Economist tallies swelling cost of Israel to US
By David R. Francis | Staff writer of The Christian Science Monitor
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.

Is U.S backing of Israel worth it?

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.

Editor's note: A previous version of this story incorrectly reported
the amount of housing loans guaranteed by the US.

See also: Editor's note regarding objectivity in this column.

The simple reality is that no great power has ever "won" in South Asia. Not the Brits–who were much smarter than the neo Cons–forget the IQ test B.S.
not the Russians
and not our neo Cons.

Internet: hmm i ma a little worried that they will censor the internet. Whatr pretext would they use? Say after a cyber attack from China or organised criminals.

What do u think, Ed?

Americans will lose in Afghanistan and Iraq. We will lose b/c we will tire of it.

It's already happening under the guise of protecting us from "hate speech." Canada has laws to protect groups from defamation. This allows them to prosecute Internet critics of Israel.

Weiss touched upon the fact that Matthews dances around the subject of the Lobby. This is true. Matthews is from Northeast Phila and he worked for Tip O'Neil. He knows ethnic politics from growing up in the big city and he witnessed it up close on the Hill. Matthews won't directly discuss the topic of the Lobby because he has a good gig and doesn't want to rock the boat. He may be an Irish boy from a rowhouse, but he's not stupid and he has survival skills.

As proof of his intellect and survival skills, Matthews was smart enough to join the Peace Corp. For those of you that do not know, Philadelphia's Edison High and Father Judge High (NE Phila) lost the most former students during the Vietnam war. While Matthews attended LaSalle College High (for the smarter or wealthier Catholics) and not Judge, he surely knew many Judge boys who shipped off to SE Asia.

You can look at it a few ways, Matthews was too smart to go to Vietnam or lacked the courage to go to Vietnam. Or maybe Matthews is too smart to discuss the Lobby or he does not have the courage to discuss the Lobby.

Either way, Matthews is a survivor.