Israel is paying through the nose for US aid and would better off without it, says a researcher for the Jerusalem Institute for Market Studies (JIMS).
American aid to Israel to the tune of $3 billion a year has been maligned by many U.S. conservatives and by the Arab world, but Israel actually loses more than it receives, according to JIMS analyst Yarden Gazit.
“U.S. aid is a net loss for Israel and Israel would be better off without it,” he concluded in his report, released on Wednesday.
Gazit explained that the conditions for the military assistance are designed to help the American military-industrial complex at the expense of the Israeli defense industry.
One condition of the American aid to Israel is that three-quarters of the grant be spent in the United States. “The ‘buy US’ requirement causes Israel to buy defense products at a high price, sometimes even products Israel may not need,” Gazit wrote. He calculated the loss to the Israeli defense industry at $600-750 million per year.
The use of American materials instead of those from Israel also hurts competitiveness in Israel and on the world market, according to JIMS. Not using domestic materials for the IDF “hurts Israeli industry’s reputation on the international market and may cause a loss of sales,” the report added.
JIMS forecasts that if Israel does not forfeit the American aid, it risks losing out on the growing Chinese and Indian market for Israeli products. Those countries will be under pressure to shop in the United States in light of American economic problems and its bloated federal budget.
Gazit also pointed out that Israel is forced spend more than $3 billion a year to retain a qualitative edge over Saudi Arabia, Egypt and Jordan, which also receives massive aid from the United States.
Every dollar granted to Egypt requires Israel to spend between $1.60 and $2.10 to maintain the balance of power, according to JIMS.
…..if, and only if, the “partnership” would operate on a more EQUAL basis than has been thus far the case.
I’m not sure that’s possible, Ted.
In any event, you are correct that “the $3 B should be transferred to the defense budget.” I’ve been making the same case at every suitable opportunity ever since the early eighties. Leaving the funding in “Foreign Aid” invariably gives altogether too much (excuse the pun) ammunition to “the usual suspects” in the hasbara war.
Addendum to # 14
Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves. –
The Wall Street Pentagon Papers: Biggest Scam In World History Exposed – Are The Federal Reserve’s Crimes Too Big To Comprehend?
Geithner admits USA bankrupt to US Senate
This is what you want to align with? Any one who does is going to get badly burnt or worse!
Why should that be a concern for us? We have lost thousands of local jobs so Americans can have higher rate of employment? We used to make uniforms and combat boots and they went out of business due to IDF switching to American sources to save shekels in the Military budget. Hundreds of Jobs lost to women in Druze villages was the result. Those boots and uniforms were made in Haiti by American companies. These are only two examples of hundreds like it. America dumped the m-16 on us for peanuts but it killed our own Galil assault rifle and nobody would buy it because the IDF didn’t, we had free M-16’s.
After making a good case for Israel getting off the American treadmill you myopically revert to status quo and suggest we should continue. Otherwise who cares how important Israel is to America or how much we contribute or save them. Are you pro American or pro Israel? In this case you can’t be both. Every purchase we make from America costs Israeli jobs, added value in export sales reduced ties to other countries like India China and Russia to name a few. Couple that to the diminishing power, political and economic of America it’s hard to rationalize your point of view objectively but that’s nothing new.
There’s a sucker born every minute.
The problem is, the last thing America wants is for Israel to reject the aid. Why so?
I read somewhere that the military supplies israel is forced to buy from the US produces 50,000 American jobs. Furthermore, America would then be hard pressed to continue providing $2 billion in military aid to Egypt.. More jobs lost. Similarly she would be hard pressed to continuing selling military hardware to anyone in the ME for fear of being accused of destablizing the ME.
Now if Israel is free to buy where they see the best value and choose to buy elsewhere, how many other US customers will follow suit. After all, if its good enough for Israel, its good enough for them. If the US loses all these sales than the cost to the US of sustaining its own military would increase due to lower volume. Now if Israel enters into joint ventures with other countries to produce military hardware including planes, the US couldn’t compete.
So to my mind the viability of the US defense industry is at stake.
So I don’t see this relationship ending any time soon, not if American has its way. Instead Israel and the US should be partners in the defense of our mutual interests and the $3 B should be transferred to the defense budget. It has been said, if the US didn’t have Israel as a partner in the ME then she would have to station an extra aircraft carrier in the area. I believe that the cost of keeping an aircraft carrier operational is $2B a year. The newest Ford-class carriers are expected to cost around $9 billion each (in 2010 dollars). These costs exclude any aircraft.
It took 6 months for America to mobilize 500,000 soldiers and equiptment to throw Hussain out of Kuwait. Israel could mobilize such a fighting force in 72 hours.
And no real pressure is likely to BE applied to reform it: since the Israel old boys school got the habit from the U.S., where “double-dipping” among military personnel (and the federal civilian bureaucracy as well) — enabling these turkeys to retire with multiple pensions (often totalling more than they ever earned at any one gig while working) — has been SOP for decades.
This is true (in the main) — because the problem is not the presidency.
The problem is the State Department — and its unelected but entrenched, unfireable bureaucracy.
Presidents come & presidents go, but the State Department is forever.
No, No, No. We do not rely on ANY nation for our survival. Our survival hinges upon G-d, period, no ifs and or buts.
True America could threaten withholding vetoes in the UN. Yawn!! So what? Ah world condemnation? Sanctions? Military invasion of Israel by the EU and America?
