Israel’s financial distress brought by soaring costs of petroleum and military requirements has been out lined in stark terms to President Carter with a request that despite America’s own economic and energy problems, he support additional assistance to the Middle East’s lone democratic nation.
In a detailed letter to the President, Rep Benjamin Rosenthal (D.NY), deputy whip at the Democratic Party in the House, asked Carter to give his “favorable consideration” to Israel’s request for $1.85 billion in military assistance and $1.6 billion in economic did for fiscal 1981, continuing the loan-grant ratios in both categories.
“In addition,” Rosenthal wrote, “I am asking for your support for conversion of the $2.2 billion loan approved following the (Egyptian-Israeli) peace treaty to 50 percent grant which is consistent with the formula for military assistance.” Rosenthal’s letter, a copy of which was obtained by the Jewish Telegraphic Agency, emphasized.
“I am not unaware of the enormous problems and pressures you face in shaping a budget to sent to Congress for fiscal year 1981. I do believe the increased assistance discussed in this letter is essential to maintaining the viability of the economy and defense of America’s best friend and most reliable ally in the Middle East. It is in the best interests of the United States and the cause of peace.”
Israel’s request for additional funding is for the U.S. fiscal year beginning next Oct. 1. The President will submit the federal budget for that year shortly after Congress returns Jan. 23 from its year-end recess. Legislation pending in Congress for the current fiscal year provides allocations for Israel of $1 billion in military aid and $750 million in economic aid, the same as in the past two years. Egypt, which is now receiving $750 million in economic aid, is understood to be in line for military assistance of about $3 billion in the coming fiscal year.
THE PEACE GAMBLE IS EXPENSIVE
As a result of its peace treaty with Egypt, Rosenthal added, Israel has “surrendered territorial and energy security to take a chance on peace. The gamble was taken willingly but it is expensive.” In this connection, he said, Israel’s turnover of the Sinai oilfields to Egypt and the loss of its major source of imported oil, Iran, results in the fact that Israel’s oil bill by 1981 will amount to nearly $2 billion annually, or a billion and a quarter more dollars than just three years ago. “This amount alone exceeds the $850 million in additional economic aid Israel is seeking for fiscal year 1981,” Rosenthal said.
“At current prices for defense items,” he continued, “the $1.5 billion Israel is requesting for next year has the same purchasing power as the $1 billion” provided by the U.S. in 1976.
“Since the level of military aid has been kept at $1 billion in fiscal years 1978, 1979 and 1980, the funds available to Israel have been insufficient to finance all the items already approved by the Defense Department. As a result of the rapidly rising cost of both equipment and the money to pay for it, Israel’s debt service to the United States in fiscal year 1981 will be $750 million or approximately the same as the economic aid presently provided by the United States.”
Continuing, Rosenthal noted that “the net aid flow to Israel would be zero if present aid levels are not increased. Israel already has the largest per capita debt in the world — $3260 as of Dec. 31, 1978. Its citizens are taxed at a rate of 66 percent of gross income. The recent dramatic jump in Israel’s outstanding debt, primarily as a result of the $2.2 billion U.S. loan authorized following the Israel-Egypt peace treaty, has damaged Israel’s ability to borrow from private markets. In a recent survey of credit ratings of 93 countries, Israel was ranked only 53rd.”
In addition to that $2.2 billion loan, the United States provided an $800 million grant to help finance the cost of redeploying Israeli forces from the Sinai to the Negev. “The most recent Israeli estimates indicate that the total costs will actually be close to $4 billion,” Rosenthal emphasized.
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The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
