US aid

Aid to Israel: The Story in Numbers
David Hazony - 01.12.2010 - 7:03 AM
While everyone over here in Israel is tittering over the question of whether George Mitchell did or did not threaten to cut back on American aid to Israel if there is no progress in peace talks, it might be worth getting a little perspective on what those numbers actually look like, both for Israelis and for Americans.

In 1985, the year Israel started receiving such high levels of American aid, U.S. taxpayers gave Israel about $3.4 billion in economic and military grants. That year, Israel’s GDP stood at about $24.1 billion in current dollars. American aid constituted about 14 percent of Israel’s GDP — an enormous amount of support for a country struggling with both a severe economic crisis and an ongoing war in Lebanon.

In 1996, the year Prime Minister Netanyahu addressed a joint session of Congress and declared his aim of ending Israel’s dependence on American aid, total grants came to $3.1 billion, while Israel’s GDP stood at $105 billion. U.S. aid was then only about 3 percent of Israel’s GDP.

In 2008, U.S. aid was down to about $2.4 billion, while Israel’s GDP was up to $199 billion. We’re talking about 1.2 percent of Israel’s GDP.

So whereas nobody would consider $2.4 billion a trivial amount of money, the economic significance of that aid has dropped dramatically, as far as Israelis are concerned. Israel’s “dependence” on American aid is not zero, but it’s heading there.

But what about American taxpayers? Here, too, we see a dramatic drop in economic significance as measured as a portion of the U.S. federal budget. In 1985, the $3.4 billion was out of an overall budget of some $947 billion — or 0.35 percent. In 2008, Israel received $2.4 billion out of a total budget of $2.99 trillion — which looks like 0.08 percent, or less than one one-thousandth. A similar drop is seen when comparing the aid against the overall GDP of the United States: from about 0.081 percent down to 0.016 percent. So while the Israelis feel the lift of American aid less than a tenth as much as they used to, Americans feel its bite less than a quarter of what they used to.

At the same time, the makeup of U.S. aid has shifted dramatically as well. If in 1985, aid was about three-fifths economic and two-fifths military, in 2008 economic aid was down to just $120 million, with the rest as military aid. The shift reflects Israel’s economic success: it no longer needs American charity, and in fact gets very little. Military aid, on the other hand, reflects Israel’s contribution to advancing U.S. strategic interests — a proposition that can be legitimately debated but should not be confused with an anachronistic sentimentality for the plight of struggling Zionist farmers. (Note: I have focused on grants and deliberately left out the billions in military loan guarantees the U.S. makes to Israel, which are not a handout as much as a promise of business for the American military industry.)

Bottom line: U.S. aid to Israel has plummeted in the past two decades by nearly every reasonable measure. And anyone who thinks the Israel lobby is bilking American taxpayers out of a false and outdated sentimentality for Israel’s plight is not paying attention to the numbers. That kind of American generosity ended a while ago.