First of all ll of UN resolutions against Israel to date have been non binding. 2ndly many or all of the SS members who have voted against Israel have done so safely because of the built in assurance that America would veto any serious anti Israel resolution. Take away that assurance and possibly some would have second thoughts. Their votes should not be taken as a given.
Israel becoming more of an asset to both Russia and China might create a more balanced approach by them towards Israel.
Israel could always in the end say bye bye to the UN and save many tens of millions we pay into that corrupt den of vipers. Then we bar any official UN organization or affiliated NGO access to Israel. They can access the PA and HAMAS through Egypt and Jordan. Very inconvenient and can you see great cooperation from those two failed states.
Then there is all those Christian friends who I would expect to Storm the White House and the UN with all those millions of ardent dien in the wool supporters. Some Jews might remember they were Jews?
Your scenario might be a support Bonanza for us and not an apocalypse.
Get real. If you got it to sell it’s sold. China and Russia as well as others reverse engineer everything even Iran does it. There is nothing in the American warehouse that is not know or can’t re bought or reproduced. There is nothing America has we can’t make better and cheaper were we to make a decision to produce them it’s a matter of priority and the cost. Israel opted for off the shelf inferior systems to insure steady supply and save money.
Did you know that over 50% of Israels Defense budget goes to paying inflated and excessive benefits and retirement packages? A soldier giving 20years of service can retire at say age 40 receive 8o% pension and begin a new career in or out of the system. Israel has an old boys school were retired vets get soft government jobs at high salaries till age 67. American aid perpetuates this stupid system as no real pressure is applied to reform it.
This is not about Obama he is only the last of a long line of POTUS and their administrations. This will continue no matter who is the next president. I don’t see Israel with her current lineup of political pygmies changing the status quo on their own, all are corrupt and all are political cowards. I am counting on Obama to do the job for us. If he is elected to a second term I think it could happen. Israel advocacy in my playbook is to support an independent Israel who is free to determine her own destiny and her own interests which is not identical to Americas.
America whether most are willing to admit it or not is in decline not yet terminal but heading for a much reduced political, military and economic influence around the world. Very hard times are coming and what will be will be unlike what has ever been. Israel must read the tea leaves and adjust accordingly in order to not only survive but continue to thrive. Attached to America this is impossible.
Problem is that even if Israel gave up the 3 billion dollars in US aid, it would still be under enormous pressure from the US to limit sales of arms to countries like China. And rightly so, since Israel can still be jettisoned into outer space at the UN if the US refuses to use its veto in the Security Council.
Maintaining the aid from the US gives Israel cover to refuse to sell weaponry whose guts might wind up in the Middle East and be used against Israel in any future war. The Chinese in particular seem to have no sense of proprietary rights when it comes to patents and copyrights. Double that for Russia. In addition, Israel will never want to alienate the US in case it needs direct US military intervention in fighting in the Middle East. Also, Obama will not be POTUS forever, while Congress will continue to support Israel and should not be dissed. Israel is stuck with the US aid. She will just have to take it and shut up about it.
Your right Yonatan, the reason I continue to call for a super Israeli PR program to bring this to light to the American people.
I believe a majority of American support Israel however, very few understand the conditions imposed on Israel with the aid. All they see or hear is the dollar amount with very little information.
Above all, who do you think provides stability in the ME? Although the administrations are full of anti-Semites, bottom line they know they can trust and need Israel.
I’m glad this was posted. I can’t wait to hear the “eagle” spin on this…
1. According to JIMS, the Defense Ministry purchases US products even
though Israeli industry is capable of producing cheaper products, which
better fit the IDF’s demands. JIMS estimates the direct loss faced by
Israeli industry at $600-750 million per year.
2. The Defense Ministry often requires Israeli companies to purchase expensive
raw materials in the US in order to use up available grant money. This raises
the cost of the final products sold by Israeli industry and hurts its
competitiveness in Israel and on the world market.
3. Since the Israeli army purchases so much in the US, some locally produced
4. The industry loses valuable potential contracts because of US-imposed
restrictions on Israeli defense exports.
JIMS forecasts that as a result of the economic crisis in the US and its ever-increasing
budget deficits, along with the rise of new powers such as India and China, which are
interested in Israeli products, the economic and strategic damage of US aid will
increase in the coming years. JIMS recommends that the Israeli government initiate
an end to US government grants.
AE will now have a conniption!
ron we are on the same page but I had something more painful in mind than the finger. 😉
America blocks our foreign military exports all of which must be approved by America because we are using American components and or technology. Israel must prove we don’t use American technology to be able to bypass the American veto/censor. Therefore America gets to know exactly what and how we produce our weapons and systems. They don’t need spies we give them what they want.
Chinese Stealth J-XX #2
Don’t be surprised to learn in the future of a close Israeli connection with this planes and technology.
We gave or sold the Chinese our Lavie fighter they call the J-10.
Now Uncle, I don’t believe these same conditions apply to the Arab world precipitants.
My main argument has been the US administration treats our only true trusted friend and ally Israel like crap while they kiss butts to the Arab world, all of whom have the worlds worst human rights violations and they hate America.
On top of this, the administration jerks want to dictate to Israel.
Tell me there isn’t something wrong with this picture.
Make sure Israel puts out the welcome mat next time Hillary, Georgie and company come to Israel.
Who ever funded this study should have checked my past posts in the archives of Israpundit and saved themselves a lot of money.