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What is America getting in return for its foreign aid?

By SUSAN TAYLOR MARTIN, Times Senior Correspondent

© St. Petersburg Times, published February 10, 2002

Every year, Israel and Egypt get a total of $5-billion in U.S. foreign aid, making them by far the largest recipients of American largesse.

Every year, Israel and Egypt get a total of $5-billion in U.S. foreign aid, making them by far the largest recipients of American largesse.

But what does the United States get in return?

To hear critics tell it, not much.

Israel, they charge, is using its U.S. aid -- at least indirectly -- to build settlements in occupied territories, destroy Palestinian homes and assassinate Palestinian leaders. The result has been to perpetuate a conflict often blamed for the anti-Americanism that led to the Sept. 11 terrorist attacks.

But the $2-billion that the United States annually pours into Egypt hasn't helped America much either, others claim.

Egypt's brand of Islamic militancy produced Osama bin Laden's closest adviser, Ayman Zawahiri, and the man thought to have been the lead hijacker, Mohamed Atta. Meanwhile, the Egyptian government has made only lukewarm denunciations of the U.S. attacks while the semi-official Egyptian press continues to foment hatred of the West.

Is it time to reconsider how much money the United States gives its two closest allies in the Middle East, or at least attach conditions that better serve American interests?

"I think aid to both countries should be reduced because it promotes a relationship that is difficult for the United States to manage," says Steven A. Cook, a research fellow at the Brookings Institution in Washington D.C.

Cook argues that the aid packages to Israel and Egypt have become "sacred cows" that are so big and laden with special interests that they leave the United States little room to maneuver.

"It ends up with the tail wagging the dog, so to speak," Cook says. "We're unable to make the kinds of demands that I think we should be able to make of our aid recipients because it's become so politicized."

Even those who criticize the massive amount of U.S. aid to to Israel acknowledge that the small Jewish nation is a special case.

Born in war in 1948, it remains surrounded by Arab nations that are icily cordial at best, openly hostile at worst. The United States' closest ally in the Middle East, Israel is also viewed as a bastion of freedom and democracy in a part of the world where both are in short supply.

As a result, Israel has long been the largest single recipient of U.S. military and economic aid -- about $3-billion this year.

"Those that want to see Israel take more risks for peace argue that U.S. security aid to Israel gives them a margin of comfort for concessions that could threaten (Israel's) security," says Jim Phillips, an expert on Middle East affairs at the Heritage Foundation in Washington.

Israel is barred from using U.S. aid in the West Bank and Gaza Strip because the United States doesn't want to create the impression it endorses Israeli occupation of those areas. But a recent report by the Congressional Research Service included allegations that Israel has used Apache helicopters and other U.S. military equipment to kill Palestinian leaders and attack Palestinian facilities. Over the past two decades, Congress has also heard testimony that Israel has transferred U.S. arms or technology to Iran, China and other countries -- all without U.S. permission.

Israel denies misusing American money or weaponry. But it is impossible to know for certain because the Israeli government is not required to account for what it does with the aid, the research service notes.

Moreover, American aid that does go for its intended purpose -- economic development, internal security and defense -- frees Israel to use millions of dollars of its own money for more controversial ends.

"Aid to Israel essentially provides budget relief to them, and that money is often poured into building settlements," says Cook of the Brookings Institution. "My view on this is that if you continue to build settlements in the West Bank and Gaza, Palestinians can only come to one conclusion -- that Israel is not necessarily interested in land for peace."

Because of its close ties to the United States and its perceived vulnerability, Israel also gets certain foreign aid perks.

"U.S. aid to Israel has some unique aspects, such as loans with repayment waived, or a pledge to provide Israel with economic assistance equal to the amount Israel owes the United States from previous loans," the congressional report says. "Israel also receives special benefits that may not be available to other countries . . such as receiving all its assistance in the first 30 days of the fiscal year rather than in three or four installments as other countries do."

Over the years, a few attempts have been made to use foreign aid as leverage when Israel was perceived to be getting too far out of line.

In 1982, the Reagan administration suspended shipments of cluster bombs after allegations Israel violated an agreement on their use during its invasion of Lebanon. (The ban is still in effect.)

