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«American Aid to the Middle East: A Tragedy of Good Intentions By Yuval Levin Aid in U.S. policy American aid to the Middle East is a tragedy of good ...»

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American Aid to the Middle East: A Tragedy of Good


By Yuval Levin

Aid in U.S. policy

American aid to the Middle East is a tragedy of good intentions on a grand scale. The

stated purposes of aid – the service of American interests, the support of allies, and the

establishment of peace – are sound, reasonable, and just. The idea of using America’s

vast economic power to mold the international arena has been an important element of

American foreign policy since the 1920s. And yet, in the Middle East aid has proven to be counterproductive and even dangerous for the United States and for its closest ally in the region: Israel. The story of how aid came to so distort the politics of the region in contradiction to its intended goals tells us much about international politics in our time, and indeed at any time.

Normally, critiques of foreign aid focus on the economic costs of aid to the American taxpayer. The fact is, though, that all foreign assistance makes up only one half of one percent of the federal budget, and if aid achieved its stated goals, it would be a bargain.

These goals, however, have not been and could not be achieved by aid. Moreover, the argument presented here is by no means an argument against American support of Israel.

Israel is the only democracy in the Middle East, and has historically been a bridgehead of American influence in the region. Israel deserves to survive and deserves the support of the United States. American foreign aid, however, does not “support Israel.” Rather it is as harmful to the Jewish state’s interests as it is to America’s.

Far from strengthening America’s allies and fostering compliance among America’s clients, U.S. aid has harmed the economies of Israel and other allies, while failing to restrain Egyptian and Palestinian misbehavior. Nevertheless, U.S. policy makers are wedded to aid because they hope that the economic “carrot” will lead the Middle East away from clashes between interests and powers, and toward a comprehensive peace.

U.S. policy seems to be based on a sense that the old ways of doing things in international affairs are no longer relevant, that history as we have known it is nearing a sort of end, and that we now stand at the threshold of a whole new world. Americans (and Israelis) who think this way ignore the actual behavior of the Arab states in part because the vast sums of American money involved give recipients an incentive to play along and donors a means to justify their commitment. Thus it may be said that Americans pay for the blindfolds that cover their eyes.

Why Foreign Aid?

The practice of subsidizing allies to assure their allegiance and to upgrade their militaries extends to antiquity. Such funding became especially important to the foreign policies of Britain and Prussia in the 18th and 19th centuries, and was an essential component o

–  –  –

balance of power system in European politics. In the United States this practice began in the aftermath of the First World War, when the U.S. loaned substantial sums to Germany to cover German reparations to America’s former allies. These loans in effect became grants when the Germans (and later the Allies) proved unable to repay them. Similar loans of funds and equipment preceded America’s entry into the Second World War as well.

But the massive economic aid programs to which we have become accustomed in the past half century were very much a product of Cold War calculations. With Europe reeling from World War II, the United States provided Western European nations with over $13 billion in aid in an effort largely intended to save Europe from communism. Thus, a new foreign policy tool was institutionalized. Despite its clearly defined political ends, American policymakers have been loath to think of aid in cold-blooded, instrumental terms. Americans have never been comfortable with the notion that aid is a bribe to foreign nations to support American interests. Hence the U.S. has always proffered rationales for aid that minimize the political calculations behind it.

Nevertheless, the formal goals of American foreign aid policy have always been expressly political. Understandably, the Congress would approve aid only on the ground of American self-interest. “The use of the economic power of the United States to achieve broad political ends is no new policy,” Undersecretary of State Dean Acheson told an audience in April of 1947, “We have always used our economic power for political ends in the national interest. It is only common sense to do so.”1 Writing in the New York Times on May 9, 1947, the well-connected James Reston made it clear that “the administration has not changed its objective: the holding back of Soviet expansionism. It has merely come to believe that reconstruction aid may well be the best barrier against such expansion.”2 The Marshall Plan and the new foreign assistance policy of the United States, then, were quite clearly to be aimed at advancing American political objectives.

