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Jerusalem Center for Public Affairs
Strategic Alliances for a Secure, Connected, and Prosperous Region

“Aid for Peace” — An Exhausted Paradigm?

Filed under: Palestinians, Peace Process, Syria, U.S. Policy
Publication: Jerusalem Viewpoints

No. 456    June 2001

Paying Israel for Territorial Withdrawals

At present, there are no substantive Arab-Israeli peace negotiations underway. Israel has had to contend with the ongoing armed offensive launched by the Palestinians in late September 2000 after the failure of the Camp David summit. Meanwhile, Israel and the Palestinians will only return to the negotiating table after a ceasefire, a meaningful cooling-off period, and confidence-building measures, in accordance with the Mitchell Committee Report. Syria, under Bashar Assad, has given evidence of assuming a harder line, making an early resumption of Syrian-Israeli negotiations unlikely.

Yet, over time, should Israeli-Palestinian violence subside and Syria take a more flexible approach to diplomacy, Israel and the U.S. will need to revisit and re-examine elements of the joint policies that have underpinned the peace process for the last decade: especially regarding the question of enhanced U.S. aid in exchange for new Israeli territorial withdrawals.

The most recent version of this doctrine goes back to the Clinton period. After their first meeting in the White House on July 19, 1999, U.S. President Bill Clinton affirmed in a public statement to Prime Minister Ehud Barak “the U.S. commitment to help Israel minimize the risks and costs it incurs as it pursues peace and affirmed the broad U.S. backing that would be accorded to Israel to facilitate the pursuit of peace.” In other words, Clinton was restating what he had already said to three previous Israeli prime ministers, that Washington was ready to offer significant new aid to Israel in the context of new peace agreements with its neighbors. Yet in the Barak period, this policy reached extreme proportions, with an unprecedented extent of territorial withdrawal envisioned, to be offset by astronomical figures for compensatory American aid.

While President Clinton is no longer in office, it is nevertheless useful to evaluate the efficacy of this policy. Both Israel and the United States have to judge for themselves whether the offer of large compensation packages to back potential peace agreements is politically realistic, and whether such packages would strengthen or weaken the prospects for lasting peace. For diplomatic strategies that worked in one era may be completely outdated and hence unworkable in a later period, due to both international and domestic political considerations.

This analysis first looks at these questions by comparing the political conditions that supported the granting of large aid packages, when agreements were signed with Egypt in the 1970s, to conditions that exist today. The experience of the 1970s established a paradigm that U.S. and Israeli policy-makers have been following without any reconsideration to this day, nearly thirty years later. Second, the analysis examines factors that could increase or decrease the likelihood that a large aid package would obtain congressional approval. Finally, it looks at the implications of the promise of large aid packages for the future of U.S.-Israel relations and the stability of agreements sought through the peace process.

It must be stressed that while analyzing the prospects for additional aid, on the basis of new peace agreements, this study does not in any way doubt the tremendous importance of the current U.S. military and civilian aid programs to Israel. Additionally, Israel is still seeking $800 million in supplemental assistance, committed by the Clinton administration to the Barak government, for its unilateral withdrawal from Lebanon in the absence of any peace treaty, that created additional risks for the Jewish state.

Given the growing dangers in the regional security environment of the Middle East, the programs to be funded by this supplemental assistance are vital for the defense of Israel. It may even be necessary to enhance certain security programs on the basis of new strategic threats from ballistic missiles and weapons of mass destruction that are already on the horizon. It is noteworthy that the Sharon government is already justifying this supplemental assistance in these regional strategic terms rather than as a “compensation package,” as was the case in the past. At a time when Israel is defending itself against a wave of violence and terrorism, it would be appropriate for the U.S. to consider accelerating the appropriation of such an aid package, as a sign of American support for Israel’s right of self-defense. The question to be analyzed below relates only to linking increases of aid to the Arab-Israel peace process, as was the practice until recently.


U.S. Compensation to Israel in the 1970s

The idea behind the Clinton administration’s consideration of large military assistance packages for Israel in order to offset the risks of an Israeli withdrawal from the West Bank, Gaza, and the Golan Heights is not new. This American role became a part of the peace process during the 1970s when Israel signed two disengagement agreements with Egypt in 1974 and 1975, and reached a full peace treaty with Egypt in 1979.

Generally, Washington recognized that there was a built-in asymmetry in the peace process. Israel was giving up tangible assets of territory in exchange for an intangible state of relations, defined as peace. Moreover, while Israel’s Arab partners could reverse the relations of peace with Israel, the loss of territory was irreversible. While the depth and intensity of peace could be adjusted or altered from a cold peace to warm relations, there was no similar adjustment that could be made with respect to withdrawal, once agreements were signed.

The U.S. was to make up the difference in this imbalanced equation. It was U.S. Secretary of State Henry Kissinger who noted during this period: “we could urge Israeli withdrawal only in the context of an Israel made secure by substantial American military deliveries and an Egypt willing to negotiate detailed conditions of peace.”1 As an inducement to Israel, the U.S. could offer the Israel Defense Forces new military technologies that were previously unavailable. Thus, while Israel might lose tangible strategic assets, like strategic depth, it would gain advanced military technology that was intended to more than make up for the loss to Israel of any land that was conceded.

