United States Embassy
Israel
71 Hayarkon Street,
Tel Aviv, Israel
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U.S. Assistance to Israel:
1949-2004 Total
Military Assistance
$64.4 Billion
Economic Assistance
$35.6 Billion
Total Assistance
$100 Billion
U.S. Assistance to Israel: FY2004
MILITARY
Military Grants (FMF) - $2.16 billion
Cooperative Defense Programs - $136 million
Interest on FMF - $38 million (Estimated)
OSP Authority = 26% (est) of FMF = $565 million
Military Total: $2.33 Billion
ECONOMIC
Scheduled Loan Guarantees - $3 billion
Economic Grants (ESF) - $480 million
Immigration & Resettlement Assistance - $50 million
Educational & Exchange Programs - $1.6 million
Economic Total: $532 Million
U.S. Assistance to Israel: FY2003
MILITARY
Military Grants (FMF) - $2.1 billion
Emergency Wartime Supplemental (Iraq) - $1 billion
Cooperative Defense Programs - $450 million
Interest on FMF - $37.6 million
OSP Authority = 26.3% of total FMF = $823 million
Military Total: $3.59 Billion
ECONOMIC
Total Approved Loan Guarantees - $9 billion
Disbursed Loan Guarantees - $2.45 billion
Economic Grants (ESF) - $600 million
Immigration & Resettlement Assistance - $60 million
Educational & Exchange Programs - $1.6 million
Economic Total: $662 Million
U.S. Assistance to Israel: FY2003.The Iraq Supplemental
On April 16, 2003 the President signed the Emergency Wartime Supplemental Appropriations Act of 2003 (P.L. 108-11)
The Act provides Israel an exceptional:
$1 billion increase in FMF; and
$9 billion in loan guarantees.
U.S. Assistance to Israel: FY2003.2003 Loan Guarantee Provisions
According to the Act,
“Guarantees may be issued … only to support activities in the geographic areas which were subject to the administration of the GOI before June 5, 1967”
“The amount of the guarantees … shall be reduced by an amount equal to the amount extended … by the GOI … for activities which the President determines are inconsistent with the objectives and understandings reached between the United States and the GOI …”
U.S. Assistance to Israel: FY2003.2003 Loan Guarantee Advantages
The Loan Guarantee Agreement allows Israel to issue nine billion dollars in financial instruments covered by the full faith and credit of the U.S. Government.
As a result, Israel is able to obtain these instruments at much lower interest rates than would otherwise be possible.
This saves Israel millions of dollars in interest payments and is a concrete expression of U.S. support for the Israeli economy.
U.S. Assistance to Israel
HISTORY I
U.S. assistance to Israel began in 1949 with a $100 million Export-Import Bank Loan.
From 1949-65, U.S. aid averaged $63 million per year. 95% was economic development assistance and food aid.
A modest military loan program began in 1959
From 1966 through 1970, average annual aid per year increased to about $102 million. Military loans increased to 47% of the total.
U.S. Assistance to Israel
HISTORY II
From 1971 to the present, U.S. aid has averaged over $2 billion per year. 66% has been military assistance.
Congress first designated a specific amount of aid for Israel (an “earmark”) in 1971.
From a collection of various programs, in 1979 U.S. economic aid was mainly replaced by direct transfers for budgetary support.
Economic aid became all grant cash transfer in 1981, military aid became all grant in 1985.
U.S. Assistance to Israel
HISTORY III
In July, 1996 then-Israeli Prime Minister Netanyahu told a joint session of Congress: “In the next four years, we will begin the long-term process of gradually reducing the level of your generous economic assistance to Israel.”
In January 1998, the USG and the GOI negotiated a net $600 million reduction in the level of U.S. assistance over a period of ten years.
To achieve this goal, Congress has reduced the amount of ESF going to Israel by $120 million per year and increased FMF by $60 million per year beginning in FY1999.
