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Originally Processed With FOIA(s):
FOIA Number:
2009-0166-S
2009-0166-S
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin: Office of the President
Series:
Daily Files
Subseries:
OA/ID Number:
90618
Folder ID Number:
90618-001
Folder Title:
Loan Guarantee israel, 9/11-14/91
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Withdrawal/Redaction Sheet
(George Bush Library)
Doc. No. / Type
Subject/Title
Date
Restriction
Classification
01a. Talking Points Themes for Sept. 12 Meeting with Leaders on Loans (2 pp.)
n.d.
(b)(1)
01b. Talking Points Themes for Sept. 12 Meeting with Leaders on Loans [index
n.d.
(b)(1)
cards] (5 pp.)
Page 1 of 1
Collection:
Record Group:
Bush Presidential Records
Office:
Office of the President
Series:
Daily Files
Subseries:
WHORM Cat.:
File Location:
Loan Guarantee israel, 9/11-14/91
Pinksheet Number:
dw2259
OA/ID Number:
90618-001
Date Closed:
4/29/2013
FOIA/Sys Case #:
2009-0166-S
Re-review Case #:
P-2/P-5 Review Case #:
September 12, 1991
The Honorable George Bush
NATIONAL
President of the United States
The White House
JEWISH
Washington, D.C. 20500
COALITION
Dear Mr. President:
Honorary Chairman
Max M. Fisher
Throughout your distinguished career, you have spoken out with conviction and
National Chairmen
compassion on the issue of Soviet Jewry. Your public recognition of America's moral
Richard J. Fox
responsibility, combined with your vigorous actions, have helped to bring about this
George Klein
miraculous exodus of Jews from the Soviet Union to the freedom and safety of Israel.
Vice Chairmen
Daniel Abraham
Similarly, your unhesitating actions in support of Ethiopian Jews have made a major
Stuart Bernstein
Paul Borman
contribution to their escape to Israel. History, which remembers the inaction of world
Sam Fox
leaders who might have prevented the Holocaust, will record that, on your watch, two
Cheryl Halpem
entire Jewish communities fleeing oppression found freedom in their historic homeland.
Sam Kane
Jay Kislak
Robert N. Snyder
In this dramatic context, there is an urgent and pressing need to help Israel carry out the
Secretary/
daunting task of absorbing these new immigrants -- providing them with adequate
General Counsel
shelter, productive jobs, education for their children, as well as the dignity they deserve.
Jeffrey P. Altman
As you know, Israel does not ask the United States to fund this enormous effort, but
Treasurer
instead seeks U.S. assistance in guaranteeing the loans that will enable her to complete
Herbert M. Linsenberg
the process.
Executive Committee
Gary Abramson
These loan guarantees represent the final chapter in America's efforts to save Soviet and
Stanford Adelstein
Ted Arison
Ethiopian Jewry, the ultimate act in a long-term United States commitment to see these
Rabbi Milton Balkany
people free and safe. Israel is facing the monumental task of absorbing these new
Lily Blankstein
The Hon. Marshall Breger
immigrants. The need for these loan guarantees is great, and immediate.
Elizabeth Dubin
Michael David Epstein
Mr. President, this is a humanitarian issue of the highest priority -- assisting people who
Melvyn Estrin
Arthur H. Friedman, Esq.
have left family, careers, and everything they know to find new hope, freedom and
Leonard Greenberg
opportunity in Israel. As the leader of the the free world, committed to helping all people
Hart Hasten
Philip E. Hixon
achieve freedom, this commitment deserves your attention. Indeed, in all our
Norma G. Kline
conversations with you and the Secretary of State, you have both made clear your
Bemard Marden
Robert R. Mazer
understanding of the overriding moral responsibility the United States has assumed. We
Dr. Ruth R. Miller
are grateful for your commitment to provide these people with the opportunity and
Herman Sarkowsky
wherewithal to start anew in Israel.
