Adonis Diaries

The USA is practically bankrupt, and yet Israel keeps receiving its multi-billion aids

Posted on: February 18, 2016

The USA is practically bankrupt, and yet Israel keeps receiving its multi-billion aids

U.S. Should Stop Subsidizing Bad Israeli Economic and start decrying Occupation Policies

America is practically bankrupt yet Israel remains a multi-billion dollar dependent. The U.S. can’t afford to continue subsidizing well-off nations, no matter how friendly.

And Israel, which spends heavily both to expand state regulation and occupy Palestinian lands, doesn’t need American support.

Doug Bandow published this Feb. 16, 2016 in Forbes

The Middle East is in flames, but Israel appears relatively secure. Argued Paul Scham of the University of Maryland’s Gildenhorn Institute for Israel Studies: “It may seem counterintuitive, or even downright strange, but Israel’s geopolitical position is probably stronger now than at any time in the country’s history.”

Andrew Bossone shared this link

US tax dollars at work

Nevertheless, there may be no more politically sacrosanct expenditure in Washington than the annual payment of $3.1 billion to Israel. That’s more than $350 to every Israeli man, woman, and child.

As of last year total U.S. aid came to $124.3 billion. There have been billions of dollars in loan guarantees as well. But few on Capitol Hill worry about the aid’s purpose or efficacy. Even many avowed fiscal conservatives want to appear to embrace Israel while seeking the Christian Zionist vote.

But America’s annual payment soon may run as high as $5 billion a year, with the extra dollars offered to pacify Benjamin Netanyahu, who attempted to block the nuclear accord with Iran.

President Barack Obama appears determined to make peace with the Israeli government, for which most of the Republican presidential contenders promised to do even more, irrespective of America’s interests.

Most of the aid goes to Israel’s military. However, money is fungible.

Since security is Israel’s first priority, that government would find the necessary resources even without U.S. support.

The latter allows Israel to shift scarce resources elsewhere. A few years ago Yarden Gazit of the Jerusalem Institute for Market Studies warned that “the Government of Israel’s reliance on the American taxpayer sets a negative example which acts to encourage a culture of dependence.”

One consequence is artificially inflating the size of the Israeli state. Gazit explained: “Without this aid, it stands to reason that the government would be forced to reduce the public sector in size, through defense budget cuts, restricting and increased efficiency in other frameworks. This would direct many more resources toward the private sector, which would be motivated to seek creative and growth-oriented solutions, involving personnel, financing, as well as land and other resources currently held by the government.”

Israel’s economic record is mixed.

Israel displays world-class entrepreneurial vigor in some areas but retains old-world collectivism in others. In 2013, the last year for which figures were available, Israel ranked 39th in the world for economic freedom. It did well in sound money, free trade, and credit market regulations.

It was middling with legal system and property rights. But it rated poorly in size of government, business regulation, and labor market regulation

To Israel’s credit, it has improved significantly over the years.

In 1980, for instance, Israel ranked just 99th in the world. Progress has been slower but still real in recent years. Nevertheless, JIMS has pointed out how government policies involving unnecessary regulatory barriers and high taxes continue to harm Israeli citizens, who in recent years have vigorously protested the high cost of living.

Unfortunately, like less prosperous Third World states, Israel faces less pressure to adopt economic reforms when foreign transfers mask policy failures. Indeed, foreign funds directly subsidize oversize government.

Even worse, U.S. cash effectively underwrites Israel’s occupation of the West Bank and attempt to colonize that area through settlements.

Had Israel seized empty land in the 1967 war keeping the territories would have been understandable. But Israel also conquered people. Subjecting them to almost a half century of rule without economic or political rights could not help but result in injustice and resentment.

The settlements greatly exacerbate this problem, creating a privileged class in the West Bank with preferred access to land, water, roads, and subsidies.

These special benefits extend “to virtually every aspect of life in the West Bank,” noted Human Rights Watch. Palestinians possess few rights vis-à-vis settlers, who strike their Arab neighbors with virtual impunity.

Settlers, a mix of religious who believe the land to be given by God and secular drawn by government subsidies, defend their presence as aiding Israel’s security. However, complained Israeli Justice Minister Tzipi Livni: “The settlements are not providers of security, they are consumers of it. Roads are paved with billions of our tax money under the premise of security—but in reality they serve a handful of homes.

Moreover, the settlers’ presence increases official repression of Palestinians—special roads and checkpoints are maintained for Israelis living in the West Bank, the security barrier encloses Palestinian lands to protect settlements, land and water are appropriated for Israeli colonists.

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February 2016

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