As the threat of communism reached beyond Europe, so did American aid – but always with the same objective. On May 8, 1950, Acheson (by then Secretary of State) announced a policy of economic and military aid to French Indochina (later Vietnam) by


The United States Government, convinced that neither national independence nor democratic evolution exist in any area dominated by Soviet imperialism, considers the situation to be such as to warrant its according economic aid and military equipment to the Associated States of Indochina and to France in order to assist them in restoring stability and permitting these states to pursue their peaceful and democratic development.3 The Marshall Plan: A Collection of Primary Documents (Independence, MO: The Harry S. Truman Presidential Library, 1978), microfilm, 3.

James Reston, “Administration Shifts Its Emphasis,” New York Times, 5 May 1947.

U.S. Senate Committee on Foreign Relations. Background Information Relating to Southeast Asia and Vietnam. 90th Cong., 1st sess., 1967.

American Aid to the Middle East: A Tragedy of Good Intentions Page 3 Throughout the 1950s, as it became clear that the Cold War would involve competition for client states, economic aid became arguably the major tool of American foreign policy. Aid was focused particularly in Asia, with the bulk directed to South Korea, Taiwan and South Vietnam.4 In the early 1960s, the justification of foreign aid widened to include a moral and ethical obligation to help developing countries in general. This focus on “development” would come to overtake nearly all other considerations in the public discourse over foreign aid. Nevertheless, the underlying political motivation of the policy remained.

In 1961 Congress passed the Foreign Assistance Act, which set up the United States Agency for International Development (USAID) and that same year President Kennedy created the Peace Corps, an organization of volunteers who perform social and humanitarian services overseas. It is important to note that this shift in focus was at the time almost entirely rhetorical. Kennedy and his advisors understood that foreign aid was to be driven by political purposes. As the president told the Congress in 1963, “these [aid] programs are clearly in our national self-interest, and have proven to be a vital tool in our efforts to hold back communism in Europe and now also in Asia and elsewhere.”5 Aid to the Middle East was no different.

The Origins of Aid to the Middle East

The Middle East was not an important focus of American aid policy until the early 1970s.

Before that time, Middle Eastern nations including Israel, Egypt, Jordan, Lebanon and others received aid generally in the tens of millions of dollars per year as part of the American food and poverty assistance effort.6 The enormous growth of aid in the 1970s was directly linked to the increasing importance of the region in the Cold War.

In the 1970s, the Nixon administration crafted a new approach to Middle Eastern politics by which the United States attempted to simultaneously support its client and ally, Israel, while carefully drawing the most powerful Arab state – Egypt – out of the Soviet camp.

American dollars were perhaps the essential tool in this effort, and beginning in the mids right through the present day, Israel and then Egypt have been the largest recipients of American foreign assistance.7 The United States gives many different types of bilateral foreign aid, but from the outset economic aid to Israel and Egypt has been granted as part of the Economic Support Fund Vernon Ruttan, United States Development Assistance Policy (Baltimore: Johns Hopkins University Press, 1996), 256.

John F. Kennedy, Collected Presidential Papers, 1963 (Washington: Government Printing Office, 1963), 317.

Ruttan, United States Development Assistance Policy, 279. According to the General Accounting Office, U.S. aid totaled approximately $1.4 billion in the years 1950-1970 (combined), while in 1999 alone aid was over $3 billion.

According to USAID, Israel became the largest recipient of American aid in 1976 (after aid to South Vietnam – which had held the top spot – was ended with the withdrawal of U.S. forces from Vietnam), and Egypt became the second largest recipient in 1979.

