![[CRS Issue Brief
for Congress]](crs_ib.gif)
For further information on related issues, see CRS Issue Brief 82008, Israeli-U.S. Relations.
In the U.S. climate of budget cuts, many are debating possible reductions in U.S. aid to Israel. Israeli Prime Minister Netanyahu told a joint session of Congress on July 11, 1996, that Israel would reduce its need for U.S. aid over the next four years.
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 for previous loans. Israel also receives special benefits that may not be available to other countries, such as the use of U.S. military assistance for research and development in the United States, the use of U.S. military assistance for military purchases in Israel, or receiving all its assistance in the first 30 days of the fiscal year rather than in 3 or 4 installments as other countries do.
For FY1996, (P.L. 104-107) the United States provided Israel $1.2 billion in Economic Support Fund grants, $1.8 billion in Foreign Military Sales grants, $80 million in refugee settlement grants, $2 billion in loan guarantees for refugee settlement (Title VI, P.L. 102-391, October 6, 1992), $10 million in cooperative development grants for Israel's foreign aid program, and one-half of the $7 million regional cooperation assistance shared with Egypt. Similar amounts will be provided for FY1997.
On March 14, 1996, President Clinton pledged an additional $100 million in anti- terrorism funds for Israel ($50 million of which was provided in the Omnibus Appropriations bill, P.L. 104-134), and on 28 April 1996, the President offered $200 million for deployment of the Israeli-built Arrow missile and $50 million for a laser anti-missile weapon.
On March 14, 1996, President Clinton offered $100 million in special assistance to help Israel fight terrorism. On March 14, the Senate passed by voice vote an amendment to H.R. 3019, the Omnibus Appropriations bill, to provide $50 million for Israel in FY1996 (P.L. 104-134, April 26, 1996). The remaining $50 million for anti-terrorism would be provided in FY1997. On April 28, 1996, President Clinton announced that the United States would provide an additional $200 million for deployment in Israel of the Arrow anti-missile missile, and an estimated $50 million for development of a laser anti- missile weapon.
H.R. 3540, the FY1997 foreign operations appropriations bill, as passed by the House did not contain earmarked funds for Israel, but stated in report language (H.Rept. 104-600, May 29, 1996) that the U.S. Congress expected the aid levels for Israel to remain at the $3 billion level. The Senate amendment earmarked $1.2 billion in economic, $1.8 billion in military, and $80 million in Soviet Jew settlement funds for Israel. The House-Senate conference on H.R. 3540 began on September 17, 1996. The foreign operations appropriation was included in H.R. 3610, the omnibus appropriations bill for FY1997, with $1.2 billion in economic, $1.8 billion in military, and $80 million in immigrant settlement funds. The House passed the conference report (H.Rept. 104-863 Star Print) on September 28 by a vote of 370-37, with one present, and the Senate passed the conference report by voice vote on September 30, 1996. H.R. 3610 was signed into law on September 30, 1996 (P.L. 104-208).
Since 1976, Israel has been the largest annual recipient of U.S. aid and is the largest recipient of cumulative U.S. assistance since World War II. From 1949 through 1965, U.S. aid to Israel averaged about $63 million per year, over 95% of which was economic development assistance and food aid. A modest military loan program began in 1959. From 1966 through 1970, average aid per year increased to about $102 million, but military loans increased to about 47% of the total. From 1971 to the present, U.S. aid to Israel has averaged over $2 billion per year, two-thirds of which has been military assistance. Congress first designated a specific amount of aid for Israel (an "earmark") in 1971. Also in 1971, economic assistance changed from specific programs, such as agricultural development, to the Commodity Import Program (CIP) for purchase of U.S. goods. CIP ended in 1979, replaced by largely unconditional direct transfers for budgetary support. The 1974 emergency aid for Israel, following the 1973 war, included the first military grant aid. Economic aid became all grant cash transfer in 1981, and military aid became all grant in 1985.