The 1975 Sinai II Disengagement Agreement is a good example of this American role. The Ford administration wanted the first Rabin government to withdraw from the Giddi and Mitla passes in Sinai; the Israeli government was reluctant to give up these strategic passes. The Ford administration ordered a “reassessment” of its relations with Israel. In the meantime, a new security package for Israel was prepared that upgraded the Israeli Air Force from Skyhawks and Phantoms (1950s technology) to F-15s and F-16s (1980s technology). Ultimately, Israel lost the passes but obtained a far more advanced qualitative edge in military technology, in exchange. The use of special U.S. military aid as an incentive for Israeli territorial concession was also used by the Carter administration several years later, to help secure the 1979 treaty of peace between Israel and Egypt. The U.S. informed Israel that it was prepared to act positively on several weapons systems that Israel had previously sought.2


The Golan Heights and Jordan Valley Defense Lines

It is important to understand that the entire calculus of a compensation package emanates from the fact that the territories Israel captured in the 1967 Six-Day War have been vital for protecting Israel’s security over the last 34 years. What has characterized the Arab-Israeli military balance over the past five decades is a significant qualitative gap between the active service standing land armies of the two sides: while the ground forces of the Arab states are mostly battle-ready standing units, the Israel Defense Forces are mostly based on reserve units that require mobilization.

For example, this difference in the force structures of the two sides produced acute asymmetries in the initial balance of forces on the Golan Heights. In the summer of 1973, Syria maintained 800 tanks on the Golan against 60 Israeli tanks (a 13 to 1 Syrian advantage). Just before the outbreak of the Yom Kippur War, Syria deployed 1400 tanks against 177 Israeli tanks (a 8 to 1 Syrian advantage). For Israel, the superior terrain conditions of the Golan Heights permit the small Israeli standing forces to withstand a ground assault, while the Israeli reserve mobilization is completed.3

This same principle applies to the Jordan Rift Valley of the West Bank. Of course, the Jordan River itself is not a serious obstacle to ground attack. However, the eastern slopes of the West Bank mountain ridge, that overlook the Jordan Valley, rise to a maximal height of 3,000 feet. When taken together with the low points of the Jordan Valley itself that are 1,200 feet below sea level, these slopes form a steep 4,200 foot incline that can provide a critical topographical advantage to a small Israeli defensive force.4

Israel does not face the sort of threat from Jordan that it faces from Syria; nonetheless, Jordan has historically been exploited as a springboard of attack against Israel, particularly by Iraqi expeditionary armies (in 1948 and in 1967 — while in 1973 they crossed Syria). Forward Iraqi formations could cross Jordanian territory in less than the time Israel requires for completing its reserve mobilization;5 Israeli airpower cannot always be relied upon to provide the necessary support to interdict these forces, as was the case in 1973 when Iraqi formations were able to reach the Golan Heights.

The proliferation of ballistic missiles in the Middle East has not changed the strategic importance of the Golan’s topography or that of the Jordan Valley for Israel. Missile attacks against Israeli population centers can delay the Israeli reserve mobilization, thereby prolonging the time that Israel’s numerically inferior forces in the Golan and Jordan Valley will need to fight before they are reinforced.

Furthermore, in a future era in which both Israel and its neighbors have similar deterrence weaponry, missiles may deter missiles, returning the overall military balance to the situation prevailing on land. This is precisely what happened to the NATO-Warsaw Pact balance in Europe during the Cold War. Thus, for the foreseeable future, the Golan Heights and strategic parts of the West Bank will be vital for the defense of Israel; any fundamental change in Israel’s military deployment in these territories, consequently, has been predicated on the U.S. providing considerable increases in military aid to Israel.

Finally, it must be noted that traditional U.S. policy on the peace process did not envision a complete Israeli withdrawal from the territories that Israel took over in the 1967 Six-Day War. U.S. diplomats labored in November 1967 to write into UN Security Council Resolution 242, which has been the basis of the peace process since 1973, that Israel would withdraw from “territories” and not “the territories” (meaning from some territories but not from all of the territories it had captured) to “secure and recognized boundaries.”

During his last address on the Middle East in September 1988 at the end of the Reagan administration, Secretary of State George Shultz emphatically restated the U.S. interpretation of Resolution 242: “The territorial issue needs to be addressed realistically. Israel will never negotiate from or return to the lines of partition or to the 1967 borders.”6 This theme was continued by President George Bush in 1991, when he stated at the Madrid Peace Conference that any solution to the Arab-Israeli conflict would be based on “territorial compromise.”7

With respect to the Golan Heights in particular, successive U.S. administrations, since the Ford administration, have stated that Israel is not expected to undertake a complete territorial withdrawal. In his September 1, 1975, letter to Prime Minster Yitzhak Rabin, President Gerald Ford wrote:

The U.S. will support the position that an overall settlement with Syria in the framework of a peace agreement must assure Israel’s security from attack from the Golan Heights. The U.S. further supports the position that a just and lasting peace, which remains our objective, must be acceptable to both sides. The U.S. has not developed a final position on the borders. Should it do so it will give great weight to Israel’s position that any peace agreement with Syria must be predicated on Israel remaining on the Golan Heights. My view in this regard was stated in our conversation of September 13, 1974 [emphasis added].8

The Ford letter was re-confirmed by the Bush administration in 1991 and by the Clinton administration in 1996. Thus, there is a firm American diplomatic tradition that sought to limit the extent of Israel’s territorial withdrawals, under UN Security Council Resolution 242, to new boundaries that Israel could defend, but not to boundaries approximating the 1967 lines.


