The Real Cost Of US Support
For Israel - $3 Trillion

By Christopher Bollyn

While it is commonly reported that Israel officially receives some $3 billion every year in the form of economic aid from the U.S. government, this figure is just the tip of the iceberg. There are many billions of dollars more in hidden costs and economic losses lurking beneath the surface. A recently published economic analysis has concluded that U.S. support for the state of Israel has cost American taxpayers nearly $3 trillion ($3 million millions) in 2002 dollars.
"The Costs to American Taxpayers of the Israeli-Palestinian Conflict: $3 Trillion" is a summary of economic research done by Thomas R. Stauffer. Stauffer's summary of the research was published in the June 2003 issue of The Washington Report on Middle East Affairs.
Stauffer is a Washington, D.C.-based engineer and economist who writes and teaches about the economics of energy and the Middle East. Stauffer has taught at Harvard University and Georgetown University's School of Foreign Service. Stauffer's findings were first presented at an October 2002 conference sponsored by the U.S. Army College and the University of Maine.
Stauffer's analysis is "an estimate of the total cost to the U.S. alone of instability and conflict in the region - which emanates from the core Israeli-Palestinian conflict."
"Total identifiable costs come to almost $3 trillion," Stauffer says. "About 60 percent, well over half, of those costs - about $1.7 trillion - arose from the U.S. defense of Israel, where most of that amount has been incurred since 1973."
"Support for Israel comes to $1.8 trillion, including special trade advantages, preferential contracts, or aid buried in other accounts. In addition to the financial outlay, U.S. aid to Israel costs some 275,000 American jobs each year." The trade-aid imbalance alone with Israel of between $6-10 billion costs about 125,000 American jobs every year, Stauffer says.
The largest single element in the costs has been the series of oil-supply crises that have accompanied the Israeli-Arab wars and the construction of the Strategic Petroleum Reserve. â?To date these have cost the U.S. $1.5 trillion (2002 dollars), excluding the additional costs incurred since 2001,â? Stauffer wrote.
The cost of supporting Israel increased drastically after the 1973 Israeli-Arab war. U.S. support for Israel during that war resulted in additional costs for the American taxpayer of between $750 billion and $1 trillion, Stauffer says.
When Israel was losing the war, President Richard Nixon stepped in to supply the Jewish state with U.S. weapons. Nixon's intervention triggered the Arab oil embargo which Stauffer estimates cost the U.S. as much as $600 billion in lost GDP and another $450 in higher oil import costs.
"The 1973 oil crisis, all in all, cost the U.S. economy no less than $900 billion, and probably as much as $1,200 billion," he says.
As a result of the oil embargo the United States created the Strategic Petroleum Reserve (SPR) to "insulate Israel and the U.S. against the wielding of a future Arab 'oil weapon'." The billion-barrel SPR has cost U.S. taxpayers $134 billion to date. According to an Oil Supply Guarantee, which former Secretary of State Henry Kissinger provided Israel in 1975, Israel gets 'first call' on any oil available to the U.S. if Israel's oil supply is stopped.
Stauffer's $3 trillion figure is conservative as it does not include the increased costs incurred during the year-long buildup to the recent war against Iraq in which Israel played a significant, albeit covert, role. The higher oil prices that occurred as a result of the Anglo-American campaign against Iraq were absorbed by the consumers. The increase in oil prices provided a huge bonus for the leading oil companies such as British Petroleum and Shell, who are major oil producers as well as retailers. The major international oil companies recorded record profits for the first quarter of 2003.
The Washington Report seeks to "provide the American public with balanced and accurate information concerning U.S. relations with Middle Eastern states." The monthly journal is known for keeping close tabs on the amount of U.S. taxpayer money that goes to Israel and how much pro-Israel money flows back to Members of Congress in the form of campaign aid.
The journal's website,, has an up-to-date counter at the top that indicates how much official aid flows to Israel. While the counter currently stands at $88.2 billion, it only reflects the minimum, as it does not include the many hidden costs.
"The distinction is important, because the indirect or consequential losses suffered by the U.S. as a result of its blind support for Israel exceed by many times the substantial amount of direct aid to Israel," Shirl McArthur wrote in the May 2003 issue of Washington Report.
McArthur's article, "A Conservative Tally of Total Direct U.S. Aid to Israel: $97.5 Billion - and Counting" tallies the hidden costs, such as interest lost due to the early disbursement of aid to Israel and funds hidden in other accounts. For example, Israel received $5.45 billion in Defense Department funding of Israeli weapons projects through 2002, McArthur says.
Loans made to Israel by the U.S. government, like the recently awarded $9 billion, invariably wind up being paid by the American taxpayer. A recent Congressional Research Service report indicates that Israel has received $42 billion in waived loans. "Therefore, it is reasonable to consider all government loans to Israel the same as grants," McArthur says.
Support for Israel has cost America dearly - well over than $10,000 per American - however the Israeli-Palestinian conflict has been extremely costly for the entire world. According to Stauffer, the total bill for supporting Israel is two to four times higher than that for the U.S. alone - costing the global community an estimated $6 to $12 trillion.




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