Israel asks US for 10bn to offset economic cost of intifada

[jcsd]

Israel asks US for $10bn to halt recession

Intifada takes its toll on a once-buoyant economy

Chris McGreal in Jerusalem
Tuesday October 22, 2002
The Guardian

Ariel Sharon is pressing Washington for billions of dollars of emergency aid to revitalise the Israeli economy, driven deep into recession by the two years of Palestinian uprising.
Already the biggest recipient of US foreign aid - $2.1bn a year, most of it spent on military equipment from America - Israel is putting together a proposal for up to $10bn (£6.5bn).

The intifada has helped to give Israel its worst recession for 25 years. Foreign investment and tourism have collapsed. The shekel loses value by the month. Unemployment has risen to 10% and shops suffer from people's reluctance to wander through malls which may attract suicide bombers.

Three years ago the economy was growing at the rate of 6%: now it is contracting.

The bursting of the dotcom bubble has compounded the crisis by battering the hi-tech industries which were the engine of Israel's growth.

The government's attempt to contain the damage with deep budget cuts, tax increases and a pay freeze has provoked a public sector strike which has left the streets of Israel's main cities strewn with rubbish but done little to reverse the economic downturn. And there is an election next year.

Last month the chairman of the national security council, Uzi Dayan, told the knesset that the intifada was costing the economy close to £2bn a year and that without an end to the violence there is little hope of reversing the financial decline.

Professor Ephraim Kleiman, an economist at Hebrew University in Jerusalem, agrees.

"Tourism revenues have halved. Foreign investment has fallen by two-thirds since the start of the intifada, although much of that drop also has to do with the bursting of the dotcom bubble.

"I think nothing will improve until something happens to the peace process."

Mr Sharon asked President Bush for the biggest aid package to Israel for more than 10 years when they met at the White House last week.

The president made no promises, but he tried to talk up the Israeli economy at a press conference. "We have great confidence in the Israeli economy. We have a great confidence in the Israeli people. I am confident that the economy will be strong," he said.

The head of the prime minister's office, Dov Weisglass, is heading a team from the treasury and the foreign and defence ministries considering a number of options, including a request for loans from the US treasury, guarantees for low-interest loans from US banks, and the diversion of some of Washington's military assistance to the Israeli treasury.

At present Israel must feed military aid back into the US economy by buying American equipment. One proposal is for it to be spent on Israeli-made weapons, which would help boost manufacturing and prop up the shekel.

Israeli officials said the Americans were "sympathetic" to the request, but there is likely to be some wrangling about the kind of help and the political price to be paid.

Prof Kleiman says Mr Sharon is seeking to take advantage of Washington's concern about Israel's role in any coming conflict with Iraq.

"I think Sharon is just trying to exploit it to get some money. Bush wants Israel to behave more decently to the Palestinians and to keep out of a war with Iraq. Sharon wants to exact a price and guarantees for cheap loans are it," he said.

Israeli officials acknowledge that the Americans may seek further concessions in return for financial assistance.

In the early 90s Yitzhak Shamir, then prime minister, sought $10bn in loan guarantees to help absorb hundreds of thousands of immigrants from the former Soviet Union.

As a condition the Clinton administration demanded a freeze on Jewish settlements in the occupied territories.

Mr Shamir refused, his government fell and he was replaced Yitzhak Rabin, who agreed to the US demand.

Prof Kleiman thinks the Americans will not want to make loans themselves, so guarantees are the most likely option. "Having these guarantees means there's no chance of Israel reneging on its foreign debt," he said.

"This improves very much Israel's credit ratings, which have come to play a much more important role. It's a confidence-building measure."

http://www.guardian.co.uk/israel/Sto...816587,00.html

[Miriam]

Originally posted by jcsd
Israel asks US for $10bn to halt recession

Intifada takes its toll on a once-buoyant economy


Ariel Sharon is pressing Washington for billions of dollars of emergency aid to revitalise the Israeli economy, driven deep into recession by the two years of Palestinian uprising.
Already the biggest recipient of US foreign aid - $2.1bn a year, most of it spent on military equipment from America - Israel is putting together a proposal for up to $10bn (£6.5bn)

...

I hope very much that this will succeed. The Israeli economic situation is tragic. And with all the money that has been put down the Palestinian drain, including, I hate to say so, my own taxes, it's high time to support the good guys - as a demonstration that terrorism won't work, among other considerations. However, it's a shame that the Israeli government has to go begging for financial aid - IMO it's the duty of the world community to offer assistance.