Elements of the 1970s Compensation Paradigm

In order to ascertain whether the U.S. policy of compensating Israel with advanced military technology in exchange for withdrawal from strategic territories can still work more than twenty years later, it is helpful to recall the specific conditions that helped make that policy possible. These conditions are important because in the U.S., decisions with respect to foreign aid are not made by the president alone. Any increase in military aid to Israel will require the approval of the U.S. Congress. What then were the political and economic conditions for the aid packages of the 1970s that made the policy of American compensation to Israel in the peace process acceptable to the U.S. Congress? Three aspects of the compensation packages can be identified:


The Amount of Increased Aid Involved in the Compensation Package

The compensation packages involved huge sums of money, but they did not exceed a 50 percent or 100 percent increase in aid. There was no effort to increase aid by a factor of five or ten. For example, prior to the 1973 Yom Kippur War, U.S. aid to Israel averaged about $500 million per year between 1971 and 1973 (mostly military loans and small economic grants); as a result of the war, aid shot up to $2.646 billion in 1974 (Israel received its first military grants) and then dropped back to $823 million in 1975. As a result of the Sinai II Agreement, aid shot up again to $2.36 billion for 1976 and then settled back to $1.78 billion a year later. These trends indicate that aid was tripled for a one-year package, but afterwards declined to a level that was a little more than 100 percent of the original level prior to the signing of agreements.

A similar pattern followed the Camp David Accords. From a level of $1.78 billion in 1977, in 1979 the U.S. massively increased aid to Israel to $4.91 billion, in a one-time package for the peace treaty, tripling the annual level. But by 1980, aid fell back to $2.15 billion, which represented an increase of little more than 20 percent in the level of U.S. aid to Israel prior to the peace treaty with Egypt. Most of the increase before and after Camp David came in the form of military loans and economic grants. Clearly, the higher the base line of aid before signing any new treaties, the lower the percentage increase that can be expected.


The Compensation Package and U.S. National Interests

The compensation packages served very clear American strategic interests in the Middle East, beyond the general support Washington would provide for the resolution of conflicts and the signing of peace treaties. The peace process during the 1970s directly supported the American policy of containment against the Soviet Union. Secretary of State Henry Kissinger could demonstrate that the advance of the peace process undercut Soviet influence in the region and strengthened the diplomatic position of the U.S. Indeed, using the peace process, Kissinger succeeded in moving Egypt from the Soviet orbit to the American sphere of influence. The shuttle diplomacy of the 1970s and the peace treaty with Egypt in 1979 came after the Arab oil embargo of 1973, so that besides reinforcing the policy of containment, the peace process helped assure American access to oil.


U.S. Aid to the Middle East as a Limited Component of the Foreign Aid Budget

The packages of the 1970s were approved during a period in which the foreign aid budget was increasing and, more significantly, were at a time when U.S. aid to the Middle East did not take up most of the total foreign aid budget. In 1975, the Middle Eastern share of U.S. foreign aid was only 27 percent. In contrast, 51 percent of U.S. foreign aid went to Asia, mostly to South Vietnam, South Korea, and Taiwan. With the American withdrawal from Vietnam and the economic success of South Korea and Taiwan, a readjustment of the regional distribution of U.S. aid from Asia to the Middle East was conceivable during the latter half of the 1970s.9


Favorable Political Environment

While foreign aid was never popular in the Democratic-controlled Congresses of the 1970s, three important political considerations affected the proposals for increased aid to Israel. First, the main objection to increased military aid came in the context of a concern with Vietnam-type involvement overseas that began with military aid, continued with advisers, and eventually resulted in the deployment of U.S. forces. Clearly this concern did not apply to the Israeli case. Second, even though some of the more liberal members of the House of Representatives at the time (David Obey, Lee Hamilton, Tom Harkin) opposed aid increases to Israel, they were ultimately defeated by the Democratic party leadership, headed by Speaker of the House Thomas P. “Tip” O’Neill, who supported the aid packages.10 Third, during the 1970s and early 1980s, increases in foreign aid and defense appropriations could be financed by deficit spending that simply increased the U.S. national debt, under a budgeting system different from the one in place today. Fourth, while both the 1975 Sinai II Agreement and the 1979 Treaty of Peace between Egypt and Israel were accompanied by deep domestic controversy in Israel, the American Jewish community was not seriously divided by these agreements.


Is the 1970s Paradigm Applicable Today?