U.S. Assistance to Israel: Highlights
MILITARY ASSISTANCE I
Military Grants (FMF) - $46.9 Billion from FY1949 to FY2004
Military Loans - $11.2 Billion from 1959 to 1984
Military Development Assistance (including Arrow, Lavi, Merkava, other programs) - $2.68 Billion up to 2004
Wye Agreement Funds - $1.2 Billion in 2000 (includes USACE base construction)
Surplus Military Equipment Withdrawn from Europe - $700 Million in 1990
U.S. Assistance to Israel: Highlights
MILITARY ASSISTANCE II
Interest on FMF due to Early Transfer - $660 Million to FY 2004
Excess Defense Articles (EDA) - $407.5 Million from 1990 to date
Counter-Terrorism Assistance - $150 Million from 1996 to Date
Non-Wye Military Construction - $70 Million to date
U.S. Assistance to Israel: Highlights
ECONOMIC
Economic Grants (ESF) - $29.8 Billion (1949 to 2004)
Economic & Ex-Im Loans -$2.7 Billion (1949 to 1986)
Immigration Assistance - $1.91 Billion (1949 to 2004
Gulf War Damages Grant - $650 Million (1991)
Cooperative Development Grants - $139 Million (1981 to 1996)
Grant for Desalination Plant - $20 Million in 1975
CCC Loan - $17.5 Million in 1982
ASHA (American Schools Hospitals Overseas) – $125 Million
U.S. Assistance to Israel: Highlights
ENDOWMENTS: U.S. Share
BARD Endowment & Income - $158 Million ‘79 to ‘03
BARD provides grants for U.S.-Israeli agricultural research.
BIRD Endowment - $140 Million from 1977 - 2003
BIRD provides financing to U.S. and Israeli companies for joint product development, principally in the high-tech sector.
BSF Endowment - $50 Million in 1972
BSF provides grants for U.S.-Israel basic research in science.
USISTC Capital - $15 Million from 1994 to 1997
USISTC supports business cooperation in the technology field through reducing barriers to trade and promoting joint ventures.
TRIDE Endowment - $700,000 from 1996 to 2003
TRIDE support three-way industrial development projects between the U.S., Jordan and Israel
Wye River Exchange Program - $10 Million
Israeli-Arab Scholarship Endowment ’91-’04 - $9 Million
U.S. Assistance to Israel: Highlights
SCIENCE AND TECHNOLOGY:
NON-ENDOWMENT PROGRAMS
MERC – 24 grants totaling $20 Million since 1999
MERC funds collaborative research between Israel and its Arab neighbors that contributes to development and quality of life issues
CDR – 350 grants totaling more than $54 Million since 1985
CDR funds collaborative research between Israel and developing country scientists to increase scientific capacity in the developing world and contribute to development
U.S. Assistance to Israel: Highlights
I: Special Financing Terms
Cash Flow Financing
Early Cash Transfer of ESF and FMF
FMS Loan Repayment Waiver
FMS Offsets & Advantageous FMS Funding Arrangements
FMS Grant Drawdown
FMS for R&D & In-Country Purchase (Offshore Procurement). Equals 26% of FMF
Waiver of Certain Provisions of Housing Loan Guarantees
U.S. Assistance to Israel: Highlights
Other Benefits and Funding
Iraq Wartime Supplemental 2003: $9 billion loan guarantees/$1 billion extraordinary FMF.
Housing Loan Guarantees - $9.226 billion authorized from 1993 to 1997, against which Israel drew $6.6 billion in non-USG loans, resulting in a $9.7 billion contingent liability to the USG through 1998.
Other loan guarantees - $3.8 billion contingent liability to USG through 1998.
War Reserve Stockpile - $485 million in equipment between WRS-I and WRS-US releasable by POTUS, plus an additional $45 million from each U.S. military department available by requisition in a crisis situation.
U.S. Defense Contractor Purchases in Israel for DoD contracts - $ 1 billion per year
Direct Commercial Contracts between DoD and Israeli firms
Military Data Exchange Agreements
Private US commercial loans to Israel - $1 billion annually
Israel Bonds Sales in US - $1.09 billion in 2001, $25 billion since 1991
Assistance to Palestinians, Egypt, and Jordan
PALESTINIANS
Total U.S. Assistance, 1994-2004: $1.27 Billion
Total U.S. Assistance, FY 2003: $173.906 Million
Total U.S. Assistance, FY2004 (Est): $251.548 Million
EGYPT
Total U.S. Assistance, 1948 - 2004: $60 Billion
Total U.S. Assistance, FY 2003: $2.22 Billion
(including Iraq Supplemental)
Total U. S. Assistance, FY 2004 (Est): 1.88 Billion
JORDAN
Total U.S. Assistance, FY1951 - 2004: $8.4 Billion
Total U.S. Assistance, FY 2003: $1.58 Billion
(including Iraq Supplemental)
Total U.S. Assistance, FY 2004(Est): $561.20 Million
U.S. Assistance to Israel
This document is prepared by the Economics Section of the United States Embassy in Israel. Data for the report are drawn from a large number of sources, primarily the Congressional Research Service report IB85066, “Israel: U.S. Foreign Assistance”
Questions about this report may be e-mailed to Clark Price, the Deputy Economic Counselor at the U.S. Embassy in Tel Aviv at: ac5@bezeqint.net.
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