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  • Economist tallies swelling cost of Israel to US

    Since 1973, Israel has cost the United States about $1.6 trillion. If divided by today's population, that is more than $5,700 per person.

    This is an estimate by Thomas Stauffer, a consulting economist in Washington. For decades, his analyses of the Middle East scene have made him a frequent thorn in the side of the Israel lobby.

    For the first time in many years, Mr. Stauffer has tallied the total cost to the US of its backing of Israel in its drawn-out, violent dispute with the Palestinians. So far, he figures, the bill adds up to more than twice the cost of the Vietnam War.

    And now Israel wants more. In a meeting at the White House late last month, Israeli officials made a pitch for $4 billion in additional military aid to defray the rising costs of dealing with the intifada and suicide bombings. They also asked for more than $8 billion in loan guarantees to help the country's recession-bound economy.

    Considering Israel's deep economic troubles, Stauffer doubts the Israel bonds covered by the loan guarantees will ever be repaid. The bonds are likely to be structured so they don't pay interest until they reach maturity. If Stauffer is right, the US would end up paying both principal and interest, perhaps 10 years out.

    Israel's request could be part of a supplemental spending bill that's likely to be passed early next year, perhaps wrapped in with the cost of a war with Iraq.

    Israel is the largest recipient of US foreign aid. It is already due to get $2.04 billion in military assistance and $720 million in economic aid in fiscal 2003. It has been getting $3 billion a year for years.

    Adjusting the official aid to 2001 dollars in purchasing power, Israel has been given $240 billion since 1973, Stauffer reckons. In addition, the US has given Egypt $117 billion and Jordan $22 billion in foreign aid in return for signing peace treaties with Israel.

    "Consequently, politically, if not administratively, those outlays are part of the total package of support for Israel," argues Stauffer in a lecture on the total costs of US Middle East policy, commissioned by the US Army War College, for a recent conference at the University of Maine.

    These foreign-aid costs are well known. Many Americans would probably say it is money well spent to support a beleagured democracy of some strategic interest. But Stauffer wonders if Americans are aware of the full bill for supporting Israel since some costs, if not hidden, are little known.

    One huge cost is not secret. It is the higher cost of oil and other economic damage to the US after Israel-Arab wars.

    In 1973, for instance, Arab nations attacked Israel in an attempt to win back territories Israel had conquered in the 1967 war. President Nixon resupplied Israel with US arms, triggering the Arab oil embargo against the US.

    That shortfall in oil deliveries kicked off a deep recession. The US lost $420 billion (in 2001 dollars) of output as a result, Stauffer calculates. And a boost in oil prices cost another $450 billion.

    Afraid that Arab nations might use their oil clout again, the US set up a Strategic Petroleum Reserve. That has since cost, conservatively, $134 billion, Stauffer reckons.

    Other US help includes:

    • US Jewish charities and organizations have remitted grants or bought Israel bonds worth $50 billion to $60 billion. Though private in origin, the money is "a net drain" on the United States economy, says Stauffer.

    • The US has already guaranteed $10 billion in commercial loans to Israel, and $600 million in "housing loans." (See editor's note below.) Stauffer expects the US Treasury to cover these.

    • The US has given $2.5 billion to support Israel's Lavi fighter and Arrow missile projects.

    • Israel buys discounted, serviceable "excess" US military equipment. Stauffer says these discounts amount to "several billion dollars" over recent years.

    • Israel uses roughly 40 percent of its $1.8 billion per year in military aid, ostensibly earmarked for purchase of US weapons, to buy Israeli-made hardware. It also has won the right to require the Defense Department or US defense contractors to buy Israeli-made equipment or subsystems, paying 50 to 60 cents on every defense dollar the US gives to Israel.

    US help, financial and technical, has enabled Israel to become a major weapons supplier. Weapons make up almost half of Israel's manufactured exports. US defense contractors often resent the buy-Israel requirements and the extra competition subsidized by US taxpayers.

    • US policy and trade sanctions reduce US exports to the Middle East about $5 billion a year, costing 70,000 or so American jobs, Stauffer estimates. Not requiring Israel to use its US aid to buy American goods, as is usual in foreign aid, costs another 125,000 jobs.

    • Israel has blocked some major US arms sales, such as F-15 fighter aircraft to Saudi Arabia in the mid-1980s. That cost $40 billion over 10 years, says Stauffer.

    Stauffer's list will be controversial. He's been assisted in this research by a number of mostly retired military or diplomatic officials who do not go public for fear of being labeled anti-Semitic if they criticize America's policies toward Israel.
    http://www.csmonitor.com/2002/1209/p16s01-wmgn.html

    Money well spent?
    I make no bones about my moral support for [terrorist] organizations. - chegitz guevara
    For those who aspire to live in a high cost, high tax, big government place, our nation and the world offers plenty of options. Vermont, Canada and Venezuela all offer you the opportunity to live in the socialist, big government paradise you long for. –Senator Rubio

  • #2
    yes

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    • #3
      Probably not: the US ends up subsidizing the conflict, which itself eats up much of the ME's economic output (at least for many Arab states). But these sorts of shenannigans wil never end, specially since they are not advertised at all (many americans would briddel at the fact that US companies have to buy Israeli products with US money, and the fact that loans to Israel are never repaid, no matter how much they may support Israel politically)
      If you don't like reality, change it! me
      "Oh no! I am bested!" Drake
      "it is dangerous to be right when the government is wrong" Voltaire
      "Patriotism is a pernecious, psychopathic form of idiocy" George Bernard Shaw

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      • #4
        but if a major conflict (not iraq) breaks out over there it's nice to have someone who can fight with you. someone who will fight just as dirty as everyone else.