[NewsGuy]

Originally posted by jcsd
Israel asks US for $10bn to halt recession

Never hurts to ask.

But I think it would be better to first appropriate all funds being held by Israel for the Palestinian Authority, and then to demand that Arafat pay damages from his personal funds held in Swiss Bank Accounts that he robbed from European foreign aid.

Israel's economic damages should be repaid by the Palestinians and by their terrorism financiers like Iraq and Saudi Arabia. The Iraqi portion should be paid from oil sales once the U.S. takes over Iraq.

And just like the American victims of 9/11 are suing the Saudi government for funding terrorism, so too should Israel place its claim as well.

I am sure that the U.S. will turn down this Israeli request, and that's fine. Already Israel is too beholden to the U.S. and there's no point in sinking further into debt that would be repaid, no doubt, with portions of the Jewish homeland.

I'd be curious, though, to see where the Palestinians will turn to, when they finally rebuild their demolished terrorist-haven towns.

[MiniMizer]

Actually, it's not like Israel is ASKING for money, but more like the US is 'bribing' Israel to lay down low during their Iraq Campaign.

[NewsGuy]

btw - Consistent with the Guardian's track record of distorted reporting and shoddy journalism, they got their facts wrong yet again.

Israel is NOT asking for $10b, as the Guardian claims.

In fact, Israel is seeking loan guarantees. That does not mean an actual loan at all, nor does it mean that $10b would even be guaranteed.

It means that if Israel was to borrow money, then its credit rating would be considered high, because the U.S. would guarantee the loan in the event that Israel would ever default.

To date, however, Israel has NEVER defaulted on any loan, so the out-of-pocket cost to the U.S. would be nothing at all.

This of course doesn't stop the Guardian of Lies and Misinformation from spreading all kinds of rumors and innuendo, tailor-made for its anti-Israel audience who similar to the Guardian, desperately seeks reasons to support their own bigotry.

As usual, why get bogged down with actual facts?

[L@mplighterM]

Originally posted by MiniMizer
Actually, it's not like Israel is ASKING for money, but more like the US is 'bribing' Israel to lay down low during their Iraq Campaign.

I tend to agree with that there has to some cost to the US because it has apparently requested Israel to back off on several occasions.

On the other hand Arafat has incited the Palestinians to initiate a war against Israel and the PA has been absolutely uncooperative in arresting alleged terrorists and keeping them in jail. There’s also the documentation signed by Arafat and recovered by Israel authorizing payment for weapons and terrorists.

I’m more than 50% (actually 100% certain) convinced that Arafat and the PA are guilty and should be held liable for damages incurred by Israel. Israel should therefore initiate a tort action against the Arafat and the Palestinians.

[jcsd]

Actually it Israel is just asking for $10bn it would probably prefer a straight loan from the US gov., but it will probably get that in loan guarentees. The Guardian did include this in the article.

The point is that Israel is guareteed low interest rates from US banks, so it certainly will cost the US economy something, but on the other hand if they couldn't afford it they certainly wouldn't give it out.

[Miriam]

Originally posted by MiniMizer
Actually, it's not like Israel is ASKING for money, but more like the US is 'bribing' Israel to lay down low during their Iraq Campaign.

You mean, the US actually offered the loan (guarantees) themselves? Then why not as straight aid?

[MiniMizer]

Because that is probably too transparent.

[jcsd]

No, both really are equally transparent, it is just cheaper for the US government to to give gurantees.

[daveed]

Israel IS NOT a CHARITY HOUSE. If you look at the records(many have not been released) it almost seems as if Israel's life force is American dollars, we have got to stop begging for money. Thats where this divestment problem comes from.

[alexbmn]

people the US will make Israek absorb twent suicide bombings without retaliation for that money.

[jcsd]

The fact is Israel does need the money as it is such a small country, and it does need a larger armed force than it could sustain on it's own. Withdrawal is a very sound economic choice as all aspects of the occupation have a negative affect on it's economy.

[alexbmn]

haha ROTFLMAO!!!!!

[jcsd]

So you don't think that streching the Israeli army into a large hostile area doesn't cost 100's of millions of dollars? The fact that Israeli produce is seen as tainted by the occupation in many markets, doesn't affect exports. Or the fear of suicide bombers does not depress the economy?