Beginning in the mid-1970s, Israel could no longer meet its balance of payments and government deficits with imported capital (gifts from overseas Jews, West German reparations, U.S. aid) and began to rely more on borrowed capital. Growing debt servicing costs, mounting government social services expenditures, perennial high defense spending levels, and a stagnant domestic economy combined with worldwide inflation and declining foreign markets for Israeli goods pushed the Israeli economy into a near crisis situation. The "unity" government, which took office in September 1984, instituted a series of "preliminary steps" intended to resolve some of the economic problems and "emergency" measures in July 1985, to cut government subsidies, freeze wages and prices, raise taxes, and other measures. Inflation was cut from the high of 445% in 1984 to an annual level of 20% for 1986 and 1987. Unemployment settled down to 5.5% for the second quarter of 1987, after a high of 7.8% for the same period in 1985. But the influx of Soviet Jews beginning in 1989 pushed unemployment to 9% by 1990 and to 11% by 1992, and left inflation in the 20% per year range. Israel still runs government deficits and balance of trade and payments deficits, although the gaps have been reduced. In 1994, unemployment dropped to the 9% range and inflation was down to 15%.
In late 1990, the press reported that Israel would request $10 billion in loan guarantees from the United States. Under the proposal, Israel would borrow $10 billion from U.S. commercial establishments, and the United States Government would guarantee the loans against default. Israel needed the funds to finance housing, jobs, and infrastructure for an anticipated 1 million Soviet Jewish immigrants expected to arrive in Israel between 1991 and 1995. During the April 1991 negotiations over Israel's request for emergency funds for Desert Storm damages, Israel agreed to postpone its guaranteed loan request until September 1991. In September, President Bush asked Congress to delay consideration of the Israeli request until January 1992, because the President feared that the loan request would jeopardize Secretary of State Baker's negotiations for a peace conference. Reluctantly, Congress agreed to delay consideration of the Israeli request.
When Congress returned in January 1992, Secretary of State Baker said the Administration would support the Israeli request only if Israel agreed to freeze all settlement activity in the occupied territories. In a series of negotiations among the Administration, the Congress, and Israel, several compromises were offered; reduce the U.S. loan guarantees by an amount equal to the Israeli expenditures on settlements in the occupied territories, reduce the annual amount of the loan guarantees, allow Israel to complete housing projects underway in the territories but ban new projects, and others, but none of the proposals were acceptable to all the parties. With the stalemate, it appeared that Israel's loan guarantee request was postponed until consideration of the FY1993 foreign aid legislation.
Following the June 1992 Israeli elections, in which Yitzhaq Rabin and his Labor party won control over the Israeli Knesset, relations between the United States and Israel improved. President Bush announced in August that he would propose approving the loan guarantees. Congress attached the loan guarantee authorization to the foreign operations appropriation bill that passed on October 5, 1992 (Title VI, P.L. 102-391, signed into law on October 6, 1992). The United States approved the first $2 billion traunch in December 1992, and Israel issued the first $1 billion in bonds in March 1993 and the second $1 billion in September 1993. On September 30, 1993, the President notified Congress, according to Section 226(d) of the Foreign Assistance Act, that the $2 billion in loan guarantees for FY1994 would be reduced by $437 million, the amount Israel spent on Jewish settlements in the occupied territories in FY1993. On September 30, 1994, the President notified Congress that the $2 billion in loan guarantees for FY1995 would be reduced by $216.8 million, an amount equal to the amount Israel spent on Jewish settlements in the occupied territories. The President notified Congress in September 1995, that the amount for FY1996 would be reduced by $60 million, and notified Congress in September 1996, that the amount for FY 1997 also would be reduced by $60 million. The $10 billion ($2 billion each year) authorized for Israel for FY1993-FY1996, has been reduced by $774 million because of settlement activity. Of the $9.226 billion available to Israel from FY1993-FY1997, Israel has drawn loans worth about $6.6 billion.
These loan guarantees are in addition to $600 million in housing loan guarantees provided for Israel.