It is essential to compare the political and economic conditions of the 1970s, when the American peace compensation model was conceived, to the situation today in order to assess whether a large American compensatory package will work in the context of an Israeli-Syrian or Israeli-Palestinian peace agreement. Many of the conditions of the 1970s have changed dramatically:


The Amount of Israel’s Aid Request in Relationship to the Current Level of U.S. Aid to Israel

Israel is currently receiving a much higher level of aid than it received in the 1970s, so it cannot expect to end up with the same percentage increases.11 Nonetheless, according to press reports, Israel reportedly sought an unprecedented compensation package in the event of a withdrawal from the Golan Heights that included some $17 billion for military aid alone. There would be additional civilian costs as well, but it is unclear at present whether Israel would also seek aid for such costs as settlement removal. The amounts of military and civilian aid together for both the Syrian and Palestinian diplomatic tracks could reach $65 billion.12 It remains to be determined to what degree Israel will absorb such costs, and what proportion will be covered by assistance from the international community. With respect to the Syrian component of the $65 billion, the costs include the removal of settlements and assistance for coping with Israel’s water problem. Among the total costs, the only component that has been formulated with any degree of specificity in the form of a request to the United States is the security assistance package for Israel. According to Israeli military sources, Israel’s security request was based on the following breakdown:13

$3.5 billion for re-deployment of forces
3.0 billion for early-warning (still assuming some Israeli presence on Mt. Hermon)
8.0 billion for military modernization and defensive capability upgrade
2.4 billion for improved defensive capability against surface-to-surface missiles
$16.9 billion total


Should Israel concede its early-warning position on Mt. Hermon, then Israel’s military aid request could increase beyond the $17 billion figure. It is further likely that Israel will seek all of this assistance in the same form as the current military assistance package, namely, grants rather than a mixture of loans and grants as in the 1970s. Similarly, the existing 25 percent limit on “Off-Shore Procurement” — the portion of assistance that can be spent outside the United States — could be applied to the new military aid package. Given the size of the contemplated aid package, it is likely that it would be spread out over a minimum of five years in a manner similar to the $10 billion loan guarantee package of 1992.

An Israeli-Palestinian agreement along the lines of the Clinton parameters of December 2000 could be at least as costly to the U.S. taxpayer. According to Palestinian National Council Speaker Salim al-Za’nun, Clinton offered the Palestinians $30 billion in exchange for sharing sovereignty in Jerusalem according to the Clinton parameters. No estimates have been given for the security and resettlement costs Israel would incur in the case of a withdrawal to the 1967 lines with small adjustments, including perhaps a “land swap” that cedes some Israeli territory in the Negev. The United States would presumably seek to spread some of these costs, particular regarding aid to the Palestinians, among Europe, Japan, international organizations, and the Arab states, but the U.S. share could well remain in the multi-billion-dollar range.


Changes in U.S. Strategic Interests in the Middle East

The American strategic interest in a Syrian-Israeli peace is qualitatively different from the interest it had in an Egyptian-Israeli peace in the 1970s. In Egypt’s case, the U.S. had the opportunity of winning over a Soviet client state, and Egypt was not only the most populous Arab state but the first to make peace with Israel. In Egypt’s case, both the geopolitical and regional stakes were higher than with Syria today. With the Cold War over, the Soviet Union gone, and the circle of the peace process having expanded to include Jordan and the Palestinians, the added value of a Syrian peace deal is significant, but much less than that of Egypt over twenty years ago.

At this point, the main U.S. strategic interest in a Syrian-Israeli agreement relates to how that agreement affects Israeli security and overall Middle Eastern stability, rather than any prospect of “winning over” an Arab state into the pro-American camp. In the post-Cold War order, the primary threats to American interests are from rogue states such as Iran and Iraq. As the only stalwart American ally and bulwark of democracy in the region, it is in America’s interest that Israel be strengthened as a counterweight to the rogue states that define themselves as enemies of both the U.S. and Israel.

What has changed, therefore, is not the strategic importance of the U.S.-Israel alliance, which remains high. The change is that, in the Cold War context, peace agreements had the potential added value of enlarging the pro-American camp, while today potential agreements should be viewed primarily through the lens of their effect on Israel’s security vis-a-vis radical states that remain committed to Israel’s destruction.

For a time, Clinton administration spokesmen asserted that an Israeli-Syrian peace would help bring about a shift in Syria’s orientation towards Iran, weakening the ties between Damascus and Tehran, and therefore serving the administration’s 1993 policy of “dual containment” of Iran and Iraq.

This was an unsubstantiated assertion to begin with. The Syrian-Iranian connection grew as a result of their mutual antipathy to Iraq (dating from 1980 with the Iran-Iraq War) and to Turkey, and not because of the Israeli factor alone.14 In the latter part of the 1990s, both Syria and Iraq have shared problems with Turkey, given that both countries are dependant on the Euphrates River which originates in Turkish territory, and both countries have served as safe havens for Kurdish groups at war with Turkey.

In any case, the Clinton administration did not sustain its own policy of “dual containment,” particularly when it began reducing sanctions against Iran and failed to halt the erosion of sanctions with respect to Iraq in the UN Security Council. There has always been a general American interest in peace, but support for a large aid package will be linked to the degree to which an agreement is seen as enhancing, rather than detracting from, Israel’s ability to stand as a bulwark against rogue nations that threaten both Israeli and American interests.

Finally, it is far from clear that Arab-Israeli peace agreements can counter the need of Arab states to rely on new political axes with Iran and Iraq. It was precisely during accelerated Israeli-Syrian negotiations under the Barak government, in late 1999 and early 2000, that Syria and Iraq began a process of rapprochement, including the resumption of diplomatic and economic relations. High-level interstate visits followed. The Syrian pipeline to the Mediterranean soon became a significant outlet for Iraq for circumventing UN sanctions on its oil trade. Equally, the high expectations from the peace process in late 1995 and early 1996 did not stop the attempts of Iran and Saudi Arabia to reach a modus vivendi. Thus, the possible impact of Arab-Israeli diplomacy on these geopolitical moves in the Middle East tends to be overstated.


