YGGDRASIL

Uses of a Holocaust - Israel Aid

Well here we have it!

The annual aid tab for Israel runs from $3 billion to $5 billion per year, depending on the number you believe.

From 1949 through 1991 the U.S. provided Israel with $53 billion.

"From 1974 to 1989, Israel received a total of $16.4 billion in "loans" that the U.S. converted to "grants," according to congressional researchers."

Call it a leveraged investment!

Does anyone really believe that these massive amounts of aid could be granted without the "Holocaust" as political justification?

Curiously, Americans are paying and we had nothing to do with the Holocaust!

Now what do you suppose would happen to this massive aid program if the Holocaust were suddenly disbelieved?

[Sept. 19, 1991 Wall Street Journal p A16]

A Close Look at U.S. Aid to Israel Reveals Deals That Push Cost Above Publicly Quoted Figures.

BY EDWARD T. POUND

Staff Reporter of The WALL STREET JOURNAL WASHINGTON-Supporters of the $10 billion in loan guarantees for Israel say the program isn't likely to require a penny of taxpayer funds. If any problems arise, they say, Israel is credit-worthy and will, as always, take care of its obligations. But a review of U.S. aid to Israel over the years reveals a more complicated picture involving special deals that wind up costing taxpayers more than advertised in the beginning.

Consider the $1.2 billion in economic aid that the U.S. transfers to Israel each year. Unlike most foreign subsidies, which are paid in quarterly installments, this one is remitted in a lump sum at the beginning of the U.S. fiscal year. That means the U.S. has to borrow the funds against future revenues, and therefore pays interest on the borrowings-at U.S. taxpayer expense. And what does Israel do with its expedited subsidy? It lends the money back to the U.S., purchasing Treasury bills that in one recent year earned Israel $76.7 million in interest payments from Uncle Sam.

A similar gimmick last year accomplished the politically sensitive purpose of increasing Israel's military subsidy. Congress directed that the U.S. disburse the military aid right away. That money, too, was invested in U.S. government securities, where it has been drawn down as needed. The net result is that Israel will earn more than $34 million this year in interest on the grant, according to a senior Israeli official.

As one congressional aide puts it, there's a "truth-in-labeling" problem: "The nature of the aid effort is sometimes more than we realize."

Finding the Cost

But as the Bush administration squares off against Israel's plea for $10 billion in immediate loan guarantees, some officials are trying to find out precisely how much money Israel's special carve-outs cost. Rep. Lee Hamilton (D., Ind.), though a supporter of Israeli aid programs, says that in recent years, his House Foreign Affairs subcommittee has identified Israel as one of three whose aid "substantially exceeds the popularly quoted figures."

In Israel's case, he says, the publicly quoted figure is $3 billion. But the State Department has provided him with figures indicating that Israel's aid in 1991 actually exceeds $4.3 billion-not including $400 million in housing loan guarantees provided earlier this year. Egypt and Turkey also receive funds in excess of the widely cited figures, he says. "It is important we understand . . . the total amount of U.S. assistance, rather than cloak it as we have done by putting it under so many spigots," Rep. Hamilton says.

* * *

Congress gave Israel a sure-fire way of repaying its debt in the mid-1980s, when Israel was in deep economic trouble. Lawmakers directed that the U.S. provide Israel with economic assistance equaling or exceeding its annual debt repayment to the U.S.

The bottom line: Israel is using most of its $1.2 billion economic grant this year to repay debt that grew from U.S. military loans, according to figures Israel supplied to the U.S. this month. In fact, military loans have a way of becoming grants. From 1974 to 1989, Israel received a total of $16.4 billion in "loans" that the U.S. converted to "grants," according to congressional researchers. The money went out in the first place with the understanding that it wouldn't be repaid; it was categorized as loans because loans don't require oversight by U-S officials while grants do the researchers say.

The financial-aid pot is sweetened in other ways. A few years ago, the U.S. allowed Israel and some other countries to refinance portions of their military debt with banks that provided lower interest rates. This arrangement saves Israel about $150 million a year in interest payments, money that would have otherwise gone to the U.S., according to State Department figures. The U.S. agreed to guarantee repayment on 90% of the bank loans.

Israel's request for the $10 billion loan guarantees has heightened concern in some quarters about its economic stability. Rep. David Obey (D., Wis.), for one, supports the request, but wants a delay so Congress can answer a few key questions. "Does Israel have the financial capacity to pay these loans back without-and I underline without-additional U.S. assistance?" he asks. Israel says it does, but Rep. Obey says his appropriations subcommittee will hold a hearing in two weeks.

"Anytime you are asked to put your name on a $10 billion loan guarantee, you have an obligation to know doggone well that it is wired together well enough so you don't wind up holding any liabilities," Rep. Obey says.

But Israel's strongest supporters don't want a delay. They argue that the program would also provide jobs and exports for Americans, and that Israel always pays its debts. Israel "has never even been late with loan payments [and ] it has good credit ratings among international commercial lenders," Sen. Harris Wofford (D., Pa.) said last week. "Our guarantee will enable Israel to borrow money from American banks at more favorable rates."

Either way, there's little doubt that Israel relies heavily upon foreign aid and borrowing to maintain its economy, according to congressional researchers. Since 1976, they say, Israel has been the largest annual recipient of U.S. foreign assistance- between 1949 and the present, the U.S. has provided Israel with $53 billion in grants and loans. With the massive immigration of Soviet Jews and others, Israeli officials say that more U.S. help is critical. Between 1990 and 1996, they expect one million people to have immigrated to Israel. Right now, they say, Israel's "absorption efforts"-the cost of resettling refugees- represent 16.1%, or $5.3 billion, of its $33 billion " budget. By 1992, they say, the resettlements will take nearly 19% of Israel's budget.

These Officials make no excuses for wringing every dollar or special favor from Congress. Israel forever is finding creative ways to stretch its U.S. aid, find new dollars, or pump up its ailing economy.

The U.S. even helps bankroll Israel's own foreign-aid program, providing a $7.5 million grant that Israel, in turn, uses to finance development projects in Third World countries and for the training of foreigners.

Hard Currency

* * *

Israel's basic source of U.S. aid amounts to $3 billion--the $1.8 billion military grant plus the $1.2 billion economic grant. But U.S. figures demonstrate that with the various programs benefiting Israel, the aid level easily exceeds $3 billion. Some officials, such as Rep. Obey, think that when the value of all cash, equipment and programs is added together, the amount is closer to $5 billion. Israel says that isn't so, but acknowledges that its assistance this year was nearly $4 billion.

* * *

Despite the size of the aid program, there is little oversight by the U.S. In the case of the $1.2 billion economic-support program, the grant agreement allows the U.S. to review Israel's documentation on how it spends the money. But U.S. officials don't exercise that option, relying instead on quarterly disbursement reports from Israel. The latest report consisted of a one page letter.


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