U.S. Aid Isn’t Good for Israel

The U.S. and Israel recently renewed the Memorandum of Understanding (MoU). The current version, signed in 2008, expires in 2018. According to officials, President Barack Obama and Israeli Prime Minister Benjamin Netanyahu agreed to an MoU that would provide more than $30 billion over a decade, which would include advanced weaponry systems.

The continuation of this 10-year financial agreement is unnecessary. Today, Israel’s economy and military are stronger than ever. Not only does Israel not need American aid, the renewal of the MoU will be economically and militarily disastrous for Israel.

An agreement which AIPAC applauds as “historic,” is anything but. Former Deputy National Security Advisor Elliot Abrams wrote in The Weekly Standard how the MoU is a disaster not only financially but also morally because it puts unfair limitations on Israel.

“The current aid agreement is for $3.1 billion a year. The new one is for $3.8 billion, but the increase is almost entirely illusory,” Abrams writes. “There is another condition in this agreement that is more absurd, and belies Obama’s claims of deepest friendship for the Jewish state. As the price for concluding the deal, Obama forced Israel to agree that if Congress appropriates additional funds in 2017 or 2018, Israel will not accept the aid and will return the money [emphasis his].”

“This is a first in American history and constitutes a deliberate undermining of the constitutional power of Congress to determine foreign aid levels,” Abrams adds.

The disrespect displayed by Obama underlies how the U.S. is showing distrust to its only true ally in the Middle East. For the White House to require Israel – even if in the midst of another war with Hamas that requires additional funding – to return aid is disloyal and repulsive. Allies support one another especially in times of need.

Meanwhile, money from America has other conditions, most notably the requirement that Israel purchase U.S. weapons, which raises Israeli acquisition costs.

According to U.S. and Israeli officials, Obama wants to ensure the funds will be only spent on U.S.-made weapons so that U.S. defense firms will greatly benefit from a new deal.

According to a 2015 report by the Congressional Research Service, a U.S. government source stated that Israeli manufacturers must export as much as 75 percent of their weaponry to stay profitable, which is a higher cost than that of other U.S. military contractors.

The CATO Institute’s Doug Bandow writes:

While bilateral defense cooperation has helped boost the Israeli arms industry, the conditions on American aid do the opposite. Since in some cases the Israeli government has to go with U.S. weapons even if the domestic products were better, cheaper or both, efficient Israeli producers lose government contracts and consequent economies of scale. Israeli companies also have to purchase American raw materials, which raise the costs of Israeli weapons in world markets.

Like Abrams and Bandow, the Boston Globe’s Jeff Jacoby expressed concerns – not only about the limits imposed by U.S. aid but about the general dangers of unnecessary dependence. “If only out of national self-respect, Israel should want to wean itself off the U.S. dole – and America shouldn’t want its friendship for its stalwart Middle East ally to be tainted by financial dependence,” Jacoby writes. “But the U.S.-Israel alliance would be stronger, not weaker, if the financial largesse were removed from the picture. That money comes with strings attached – strings that by definition limit Israel’s freedom to make choices.”

The writing has been on the wall well before Abrams and Jacoby’s articles.

A 2012 report published by Bandow, which appeared in National Interest, best describes the overall situation:

Israel does not need foreign aid – it is a wealthy nation with a booming hi-tech sector. Weaknesses elsewhere in the economy are largely self-inflicted through collectivist economic practices. Moreover, Israel is a regional military superpower.

Israel receives $3 billion annually, three-quarters of which must be used for the purchase of U.S. weapons. [The Jerusalem Institute for Market Studies’ Yarden] Gazit noted: “While on the face of it, three billion dollars of annual assistance seems fully advantageous, a closer look reveals not a few shortcomings.”

National Affairs founding editor Yuval Levin published a report almost two decades ago titled “American Aid to the Middle East: A Tragedy of Good Intentions.” He writes:

The argument presented here is by no means an argument against American support of Israel. Israel is the only democracy in the Middle East, and has historically been a bridgehead of American influence in the region. Israel deserves to survive and deserves the support of the United States.

By any measure, Israel is the largest recipient of American aid. Since 1948, it has received at least $90 billion in direct aid. This is more than twice the amount of combined U.S. aid to all of Latin America in the same period, and over 2.5 times what all of Africa (excluding Egypt) has received.

During the 1950s and 60s, Israel’s economy grew at an average rate of 5.6 percent. Once Jerusalem began accepting U.S. aid in 1973, Israel’s average annual growth rate plummeted to roughly 1.5 percent over the next 25 years. Levin describes the aid as a “carrot” in the hopes that Middle East countries will not clash and eventually make peace with each other.

Levin cites Israeli politicians who have expressed concern over U.S. military assistance to the Jewish State. “If we absolutely needed aid for our defense,” says Uzi Landau, a now former Likud and Yisrael Beiteinu member of the Knesset, “it would be worth the associated headaches, but we do not… It will be a painful process, I’m sure, but ultimately our economy and our national security will benefit.”

A country’s military economy is as crucial as its overall economy. A prominent example is how the U.S. survived the Great Depression. According to economists J. David Ferguson and Thomas E. Hall, by the end of 1941, before American entry into the war, defense spending and military mobilization had started one of the greatest booms in American history thus ending the last traces of unemployment.

Israel’s case is no different. Its economy is strong enough that it can produce and maintain its defense systems, such as the Iron Dome, without U.S. assistance. An alliance does not only need to be conducted economically but also morally in combatting a common enemy. Israel needs more of the latter than the former, especially to combat an enemy of both the U.S. and Israel: terrorism.

Feelings are one thing. Facts are another. U.S. assistance to Israel needs to be examined rationally, not emotionally. If we care about Israel, we should look at data that’s quantitative, not just qualitative.

Jackson Richman is a senior studying political science at George Washington University. He has interned at The Weekly Standard and The Daily Caller. He’s a frequent contributor for Red Alert Politics and American Action News. You can follow him on Twitter: @jacksonrichman.