Everyone in the United States pays taxes and most taxpayers have strongly held opinions on foreign aid. But there is a misconception about the amount of foreign aid the United States actually provides. In fact, in 2004, foreign aid (both economic and military, but not including Iraq war costs) was a scant 0.9 percent of the U.S. Federal Budget. Nevertheless, some constituents complain that foreign aid is a squandering of tax dollars which should be spent on Americans. Others appeal for increases to help the world’s poorest people, victims of disaster and disease, or to benefit women and children. Some would deny foreign aid to those who do, or don’t do, certain things.

While foreign aid has become a key component  of U.S. foreign policy, those elected to the House and Senate continue to favor appropriating monies that flow to their states and constituents. The members of the House and Senate Appropriations Committees, particularly the 15 Representatives and 17 Senators  on the Foreign Operations subcommittees, are the ones who act on the Administration’s budget request and shape the foreign aid bill that goes to the floor. Still, all Representatives and Senators have a role in influencing the appropriation process by means of non-binding resolutions, “Dear Colleague” letters, floor remarks, amendments from the floor and informal conversations.

Support for the foreign aid bill is strong among pro-Israel advocates. Constituents have let their elected officials know they want the U.S. to provide economic and military assistance to Israel and to vote yes on the foreign aid bill. It is a cliché among the Washington staff of development organizations, who seek funding for many countries and causes, that support for aid to Israel drives the train of foreign aid. So, there has been little opposition in Washington to the roughly 38 percent of total foreign aid that goes to the Middle East, 93 percent of which goes to Egypt and Israel. 

With the 2005 advent of President Bush’s active engagement, following the election of President Abbas and Israel’s decision to disengage from Gaza, appropriators are facing requests for supplemental foreign aid, over and above the “regular” amounts,  for both the Palestinians and Israel. With the disengagement plan in play, Israel is reportedly requesting a special aid package of a whopping $2 billion in some, as-yet unknown, combination of grants, loans, and loan guarantees.

The White House has new opportunities for using this aid to Israel as a foreign policy tool as it prepares a funding request for Congress. Both citizen and congressional supporters of Israeli-Palestinian peace will have to work hard to guarantee that the funds are used to support steps toward the two-state solution and peace.  

New Aid to New Leadership

The U.S. is the single largest contributor of assistance to the Palestinian people, a fact not widely known.  The U.S. has been giving an average of about $85 million per year in foreign aid to the Palestinians since the signing of the Oslo Accords in 1993. Most of the aid has been channeled through the U.S. Agency for International Development (USAID) to contractors and private voluntary organizations. (Outside of regular foreign aid, the U.S. has provided funds to the United Nations Relief and Work Agency (UNRWA) since 1950 and is also the largest donor to this U.N. program for Palestinian refugees.)

U.S. aid to the Palestinians has more restrictions than does any other aid program, including a ban on direct aid to the Palestinian Authority. The law does allow the President to waive that prohibition by certifying that it is in the national security interest of the U.S. to do so. Aid has been given to the Palestinian Authority (PA): $36 million in FY1994, $20 million in FY2003, $20 million in FY2004, and in May of this year the President announced he will provide $50 million in direct aid, which will be drawn from remaining FY2005 funds.

The President announced in his 2005 State of the Union Address that he would provide $350 million to the Palestinians, a substantial increase from previous years, to support Palestinian reforms and further his two-state vision. The battle for this aid began almost immediately, with the FY2005 Supplemental Funding Request becoming a playground for anti-Palestinian action. Many Members of Congress had a difficult time grasping the new opportunity for peace that had emerged and failed to adapt to the changing situation.  As Rep. Gary Ackerman (D-NY) explained when asked about efforts to condition this aid package, “If you want to ensure that there will not be a peace process, then you attach enough strings [to the aid package] that you strangle the process.” 

By the time the dust had cleared, the aid package to the Palestinians had been slapped with excessive restrictions and conditions that went far beyond the transparency and accountability measures present when Arafat was in charge, including language that a Presidential waiver not be used to give aid to the Palestinian Authority.

After Congressional manipulations that earmarked $52 million for Israel’s use and $5 million for an extra audit, the Palestinians will receive $143 million of the $200 million initially promised in the Supplemental, with every dollar of this assistance earmarked, by Congress, for specific programs. Additionally, the Administration raised the “regular” foreign aid to West Bank/Gaza to $150 million, up from $75 million.   

Outdated Zero Sum Game

Despite significant American-Jewish support for this new aid to the Palestinians, many Members of Congress were still under the impression, as M.J. Rosenberg of the Israel Policy Forum observed, “that humiliating Abbas and the Palestinians helps Israel. For them Israel and Palestine is a zero sum game: help one, hurt the other.  They could not be more wrong.” 

Fortunately, some Members of Congress understood the President’s wisdom in seizing the moment to bolster peace through additional aid to the Palestinians. Sen. Frist (R-TN), Sen. Dianne Feinstein (D-CA), Sen. Lamar Alexander (R-TN), Sen. Joseph Biden (D-DE), Rep. Lois Capps (D-CA) and Rep. Barney Frank (D-MA) are among those that have spoken in support of Palestinian aid. 

