How Much US Aid Does Israel Need?

Does Israel really need $3.4 billion in U.S. aid grants this year when it has one of the strongest economies in that part of the world? That is the question raised in a report by NBC News’s longtime Israel-based correspondent Martin Fletcher.

The Israeli Finance Ministry is predicting Israel’s economy will expand by 3.5% this year and next.  By contrast, economists surveyed by the Wall Street Journal predicted 2.4 percent growth for the United States.

Here are some of the findings in the NBC Report.

• The shekel was the strongest of 31 major currencies tracked over the last six months, according to a Bloomberg survey.
• Natural gas began flowing from Israeli offshore gas fields last week and in two more years the country is expected to be fully energy independent and possibly a net exporter.
• “Israel is well on the way to water independence.”
•  “Unemployment is relatively low at 6.3 per cent, but the gap between rich and poor is one of the highest of all developed countries, according to the OECD.”

Fletcher, based in Tel Aviv for the past 30 years, said, “The boom may give a louder voice to calls for a reduction to the $3 billion worth of financial assistance Israel receives from the U.S. each year – especially in the Washington, where budget battles continue.”

About three quarters of the U.S. aid to Israel is spent in the United States on defense-related purchases; the rest is spent in Israel; none goes for domestic or civilian projects. 

That aid package has a powerful political constituency at both ends of Pennsylvania Avenue in Washington.  President Obama’s budget out last week calls for maintaining the same level of aid as last year, and Congress is unlikely to seek any cuts. Don’t look for any serious discussion on Capitol Hill about cutting this politically sensitive spending even though there may be much debate on trimming the Pentagon budget. 

Naftali Bennett, head of the right wing Jewish Home party, said during the recent election campaign Israel is “much stronger, much wealthier” than it was 30 years ago and needs to free itself from U.S. assistance.  But he may have changed his mind now that he is in the government and the Minister for the Economy.  It’s an old political truism:  where you stand is often linked to where you sit.