P.L. 101-302, the supplemental appropriation for FY1990, included $400 million in housing loan guarantees and $5 million in additional refugee settlement funds for Israel to help Israel settle Soviet and Ethiopian Jewish immigrants. As is true of all U.S. aid to Israel, the housing loan guarantee and the refugee resettlement grants cannot be used by Israel in the occupied territories because the United States does not want to foster the appearance of endorsing Israel's annexation of the territories without negotiations. Israeli Foreign Minister David Levy stated in an October 2, 1990, letter to Secretary of State James Baker that Israel would not use the housing loan guarantees in the occupied territories (which means that Israel would not use the funds in east Jerusalem). Some Israelis claim that Israel should use the U.S.-backed funds in east Jerusalem, which they say is part of Israel. Title VI of P.L. 102-391 (H.R. 5368), which authorizes $10 billion in loan guarantees for Israel, states that the funds may not be used in the occupied territories.
It has been suggested that the United States should provide aid to Israel only if Israel takes actions or meets conditions in keeping with U.S. policies. For example, as mentioned above in Aid for Soviet and Ethiopian Jewish Refugees, the United States might withhold assistance unless Israel stopped establishing settlements in the occupied territories. Other examples of conditions that might be applied to U.S. aid include Israel reversing its annexation of the Golan Heights and east Jerusalem, Israel agreeing to withdraw from the occupied territories, or Israel accepting the land- for-peace formula. Israelis and their supporters oppose any conditions attached to U.S. aid. The United States did withhold aid to Israel in 1953, during the Eisenhower Administration, until Israel stopped a water diversion project in a U.N. demilitarized zone along the Israeli-Syrian boundary, but between Presidents Eisenhower and Bush, as far as is known no Administration applied conditions to U.S. aid to Israel. Secretary of State Baker told a congressional hearing on February 24, 1992, that the Administration would not approve Israel's loan guarantee request until Israel froze settlement activity.
In addition to political conditions, others have suggested that the United States attach economic conditions to Israel's aid as a way of forcing Israel to implement needed economic reforms. Examples of economic conditions might include faster privatization of Israeli government owned business enterprises, cutting subsidies for housing in the occupied territories, or cutting the civil service. Opponents of attaching economic conditions suggest that Israeli officials are capable of making the changes needed to restore the economy, and that any such outside interference is a violation of Israeli sovereignty. Proponents of conditions suggest that Israel should demonstrate its capability to implement austerity measures before aid is given to Israel.
Of the more than $70 billion in aid the United States has provided Israel through FY1996, about $55 billion has been grants and $15 billion has been loans. In 1987, Congress added the Foreign Military Sales Debt Reform section to the foreign aid appropriations bill (P.L. 100-202), which allowed countries to refinance existing military debts carrying interest rates over 10%. At the time the bill passed in 1987, Israel owed the U.S. Government about $10 billion (having paid off the other $5 billion), $6 billion of which was military loans bearing interest rates over 10%. In 1988 and 1989, Israel refinanced about $5.5 billion in military loans by borrowing money from U.S. commercial institutions at interest rates below 10%, and paying off the U.S. Government. As provided in P.L. 100-202, the U.S. Government guaranteed up to 90% of the commercial loans. As of December 31, 1994, Israel owed the U.S. Government $3.426 billion in direct economic and military loans, and the U.S. Government has a contingent liability (guaranteed loans) for another $9.854 billion (that includes the loan guarantees for settling Soviet Jews in Israel).
The United States has not cancelled any of Israel's debts to the U.S. Government, but the U.S. Government has waived repayment of aid to Israel that originally was categorized as loans. Following the 1973 war, President Nixon asked Congress for emergency aid for Israel, including loans for which repayment would be waived. Israel preferred that the aid be in the form of loans, rather than grants, to avoid having a U.S. military contingent in Israel to oversee a grant program. Since 1974, some or all of U.S. military aid to Israel has been in the form of loans for which repayment is waived. Technically, the assistance is called loans, but as a practical matter, the military aid is grant. From FY1974 through FY1992, Israel has received $21 billion in waived loans. (Egypt also receives some of its U.S. military assistance in the form of loans with repayment waived. In 1990, the United States canceled $6.7 billion in past military debts that Egypt owed to the United States.)
