Israel, U.S. Begin Discussions On Renewal Of Foreign Aid Package

Taken from Haaretz, Israel, 08 Feb 2007
By Shmuel Rosner

Israeli officials have been discussing over the past few months how much financial aid Israel should request from the United States in the coming years. The issue has come up for initial discussions with the Bush administration, and will be raised again at a meeting in Washington next month. Prime Minister Ehud Olmert is due to make the final decision on the matter.

The Bush administration this week asked Congress for $2.4 billion in financial aid for Israeli security needs, the highest amount possible under America's current agreement with Israel.

The financial aid issue is on the table once again because the previous agreement expires this budgetary year, after being in effect for a decade.

As prime minister, Benjamin Netanyahu said in 1997 that Israel was interested in reducing, to the point of eliminating, the American funds allocated for civilian purposes in Israel. The agreement reached at the time gradually altered the structure of the assistance. At the time, Israel was receiving $3 billion, of which $1.2 billion was allocated for civilian purposes.

Under the new arrangement, it was agreed that $120 million would be cut from the overall aid package every year, while the funds allocated for security purposes would increase by $60 million. As the agreement comes to an end, the civilian aid no longer exists and the security aid amounts to $2.4 billion.

Initial talks on a new financial aid package indicate that both the American and Israeli governments are interested in renewing the aid in an "orderly manner," as one person familiar with the issue put it, rather than returning to the system whereby Israel has to renew its aid request every year.

Israel needs to make a decision on whether to renew a request for civil assistance, and whether to ask for the current level of security assistance on a long-term basis or request more funding for the security challenges Israel faces.

Several officials told Haaretz that Israel has not made a final decision on these issues, although some said they had reservations about the return of civilian funding. One official noted that the outcome "will have strategic importance," not just on the economic level, but also regarding Israel-U.S. relations. The matter has recently been discussed at the defense and foreign ministries.

The Foreign Ministry convened a group of external experts, including former Israeli ambassadors to the U.S. Zalman Shoval and David Ivri, a few weeks ago to discuss some of the issues related to bilateral relations. The participants agreed that the Bush administration has been one of the friendliest to Israel and that there is an advantage to making agreements with U.S. President George W. Bush before he is replaced by someone else.

Israel also views the newly elected Congress as being friendly, and Israeli officials plan to request meetings with House and Senate leaders from both parties once Israel decides on the financial aid questions, in an effort to reach an agreement that is acceptable to Congress.

Financial aid requests related to Israel that are submitted to Congress by the administration are generally approved without a problem, due in part to agreements reached ahead of time with congressional members.

Olmert will make the final decision on Israel's position after consulting with the heads of the defense and foreign ministries. The Defense Ministry, the primary recipient of security aid, has been asked to come up with estimates of Israeli security needs and how much funding they will require. An Israeli official said the Finance Ministry is also involved in some of the preliminary talks.