Declining Congressional Support for Foreign Aid

The notion of increased aid to the Mideast in support of possible peace agreements is coming at a time when U.S. support for foreign aid is declining. It is true that the actual voting patterns in both the House and Senate for the annual foreign aid appropriations bill have remained relatively steady over the decade of the 1990s. But that stability only reflects the fact that there was no serious effort to markedly increase the foreign aid budget. As a result, foreign aid legislation passed during most of the 1990s without tremendous controversy (except for 1999). But in reality, the U.S. foreign aid budget has in fact declined over the last fifteen years. While overall federal spending rose by approximately 16 percent from 1985 to 1995, foreign aid spending fell by 32 percent. Furthermore, instead of comprising only 27 percent of the foreign aid budget as in 1975, the Middle Eastern share of all U.S. bilateral aid in 1995 stood at 55 percent. Eastern Europe and the former Soviet Union received only 18 percent, despite the growing American intervention in the Balkans. Looking only at U.S. expenditures for security assistance, Israel and Egypt use up about 92 percent of this budget.15 A massive boost in U.S. aid to Israel would further skew the foreign aid budget towards the Middle East, leaving other regions inadequately funded.

In fact, during the 1990s it was possible to discern certain signs of fatigue with respect to aid for Israel. This began in 1990 with the proposal of Senate Minority Leader Bob Dole to cut aid to Israel and four other countries by 5 percent and transfer the funds to new democracies in Eastern Europe. Dole’s proposal was more of a trial balloon; it was opposed by 73 senators, but it broke the ice on a topic that had been politically taboo.16 In September 1993, even at the height of the euphoria over the Oslo agreements, Senator Patrick Leahy, who as a Democrat headed the Foreign Operations Subcommittee of the Appropriations Committee prior to the Republican control of the Senate in 1994, told National Public Radio: “I would only say that we’re already spending $5 billion on the Camp David countries….The American taxpayer cannot spend any more money in the Middle East.”17

During the period of Republican control of the Senate Foreign Operations Subcommittee, Senator Mitch McConnell commented in 1995 on a theoretical aid package to Israel for giving up the Golan. Asked whether he would approve a $5 billion compensation package, he answered: “I’m interested in the U.S. helping to secure peace in the Middle East and I’m ready to support certain aid, but $5 billion is out of the question.” McConnell’s position may have evolved since that time, but his expression is an important indication of the congressional mood. In early January 2000, McConnell’s counterpart in the U.S. House of Representatives, Rep. “Sonny” Callahan of Alabama, who had headed the Foreign Operations Subcommittee, labeled Israel’s compensation requests as “financial opportunism.” He stated: “I hope that Israel will not agree to give up lands strategic to their national defense, and I think the Golan Heights are strategic.”18

Senator Jesse Helms, then Republican chairman of the Senate Foreign Relations Committee, wrote a letter on March 9, 2000, stating: “While I would like to see peace between Israel and Syria as much as anyone, I do not believe the United States should be in a position of bribing the two sides with large aid packages in order to secure an agreement.”

Despite the indications of exhaustion with respect to additional aid to Israel, Congress was willing to accept new arrangements regarding future aid to Israel that give a sense of what is politically possible. After understandings reached between the Netanyahu government and the Clinton administration in May 1998, Israel is now reducing its economic support fund (ESF) civilian aid, but for every dollar it is cutting, it is getting Congress to approve a half-dollar increase in foreign military funds (FMF) military aid. This understanding will actually allow Israel to increase its military assistance from the U.S. from $1.8 billion in 1998 to $2.4 billion in the year 2008. This suggests that U.S. tolerance for increases in military aid is greater than its tolerance for increases in civilian aid.19

During the election year of 2000, foreign assistance was not immune to the strains between the Clinton White House and the Republican-led Congress. The Republican leadership cut the Clinton administration’s foreign aid budget for fiscal year (FY) 2000 during the fall of 1999. President Clinton sought $15.1 billion. The Republican foreign aid bill sought to slash this by 12 percent to $12.7 billion. The Majority Whip in the House of Representatives, Tom Delay, explained that the Republicans prefer to provide funding for social security rather than foreign aid. This theme was stressed by the entire Republican leadership, including Speaker of the House Dennis Hassert: “Congress will not use social security as a pot of gold to fund foreign aid.”20 The Republicans are not isolationists. They, in fact, proposed foreign aid increases to Colombia and the Iraqi opposition. Simply, they seriously scrutinized the Clinton foreign aid budget proposals.

The struggle between the Clinton administration and the Republican majority in Congress led to the freezing of the additional Wye Agreement aid that Israel had been promised in return for withdrawing from more West Bank territory than it had originally wanted to. The Wye River Memorandum was signed on October 23, 1998, but it was not until a year later, on November 5, 1999, that the House of Representatives finally approved a $1.8 billion aid package, including $1.2 billion for Israel, $400 million for the Palestinian Authority, and $200 million for Jordan. Though the Wye aid package ultimately received strong bipartisan support, it was subject to considerable partisan wrangling on the way to approval. After a presidential veto, a compromise was reached. Rather than dip into the social security trust fund, Congress shifted costs from the FY 2000 budget to the FY 2001 budget; in order to help fund this shift, the early disbursement of Israeli economic aid was delayed.21

Though the Wye aid package became captive to strained relations between the Clinton administration and Congress, the political difficulties in delivering on this particular “land-for-aid” deal should be instructive for the future. Now that the U.S. Senate is in Democratic hands, political tensions could well combine with budgetary difficulties if an aid package several times the size of the Wye package were to be considered.