Diane Sembler
Albert H. Small
Amold Thaler
Frankly, we are now worried that other issues are intruding into consideration of how to
Randolph L. White
realize this humanitarian goal. In the process, it appears as if the United States is
Executive Director
wavering in its commitment. Out of our own deep concern for the completion of this
Matthew Brooks
historic effort, we urge you to proceed with the provision of the loan guarantees. It is
crucial that this humanitarian effort be undertaken independently of other issues, and
without delay, for the sake of the thousands of Soviet and Ethiopian Jews who need our
help.
Sincerely,
Max 2 Fisher
the
Max M. Fisher
Richard J. Fox
George Klein
(202)547-7701
Honorary Chairman
Co-Chairman
Co-Chairman
Fax:544-2434
415 SECOND STREET, N.E.
SUITE 100
WASHINGTON, DC 20002
From the desk of
George Bush
P
9/14
Lite all relate
to Isracl Loan Grauter
Document Originally
Bush Library Photocopy
Attached to
George Bush Handwriting
Following Page
<ORIG> FBIS
<TOR> 910911032825
<TEXT>FBIS 032
UNCLAS 5L
ISRAEL: SHARON CALLS U.S. BEHAVIOR 'DANGER SIGNAL' (TAKE 1 OF 2)
TA1109065291 JERUSALEM QOL YISRA'EL IN HEBREW 0505 GMT 11 SEP 91
[TELEPHONE INTERVIEW WITH CONSTRUCTION AND HOUSING MINISTER
ARI'EL SHARON BY HAYIM ZISSOWITZ AND YARON ENOSH LIVE]
[TEXT] [ZISSOWITZ] GOOD MORNING, CONSTRUCTION AND HOUSING
MINISTER SHARON.
[SHARON] GOOD MORNING TO YOU.
[ZISSOWITZ] OUR CORRESPONDENT YARON ENOSH WILL ALSO BE SPEAKING
WITH YOU.
[ENOSH] AS WE JUST HEARD, WASHINGTON IS UNOFFICIALLY LINKING THE
RECENT INCREASE IN SETTLEMENTS AND THE DEFERRAL OF THE LOAN
GUARANTEES BY AT LEAST SEVERAL MONTHS. HAS THE SETTLEMENT DRIVE IN
JUDAEA, SAMARIA, AND THE GAZA STRIP REALLY BEEN STEPPED UP, AND IF
SO WHY NOW?
[SHARON] THE CONSTRUCTION DRIVE THROUGHOUT THE ENTIRE COUNTRY IS
BEING CARRIED OUT AT A RAPID PACE. THIS IS HAPPENING IN THE
GALILEE, THE NEGEV, AROUND JERUSALEM, AND EVERYWHERE IN THE COUNTRY.
THERE IS NOTHING EXCEPTIONAL ABOUT THE RATE OF CONSTRUCTION IN
JUDAEA, SAMARIA, AND THE GAZA STRIP IN COMPARISON TO OTHER
LOCATIONS. CONSTRUCTION IS BEING CARRIED OUT EVERYWHERE. ONE MUST
UNDERSTAND WHAT IS HAPPENING AND WHAT THE ARABS ARE DOING. THEY
HAVE MADE THEIR PARTICIPATION IN THE PEACE CONFERENCE CONDITIONAL ON
THE DEFERRAL OF THE LOAN GUARANTEES AND THE U.S. ADMINISTRATION HAS
CAPITULATED TO THE ARAB DEMANDS. THE ARABS ARE NOT DOING THIS
BECAUSE OF THE SETTLEMENTS BUT BECAUSE THEY OPPOSE ALIYAH.
THEREFORE, CONSCIOUSLY OR UNCONSCIOUSLY, AN AWFUL PRECEDENT HAS BEEN
CREATED IN WHICH THE U.S. ADMINISTRATION HAS TAKEN THE SIDE OF THOSE
ARABS CALLING FOR RAISING OBSTACLES TO ALIYAH WITH THE AIM OF
STOPPING IMMIGRATION. BY THE WAY, THIS IS SOMETHING THAT THE ARABS
HAVE BEEN TRYING TO DO FOR OVER 100 YEARS. THIS IS SOMETHING THAT
CANNOT BE COUNTENANCED, AND EVERY JEW IN ISRAEL AND IN THE DIASPORA
AND ALL FRIENDS OF ISRAEL MUST FIGHT THIS WITHOUT COMPROMISE. THE
ISRAELI GOVERNMENT, OF COURSE, MUST INITIATE THIS BATTLE. I AM
SORRY TO SAY THAT PRESIDENT BUSH MAY HAVE NOT UNDERSTOOD WHAT KIND
OF ARAB TRAP HE WAS FALLING INTO.
