reduce US aid to Israel that was fair, imaginative and not seen as an attempt to undermine the strategic partnership, some members of Congress might soften their positions.
Philip Wilcox, president of the Foundation for Middle East Peace and Development and a former deputy assistant Secretary of State for Middle Eastern Affairs is quite confident.
“If they would come up with a more effective, forthright leadership, the Congress would follow,” Wilcox said.
Although Rosenberg said that if “America didn’t provide that aid, Israel would not listen to anything it has to say,” few Middle East analysts believe Israel is listening anyway.
Prime Minister Ariel Sharon has ignored repeated requests from the Bush administration to halt construction of the security wall and to scale back settlement activity in the West Bank.
No funding fears
So the relatively small cut in loan guarantees is unlikely to trigger any sense of panic in Jerusalem, Wilcox said.
“I think that the US has to look at the larger picture and try to balance it”
president, Foundation for Middle East Peace and Development
“I think it has virtually no influence over them,” he added.
Rather than cutting loan guarantees, something viewed by many as a shallow political gesture, the Bush administration would be wise to consider a more aggressive reduction in its aid package consistent with Israeli actions on settlements, he said.
“A far more effective policy would be to come up with a far more accurate estimate of how much money they’re spending on the settlements and to deduct that money from our annual assistance program,” he added.
That, combined with more humanitarian aid for the Palestinians, could go a long way towards achieving a peaceful resolution to the Israeli-Palestinian conflict, Abid said.
“I think that the US has to look at the larger picture and try to balance it,” he continued.