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Friday, April 27, 2007

Israeli dependence day and US Aid

In Just an optical illusion Nehemia Shtrasler points out Israel's dangerous dependence on US aid.
Although there are no official statistics, more Israelis apparently waved their national flag this past Independence Day. Perhaps this was out of a longing for a more innocent period, when the corrupt at least felt ashamed of their deeds, or perhaps the reason was that Bank Hapoalim distributed free flags. However, there was another phenomenon, unparalleled in any other nation: The Stars and Stripes were flown alongside the national flag. This is essentially a declaration that Israelis cannot celebrate their own independence day without remembering that their country's existence is wholly dependent on American backing.
This backing has several aspects. One of them is the military and economic aid that Israel receives annually from Uncle Sam. In this regard, there will soon be a change, in five months' time. October 1 will mark the last time Israel will receive economic aid (totaling $120 million) from the United States. This will be the closing chord of the economic aid Israel has received since the mid-1980s. After October 1, Israel will receive military aid only: $2.4 billion yearly.
The process of gradually reducing the economic assistance began in 1996, with a festive speech by then prime minister Benjamin Netanyahu to both houses of the U.S. Congress. In that address, he passionately declared that Israel had emerged from its childhood and was now mature enough to stand on its own two feet and achieve economic independence. Thus, he announced, Israel was waiving the economic aid that it had received until then from America. Members of Congress, who were moved by this gesture, gave Netanyahu a standing ovation, out of respect for someone willing to give up several hundred million dollars a year.
However, the truth is that this was not a freely given concession; it was a response to American pressure.
Today, 11 years after that festive "concession speech" and after Israel's celebration of its 59th year of independence, has Israel achieved the economic independence that Netanyahu promised? And is it politically independent?
There are those who argue that Israel has already achieved economic independence: For the first time in Israeli history, there was a respectable surplus in our balance of payments, with exports exceeding imports by $0.9 billion and with a large surplus ($6.8 billion) in the current account. If we also factor in a rapid growth rate of five percent for the fourth consecutive year, a negligible inflation rate, the strengthening of the shekel vis-a-vis the dollar, a lower interest rate than in the U.S., and a decrease in unemployment, it is clear why many people believe that Israel has achieved economic independence.
However, this is just an optical illusion. It is a sort of mirage, mere virtual reality - nothing more.
If any American president were to give a small cough and say, in a half-whisper, "hmm, I am considering my steps concerning Israel," our country's excellent economic situation would immediately turn topsy-turvy. Israel's international credit line would instantly freeze, the dollar would soar, and so would our inflation rate. Our balance of payments surplus would become a deficit and foreign investment would flee Israel many times faster than it came. After all, the world knows that without American backing, tiny Israel would quickly revert to its natural proportions.
Therefore, it really does not matter whether or not the economic aid ends in October. What is important is that Israel continue to enjoy the political support of the most powerful nation on earth. After all, were it not for America's veto in the United Nations Security Council, economic sanctions, a la South Africa during its apartheid regime, would have been imposed on Israel long ago. Without that veto, Israel would never have been able to continue fighting the Second Lebanon War when every other country in the world wanted it stopped as soon as it began.
Anyone who needs further evidence of the sad fact that Israel is very far from independence - either economic or political - should know that Israel recently submitted another request for an increase in American military aid. Israel is now asking for a $50 million annual increment in the military grant, so that, in another 10 years' time, it would amount to $2.9 billion.
In the current tense relationship between a Republican administration and a Democratic Congress, where there are sharp disagreements about every conceivable topic, there is only one subject on which President George Bush and Congress see eye-to-eye: unqualified support for Israel. Therefore, it is reasonable to assume that Israel will soon receive that additional $50 million annually.
And when the money arrives, Israelis will have yet another reason to lift the American flag high next Independence Day. On Israeli Independence Day, that is.

Copyright - Original materials copyright (c) by the authors. Originally posted at Please do link to these articles, quote from them and forward them by email to friends with this notice. Other uses require written permission of the author.


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