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Wednesday, January 13, 2010

American aid to Israel in perspective

With American aid to Israel having been put on the table as a topic for conversation, David Hazony gives us some perspective on what that aid means and what it meant 25 years ago.
In 1985, the year Israel started receiving such high levels of American aid, U.S. taxpayers gave Israel about $3.4 billion in economic and military grants. That year, Israel’s GDP stood at about $24.1 billion in current dollars. American aid constituted about 14 percent of Israel’s GDP — an enormous amount of support for a country struggling with both a severe economic crisis and an ongoing war in Lebanon.

In 1996, the year Prime Minister Netanyahu addressed a joint session of Congress and declared his aim of ending Israel’s dependence on American aid, total grants came to $3.1 billion, while Israel’s GDP stood at $105 billion. U.S. aid was then only about 3 percent of Israel’s GDP.

In 2008, U.S. aid was down to about $2.4 billion, while Israel’s GDP was up to $199 billion. We’re talking about 1.2 percent of Israel’s GDP.

So whereas nobody would consider $2.4 billion a trivial amount of money, the economic significance of that aid has dropped dramatically, as far as Israelis are concerned. Israel’s “dependence” on American aid is not zero, but it’s heading there.

But what about American taxpayers? Here, too, we see a dramatic drop in economic significance as measured as a portion of the U.S. federal budget. In 1985, the $3.4 billion was out of an overall budget of some $947 billion — or 0.35 percent. In 2008, Israel received $2.4 billion out of a total budget of $2.99 trillion — which looks like 0.08 percent, or less than one one-thousandth. A similar drop is seen when comparing the aid against the overall GDP of the United States: from about 0.081 percent down to 0.016 percent. So while the Israelis feel the lift of American aid less than a tenth as much as they used to, Americans feel its bite less than a quarter of what they used to.


At 1:18 AM, Blogger NormanF said...

In fact, the US owes more money to Israel than the other way around. Its amusing to find a deadbeat America talking of imposing strings on loans on to Israel. Israel and the rest of the world could call in their markers. How would the US economy fare then?

Let's keep things in perspective. A lot has changed since the 1980s.


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