Letter: U.S. loans to Israel

The Washington Times

30 November 2002

The article "Israel seeks military aid increase" (Nation,

Wednesday), which tells of an Israeli request for loans and grants

totaling $14 billion, mentions that Israel never has defaulted on a

loan. Friends of Israel never tire of saying that Israel has never

defaulted on repayment of a U.S. government loan, but it would be

equally accurate to say Israel has never been required to repay a

U.S. government loan. The truth is complex, and designed to be so by

those who seek to conceal it from the U.S. taxpayer. Most U.S. loans

to Israel are forgiven, and many were made with the explicit

understanding that they would be forgiven before Israel was required

to repay them. By disguising as loans what in fact were grants,

cooperating members of Congress effectively exempted Israel from the

U.S. oversight that would have accompanied the loans. Initially,

Israel was expected to pay the interest and eventually begin

repaying the principal on loans. But the so-called Cranston

Amendment, which has been attached by Congress to every foreign-aid

appropriation since 1983, provides that economic aid to Israel will

never dip below the amount Israel is required to pay on its

outstanding loans. In short, whether U.S. aid is extended as grants

or loans to Israel, it never returns to the U.S. Treasury. The total

since 1949 exceeds $84 billion. Saying that Israel never has

defaulted on a loan is a partial truth, but part of it is quietly

suppressed.