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Focus on Issues Outlook for U.S. Aid to Israel

August 22, 1980
See Original Daily Bulletin From This Date

Burdened by a continuing defense program that eats up two-fifths of its budget and the enormously increased costs of energy, the government of Israel has formally presented to the United States a request for economic and military aid to totaling $2.9 billion for the U.S. fiscal year of 1982 beginning Oct. 1, 1981.

This request is for $700 million more than the appropriation being legislated for the year beginning next Oct. 1. The long lead time for presentation of requests is required to enable the U.S. legislative processes to consider all aid requests minutely.

The Israeli request was presented yesterday by Israeli Ambassador Ephraim Evron to Deputy Secretary of State Warren Christopher at the State Department. Evron was accompanied by Dan Halperin, the Israel Embassy’s Minister for Economic Affairs. The State Department, which guides the U.S. Agency for International. Development (AID), initiates U.S. assistance abroad.

It is considered improbable that the Israeli request for the fiscal year 1982 will be fully considered by the U.S. government until after the Presidential inauguration and the convening of the new Congress next January. The program for the fiscal year beginning next October is itself far from complete in both houses of Congress.


The $2.9 billion request, Israeli sources noted, is “realistic” in that it represents the difference between the expected outflow for Israel’s expenditures in the fiscal year 1982 and its income. Israel’s citizens are the highest taxed in the world and the defense budget of the Middle East’s lone democracy is also the highest. Although Israel and Egypt have a peace treaty, Israel still faces potential warfare on three fronts

Aid to Israel was $1.8 billion in the fiscal year 1980, the current year. The Congress now is considering slightly less than $2.2 billion for the fiscal year beginning Oct. I. This includes $1.4 billion in military aid and $785 million in economic supporting assistance — the highest total for any country. For Egypt, economic aid is set at $750 million and military aid at $550 million. Economic assistance for Egypt, however, is enhanced to about $1 billion when the Food for Peace Program, administered by the U.S. Department of Agriculture, is included.

While this legislation is incomplete, these totals, having both the usual bipartisan support in Congress and backed by the Carter Administration, are expected to prevail. The authorization measure, which sets the foreign aid policy, is in a Senate-House conference. The appropriation bill, which funds the suggested totals in the authorization legislation, has been approved by the House Appropriations Committee but its Senate counterpart has not yet taken it up. Matters other than funds for Egypt and Israel are slowing the legislative process.

Israeli sources note that 40 percent of Israel’s budget is for defense. It’s oil costs in 1978 — the year before the Alma oil fields were yielded to Egypt — was $700 million. For fiscal year 1981, the cost is put at more than $2.5 billion and even higher for 1982 in view of the expected increases in petroleum prices.

In 1979, the Alma oil fields supplied Israel with 22 percent of its petroleum needs. Had Israel kept the fields, its development of them would have made Israel self-sufficient in petroleum by 1983.

In preparing their budget, Israelis face a three-fold burden, Primary is defense. The cast to Israel of evacuating Sinai and establishing a new military infrastructure in south Israel as a result of the treaty with Egypt is about $5 billion over a three-year period. The U.S. has contributed a grant of $800 million for these purposes and a loan of $2.4 billion at a relatively high interest rate, leaving a gap of about $2 billion for Israel to meet.

A second burden is the loss of the Sinai oil fields and the increasing outlays for imported oil at world market prices. The third burden is the absence of oil imports from Iran which was a principal supplier before the Shah’s departure from Teheran.

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