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CRS: U.S. Foreign Aid to Israel

Author: Jeremy M. Sharp
April 25, 2007

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This report provides an overview of U.S. foreign assistance to Israel. It includes a review of past aid programs, data on annual assistance figures, and an analysis of current issues. The report will be updated annually to reflect developments over the previous year.

Israel is the largest cumulative recipient of U.S. foreign assistance since World War II. From 1976-2004, Israel was the largest annual recipient of U.S. foreign assistance, having recently been supplanted by Iraq. Since 1985, the United States has provided nearly $3 billion in grants annually to Israel.

Over the years, Israel has developed an advanced industrial economy, which, according to the World Bank, places it among the top 40 richest nations in terms of per capita income (between Greece and Cyprus respectively). With Israel becoming more economically self-sufficient, former Israeli Prime Minister Benjamin Netanyahu told a joint session of Congress in 1996 that Israel's need for economic aid would be reduced over time. In 1998, Israel proposed gradually eliminating the $1.2 billion economic aid and increasing the $1.8 billion in military aid by $60 million per year over a 10-year period beginning in the year 2000. Subsequent appropriations for Israel have included cuts of approximately $120 million in economic aid and increases of $60 million in military aid each fiscal year.

Strong congressional support for Israel has resulted in Israel's receiving benefits that may not be available to other countries. For example, Israel can use U.S. military assistance both for research and development in the United States and for military purchases from Israeli manufacturers. In addition, all U.S. foreign assistance earmarked for Israel is delivered in the first 30 days of the fiscal year. Most other recipients normally receive their aid in staggered installments. The United States gives all Economic Support Funds (ESF) directly to the government of Israel as a cash transfer grant rather than allocating funds for specific development projects.

The Administration has requested $2.4 billion in military assistance and no economic aid for Israel in fiscal year 2008. With continued conflict on Israel's borders, the 110th Congress may address issues concerning U.S. foreign assistance to Israel. According to various Israeli media sources, the Israeli government is deliberating over whether to seek an overall increase in U.S. aid to Israel from the Administration and Congress.

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