Israel Loan and American Economy
"Strategic cooperation with Israel remains a cornerstone of American defense policy."--Secretary of Defense Richard Cheney.
Hundreds of contracts are signed between Israel and U.S. firms. The largest orders are worth $100,00 or more. In four years between 1988-1992, 1,000 companies in 47 states, Washington DC and Puerto Rico have signed contracts worth more than $4.2 billion.
This is because Israel had received $41.8 billion in foreign Military Financing (FMF)from the United States as of 1992. 80% of the money was spent in the United States to generate profits and jobs. Oregon received $6,119,409. Maryland received $89,957,587 up to 1992.
This is the way that the US government program for financing through grants or loans enables friends and allies to improve their defense capabilities. FMS is available under the authority of the Arms Export Control Act. Congress appropriates FMF funds in the the International Affairs Budget and the Dept. of State allocates the funds for eligible friends and allies. The Dept. of Defense executes the program. Monies are to be used to purchase US military equipment and training. This benefits both America's armed forces and American workers.
The USA has had a very busy year. So far, they have had these arm sales to many countries besides Israel. They have done business under the FMF funding with Turkey, U.K, Romania, Saudi Arabia, Spain, Canada, Korea, Pakistan, Qatar, Singapore, Jordan, Australia, Germany, Italy, Iraq, Morocco, United Arab Emirates, India, and Finland. Black Hawk Helicopters were sold to the United Arab Emirates and to Egypt.
9/14/08: 60 countries get annual military aid from the USA. This is $4.5 billion a year which helps them to buy US weapons. Israel and Egypt receive more than 80% of this aid. The USA has also give Iraq and Afghanistan large amounts of weapons and other equipment and is training military units at no charge. Most arms exports are paid for by the purchasers without US financing.
Israelis are among the most highly taxed people in the world with income taxes ranging up to 48%. The average gross annual income for a family of four was $16,800 as of 1992. This is due mostly to the country's defense burden. Not only have they taken in the Ethiopians, when they accepted their claims of being Jewish, but they had previously taken in 400,000 Russians, causing financial claims on their treasury.
Israel gave up oil fields it developed in the Sinai as part of a peace agreement with Egypt. By doing that, they lost their chance to become energy-dependant. Like us, Israel suffers from oil price swings and is working on solar power, even creating a solar powered car.
By the time I left Israel in 1985, they had just implemented a stabilization program. The New York Times described the program as "Everybody takes a step backward-together." It worked, but I didn't get to see it. Inflation fell sharply, the shekel stabilized, foreign-currency reserves recovered, exports increased and the budget deficit contracted.
In September 1990 a new economic program was implemented to help pay for the absorption of Soviet Jews. It raised taxes and liberalized capital and foreign-currency markets to stimulate private investment and job creation.
Since then we have had the attack from Lebanon which shelled my city of Safed where I lived for 5 years. Certainly this has had an effect on the economy.
We see that though Israel has been helped financially by the USA, almost all the money is spent in the USA giving jobs to Americans.
Lately, Israel has been helping American airports in their security problems. Sadly, they've had lots of experience in this.
Reference: Myths and Facts: a concise record of the Arab-Israeli conflict by Mitchell G Bard and Joel Himelfarb
(added 9/14/08)Oregonian Newspaper A10 US arms foreign nations at an increasingly fast clip by Eric Lipton of NY Times, 9/14/08