[ENOSH] MINISTER SHARON, ISRAEL AGREED IN THE PAST TO LIMIT THE
DIVERSION OF IMMIGRANTS TO THE TERRITORIES. WHY CANNOT SOME SORT OF
COMPROMISE ALSO BE FOUND NOW REGARDING THE BUDGET ALLOCATED TO
DEVELOPMENT IN THE TERRITORIES, so AS NOT TO AFFECT THE U.S. LOAN
GUARANTEES?
[SHARON] ISRAEL DECLARED THAT IT WAS NOT DIVERTING OR DIRECTING
IMMIGRANTS TO JUDAEA, SAMARIA, AND THE GAZA STRIP. THE NUMBER OF
IMMIGRANTS WHO SETTLED THERE OF THEIR OWN VOLITION DID NOT EXCEED 1
PERCENT OF THE 355,00 IMMIGRANTS WHO HAVE ARRIVED OVER THE LAST TWO
YEARS. ISRAEL DID THIS so AS NOT TO HARM THE CHANCES OF ALIYAH FROM
THE SOVIET UNION, OUT OF FEAR THAT THERE COULD BE DIFFICULTIES IN
GETTING THE JEWS OUT OF THERE. MOREOVER, I WOULD LIKE TO STRESS
THAT ISRAEL IS NOT USING U.S. AID TO BUILD IN JUDAEA, SAMARIA, AND
THE GAZA STRIP. THIS IS A HUMANITARIAN ACT OF HELPING JEWS AND IN
MANY CASES OF SAVING THEIR LIVES. THERE CAN BE NO COMPROMISE ON
THIS ISSUE. THIS IS ALSO THE BEST THING THE UNITED STATES CAN DO.
THE U. . S. ADMINISTRATION'S BEHAVIOR REGARDING THE LOAN GUARANTEES
BESPEAKS THE NATURE OF THE SCHEDULED PEACE CONFERENCE AND THE
ATMOSPHERE UNDER WHICH IT WILL BE CONVENED. THAT IN ITSELF
CONSTITUTES A DANGER SIGNAL.
(MORE)
11 SEP 0728Z DEP
NNNN
<ORIG> FBIS
<TOR> 910911033258
<TEXT>FBIS 033
UNCLAS 5L
ISRAEL: SHARON CALLS U.S. BEHAVIOR 'DANGER SIGNAL' (TAKE 2 OF 2--
032SEP11)
11/A DANGER SIGNAL
TA1109071391
[TEXT] [ZISSOWITZ] IF THE CONGRESS INDEED ACCEDES TO
PRESIDENT BUSH'S REQUEST TO DEFER THE LOAN GUARANTEES BY SEVERAL
MONTHS, WILL YOU RECOMMEND TO THE CABINET THAT ISRAEL NOT
PARTICIPATE IN THE PEACE CONFERENCE?
[SHARON] WE ALL WANT PEACE. NO ONE DESIRES PEACE LESS OR MORE
THAN ANYONE ELSE. I PROPOSED TO THE CABINET SEVERAL TIMES, NOT ON
THIS MATTER BUT ON NO LESS SIGNIFICANT ISSUES, THAT ISRAEL WAIT AND
REEXAMINE ITS POSITION IN LIGHT OF THE CHANGING CONDITIONS AND
OBVIOUSLY WHAT IS HAPPENING WITH THE LOAN GUARANTEES ONLY
STRENGTHENS MY OPINION AND THEN COME OUT WITH A PROPOSAL THAT CAN
REALLY BRING PEACE. I AM SORRY TO SAY THAT THE INTERNATIONAL
CONFERENCE WE ARE BEING DRAGGED INTO, WHICH STANDS CONTRARY TO ALL
OUR PAST POSITIONS, CANNOT BRING PEACE. IT WILL ONLY LEAD TO
ADDITIONAL TENSION AND MORE PRESSURE ON ISRAEL. A CONCESSION ISRAEL
MAKES TODAY WILL ONLY LEAD TO ANOTHER. ONE CONCESSION WILL LEAD TO
ANOTHER. ALMOST NOTHING IS LEFT OF THE POINTS WE INSISTED ON AND
UPON WHICH WE REACHED AGREEMENT WITH THE UNITED STATES. NOTHING IS
LEFT OF THEM.