The U.S. domestic debate over the foreign aid budget indicates that even in an era of unprecedented American economic growth and a U.S. federal budget surplus, with the end of the Cold War there is declining support for diverting American resources abroad and an increasing concern with the U.S. domestic agenda. Moreover, unlike the deficit spending of the 1970s, today increases in foreign aid spending have to come out of another account in the U.S. federal budget; any huge compensation package for Israel would be constrained by the 1997 federal budget caps.22


Factors Affecting Future Congressional Support for Compensation

Despite the changed foreign aid environment there are several factors that should be noted which could affect the chances for congressional approval of a large compensation package.


Support for Military Aid More Likely than Support for Civilian Aid

It is essential to draw a distinction between different sorts of aid in any aid package for a peace agreement. Congress may be supportive of additional military aid for Israel, especially if it is directly tied to the risks Israel is taking upon itself by withdrawing from territory (for example, to pay for early-warning technology that will be needed if Israel withdraws from Mt. Hermon). Military aid not directly related to the withdrawal will be more heavily scrutinized by Congress. For example, former House Foreign Operations Subcommittee Chairman “Sonny” Callahan was critical of Israel for not adequately justifying its special Wye aid package in the fall of 1999: “The money we were talking about in the Palestinian agreement was unrealistic. Israel couldn’t produce for me the justification for what was needed.” Regarding the Golan Heights, Callahan expressed general support for aid to Israel that bolstered Israel’s new border with Syria, but he expressed doubts about the details of Israel’s expected acquisition requests; he asked about “what an airplane has to do with the Golan Heights.”

In looking at a range of possible aid components, Congress will be less supportive of economic aid than military aid (if Israel seeks American help with moving settlements, for example). In the past, congressional support for military aid was facilitated by the fact that Israel was required to spend most of this funding on American-made weaponry. Aid to Israel, thus, meant more jobs for states that manufactured the weapons systems Israel sought. Only $475 million out of the $1.8 billion military aid package could be converted to shekels and spent on Israeli-manufactured equipment (Off-Shore Procurement — OSP). Congress has resisted, and is likely to resist in the future, efforts to increase OSP for Israel. But in an era in which the differences in American weapons platforms and subsystems that are supplied to Israel and its Arab neighbors are narrowing, Israeli manufactured subsystems, funded by OSP, are a critical component for preserving Israel’s “qualitative edge.”23 In this sense, for compensation packages to truly protect Israel’s “qualitative edge” in the future, more attention should be given to increasing OSP, even if it is politically very difficult in the budgetary environment of the next few years.


Congress More Prone to Financially Back an Agreement that Results in an End to the Arab-Israel Conflict

No member of Congress wants to be identified as being against peace. If the future agreements on the Syrian or Palestinian tracks are perceived as bringing about real peace for Israel, then it will be difficult to oppose a large compensation package. The perception of the treaty leading to real peace will be affected by a number of factors. If the treaty leads to a new relationship with the whole Arab world, then the treaty might be viewed as marking the end of the Arab-Israeli conflict. Former Speaker of the House Newt Gingrich, for example, was willing to express his personal support for an aid package in the context of a real end of the Arab-Israeli conflict:

    We should look at what we just spent in Kosovo and what we will spend in the reconstruction of Kosovo and ask ourselves what it would cost if the Middle East disintegrated into a real war. For, I think, less than the cost of Kosovo, the United States can, over the next five to ten years, bring to an end a half-century of war.
What I think the president’s job should be right now is to sit down with the Congressional leadership and senior media people and begin to lay the base so that, if Barak can do his job, then [it will be the president’s job] to bring American resources and support in a very substantial way.
To think that we are going to end 50 years of conflict without some [aid] commitment is, I think, just absolutely impossible.24

Alternatively, if the agreement falls short of what might be viewed as a real and final peace, congressional support will not be automatic. Given the failure of Camp David, due, in part, to Arafat’s refusal to accept an “end of conflict” clause, the chances of producing some kind of finality in a future Israeli-Palestinian peace agreement are not very great. If major Middle Eastern countries like Saudi Arabia refuse to begin a diplomatic dialogue with Israel as a result of a Syrian-Israeli treaty, so that such an agreement is seen chiefly as a bilateral understanding and not as an end of the state of war with the Arab world, then it will be more difficult to achieve high levels of financial support.


The American Jewish Consensus

The question of the timing of congressional approval of any funding is related to the issue of the position of the American Jewish community. The past major foreign assistance packages for the peace process were approved by Congress when there was an overwhelming consensus in the American Jewish community, and among its leadership, backing the agreement. Even the Wye funding package was difficult to oppose, given the backing it received initially from the conservative side in Israel.