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        • #5
          I think it's terribly unreasonable that we should be asked to defray the costs of supressing a legitimate insurrection. Israel should pay for their gestapo tactics out of their own pocket. We'll help them defend themselves against external enemies.
          Christianity: The belief that a cosmic Jewish Zombie who was his own father can make you live forever if you symbolically eat his flesh and telepathically tell him you accept him as your master, so he can remove an evil force from your soul that is present in humanity because a rib-woman was convinced by a talking snake to eat from a magical tree...

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          • #6
            fact that loans to Israel are never repaid,
            Huh? Israel has never defaulted on a loan, so where are you pulling the prediction out of?
            "I read a book twice as fast as anybody else. First, I read the beginning, and then I read the ending, and then I start in the middle and read toward whatever end I like best." - Gracie Allen

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            • #7
              Originally posted by chegitz guevara
              I think it's terribly unreasonable that we should be asked to defray the costs of supressing a legitimate insurrection. Israel should pay for their gestapo tactics out of their own pocket. We'll help them defend themselves against external enemies.
              We only pay for about 20% of the Israeli Military costs - and I'm pretty sure that Israel has used less than 80% of their military - so your fears are unjustified.
              "I read a book twice as fast as anybody else. First, I read the beginning, and then I read the ending, and then I start in the middle and read toward whatever end I like best." - Gracie Allen

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              • #8
                Originally posted by Edan
                Huh? Israel has never defaulted on a loan, so where are you pulling the prediction out of?
                Because they were all forgiven.
                Christianity: The belief that a cosmic Jewish Zombie who was his own father can make you live forever if you symbolically eat his flesh and telepathically tell him you accept him as your master, so he can remove an evil force from your soul that is present in humanity because a rib-woman was convinced by a talking snake to eat from a magical tree...

                Comment


                • #9
                  Che is correct: the US has never actually asked Israel to pay any of the money we have 'loaned' them back: and Israel ussually makes sure to borrow from us. calling the money 'loans' helps deffer the political cost of all that aid to Israel.
                  If you don't like reality, change it! me
                  "Oh no! I am bested!" Drake
                  "it is dangerous to be right when the government is wrong" Voltaire
                  "Patriotism is a pernecious, psychopathic form of idiocy" George Bernard Shaw

                  Comment


                  • #10
                    About one trillion dollars of the so called cost of supporting israel the author attributes to the OPEC oil embargo and price hikes. I don't think these items should be entirely laid at the doorstep of America's support for Israel. OPEC is not entirely an Arabic consortium, its members include Mexico, Venezuela, Nigeria, and Indonesia, none of whom had much interest in opposing American support for Israel in the 1970s. The oil embargo was just as much OPEC flexing its muscles as opposing US foreign policy. Furthermore, given the cold war climate of that era even if Israel hadn't existed there was bound to be conflict in that part of the world anyway. Eventually the oil cartel members would almost with certainty have asserted themselves in such a manner.
                    "I say shoot'em all and let God sort it out in the end!

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                    • #11
                      Most studies trying to 'taly' the cost of anything ususaly make huge assumptions. At best, we can say that Israel has cost the US 240 billion in direct aid, then add up the loans, the discounts on military hardware and other direct or indirect subsidies.

                      I don't know if it is so valid to count the 117 billion to Egypt: after all, we wanted to buy Egypt for more reasons that just having it make peace with israel.
                      If you don't like reality, change it! me
                      "Oh no! I am bested!" Drake
                      "it is dangerous to be right when the government is wrong" Voltaire
                      "Patriotism is a pernecious, psychopathic form of idiocy" George Bernard Shaw

                      Comment


                      • #12
                        Originally posted by chegitz guevara
                        Because they were all forgiven.
                        Source please?
                        "I read a book twice as fast as anybody else. First, I read the beginning, and then I read the ending, and then I start in the middle and read toward whatever end I like best." - Gracie Allen

                        Comment


                        • #13
                          Originally posted by Edan
                          Source please?
                          Try just about every newspaper from 1990, when the US forgive all of Israel's loans when they did the same for Egypt.
                          Christianity: The belief that a cosmic Jewish Zombie who was his own father can make you live forever if you symbolically eat his flesh and telepathically tell him you accept him as your master, so he can remove an evil force from your soul that is present in humanity because a rib-woman was convinced by a talking snake to eat from a magical tree...

                          Comment


                          • #14
                            This last round of loan guarantees really hacks me off. We are supposedly giving the Israelis loan guarantees to keep them from screwing up whatever we do in Iraq. If we had our priorities straight, we would be using the loan guarantees as leverage to get Israel to dismantle settlements, most of which are uneconomical anyway.
                            Old posters never die.
                            They j.u.s.t..f..a..d..e...a...w...a...y....

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                            • #15
                              I think we can rest assured that our support for Israel has been a gargantuan monetary sinkhole for the US.

                              That's why we're willing to spend whatever it takes to make an Israel-Palestine agreement stick. Israel-Egypt only costs us $3 billion a year. I'm guessing that Israel-Palestine will cost a lot more. But even then, it will be a bargain.
                              I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

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