[ENOSH] IF THAT IS THE CASE, THEN YOU AT LEAST FEEL THAT YOUR
POSITION HAS BEEN VALIDATED. WHAT EFFECT, HOWEVER, WILL THE
DEFERRAL OF THE LOAN GUARANTEES HAVE ON THE PROCESS OF IMMIGRANT
ABSORPTION IN ISRAEL? THE LOAN GUARANTEES WERE INCLUDED IN THE
STATE BUDGET. WHAT THEN WILL HAPPEN IN THE COMING MONTHS WHEN, AT
LEAST AS THINGS APPEAR NOW, THE GUARANTEES ARE NOT BE APPROVED?
[SHARON] OBVIOUSLY THIS WOULD BE A VERY SERIOUS MATTER. I THINK
THAT THE SEVERITY OF THIS MATTER IS NOT ONLY IN THE DIFFICULTIES
THAT WILL BE CAUSED ISRAEL, THE SEVERITY IS IN THE CAPITULATION TO
THE ARABS, WHICH WILL UNDOUBTEDLY RESULT IN INCREASED AND MORE
EXTREME ARAB DEMANDS PRIOR TO THE NEGOTIATIONS AND DURING THE TALKS
THEMSELVES. IF ONE CAN GET A COUNTRY LIKE THE UNITED STATES AND THE
ADMINISTRATION OF ISRAEL'S GREATEST FRIEND IN THE WORLD TO HARM A
HUMANITARIAN ENTERPRISE AIMED AT SAVING JEWS, THEN ONE CAN
UNDOUBTEDLY MAKE EVEN GREATER INROADS ON OTHER ISSUES. ESPECIALLY
SINCE THIS AN ENTERPRISE THAT SHOULD HAVE BEEN THE DIRECT
CONTINUATION OF THE LONGSTANDING U.S. EFFORTS TO OPEN THE GATES OF
THE SOVIET UNION. OF COURSE, THIS WILL MAKE THINGS HARDER FOR
ISRAEL; IT ALSO SERVES AS A HINT OF WHAT AWAITS US IN THE FUTURE.
THIS ALSO CAUSES PRACTICAL DIFFICULTIES, BUT I DO NOT THINK THAT WE
WILL NOT BE ABLE TO CONTINUE ABSORBING IMMIGRANTS. I AM NOT
DISMISSING THE SIGNIFICANCE OF THIS MATTER, THE ISSUE OF THE LOAN
GUARANTEES IS OF TREMENDOUS IMPORTANCE; HOWEVER, ISRAEL CAN AND WILL
GO ON. PERHAPS EACH ONE OF US WILL HAVE TO CARRY A SLIGHTLY GREATER
BURDEN. LET US BE TRUTHFUL: NOT EVEN ONE OF US HAS FELT THE
ARRIVAL OF 355, 000 JEWS IN TWO YEARS. WE ARE STILL LEADING OUR
NORMAL LIVES, AND IF WE WILL HAVE TO DO MORE WE WILL HAVE NO CHOICE
BUT TO DO MORE. WE CAN ALSO APPEAL TO INTERNATIONAL JEWRY TO MAKE A
GREATER EFFORT. ISRAEL IS NOT ALONE.
[ZISSOWITZ]
THANK YOU, MINISTER SHARON.
(ENDALL)
11 SEP 0733Z DEP
NNNN
THEMES FOR SEPT. 12 MEETING WITH LEADERS ON LOANS
Thanks for coming in at such short notice.
As you know from my recent letter, we are on the brink of
what could be a historic breakthrough in the Middle East.