The so-called Cranston Amendment, named after its Senate sponsor, was added to the foreign aid legislation in 1984 (Section 534, P.L. 98-473), and has been repeated each year since in the annual aid appropriation bill: most recently in Section 517 of H.R. 3540, in conference beginning on September 17, 1996. The amendment states that it is "the policy and the intention" of the United States to provide Israel with economic assistance "not less than" the amount Israel owes the United States in annual debt service payments (principal and interest). For the current year, Israel received $1.2 billion in ESF, and owed the U.S. Government about $1 billion in debt service. The Cranston amendment is a statement of U.S. policy and intent, and may not be binding. Contingent liabilities -- guaranteed loans, such as housing guarantees or the requested $10 billion for immigrant settlement -- apparently are not included under the Cranston amendment because the debts are not owed to the U.S. Government.
The United States stipulates that U.S. aid funds cannot be used in the occupied territories. Over the years, some have suggested that Israel may be using U.S. assistance to establish Jewish settlements in the occupied territories. Israel denies that it uses U.S. aid funds for settlements in the occupied territories. Because U.S. economic aid is given to Israel as direct government-to-government budgetary support without any specific project accounting, and money is fungible, there is no way to tell how Israel uses U.S. aid. Israel provides an annual letter to the U.S. Agency for International Development stating that the economic funds are used to service Israel's debt to the United States (approximately $1 billion per year).
Also, the United States stipulates that U.S. military equipment provided through the FMS program can be used only for internal security or defensive purposes, and that U.S. weapons and equipment cannot be transferred to a third country without U.S. approval. (See Sections 3 and 4 of the Arms Export Control Act, P.L. 90-629, as amended.) In 1978, 1979, and 1981, the executive branch notified Congress that Israel "may have violated" U.S.-Israeli agreements by using U.S. weapons for non-defensive purposes, and in 1982, the United States suspended shipments of so-called cluster bombs after allegations that Israel violated an agreement on the use of the bombs during the Israeli invasion of Lebanon. In the 1978, 1979, and 1981 instances, the Administrations took no further action. The cluster bomb ban remains in effect. Israel maintains that the weapons were used for defensive purposes.
In 1982 testimony before Congress, executive branch officials said Israel transferred U.S. arms to Iran and the "South Lebanon Army" without U.S. permission, and similar charges emerged in 1992 concerning Israeli transfers of U.S. technology or equipment to China, South Africa, Chile, Ethiopia, and other countries. A U.S. Defense Department team went to Israel in late March 1992, to investigate the alleged transfer of Patriot missile technology to China, but announced on April 2 that it found no evidence of an unauthorized transfer. The State Department Inspector-General released a report on April 2, 1992, that suggested that Israel had transferred other U.S. arms technology without U.S. permission.
Since 1986, the United States has provided Israel with more than $500 million in grants for research and development of the Arrow anti-missile missile. During Prime Minister Rabin's November 1994 visit to the White House, President Clinton said the United States would continue funding the Arrow. Press reports suggest that the United States will provide an additional $180 million through the deployment phase scheduled for completion in 1999. Some people call the Arrow funds "foreign aid" although Arrow was conceived as a joint research and development project in which the United States and Israel would share technology. U.S. funding for Arrow is authorized and appropriated through the defense budget. The U.S. Army says it will not procure the Arrow for U.S. use. Israel has invested $150 million in the Arrow project.
On April 28, 1996, President Clinton told a Washington audience that the United States would provide Israel with an additional $200 million for deployment of the Arrow in Israel, and funding (later estimated at $50 million) for development of a laser anti- missile weapon.
