Changing Israel’s Behavior Will Require Much More Than Tinkering With Aid And Loan Guarantees

By Mitchell Plitnick

Last week, I explained some of the mechanics of U.S. aid to Israel and why a president would find it difficult to use aid as leverage against Israel. I also explained why the traditional theoretical targets of leveraging aid—settlements and a two-state solution—were no longer relevant and their futility meant supporters of the Israeli right would be delighted to see those targets in the center of a fierce debate over U.S. aid.

Those ideas raised other questions. While my original focus was U.S. military aid to Israel, what about loan guarantees? Might that be a more fruitful path to pursue? Does a president’s relative inability to use military aid as leverage mean it is a dead issue, or might there be other avenues? Is it pointless to even discuss U.S. military aid to Israel? These are some of the questions raised in response to my article, and they lead to some important answers.

Withholding loan guarantees has worked in the past. Couldn’t it work again?

Military aid under the Foreign Military Financing program (FMF) is only one way the United States supports Israel. Under the current memorandum of understanding (MOU), concluded between Israeli Prime Minister Benjamin Netanyahu and President Barack Obama in 2016, the U.S. provides Israel $3.3 billion annually in FMF, and an additional $500 million each year for missile defense aid. Additionally, Congress has authorized loan guarantees, which amount, after deductions for various costs, to around $3.8 billion annually. This is not funding, but rather the amount Israel can borrow each year from international lenders which the United States would guarantee.

Israel is only meant to use the loan guarantees to borrow money for use within the 1967 borders and the authorization includes a stipulation that allows the U.S., based on reports from the White House, to reduce the loan guarantees by the amount Israel spends on settlement activity.

President George H.W. Bush made this an issue in 1991 when he first delayed and then threatened to withhold $10 billion in loan guarantees that Congress had authorized to help Israel in resettling immigrants from the collapsing Soviet Union. Bush did this primarily because he wanted to induce the Arab states to attend the Madrid Peace Conference he was then assembling, but also because he believed that Israel had used previous U.S. loan guarantees for expanding settlements in the West Bank.

Israel initially tried to marshal its forces in Congress to confront the president, but eventually, recognizing that Bush was not going to back down, relented. Many see this as an object lesson in how presidents can confront Israel and win. But it’s not that simple.

Many factors went into Bush’s ability to confront Israel’s lobby in Washington and win. At that time, Bush was riding a high approval rating, around 70 percent in most polls. The victory in the first Gulf War was still fresh in many minds. Congress was not eager to get into a major confrontation with a popular president, especially not on his strongest turf, foreign policy.

Additionally, Israel was in an unusually weak position. The loan guarantees were desperately needed. At that time, Israel was in the midst of absorbing about one million newcomers from the Soviet Union, a massive influx of people to a country whose population was about five million at the time, not including those living under occupation. Israel’s economy had stabilized by that time from the hyper-inflation crisis of the mid-1980s, but it was not yet as stable and robust as it would become over the next decade. Israel desperately needed the loan guarantees, making it unusually susceptible to Bush’s pressure.

Today, Israel is far more independent economically. In fact, Israel has not used the U.S. loan guarantees in fifteen years. Congress still authorizes them, and the Treasury still sets the funding aside, but Israel has not had cause to use it since it needed help shoring up its economy in the wake of the second intifada. Not coincidentally, that was also the last time loan guarantees were used to pressure Israel, as George W. Bush wanted Israel to alter the route of its separation wall in the West Bank. The route of the wall was altered slightly, but Israel simply weathered the loss of a small portion of the loan guarantees.

The circumstances that enabled the elder Bush to use loan guarantees to alter Israel’s policies are not likely to exist again any time soon. Israel doesn’t need the guarantees any longer. They are an insurance policy for future days of crisis, days which may never come. Even back in 1991, it’s not certain that the president could have prevailed over a determined Congress. Ultimately, neither Congress nor Israel wanted to have that fight, an unlikely outcome today. (It should also be noted that the idea that Bush lost the election in 1992 over this is unfounded. It may have had some impact, but it was ultimately a small one next to the recession, his broken promise on taxes, and the candidacy of H. Ross Perot).

There are alternatives, but they all run through Congress

There is good reason that activists want to find a way to pressure Israel through the president. Turning Congress around on this point is a massive undertaking, one which is likely to take many years of arduous work building public support for a different U.S. role in Israel and Palestine. That’s not a very encouraging prospect, nor is it a road marked by a great deal of past success.

But neither is it hopeless. Popular discourse has shifted tremendously in the past ten years. Activists have made that happen, and they can do a lot more. For years, that success has not translated into any movement in Congress, but there is an opportunity to change that in 2020 by making sure that Reps. Ilhan Omar (D-MN) and Rashida Tlaib (D-MI) are re-elected and that at least a few other likeminded candidates join them.

But there are other tools. For example, Rep. Betty McCollum (D-MN) has introduced a bill that would forbid funds to any country that might use it in detaining or abusing children in violation of international law. It hasn’t inspired much support in the House, despite efforts from activists to promote them. Still, it has 22 co-sponsors, despite the common understanding that it is targeting aid to Israel. 

There is also the Leahy Law, which prohibits U.S. funding to any military unit that has committed a serious human rights violation. There have been several attempts to investigate whether Israeli units should be held liable under the Leahy Law, but they have routinely been rebuffed by the State Department, which is tasked with investigating them and reporting to Congress.

The Foreign Assistance Act stipulates that “any country the government of which engages in a consistent pattern of gross violations of internationally recognized human rights” should not receive U.S. military assistance. Meanwhile, the Arms Export Control Act dictates that U.S. arms can only be sold to other countries for specific purposes: (1) “for internal security”; (2) “for legitimate self-defense”; (3) “for preventing or hindering the proliferation of weapons of mass destruction and of the means of delivering such weapons”; (4) “to permit the recipient country to participate in regional or collective arrangements,” including the United Nations; and (5) “for the purpose of enabling foreign military forces in less developed friendly countries to construct public works and to engage in other activities helpful to the economic and social development of such friendly countries.”

Israel would not be the only country that would be deeply concerned if the United States decided to follow its own laws. Finding ways to bring these points into the policy debate should be a top priority for anyone who wants to find ways to pressure U.S. allies, including Israel, into changing their ways.

Such a change would represent a fundamental shift in U.S. foreign policy. That’s why the task is so monumental. But this is the only way to use U.S. aid to leverage Israeli behavior, as well as that of the many other countries that spend large sums on U.S. weaponry. It is a very worthwhile project for supporters of Palestinian rights to put some energy towards.

But it’s not the panacea that some believe it to be. Indeed, if we are ever to see a U.S. government that is truly willing to enforce human rights norms in its weapons sales, we are likely to see one that is already pulling back sharply on those sales, and is already using its other diplomatic tools to press for justice. In other words, it is useful to bring the idea of using aid to leverage Israel into recognizing Palestinian rights not because that alone will force Israel to change but because it is a component of building the public support, and, crucially, the policy debate that moves U.S. foreign policy from its focus on coercion and warfare to achieve its ends. That’s how we work toward a policy of leading by promoting universal human rights through international law.