Aid to Israel isn’t aid to Israel. It is corporate welfare for U.S.-based military contractors.
Aid to Israel isn’t aid to Israel. It is corporate welfare for U.S.-based military contractors.
W ith Hamas rockets and Israeli reprisals thundering back into the headlines, President Joe Biden must face a tough question — or, rather, whoever it is who explains to President Biden what he thinks must face a tough question:
What to do about the money?
As rich people tend to do for obvious reasons, Americans will labor mightily to make a financial issue out of a nonfinancial one, and so the question of U.S. aid to Israel — a poorly understood and often misrepresented issue — returns periodically to prominence. Nicholas Kristof, writing in the New York Times, laments: “As American taxpayers, we don’t have much influence over Hamas, while we do have influence over Israel and we provide several billion dollars a year in military assistance to a rich country and thus subsidize bombings of Palestinians.”
Most people think of U.S. military aid to Israel as Washington doing Jerusalem a favor — the truth is almost exactly the opposite.
It is important to understand that there is really no U.S. military aid to Israel. Of course there is, on paper, just under $4 billion a year in military aid to Israel. Why provide aid to a country that is, as Kristof correctly notes, affluent? Because aid to Israel isn’t aid to Israel — it is corporate welfare for U.S.-based military contractors, which is where the money ends up. Joe Biden, of all people, should know this: He worked for the administration that set up the current system.
The Israeli government is contractually obliged to spend a certain percentage of U.S. military aid with U.S.-based firms; historically, about three-fourths of the money is encumbered that way. You can think of $1 in aid to Israel as 75 cents in support of Lockheed Martin (Israel is the first non-U.S. operator of the F-35 Joint Strike Fighter) and similar firms. During the presidency of Barack Obama, that aid was further conditioned. At the demand of National Security Adviser Susan Rice, the 2016 aid agreement established a timeline for phasing out the share (only 26.4 percent to begin with) of aid that could be converted from U.S. dollars to Israeli shekels and that thus could be used by the Israeli government for domestic procurement rather than to pay dollar-funded U.S. contracts. The same agreement also prohibited the Israelis from using aid funds to procure fuel, which generally is purchased from non-U.S. providers, making more money available to be spent on U.S.-sourced goods and services.
The reasoning behind this was a familiar one if you have listened to the speeches of Joe Biden: economic nationalism. As the Foundation for Defense of Democracies reports, the Obama administration insisted that “it is unacceptable for Israel to convert American dollar aid into shekels and then use those funds to develop state-of-the-art products that eventually compete with American products throughout the world.”
U.S. aid to Israel isn’t about saving Israeli lives — it is about creating U.S. jobs and fattening U.S. profit margins.
If you have followed Veronique de Rugy’s fascinating and urgent work on the Export-Import Bank, the underlying financial arrangements will be familiar. In addition to the direct aid, Washington provides Israeli military buyers with sweetheart financing, loan guarantees, and the like to keep the flow of cash moving — not to Israel, only through Israel, and thence back home to employers represented in the Senate by Elizabeth Warren, Tim Kaine, and Ben Cardin. As I have argued at length elsewhere, the U.S. government often appears to be a bank that sometimes acts like a state rather than a state that sometimes acts like a bank.
Suspending U.S. military aid to Israel would not slow down the Israeli military — it might even strengthen Israel’s military by giving it a broader range of real choices about how to arm and supply itself. Israel doesn’t need the money — it needs the relationship with Washington. And so it allows its national-security apparatus to be used as a conduit for old-fashioned American payola politics.
The questions facing the United States in our relationship with Israel are only incidentally financial. They are in the main questions of values and interests, which are what matter in international relations. And that puts President Biden in a tough spot, too: His party is home to a great many traditional, pro-Israel Democrats, and a commanding majority of Jewish voters supported him in 2020. Jewish Americans are not a homogeneous political bloc, but the Democratic Party at the moment goes out of its way to accommodate anti-Israel radicals such as Representative Alexandria Ocasio-Cortez and anti-Semites such as Representative Ilhan Omar and Representative Rashida Tlaib. Those present ultimately irreconcilable sets of values, which makes for a delicate coalition. Joe Biden, rolling through the world scene as stately and as relevant as a Studebaker, seems to believe he can finesse such questions as he pursues his own variation on Donald Trump’s nickel-and-dime diplomacy.
About that, he is mistaken.
Anti-Semitism is not simple bigotry or race-hatred. It is a political ideology, which is why the problems plaguing our Democrats also have plagued other left-wing parties around the world, notably U.K. Labour. In fact, in 2019 Representative Tlaib, Representative Omar, and the recently ousted Labour leader Jeremy Corbyn were grouped together by the Simon Wiesenthal Center as the world’s most significant anti-Semites in a 2019 report. A Democratic president cannot ignore this.
The ideology that heaps scorn and hatred on the Jewish state also heaps scorn and hatred on the United States, insisting that the United States and Israel are two local expressions of the same global phenomenon — and they are not wrong about that. The Left may give that phenomenon any number of damning names — capitalism, colonialism, imperialism, etc. — but the Noam Chomskys of the world are entirely correct to believe that the United States and Israel represent one possible way of being in the world while Hamas and Cuba and Iran and Venezuela represent a different way of being in the world. We know which side Representative Ocasio-Cortez is throwing in with.
What about President Biden?
The important question for the United States in this conflict is not the petty logrolling associated with foreign-aid payments amounting annually to approximately 30 hours of Social Security spending. With Israel on one side and Hamas on the other, the question for the United States is whether we still know how to take our own side in a fight.