As pointed out in the June 24, 1983, General Accounting Office (GAO) report, U.S. Assistance to the State of Israel (GAO/ID-83-51), Israel receives favorable treatment and special benefits that may not be available to other countries or that may establish precedents for other U.S. aid recipients. Israel's supporters justify the unusual treatment accorded to Israel because of the special relationship between the United States and Israel and because of Israel's unique economic and political status. The GAO list of benefits includes:
-- Cash flow financing: Israel is allowed to set aside FMS funds for current year payments only, rather than set aside the full amount needed to meet the full cost of multi-year purchases. GAO believes that cash flow financing creates a commitment to furnish aid in future years at a level sufficient to meet the future payments. Egypt and Turkey now use cash flow financing.
-- FMS loan repayment waiver: (See Loans with Repayment Waived section above)
-- ESF cash transfer: The United States gives all ESF funds directly to the Government of Israel rather than under a specific program. There is no accounting of how the funds are used. (Israel does send an annual letter describing Israeli payments to the United States for debt servicing.) A number of other nations receive part of their ESF as cash transfers, but not under such flexible conditions.
-- FMS offsets: Israel receives offsets on FMS purchases (contractors agree to offset some of the cost by buying components or materials from Israel). Although offsets are a common practice in commercial contracts (countries dealing directly with U.S. firms), GAO said offsets on FMS sales were "unusual" because FMS is intended to sell U.S. goods and services.
-- Early transfers: In 1982, Israel asked that the ESF funds be transferred in one lump sum early in the fiscal year rather than in four quarterly installments, as is the usual practice with other countries. The United States pays more in interest for the money it borrows to make lump sum payments. In March 1985, an A.I.D. official estimated that it cost the United States between $50 million and $60 million to borrow funds for the early, lump-sum payment. In addition, the U.S. Government pays Israel interest on the ESF funds invested in U.S. Treasury notes, according to A.I.D. officials. It has been reported that Israel earned about $86 million in U.S. Treasury note interest in 1991.
-- FMS drawdown: Israel was permitted to draw down the grant (waived) portion of its FMS credits before the loan portion, thus delaying paying interest on the loans. Usually, loans and grants are drawn down at an equal rate.
Another GAO report, Security Assistance: Reporting of Program Contents Changes, GAO/NSIAD-90-115 of May 1990, pointed out Israel's unique FMS funding arrangements. Other countries primarily deal with DOD for purchases from U.S. companies for U.S. military items, but Israel deals directly with U.S. companies for 99% of its military purchases in the United States. Other countries have a $100,000 minimum purchase amount per contract, but Israel is allowed to purchase military items for less than $100,000. According to the GAO report, Israel processed over 15,000 orders for less than $50,000 in 1989, with no DOD review of the purchases as would have been the case with other countries' purchases. Other countries have the U.S. Government disburse funds to companies directly, but the Israeli Purchasing Mission in New York pays the companies and is reimbursed by the U.S. Treasury.
Apart from the precedents cited by GAO, there are other unique features of the Israel aid program.
-- FMS for R&D: Israel asked for and received permission for a "one-time-only" use of $107 million in FY1977 FMS funds to be spent in Israel to develop the Merkava tank (prototype completed 1975, Merkava added to Israeli arsenal 1979). Israel asked for a similar waiver to develop the Lavi ground-attack aircraft. In November 1983, Congress added an amendment to the FY1984 Continuing Appropriation (P.L. 98-151) that allowed Israel to spend $300 million of FMS funds in the United States and $250 million of FMS in Israel to develop the Lavi. Between 1983 and 1988, Congress earmarked a total of $1.8 billion (through FY1987) for the Lavi. GAO reported in January 1987 that the United States provided $1.3 billion of $1.5 billion Lavi development costs between 1980 and 1986. On August 30 1987, the Israeli cabinet voted to cancel the Lavi project, but asked the United States for $450 million to pay for canceled contracts. The State Department agreed to raise the FMS earmark for procurement in Israel from $300 million to $400 million to pay Lavi cancellation costs. The earmark for the $150 million for U.S. R&D continues.
-- FMS for in-country purchase: Israel has requested that part of the FMS funds be transferred to Israel for the Lavi aircraft, canceled on August 30, 1987, be continued for other Israeli defense purchases in Israel. Israel received $400 million of the $1.8 billion FMS for use in Israel in each fiscal year 1988 through 1990, and $475 million in each fiscal year since FY1991.