For the first time since Camp David, direct peace talks
between Israel and the Arabs is a real possibility.
It is also my view and that of Jim Baker that we will not be
able to settle the remaining outstanding issues and convene
the conference if the Congress chooses this moment to debate
the question of U.S. loans to finance Israeli immigrant
absorption.
There is no way of having such a debate without all sorts of
controversial issues about the Occupied Territories coming
out of the woodwork--issues so controversial that we will
either lose the Israelis, the Arabs, or both as negotiating
partners.
It was for this reason that I asked Congress to defer
considering the loan guarantees for 120 days, at which point
I believe we will be in a much improved position to address
this.
I was prepared to give you and your colleagues time to think
this over and to allow Jim Baker one more meeting with Prime
Minister Shamir.
But it has become apparent to us that Israel's supporters on
the Hill are taking advantage of this time to line up
support for providing the guarantees now and present us in
the Administration with a fait accompli.
I want to be as clear as I can: I am not prepared to sit
back and watch this happen.
I am also concerned that the impression is gaining hold that
we are reneging on a deal to support loan guarantees now.
This is not true; what was agreed was that Israel would hold
off asking for them until'now. And don't forget that we
authorized $650 million in emergency aid for Israel at the
time.
Similarly, some are spreading the word that I am prepared
now to trade postponing this in exchange for automatic
support when the issue would come up again in January.
Again, this is not so.
What I am asking is simply to defer this matter without
prejudice, one way or the other. Toward this end, we have
put forward a package of 6 points designed to be as fair as
2
possible. But this is not an opening gambit in a
negotiation.
As I said, I am sorry to see that our good-faith effort to
give Congress time to consider the wisdom of deferring this
program is being taken advantage of. As a result, I feel I
am left with no choice but to bring this issue before the
American people, which I intend touda later today.
start
3
I am confident that when I explain just what we are asking
for and why, they will support me and make this support
clear to their representatives in the Congress. I will
emphasize that this is not about support for immigration,
much less about support for Israel. Rather, it is all
about
support for peace, and this is something the American people
will understand.
I believe too they will understand and support the
President's need for the freedom to conduct sensitive
diplomacy without having the rug pulled out from under him.
This is not a partisan issue, but an issue of principle and
policy--and one for which I am prepared to do all that I can
to prevail.
BUSH LIBRARY PHOTOCOPY - GEORGE BUSH HANDWRITING
The Administration will guarantee a vehicle for action on
loan guarantees at the end of the 120-day deferral period.
The Administration will commit to seek no further delay at
the end of 120 days no matter where the peace process is at
that time.
The Administration will restate support for the principle
of absorption aid to Israel.
The Administration will commit to handle "scoring" by OMB
in most reasonable possible way consistent with legal
requirements.
The Administration will mount an international effort after
January to solicit support from other countries for
absorption aid.
If there is cost to Israel associated with deferral, the
Administration will agree that such cost be offset in the
ultimate package.
CARD 1 OF 5
THEMES FOR SEPT. 12 MEETING WITH LEADERS ON LOANS
THANKS FOR COMING IN AT SUCH SHORT NOTICE.
AS YOU KNOW FROM MY RECENT LETTER, WE ARE ON
THE BRINK OF WHAT COULD BE A HISTORIC
BREAKTHROUGH IN THE MIDDLE EAST. FOR THE
FIRST TIME SINCE CAMP DAVID, DIRECT PEACE
TALKS BETWEEN ISRAEL AND THE ARABS IS A REAL
POSSIBILITY.
IT IS ALSO MY VIEW AND THAT OF JIM BAKER THAT
WE WILL NOT BE ABLE TO SETTLE THE REMAINING
OUTSTANDING ISSUES AND CONVENE THE CONFERENCE
IF THE CONGRESS CHOOSES THIS MOMENT TO DEBATE
THE QUESTION OF U. S. LOANS TO FINANCE ISRAELI
IMMIGRANT ABSORPTION.
al
p.y
5 bill
CARD 2 OF 5
THERE IS NO WAY OF HAVING SUCH A DEBATE
WITHOUT ALL SORTS OF CONTROVERSIAL ISSUES
ABOUT THE OCCUPIED TERRITORIES COMING OUT OF
THE WOODWORK--ISSUES SO CONTROVERSIAL THAT WE
WILL EITHER LOSE THE ISRAELIS, THE ARABS, OR
BOTH AS NEGOTIATING PARTNERS.