In 1992, the Bush administration said it would grant $10-billion in loan guarantees to help relocate Soviet Jews only if Israel froze all settlement activity in Gaza and the West Bank. The amount eventually was reduced by $774-million -- what Israel spent on settlements from 1993 to 1996 -- but most of the guarantees were approved.

And in 2000, U.S. Rep. Sonny Callahan, chairman of a powerful House subcommittee, vowed to to block $250-million in aid unless Israel canceled its sale of a radar system to China. The deal, which Congress feared would give China an edge in any conflict with Taiwan, was later scrapped.

Callahan also helped engineer -- at the request of then-Prime Minister Benjamin Netanyahu -- a plan to reduce U.S. economic aid to Israel while increasing military aid.

"We discussed the fact that Israel was getting a great deal of economic support whereas the economy in Israel was better than in the United States," says Callahan, R-Alabama. Indeed, with a per capita income of $18,900, Israel's 6-million people enjoy a standard of living comparable to that in some Western European nations.

As a result of the negotiations, economic aid to Israel is being cut by 10 percent a year, while military aid increases by 5 percent annually. (Egyptian President Hosni Mubarak has proposed a similar plan for his country.)

Callahan says the boost in military assistance is justified. Egypt and Israel "are our prime allies in the Middle East and it is necessary they have the capability of 1) defending their own boundaries and 2) assisting us when we need them in that region," Callahan says.

By the latter measure, both countries have been good friends of the United States. Even though it was under attack by Iraqi missiles during the 1991 Persian Gulf War, Israel refrained from firing back in order not to upset America's fragile alliance with Arab nations. A decade earlier, Israel eradicated a global threat when it bombed a nuclear reactor under construction in Iraq.

America's close ties to Egypt have also paid off. Experience gained from years of joint military exercises helped improve coordination during the Gulf War. And after Sept. 11, Egypt provided the United States with valuable intelligence on the al-Qaida terrorist network and facilitated the transit of U.S. forces to Central Asia through the Suez Canal.

But it could have done more, says Cook of the Brookings Institution.

"We've invested $50-billion in Egypt since the 1970s and now when push comes to shove we don't get the kind of support we need," he says. "Because Egypt is the most influential and powerful Arab state, we need Mubarak and others to clearly denounce the attacks and they did not do that. They did not side with the U.S., unlike the Turks, for example, where there was no daylight between us and the Turks."

Cook notes that Egypt has also softened its position on Iraq and can no longer be counted on to support the United States in efforts to oust Saddam Hussein. Cairo and Baghdad have long been rivals for leadership of the Arab world, and Egypt fears that a liberated Iraq would usurp Egypt's current preeminence.

When then-President Anwar Sadat signed Egypt's historic 1979 peace treaty with Israel, "one of the things he said to us was that a moderate, stable Egypt would be a perfect launching point for the United States in event of crisis in the Gulf," Cook says. "All this money has been spent. If at crunch time, when the rubber hits the road, they're not with us, why are we investing this money?"

The huge amounts of foreign aid to Egypt are generally seen as a reward for being the first Arab nation to reach peace with Israel.

Since 1979, billions of U.S. dollars have been spent on roads, power plants, sewage systems and other improvements that have bettered the lives of Egypt's 70-million people. But Egypt's economy remains highly inefficient and too dependent on tourism, which has dropped alarmingly since Sept. 11.

"I think that the one thing we're not doing enough of in regard to Egypt is we're not encouraging them to adopt economic reforms that would result in greater economic growth," says Brett Schaefer, a fellow at the Heritage Foundation. "While poverty is not a root cause of terrorism, it certainly creates a conducive environment that makes people more susceptible to outlandish ideas."

Still, Schaefer says, the 1979 peace treaty -- and all the U.S. money flowing to Egypt and Israel since -- have had an undeniably positive effect.

"There is a legacy of Egypt recognizing Israel even though it's a frosty relationship fraught with problems. In that context, I think the United States is getting good value. Egypt, while it may be critical of Israel and far from being fast friends with Israel, is not the outright adversary some other countries are."

-- Susan Martin can be reached at susan@sptimes.com

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