-- The foreign assistance appropriation bill signed on November 5, 1990, provides for Israel to receive the FMS aid in a lump sum during the first month of the fiscal year.
-- The appropriation bill of November 5, 1990, also provided Israel with grant military equipment, valued at $700 million, to be withdrawn from Western Europe.
-- The $400 million housing loan guarantee provided in P.L. 101-302 of May 25, 1990, waived the $25 million per country ceiling, waived the administrative fee, and waived the provision limiting the housing to poor people.
Authorization. The foreign assistance bill, H.R. 2508, was introduced on June 3, 1991, was reported out of committee on June 4, 1991 (H.Rept. 102-96), and was passed by the House on June 20, 1991, by a vote of 274-138. For Israel, the bill provided $1.2 billion in ESF grants for FY1992 and $1.2 billion in ESF grants for FY1993, $1.8 billion in FMF grants for FY1992 (of which $150 million may be spent in the United States for research and development and $475 million may be spent in Israel for military procurement) and $2 billion in FMF grants for FY1993, a $300 million increase for military stockpiles in Israel for FY1992 and $300 million increase in military stockpiles in Israel for FY1993, $7.5 million for the Cooperative Development Program for FY1992 and $7.5 million for Cooperative Development Program for FY1993 (of which $5 million is for the Israeli foreign aid program and $2.5 million is for cooperative research projects). H.R. 2508 passed the House on June 20, 1991, by a vote of 274-138, and passed the Senate on July 26 in lieu of S. 1435, by a vote of 74- 18. The conference committee reported the bill on September 25 (H.Rept. 102-225). The Senate agreed to the conference report on October 8, by a vote of 61-38, but the House defeated the conference report on October 30 by a vote of 159-262.
Appropriation. The House passed the foreign assistance appropriations bill on June 24, 1991, by a vote of 301 to 102 (H.R. 2621, introduced on June 12, 1991, and reported (H.Rept. 102-108) on June 12, 1991). H.R. 2621 includes $1.8 billion in FMF grants ($150 million of which may be used in the U.S. for research and development and $475 million of which may be used in Israel for defense procurement), $1.2 billion in ESF grants, $80 million in grants for settling refugees in Israel, $7.5 million in U.S.- Israel cooperative development funds for Israel's foreign aid program, and $7 million for the Egyptian-Israeli regional cooperation program. The bill died in the Foreign Operations Subcommittee of the Senate Appropriations Committee while waiting for White House-Congress-Israel compromises on the $10 billion loan guarantee issue.
Meanwhile, the House reported (H.Rept. 102-266) a Continuing Resolution, H.J.Res. 360, on October 23 that funded Israel's foreign assistance at FY1991 levels ($1.2 billion in ESF and $1.8 billion in FMF) through March 31, 1992 (which means Israel received only one-half the amounts). The House passed H.J.Res. 360 on October 24, by a vote of 288-126, and the Senate passed H.J.Res. 360 on October 24 by voice vote. The President signed the bill on October 28, 1991 (P.L. 102-145). Another Continuing Resolution, H.J.Res. 456, providing foreign assistance funds at FY1991 levels for the period from April 1 through September 30, 1992, passed the House by a vote of 275 to 131 on March 31, and passed the Senate by a vote of 84 to 16 on April 1. The President signed the bill on April 1, 1992 (P.L. 102-266).