IT WAS FOR THIS REASON THAT I ASKED CONGRESS
TO DEFER CONSIDERING THE LOAN GUARANTEES FOR
120 DAYS, AT WHICH POINT I BELIEVE WE WILL BE
IN A MUCH IMPROVED POSITION TO ADDRESS THIS.
I WAS PREPARED TO GIVE YOU AND YOUR COLLEAGUES
TIME TO THINK THIS OVER AND TO ALLOW JIM BAKER
ONE MORE MEETING WITH PRIME MINISTER SHAMIR.
BUT IT HAS BECOME APPARENT TO US THAT ISRAEL'S
SUPPORTERS ON THE HILL ARE TAKING ADVANTAGE OF
THIS TIME TO LINE UP SUPPORT FOR PROVIDING THE
GUARANTEES NOW AND PRESENT US IN THE
ADMINISTRATION WITH A FAIT ACCOMPLI.
BUSH LIBRARY PHOTOCOPY - GEORGE BUSH HANDWRITING
CARD 3 OF 5
I WANT TO BE AS CLEAR AS I CAN: I AM NOT
PREPARED TO SIT BACK AND WATCH THIS HAPPEN.
I AM ALSO CONCERNED THAT THE IMPRESSION IS
GAINING HOLD THAT WE ARE RENEGING ON A DEAL TO
SUPPORT LOAN GUARANTEES NOW. THIS IS NOT
TRUE; WHAT WAS AGREED WAS THAT ISRAEL WOULD
HOLD OFF ASKING FOR THEM UNTIL NOW. AND DON'T
FORGET THAT WE AUTHORIZED $650 MILLION IN
EMERGENCY AID FOR ISRAEL AT THE TIME.
SIMILARLY, SOME ARE SPREADING THE WORD THAT I
AM PREPARED NOW TO TRADE POSTPONING THIS IN
EXCHANGE FOR AUTOMATIC SUPPORT WHEN THE ISSUE
WOULD COME UP AGAIN IN JANUARY. AGAIN, THIS
IS NOT SO.
WHAT I AM ASKING IS SIMPLY TO DEFER THIS
MATTER WITHOUT PREJUDICE, ONE WAY OR THE
OTHER. TOWARD THIS END, WE HAVE PUT FORWARD A
PACKAGE OF 6 POINTS DESIGNED TO BE AS FAIR AS
CARD 4 OF 5
POSSIBLE. BUT THIS IS NOT AN OPENING GAMBIT
IN A NEGOTIATION.
AS I SAID, I AM SORRY TO SEE THAT OUR
GOOD-FAITH EFFORT TO GIVE CONGRESS TIME TO
CONSIDER THE WISDOM OF DEFERRING THIS PROGRAM
IS BEING TAKEN ADVANTAGE OF . AS A RESULT, I
FEEL I AM LEFT WITH NO CHOICE BUT TO BRING
THIS ISSUE BEFORE THE AMERICAN PEOPLE, WHICH I
INTEND TO DO LATER TODAY.
I AM CONFIDENT THAT WHEN I EXPLAIN JUST WHAT
WE ARE ASKING FOR AND WHY, THEY WILL SUPPORT
ME AND MAKE THIS SUPPORT CLEAR TO THEIR
REPRESENTATIVES IN THE CONGRESS. I WILL
EMPHASIZE THAT THIS IS NOT ABOUT SUPPORT FOR
IMMIGRATION, MUCH LESS ABOUT SUPPORT FOR
ISRAEL. RATHER, IT IS ALL ABOUT SUPPORT FOR
PEACE, AND THIS IS SOMETHING THE AMERICAN
PEOPLE WILL UNDERSTAND.
