You can’t buy love, it is said, but it isn’t for want of trying by Washington. The United States appears to believe the only way to demonstrate friendship with other governments is to either defend or subsidize them. Unfortunately, the latter strategy rarely works. It’s time for Washington to turn off the aid spigot—especially for wealthier nations like Israel.
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. If anything, the transfers should run in the other direction. However, the Senate is considering legislation to extend $9 billion in loan guarantees and provide more military support. Rather than reflect warming ties, however, the extra cash indicates an election-year financial raid. Israeli politicians enjoy having more American money to spend while U.S. politicians enjoy spending more American money to win votes.
Yet even some Israelis doubt that American “assistance” is so good for their nation. Last year, Yarden Gazit of the Jerusalem Institute for Market Studies wrote a study that warned “a good many people do not appreciate the real costs of America’s assistance to Israel.” His analysis suggests that true friendship for Israel would be to set it free.
Washington has provided more than $110 billion in aid over the years, not counting loan guarantees. Last year, figured Gazit, American support accounted for 1.5 percent of Israel’s GDP, 4 percent of the government’s budget and 24 percent of security outlays. Since 2008, all U.S. aid has been for the military, but money is fungible. Israel receives $3 billion annually, three-quarters of which must be used for the purchase of U.S. weapons. 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.” Money from America has conditions, most notably the requirement that Israel purchase U.S. weapons, which raises Israeli acquisition costs. Gazit estimated that America’s “gift” may cost around $600 million. That’s a fifth of the nominal “foreign aid.” That money, at least, is primarily a subsidy to U.S. arms makers.
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