Appropriation. H.R. 5368, passed by the House on June 25, 1992, by a vote of 297 to 124, included for Israel: $1.8 billion in Foreign Military Financing, of which $150 million may be used in the United States for research and development and $475 million may be used in Israel for military procurement; $1.2 billion in Economic Support Funds; $80 million in Migration and Refugee Funds for settling East European, Soviet, and other Jews in Israel; $10 million for cooperative projects (Israel's foreign aid program), of which $5 million is for the cooperative development projects, $2.5 million is for cooperative development research, and $2.5 million is for U.S. and Israeli projects in Eastern Europe, the Baltic countries, and the former Soviet Union; and $7 million for the Regional Cooperation Program, of which one-half is for Israel and one-half for Egypt. On September 18, 1992, the Senate Appropriations Committee added Title VI to the bill, which included the authorization for the $10 billion in loan guarantees for Israel. The Committee reported the bill on September 23, 1992, and the Senate passed the bill on October 1 by a vote of 87 to 12. The House passed the conference report on October 5 by a vote of 312 to 105 and the Senate passed the conference report the same day by voice vote. The President signed the bill into law, P.L. 102-391, on October 6, 1992.
Following his March 15, 1993 conversation with Israeli Prime Minister Rabin at the White House, President Clinton said the United States was committed to maintaining the current levels of aid for Israel, to maintaining Israel's qualitative advantage in weaponry, and was prepared to compensate Israel for the risks it may take to make peace.
Authorization. H.R. 2333, introduced on June 8, 1993, authorized both foreign assistance and State Department operations. On June 14, the bill was divided into 2 parts, with a new bill, H.R. 2404, introduced to authorize foreign assistance. H.R. 2404 provides $1.2 billion in ESF, $1.8 billion in FMF (of which $150 million may be spent in the United States for military research and development and $475 million may be spent in Israel), $10 million for Cooperative Development Programs (Israel's foreign aid program), $7 million for Middle East Regional cooperative programs (to be divided between Israel and Egypt), and $80 million to resettle Jews in Israel. H.R. 2404 passed the House on June 16 by a voice vote.
Appropriation. H.R. 2295, introduced on May 27, 1993, and reported by the Committee on June 10, 1993, did not earmark assistance for Israel. The Committee report accompanying the bill (H.Rept. 103-125) recommended $1.2 billion in ESF, $1.8 billion in FMF (of which $150 million may be spent for military research and development in the United States and $475 million may be spent in Israel), $80 million for Soviet Jews settling in Israel, $10 million in cooperative development for Israel's foreign assistance program, $2 million for joint Israeli-Palestinian educational, cultural, or humanitarian projects, and $7 million for Middle East regional cooperation, to be divided between Egypt and Israel. H.R. 2295 passed the House on June 17, 1993, by a vote of 309-111, and passed the Senate on September 23, 1993, by a vote of 88-10. On September 28, the House and Senate agreed to the conference report, and the President signed the bill into law (P.L. 103-87) on September 30, 1993.
Following the September 13, 1993, Israeli-PLO Declaration of Principles signing in Washington, the Israeli Defense Forces Chief of Staff stated that Israel's militarywithdrawal from the Gaza Strip and Jericho would cost between $175 million and $245 million. Some interpreted the General's remarks as Israel's first bid for additional funds to finance the peace process. On September 30, 1993, President Clinton informed Congress that the $2 billion in loan guarantees for Israel for FY1994 would be reduced by $437 million, the amount Israel spent on new settlements in the occupied territories during 1993. (Section 226(d) of the Foreign Assistance Act of 1961, as amended by Section 601, Title VI, P.L. 102-391, 106 Stat. 1633, October 6, 1992.) Press reports suggested that the withheld $437 million in loan guarantees, originally intended for helping Soviet Jews, would be transferred to Israel to be used to pay for Israeli withdrawal from the Gaza Strip and Jericho.
H.R. 3765, the Administration's revision of foreign assistance, does not contain any aid earmarks for Israel.