A recent World Bank report warns of “the potential disintegration of the Palestinian economy.” U.S. aid to the Palestinians can provide tangible economic help, such as building housing that reawakens hope of a better future with President Abbas at the helm of the Palestinian government. As Assistant Secretary of State David Welch recently testified in a House hearing, U.S. aid to the Palestinians “supports President Abbas,” “helps ensure Israel’s long-term security” and is a “very important component” of advancing the key U.S. policy goal of a two-state solution to the conflict.   

Carrot or Caviar?

The annual economic aid to Israel that is earmarked in the foreign operations bill, $240 million in the FY2006 budget, is given as a cash grant without conditions or accountability, other than the law that prohibits U.S. aid being spent in the occupied territories. The bulk of Israel’s annual foreign aid package is for Foreign Military Financing (FMF) which is intended to sell U.S. goods and services. About 25 percent of the $2.28 billion in FMF for Israel in FY2006 can be used for purchases within Israel.

Common sense would lead one to think that ending or cutting foreign aid to Israel would change its behavior. If the U.S. would just use the leverage it has, in providing an annual hefty foreign aid package, it is argued, then Israel would be compelled to stop settlement building and would end the occupation. Or, if the President would just threaten to cut the amount of the aid, surely Israel’s leaders would do what the President asks. The flaws in the logic lie in the “if” and the “why.”

First, the “if:” It is NOT going to happen; at least not in any public way by a Presidential statement or in legislation. Then, the “why” it is not going to happen. The political commitment to providing the “aid package” to Israel, which was designed to fortify the 1979 Egyptian-Israeli Camp David Peace Treaty, is entrenched. It is synonymous with supporting the existence of Israel. For a legislator, or an advocate, to call for cutting or ending aid to Israel as a punitive or pressure tactic, is considered tantamount to calling for the destruction of Israel and is seen as political suicide.             

This phenomenon is only partly explained as the result of decades of savvy lobbying by AIPAC (American Israel Public Affairs Committee), the powerful pro-Israel lobby in Washington, and Jewish activism in political campaigns. Many Americans, politicians as well as ordinary people, know of the historical plight of Jews and have internalized the pledge of “never again.” Calling for an end of aid to Israel is widely viewed as a threat to Israel’s survival, and therefore, morally wrong.  

Keep Your Eye on the Ball

To the contrary, most of those who call for cutting aid to Israel do so as a strategy to transform the conflict, making it possible for a viable Palestinian state to be created that would exist side-by-side Israel. But frustration is high. Presidents and peace activists have appealed to Israel for decades to stop building settlements on Palestinian land, only to watch infrastructure and housing spread out on confiscated land. During recent years, by building a separation barrier, Israel has strengthened its hold on some of the best of the West Bank land. 

Nevertheless, the actual goal — moving Israel toward peacemaking — must be kept in mind. Israel’s self-identity as an isolated and beleaguered state, having faced hostility since its founding, must be replaced by a confidence among Israelis and their defenders that peace is possible. With careful shaping of incentives and monitoring, the special aid request could foster a readiness in Israel to make the compromises necessary for negotiated agreements.  

A Friend in Deed 

There IS a growing awareness that if Israel does not end the occupation soon, the opportunity for a two-state solution will be lost, along with the recognition and security it could gain through a negotiated peace. Israel’s political scene has shifted steadily toward the right, with the settler movement and religious hard-liners now vehemently resisting P.M. Sharon’s withdrawal from Gaza. Much to the chagrin of Israel’s peace advocates, Israel’s political will to be a partner for peace seems to have weakened at a time when the readiness of the Palestinians has increased and the Bush Administration has taken leadership. Meanwhile, Israel’s government and settler movement have entrenched their hold on key areas of the West Bank.

The Administration has chastised Israel in remarkably strong terms. Secretary of State Rice reportedly said to Israeli Foreign Minister Silvan Shalom in June, “It is not possible to operate in the territories in a manner that will change the situation before discussions on final status…We cannot sanction creating a new reality on the ground by actions that continue today. I mean by this those activities in Jerusalem and its environs…”

By backing its words with actions, the Administration can persuade Israel’s leaders that its actions and policies need to be conducive to the establishment of a viable Palestinian state, which requires territorial contiguity on the West Bank and with East Jerusalem. The United States can, and should, require that all special aid given to Israel,  such as the anticipated request for costs related to the disengagement, be used in an effective and responsible manner that is consistent with the U.S. government’s policy goals.

The need for transparency in how Israel spends financial aid is revealed by an official Israeli inquiry on outposts and settlement expansion expenditures. The Sasson Report concluded that outposts have received “massive financing by the State of Israel, with no appropriate transparency.”  P.M. Sharon has promised to remove outposts, as required by the Road Map, yet the Ministry of Construction and Housing “pumped millions of dollars into the outposts through a system of winks and nods that shredded the rule of law,” writes Dror Etkes, director of Peace Now’s Settlement Watch project. The Israel newspaper Haaretz investigated settlement funding in 2003 and concluded: “One of the most closely guarded secrets in Israel is the amount of funding that is channeled to the settlements.”