BUSH LIBRARY PHOTOCOPY - GEORGE BUSH HANDWRITING
CARD 5 OF 5
I BELIEVE TOO THEY WILL UNDERSTAND AND SUPPORT
THE PRESIDENT'S NEED FOR THE FREEDOM TO
CONDUCT SENSITIVE DIPLOMACY WITHOUT HAVING THE
RUG PULLED OUT FROM UNDER HIM. THIS IS NOT A
PARTISAN ISSUE, BUT AN ISSUE OF PRINCIPLE AND
POLICY--AND ONE FOR WHICH I AM PREPARED TO DO
ALL THAT I CAN TO PREVAIL.
Order Code IB85066
Israel: U.S. Foreign Assistance Facts
Updated September 4, 1991
by
Clyde R. Mark
Foreign Affairs and National Defense Division
900
02:21
16/21/60
CONTENTS
SUMMARY
ISSUE DEFINITION
BACKGROUND AND ANALYSIS
Country Data
Program Background
Key Issues
Should Israel's aid be cut to allow the United States to provide
assistance to nearly emergent democracies in Eastern Europe or
Central America?
Should the United States provide supplemental aid to Israel to resettle
Soviet Jews?
Should the United States use aid to extract political or foreign
policy concessions from Israel?
Should the United States attach economic conditions on aid
to Israel?
Does special treatment granted to Israel set precedents for
other countries?
Are the charges that Israel has misused U.S. aid valid?
Congressional Action
FY1987
FY1988
FY1989
FY1990
FY1991
For further information on related issues, see: Israeli-American Relations, Issue Brief
82008.
200
02:21
16/21/60
IB85066
09-04-91
Israel: U.S. Foreign Assistance Facts
SUMMARY
Israel is not economically self-sufficient, and relies upon foreign assistance and
borrowing to maintain its economy. For the past five years, the United States has
provided $3 billion in grants annually to Israel. Since 1976, Israel has been the largest
annual recipient of U.S. foreign assistance, and is the largest cumulative recipient. In
addition to U.S. assistance, it is estimated that Israel receives about $1 billion annually
through philanthropy, an equal amount through short- and long-term commercial loans,
and about $500 million or more in Israel Bonds proceeds.
Should the United States set conditions on its aid to Israel to extract political or
economic concessions? Does the special treatment granted to Israel set precedents for
other U.S. recipients? Are the charges that Israel has misused U.S. aid valid, and if so,
what should the United States do about it? Should the United States increase aid to
Israel to help resettle Jews emigrating from the Soviet Union?
The United States provided $1.2 billion in Economic Support Fund grants, $1.8
billion in Foreign Military Sales grants, $45 million in refugee resettlement grants,
$400 million in housing loan guarantees, $700 million in surplus weapons withdrawn
from Europe, $650 million in supplemental emergency ESF, and $7.5 million in
cooperative development grants for Israel for FY1991.
According to Israeli press reports, Israel seeks $10 billion in housing loan
guarantees over 5 years to settle Soviet Jews in Israel.
800
TE:ET
16/21/60
IB85066
09-04-91
ISSUE DEFINITION
For most Members of Congress, the issue is not if Israel should receive U.S. foreign
assistance, but under what conditions Israel should receive the aid. Should the United
States attach conditions to its foreign aid to get Israel to cooperate with the peace
process or to stop building settlements in the occupied territories? Should the United
States increase aid to Israel for settling Soviet, Ethiopian, and other Jewish refugees?
Should Israel continue to receive preferential treatment?
BACKGROUND AND ANALYSIS
Country Data
Country data were taken from the following sources: Agency for International
Development, A.L.D. Congressional Presentation FY1987; Central Intelligence Agency,
The World Factbook 1985; U.S. Dept. of Commerce, Foreign Economic Trends, August
1985; and the Central Bureau of Statistics of Israel.