A funding package for Israel in the case of an Israeli-Syrian treaty could be different. If large portions of the Israeli public doubt the agreement, these reservations are likely to be carried over into the American Jewish community. The relationship between different Israeli political elites and the American Jewish diaspora leadership has completely changed from the period of the 1970s. During the 1990s, new organizations have arisen in the American Jewish community that reflect positions of parties in Israel, without requiring formal associations with a specific political party (e.g., Israel Policy Forum, American Friends of Peace Now, Committee for a Secure Peace). If the struggle over the aid package precedes a national referendum in Israel, then the splits in the American Jewish community are likely to express themselves during the congressional debate.

In general, the strength of American Jewish support for an agreement and an associated aid package will be directly related to whether the Israeli public is unified or divided regarding the agreement. Clearly, should future agreements be backed by a national unity government, then the polarization of the American Jewish community over the terms of the treaty would be minimized. Strong doubts within Israel regarding whether an agreement will bring real peace will likely be reflected both in the American Jewish community and in the U.S. Congress.


Aid to Syria as Part of a Compensation Package for Israel would Weaken Its Overall Support in Congress

Israel still enjoys tremendous sympathy in American public opinion, but the same cannot be said about Syria. There are strong sentiments in American public opinion against giving American aid to Syria in the future. A survey conducted by John McLaughin & Associates on January 13, 2000, for the Middle East Quarterly, indicated that when a sample of 1,000 Americans was asked, “In return for Syria signing a peace treaty with Israel, should the U.S. Congress authorize a multi-billion dollar package to strengthen Syria’s economy?,” they answered 63.8 percent negative and 21.2 percent positive (15 percent did not know or refused).

Under the Export Administration Act, the U.S. Department of State is required to prepare a list of countries that have repeatedly provided support for international terrorism; Syria has appeared on this “terrorism list” since it was first prepared in 1979. As a result, U.S. foreign assistance programs to Syria have been terminated, trade restrictions between the two countries have been imposed, and the sale of U.S. military equipment to Syria has been prohibited.

Changing this U.S. determination with respect to Syria would face serious congressional opposition. Senator Jesse Helms has explicitly charged Syria with the 1983 bombing of the U.S. Marine barracks in Beirut that killed 241 Americans: “The Syrian government has American blood on its hands.” Helms’s comment is consistent with the Long Commission that investigated the bombing in the 1980s. As a result, these anti-Syrian sentiments are common in the U.S. Congress.25

Thus, should the aid package for Israel be tied to an aid package for Syria, it would become more difficult to win approval. But should the U.S. refrain from economic assistance to Syria and only seek a special assistance package for Israel, then the chances of approval would increase. Clearly, Israel should prefer a situation in which its security assistance is handled on a purely bilateral basis, given the special U.S.-Israel relationship, and not made contingent upon U.S. foreign assistance programs for other Arab states.


An Alternative Strategy — Cost-Effective Diplomacy

The clear tradeoff that has emerged over two decades in the Arab-Israeli peace process has been not just “land for peace,” but rather “land for increased U.S. assistance.” During the Clinton years, this formula reached unprecedented extremes as the depth of the Israeli withdrawal being considered went beyond what had been expected by U.S. policy-makers in the past and the consequential sums of money contemplated by the U.S. administration reached unprecedented heights. An undesirable by-product of this policy was that any significant upgrade of the U.S.-Israel bilateral relationship (aid or other strategic support) became linked to progress in the peace process.

Even during the implementation of interim arrangements with the Palestinians like the 1998 Wye Agreement, this pattern continued. While the Clinton administration promised in writing to the Netanyahu government that only Israel would decide the size of three interim pullbacks, called “further redeployments,” Secretary of State Madeleine Albright insisted that Israel turn over 13 percent of the West Bank for the second pullback. In order to get Israel to agree to the U.S.-specified redeployment, which went beyond the 9-10 percent that Netanyahu offered, the Clinton team was willing to provide $1.2 billion in additional assistance. Had the administration settled on the 9-10 percent pullback that Israel offered, it would have fulfilled its written obligation to Israel (to let it decide the pullback’s size) and saved the U.S. taxpayer over a billion dollars.

The alternative to this reliance on increasing foreign aid for inducing deeper Israeli concessions is to arrive at peace arrangements that do not presume radical Israeli withdrawals. Such an approach would be fully consistent with UN Security Council Resolution 242 and with past American declaratory policy on the Middle East, particularly during the Reagan and Bush administrations, prior to 1993. In the West Bank, after the failure to reach an Israeli-Palestinian accord on permanent status, this logic would point in the way of more realistic interim arrangements, like non-belligerency, that would leave Israel in control of eastern and western security zones. A renewed push toward a final status agreement would not only entail trying to bridge diplomatic gaps that the Camp David experience proved were unbridgeable, but also involve considerable increases in foreign aid to Israel, should diplomacy even modestly advance.

In the Golan Heights, should a future Israeli government reach a reasonable territorial settlement with Syria, by keeping Mt. Hermon in Israeli hands, the U.S. would not have to provide compensatory funds for alternative air-based or space-based warning assets that could cost billions of dollars and not even fully substitute for what Israel has on the ground at present. Such arrangements would not only be better for Israeli security and produce a more stable peace, but also would be less demanding on the U.S. federal budget and the American taxpayer.