American Aid to the Middle East: A Tragedy of Good Intentions Page 4 (ESF) operated through the U.S. Agency for International Development.8 In fact, Israel and Egypt alone account for over two thirds of all ESF funds granted annually.9 ESF, although it is classified as a development fund, exists to aid nations that the U.S.

considers important to its strategic interests. The purpose of ESF assistance has been quite clearly articulated by the State Department: “to support U.S. economic, political and security interests and to advance U.S. foreign policy objectives.”10 These purposes provide the U.S. with criteria against which to measure the results.

Aid and the Israeli-Egyptian Peace Accords

Starting after the 1973 Yom Kippur War, the United States made clear that it was willing to entice the Egyptians by offering them vast sums of money, essentially on par with the economic (though at first not military) aid received by Israel. Following the Camp David Peace Accords of 1979, Egypt began receiving military aid as well, and this aid became linked with Israel’s in principle and legislation. The Camp David aid package was truly gargantuan: nearly $5 billion to the two sides. This was a long-term commitment of American resources to fund a new sort of politics – to purchase a new world.

But what exactly was the U.S. purchasing? Ostensibly, the funds were to help both countries deal with the costs of implementing the deal, and to support them as American allies. However, two decades later it is clear that aid at best has been an incentive for the Egyptians to keep up the appearance of playing their new role (though even this has not always been done). And U.S. aid to Israel has undermined both Israel’s economic policy and its strategic self-sufficiency.

Aid to Egypt

U.S. aid to Egypt demonstrates the inadequacy of one of the central assumptions of American aid policy: that aid allows a meaningful measure of control over the behavior of potentially unfriendly regimes. In fact, as we shall see, aid and the politics surrounding it seem to make the U.S. less capable of dealing with such states, not more so. This is both because the amounts of money involved inevitably create interest groups that make their living off the continuation of the aid, and because if the aid were to be stopped the entire structure of American expectations would collapse – along with the reputations of the policymakers. And so, the U.S. is stuck financing regimes that squarely oppose its strategic interests, all the while maintaining that supporting them is an essential American strategic concern.

ESF has only existed under that title since 1978, but programs which fell under the “Economic Support for Defense” and “Security Supporting Assistance” programs before that time are now generally referred to as ESF aid as well, since the authorizing language of these different programs was essentially identical.

Government documents tend to group all three under the title of ESF aid, and I will do the same in the pages to come.

Ruttan, United States Development Assistance Policy, 27l.

United States Agency for International Development, Congressional Presentation for Fiscal Year 1987, Vol. 99 (Washington: Government Printing Office, 1987), 21.

American Aid to the Middle East: A Tragedy of Good Intentions Page 5 American aid to Egypt began in 1951, with an agreement between the Truman Administration and the Royal Government that preceded the Officers’ Coup that brought Gamal Abdul Nasser to power and created modern Egypt. The agreement committed the U.S. to only very modest levels of support, consisting mainly of credits to buy U.S.

equipment and the training of Egyptian personnel in the United States.

When Nasser’s revolutionary regime took over, however, the U.S. decided to court it with aid. In May of 1953, the two governments agreed on a new project called the Egyptian-American Rural Improvement Service (EARIS) intended to assist rural Egyptian communities. In fiscal 1954 the Eisenhower Administration, determined to keep Nasser from becoming a Soviet client, increased this program enormously, and made $10 million available to Egypt in a lump sum. Soon thereafter, however, the U.S. realized that Nasser was turning toward the Soviet camp. Egypt’s refusal to join the Middle East Defense Organization (established by the Baghdad Pact of 1955) and Nasser’s general resistance to Western influence caused a cooling of relations and a drop-off in aid funds, culminating with the American refusal to fund the Aswan High Dam project in 1956.

Following the Suez War of that year, the U.S. completely halted its participation in the EARIS program, and for a short time ended nearly all aid to Egypt. In 1959 and 1960, however, the Eisenhower administration made another effort to buy Nasser’s sympathies.

The EARIS program was renewed and a March 1960 agreement earmarked $32.5 million dollars in development aid for Egypt.

Still, through the 1960s, the two nations seemed to be moving in opposite directions.

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