Population ('90): 4.777 million (CBS)
Population growth rate('89): 1.8%; ('90): 3.0 (FET)
GNP: ('88) $40.7 billion; ('89) $42.7 billion (FET)
Per capita GNP ('89): $9,460.4 (FET)
Annual per capita GNP growth rate/long term ('65-'86): 2.6%
Annual GNP growth rate/short term: ('88) 0.7%; ('89) 2.8% (FET)
Annual inflation rate/long term ('70-'82): 52.3%
Annual inflation rate/short term: '82-132%, '83-191%, '84-445%,
'85-183%, '86-19.7%, '87-16.1%, '88-16.4%, '89-20.7%
Unemployment rate ('84): 5.9%, ('85): 6.7%, ('86):7.4%, ('87): 6.1%,
('88): 6.4%, ('89): 8.9%, ('90): 9.3% (FET)
Avg. life expectancy ('89): 76.7 yrs. (A.I.D.)
International debt ('89): $23.664 billion) (FET)
Debt service payments as a % of exports ('89): 41.6%
Avg. per capita growth rate of agricultural production ('74-'83):
0.0%
Proportion of the labor force in agriculture ('82): 5.6%, ('87): 5.2% (CBS)
Major crops: Wheat, citrus fruit
Merchandise exports ('89): $10.335 billion (FET)
Merchandise imports ('89): $12.737 billion (FET)
Program Background
Since 1976, Israel has been the largest annual recipient of U.S. aid and is the
largest recipient of cumulative U.S. assistance: From 1949 through 1965, U.S. aid to
Israel averaged about $63 million per year, over 95% of which was economic
development assistance and food aid. A modest military loan program began in 1959.
CRS-2
600
TE:CT
16/21/60
IB85066
09-04-91
From 1966 through 1970, average aid per year increased to about $102 million, but
military loans increased to about 47% of the total. From 1971 to the present, U.S. aid
to Israel has averaged over $2 billion per year, two-thirds of which has been military
assistance. Congress first designated a specific amount of aid for Israel ("earmark") in
1971. Also in 1971, economic assistance changed from specific programs, such as
agricultural development, to the Commodity Import Program (CIP) for purchase of U.S.
goods. CIP ended in 1979, replaced by largely unconditional direct transfers for
budgetary support. The 1974 emergency aid for Israel, following the 1973 war, included
the first military grant aid. Economic aid became all grant cash transfer in 1981, and
military aid became all grant in 1985.
The FY1991 U.S. aid of $3.0 billion in grants was made available to Israel in
October 1990; $1.2 billion in Economic Support Funds (ESF) grants ($200 million of
which may be spent for military purposes despite laws to the contrary), and $1.8 billion
in Foreign Military Sales (FMS) grants (of which $150 million may be spent in the
United States for research and development (R&D) for advanced aircraft and $475
million may be spent in Israel for defense procurement). U.S. aid to Israel is made
available in lump sum in October to allow Israel to invest the funds in interest-
producing U.S. Government securities. Israel also received $700 million in defense
articles to be withdrawn from Europe, an increase of $100 million (up to $200 million)
in the military stockpile in Israel, $650 million in emergency ESF grants, a $400 million
loan guarantee for housing for Soviet refugees, a grant of $7.5 million for its foreign
assistance program, a $45 million grant for refugee resettlement, and shares a $7
million program with Egypt for cooperative development programs to promote the
Egyptian-Israeli peace treaty.
Beginning in the mid-1970s, Israel could no longer meet its balance of payments
and government deficits with imported capital (gifts from overseas Jews, West German
reparations, U.S. aid) and began to rely more on borrowed capital. Growing debt
servicing costs, mounting government social services expenditures, perennial high
defense spending levels, and a stagnant domestic economy combined with worldwide
inflation and declining foreign markets for Israeli goods pushed the Israeli economy into
a near crisis situation. The "unity" government, which took office in September 1984,
instituted a series of "preliminary steps" intended to resolve some of the economic
problems and "emergency" measures in July 1985, to cut government subsidies, freeze
wages and prices, raise taxes, and other measures. Inflation was cut from the high of
445% in 1984 to an annual level of 20% for 1986 and 1987. Unemployment settled
down to 5.5% for the second quarter of 1987, after a high of 7.8% for the same period
in 1985. By 1990, unemployment had climbed over 9%, and inflation remained in the
20% per year range. Israel still runs government deficits and balance of trade and
payments deficits, although the gaps have been reduced.
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