Finally, breaking the link between the peace process and enhanced aid as well as strategic programs would be good for the U.S.-Israel bilateral relationship. During the Clinton years, upgrading the U.S.-Israel strategic relationship was viewed as part of an Israeli-Arab peace package. The U.S. and Israel would plan on a “strategic upgrade” in the event there was a breakthrough in the peace process. This made U.S.-Israel relations hostage to the decisions of Arab leaders, like Yasser Arafat and Hafez al-Assad. What is needed now is a new bilateralism that is not contingent upon the peace process. Should the U.S. and Israel decide that their relationship requires a higher diplomatic status, like a formal alliance, or more resources against regional threats, discussion in this direction may be taken regardless of how the peace process is progressing.

Even the most sound and stable peace agreement may be facilitated by, or even require, foreign assistance to the parties involved. The new strategic equation produced by a peace agreement based on territorial compromise must, however, stand on its own, before the element of financial assistance is included in the mix. Generally speaking, discussion of extremely large assistance packages should be taken as a warning signal that aid is being used to bridge the gap between a stable and an unstable agreement. Any agreement in which financial assistance becomes a central, rather than secondary, component is likely to be very costly, least of all in financial terms.

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* This report is based on the testimony of Dr. Dore Gold, prepared with the author’s assistance, before the Israel Knesset Comptroller’s Committee, March 27, 2000.

1. Henry Kissinger, White House Years (Boston; Little Brown, 1979), p. 578.

2. William Quandt, Camp David: Politics and Peacemaking (Washington: Brookings, 1986), p. 314.

3. Dore Gold, U.S. Forces on the Golan Heights and Israeli-Syrian Security Arrangements, JCSS Memorandum Number 44 (Tel Aviv: Jaffee Center for Strategic Studies, August 1994), pp. 5-6.

4. Dore Gold, Fundamental Factors in a Stabilized Middle East: Security, Territory, and Peace (Washington: Jewish Institute for National Security Affairs, 1993), p. 11.

5. An Iraqi division deployed in H-3 could reach the West Bank in 35 hours; public estimates of Israel’s reserve mobilization time are 48 hours. See Aryeh Shalev, The West Bank: Line of Defense (Tel Aviv: Hakibbutz Hameuchad, 1986), p. 52.

6. Secretary of State George P. Shultz, “The Reagan Administration’s Approach to Middle East Peacemaking,” Wye Plantation Policy Conference, September 16, 1988. Full text can be found at

7. President George Bush, Remarks at the Opening Session of the Middle East Peace Conference, Madrid, October 30, 1991;

8. Text can be found at

9. The Role of Foreign Aid in Development (Washington: Congressional Budget Office, May 1997).

10. David Schoenbaum, The United States and the State of Israel (New York: Oxford, 1993), pp. 229-239.

11. On January 29, 2001, the day before Clinton left office, the U.S. and Israel signed a Memorandum of Understanding regarding U.S. assistance to Israel. According to the MOU, economic assistance to Israel would be reduced by about $120 million per year and be phased out entirely by 2008. At the same time, military assistance to Israel would be increased by about $60 million per year, rising to about $2.4 billion in 2008. See State Department briefing by Spokesman Richard Boucher, January 19, 2001.

12. Ze’ev Schiff, “The Amount that Israel will Request for Funding Peace: 65 Billion Dollars,” Ha’aretz, January 7, 2000.

13. Testimony of Colonel Moli Ben Tzvi, Head of Land Forces Budgeting, before the Knesset Comptroller’s Committee, March 27, 2000.

14. Hussein J. Agha and Ahmed S. Khalidi, Syria and Iran: Rivalry and Cooperation (London: Royal Institute of International Affairs, 1995), pp. 10-13, 25-32, 82-86.

15. Duncan Clarke, “U.S. Security Assistance to Egypt and Israel: Politically Untouchable,” Middle East Journal, vol. 51, no. 2 (Spring 1997):200-214.

16. Dore Gold, Israel’s Standing in the United States and the Peace Process: Current Assessment and Plan of Action, Memorandum No. 32, July 1990, Jaffee Center for Strategic Studies, Tel Aviv University.

17. Dore Gold, “Land for Cash,” Commentary, March 1995. Since the switchover of the Senate to Democratic control in mid-2001, Leahy has returned to the chairmanship of the Foreign Operations Subcommittee.

18. The Forward, January 7, 2000.

19. See note 9.

20. “Clinton Vetoes Foreign Aid Bill,” Associated Press, October 18, 1999.

21. “White House, Hill GOP Agree on Foreign Aid,” Washington Post, November 5, 1999; National Journal, December 11, 1999.

22. “Foreign Affairs: Global Issues will Again be on the Front Burner,” National Journal, January 22, 2000.

23. Dore Gold, U.S. Policy Toward Israel’s Qualitative Edge, Memorandum No. 35, September 1992, Jaffee Center for Strategic Studies, Tel Aviv University.

24. Jerusalem Post, August 17, 1999.

25. Alfred B. Prados, CRS Issue Brief, Syrian-U.S. Relations, updated December 24, 1996.


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Saul Singer heads the Project on U.S.-Israel Relations at the Jerusalem Center for Public Affairs. He has previously served as a foreign policy advisor to U.S. Senator Connie Mack and on the staffs of the House Foreign Affairs Committee and the Senate Banking Committee.