Appropriation. H.R. 4426 does not contain earmarks for Israel, but Committee Report 103-524 "recommends" that not less than $1.2 billion in economic grants and not less than $1.8 billion in foreign military financing be available for Israel. In addition, the Committee report recommends that Israel receive $10 million for cooperative projects (Israel's foreign aid program), share in a $7 million cooperative program with Egypt, $80 million for settling Soviet Jews, up to $200 million in additions to the Israeli military equipment stockpile, and $75 million in defense equipment drawn from U.S. stocks, primarily F-16 aircraft. H.R. 4426 was introduced on May 16, 1994, was reported out of committee on May 23 (H.Rept. 103-524), and passed the House of Representatives on May 25, 1994, by a vote of 337 to 87. The Senate Appropriations Committee reported H.R. 4426 with amendments on June 16, 1994 (S.Rept. 103-287). The Senate passed H.R. 4426 on July 15 by a vote of 84 to 9. Conference Report 103-633 was filed on August 1. The House passed the conference report on August 4 by a vote of 341-85, and the Senate passed the conference report on August 10 by a vote of 88-12. The President signed the Act into law on August 24, 1994, P.L. 103-306.
The Administration requested $1.2 billion in economic grants, $1.8 billion in military grants, and $80 million in refugee settlement assistance for Israel for FY1996. The Foreign Aid Authorization bill, H.R. 1561, was reported out of committee on 19 May 1995 (H.Rept. 104-128) and passed the House on June 8, 1995, by a vote of 222- 192. H.R. 1561 earmarks $1.2 billion in economic, $1.8 billion in military, and $80 million in refugee assistance for Israel for each of the fiscal years 1996 and 1997.
The foreign operations appropriation bill, H.R. 1868, reported out of the House Committee on June 15, 1995 (H.Rept. 104-143), did not contain earmarks for Israel, but the report recommended $1.8 billion in military, $1.2 billion in economic, and $80 million in refugee assistance for Israel for FY1996. H.R. 1868 passed the House on July 11, 1995, by a vote of 333 to 89, and passed the Senate on September 21, 1995, by a vote of 91 to 9. The House passed Conference Report 104-295 on October 31, 1995, by a vote of 351 to 71, and the Senate passed the conference report on November 1, 1995, by a vote of 90 to 6. The final version of H.R. 1868 provided $1.8 billion in military and $1.2 billion in economic assistance grants for Israel. H.R. 1868 was considered enrolled pursuant to Section 301 of H.R. 2880 (passed by reference), which passed on January 26, 1996 (P.L. 104-99), and became P.L. 104-107 on February 12, 1996.
While in Israel on March 14, 1996, following the Sharm al-Shaykh anti-terrorism conference, President Clinton promised Israel $100 million in assistance for Israel's anti-terror activities. Also on March 14, the Senate amended H.R. 3019 (S.Amdt. 3527), the Omnibus Appropriations bill, to add $50 million for Israel for anti-terror assistance in FY1996 (P.L. 104-134, April 26, 1996). The $50 million for FY1996 will come out of foreign assistance funds. The remaining $50 million will be provided in FY1997. According to press reports, the funds will be used for anti- explosive electronic equipment, anti-terrorism training, and a fence along the Israel- Palestine boundary.
The Administration requested $3 billion for Israel for FY1997, $1.2 billion in economic grants and $1.8 billion in military grants. It is assumed that the additional $200 million promised by President Clinton for the Arrow missile deployment will come out of FY1997 Department of Defense funds, and that the $50 million in anti-terror funding promised by the President will come out of FY1997 foreign assistance funds. It is not clear where the $50 million will come from for funding the Nautilus laser anti-missile weapon.
H.R. 3540, the FY1997 foreign operations appropriations bill, did not contain earmarked funds for Israel as introduced in the House. H.Rept. 104-600 of May 29, 1996, states that Congress expects the aid levels to remain at $3 billion for Israel for FY1997. H.R. 3540 passed the House on 29 May 1996, by a vote of 366-57. H.R. 3540 was reported to the Senate on 27 June (S.Rept. 104-295), and passed the Senate on 26 July 1996, by a vote of 93-7. The Senate added earmarks for Israel. The House-Senate conference on H.R. 3540 began on September 17, 1996. Foreign operations funding, including earmarked aid for Israel, was included in H.R. 3610, the omnibus appropriations bill that passed the House on September 28 by a vote of 370-37-1 (H.Rept. 104-863 Star Print), and the Senate by voice vote on September 30, 1996. The President signed H.R. 3610 into law (P.L. 104-208) on September 30, 1996.