“Americans Pay a High Price for Israel’s Friendship.”
the magnitude of U.S. aid to Israel and the hefty tab the American people are picking up is a well kept government secret.
palestinecenter.org
“Americans Pay a High Price for Israel’s Friendship.”
Report from a Palestine Center briefing by Thomas Stauffer
The American people do not know the extent of domestic economic losses resulting from U.S. policy in the Middle East, particularly the losses which are “directly or consequentially” linked to U.S. support for Israel, according to Thomas Stauffer, an international oil and finance consultant. Speaking a 14 May 2002 Center for Policy Analysis on Palestine (Palestine Center) briefing, Stauffer blamed the public’s naïveté on the U.S. government, adding that the magnitude of U.S. aid to Israel and the hefty tab the American people are picking up is a well kept government secret.
Stauffer describes U.S. aid to Israel in terms of categories, most of which are kept off the government’s budget balance sheet and conventional U.S aid records. Putting a price tag on the total amount of U.S. aid to Israel is difficult because most costs are consequential, or indirect. “It would be interesting to know how the public would react if the public knew how much it [aid to Israel] costs them,” Stauffer said.
Stauffer pointed out that Israel enjoys a “remarkable” spectrum of ad hoc and special forms of aid, which for years has cost the American people billions of dollars in lost trade, contracts, jobs, and business ventures in the Middle East. Stauffer broke down U.S economic losses into six broad categories, one being the publicly known and traceable form of direct aid that the United States also provides to Egypt and Jordan. The total price tag for U.S. taxpayers is roughly $5.5 billion per year. Stauffer calls this the “simplest and smallest” category of U.S. aid.
Other forms of aid to Israel come as a result of “consequential” aid that the majority of Americans know nothing about. This adds up to approximately $8 billion annually over a roughly ten-year period. U.S aid to Turkey, which amounts to billions of dollars annually, is linked to Turkey’s relationship with Israel, which in turn is linked to U.S. policy toward Israel. Billions of dollars in U.S. aid to Central Asian countries, under the pretext of promoting emerging democracies, are part of U.S. efforts to confine Iran, which again is tied to U.S. policy toward Israel. The same applies to the countries of the Caucasus. Aid to Turkey, Central Asia, and the Caucasus should be thrown into the “pot” of aid to Israel, Stauffer stressed. Contributions by Jewish organizations and individuals are another element of consequential aid to Israel. These contributions, averaging from $1-1.5 billion are tax-deductible.
But the real losses to Americans, Stauffer argued, come from the harder to track forms of aid because there is no government overview. One example comes from the Central Bank of Israel’s statistics which show that in the 1980s the United States bailed out the Israeli banking system at a cost of $10-12 billion. Americans probably never knew this because there is no trace of the money in American records. Israel has never returned the money and is unlikely to be asked to return it. Furthermore, the United States has undertaken loan guarantees from various sources totaling about $10 billion, of which $7 billion have been initialed. Stauffer calls this a “contingent liability” on the United States, and asserts that Israel has no prospect of repayment. Jewish immigration from Russia to Israel, also a hidden cost, is subsided by the United States with some $60-100,000 million annually.
And then there are the losses to U.S. military institutions. According to Stauffer, the United States has poured billions of dollars into Israeli military technology, technology that is in direct competition with that of the U.S., citing the Israeli Lavi fighter program and Arrow missile system as examples. Israel enjoys large discounts on what are considered “surplus” U.S. arms, and Israeli military firms have the upper hand in relationships with U.S. military firms. U.S. contractors, Stauffer asserted, are required to subcontract Israeli firms for military components, subcontracts that would otherwise have gone to American firms. Furthermore, for every dollar of military equipment the United States gives Israel, the United States buys 60 cents worth of Israeli equipment. The difference here is that while the United States pays with real money, Israel does not.
Another “consequential” cost to the U.S. economy with a potential price tag of $20-30 billion a day is the oil supplies guarantee. Should Israel’s oil supply be cut off, Stauffer explained, the United States guarantees to provide Israel with oil regardless of U.S. oil supply levels.
Another hidden cost to the U.S. economy with a direct effect on the American people is trade losses with Israel and with those countries Israel perceives as hostile. Stauffer’s data reveal that the United States’ trade deficit with Israel is about $5-5.5 billion. One reason for this is that Israel, for example, can buy textile from China, re-label it, and sell it to the United States duty-free. But the real reason behind the losses, said Stauffer, is the trade imbalance between the United States and Israel. While the United States pays real money for its imports from Israel, Israel does not pay real money for its imports from the United States. The result is an annual trade imbalance of just under $10 billion. In terms of jobs, that comes to about a quarter of a million American jobs lost.
U.S. sanctions on Libya, Syria, Iran, and Iraq—sanctions linked to U.S. policy toward Israel—are costing the U.S. economy about $14 billion annually in potential trade, Stauffer argued, basing his calculations on trade and economic studies. The sanctions, which only affect U.S. companies and not their competitors, translate into 500,000 to 600,000 in lost U.S. jobs. U.S. policy toward Iraq, presented to the American people in terms of protecting Gulf oil supplies, is really meant to weaken Iraq, seen by Israel as a potential threat. The Israeli lobby in the United States has foiled major U.S trade contracts with Arab and Muslim countries, like the 1980s aircraft sales contract with Saudi Arabia that cost the U.S. economy between $20-25 billion annually.
So, who is benefiting from this costly U.S. policy toward Israel? Congress and presidential candidates, Stauffer claimed, have benefited “handsomely” from contributions made by the Jewish community. About 20 to 40 percent of the total political campaign contributions—tens of billions of dollars—from the Jewish community in the United States, go into the pockets of U.S. leaders. As for the benefit to the United States, that, Stauffer said, is hard to find.
The above text is based on remarks delivered on 14 May 2002 by Thomas Stauffer. The speaker’s views do not necessarily reflect those of the Palestine Center or The Jerusalem Fund. This “For the Record” may be used without permission but with proper attribution to Palestine Center.
This information first appeared in “For the Record” No. 113, 16 May 2002. |
