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Neal M. Sher Executive Director American Israel Public Affairs Committee (AIPAC)

Aid to Israel
25 April 1996 - House Appropriations Committee
Subcommittee on Foreign Operations, Export Financing, and Related Programs

Thank you, Chairman Callahan and members of this distinguished Subcommittee, for the opportunity to testify before you. As Executive Director of the American Israel Public Affairs Committee (AIPAC), I recognize the critical role this Subcommittee plays every year in ensuring that the U.S.-Israel relationship remains strong. Appearing with me are Brad Gordon, AIPAC's Legislative Director, and Ester Kurz, AIPAC's Director for Legislative Strategy and Policy. AIPAC believes in the critical importance of U.S. relations with Israel, and recognizes the prominent role that foreign aid plays in accomplishing America's foreign policy objectives -- not only in Israel but around the world. In this regard, I want to express AIPAC's strong support for a viable foreign assistance program.

AIPAC, a domestic, non-partisan membership organization of American citizens, works on a daily basis with its members to nurture a close and consistently strong partnership between our country and Israel. On our Executive Committee sit the presidents of the 52 major American Jewish organizations, representing more than four-and-a-half million active members throughout the United States, as well as leaders of the country's pro-Israel community from all 50 states. AIPAC is the designated spokesman on Capitol Hill on behalf of the organized American Jewish community on issues relating to the U.S.-Israel relationship.

Mr. Chairman, I submit this testimony in strong support of the President' s request for $3 billion in earmarked economic and military aid to Israel -- that nation's lifeline -- and in support of the legislatively-mandated terms under which this aid is provided. While I fully understand and appreciate the budgetary pressures under which you and other Appropriations Subcommittee chairmen are operating, I strongly believe this aid to Israel is vitally important to U.S. national security interests, more than pays for itself in terms of overall benefits to the United States, and has proven effective throughout many years in advancing critical U.S. foreign policy goals. Furthermore, most of the funds spent on aid to Israel come right back to this country in the form of procurements from U.S. defense contractors or repayments of old military debts.

The world, unfortunately, has not become a safe place with the end of the Cold War; in some respects it is now more precarious than ever. The Middle East in particular is one of the world's most dangerous areas -- and yet also one of the most important for U.S. interests.

The Middle East is high on America's foreign policy agenda. Among "five key areas that offer significant opportunities to advance America's interest in shaping a more secure and prosperous world," Secretary of State Warren Christopher lists, in a 1995 article in the respected quarterly journal Foreign Policy, "helping foster a comprehensive peace in the Middle East," as well as "combating the spread of weapons of mass destruction" -- a reference that certainly includes Iran and Iraq. Senator Bob Dole includes "preserving access to natural resources, especially in the energy heartland of the Persian Gulf," among six "core interests of America" in another article in that same issue of Foreign Policy. And Rep.Newt Gingrich stated in a 1995 interview with the Israeli newspaper Ha'aretz (Jan. 8): "I believe that these two challenges -- Islamic totalitarianism and Iranian dictatorship and the danger of nuclear weapons [in Iranian hands] -- are the single biggest near-term national security problem. I put that at the top of the list; it's a problem that the United States should be working to solve." In his book Seize the Moment, the late President Richard Nixon highlighted the potential dangers emanating from the Middle East: "We should tackle the immediate problems -- such as Persian Gulf security and the Arab-Israeli conflict -- that threaten to trigger further bloodshed. Unless we succeed in meeting these challenges, the cradle of civilization could become its grave."

According to a 1994 survey by the Chicago Council on Foreign Relations, 82 percent of the American public (and 90 percent of a leadership sample) view "preventing the spread of nuclear weapons" as a "very important foreign policy goal of the United States"; 62 percent of the public (and 67 percent of the leadership sample) regard "securing adequate supplies of energy" as an important goal as well. An even more recent survey, conducted in March 1995 by the Mellman Group for the Israel Policy Forum, finds that 64 percent of all Americans believe that "peace between Israel and the Arabs and stability in the Middle East are...in the interest of the United States" (versus only 13 percent opposed). 54 percent (versus 17 percent) think the United States should continue its "active efforts to achieve peace agreements between Israel and the Arab countries."

Clearly, then, there is a broad consensus in the U.S. government, Congress, the foreign policy establishment, and the American public at large, that securing the flow of oil from the Persian Gulf, preventing rogue states such as Iran and Iraq from attaining nuclear weapons, and achieving Arab-Israeli peace are vital American interests. In addition, 69 percent of the public view "international terrorism" - a phenomenon largely emanating from the Middle East -- as a "critical threat" to vital American interests, and number six among those perceived threats is "possible expansion of Islamic fundamentalism" (33 percent) -- also a Middle East phenomenon.

Among the countries of the Middle East, Israel holds a unique place in the hearts and minds of Americans. As the sole democracy in the region and a nation of biblical origin with which Americans feel special affinity, Israel is the only Middle Eastern country toward which Americans have "a warm feeling," according to the Chicago Council survey (Iran and Iraq get the world' s lowest "temperature" ratings in the poll). That warm feeling is mutual. The affection of Israelis for Americans is such that Halfa, Israel, has become the only Sixth-Fleet port of call in the Mediterranean where U.S. sailors wear uniforms on shore. It is also instructive that for many years, Israel's vote in the UN General Assembly has coincided with that of the United States more than has the vote of any other nation. Thus, in 1995 Israel voted with the United States on 97 percent of the General Assembly resolutions introduced in the 50th session; this contrasts with 40.5 percent for Kuwait, 32.9 percent for Saudi Arabia, and even lower rates for other Arab countries.

Sixty-four percent of the American public (and 86 percent of the leadership sample), according to the Chicago Council survey, believe that "the U.S. does have a vital interest in Israel." As President Reagan put it in a September 6, 1984 address, "We who are friends of Israel may differ over tactics, but one goal remains always unchanged: Permanent security for the people of that brave state. In this great enterprise, the United States and Israel stand forever united." And in an August 15, 1979 Washington Post article, Reagan had this to say about Israel's strategic value: "The fall of Iran has increased Israel's value as perhaps the only remaining strategic asset in the region on which the United States can rely .... Israel' s strength derives from the reality that her affinity with the West is not dependent on the survival of an autocratic or capricious ruler. Israel has the democratic will, national cohesion, technological capacity and military fiber to stand forth as America's trusted ally." Nothing has happened during the last seventeen years to detract from the validity of this statement.

President Clinton similarly has lauded the U.S.-Israel relationship, stating at a March 15, 1993, press conference: "One thing I can say definitely will never change is the unique bond that unites the United States and Israel.

It is a bond that goes back to the founding of the State of Israel and beyond, based on shared values and shared ideals. Israel's democracy is the bedrock on which our relationship stands. It's a shining example for people around the word who are on the front line of the struggle for democracy in their own lands. Our relationship is also based on our common interest in a more stable and peaceful Middle East ....I believe strongly in the benefit to American interests from strengthened relationships with Israel ....Israel's security must be assured."

Mr. Chairman, my testimony is divided into two parts: First, I will explain the importance of the Middle East to vital American interests, and the past, present, and future threats to these interests. I will then describe the ways in which U.S. aid to Israel helps promote our interests and deal with the threats.

I. AMERICAN INTERESTS IN THE MIDDLE EAST

Among the most critical U.S. security interests -- and threats to them -- are those that emanate from the Middle East. These include:

  • maintaining the free flow of Persian Gulf oil;
  • preventing radical Mideastern states from acquiring weapons of mass destruction;
  • preventing Mideast-originated international terrorism;
  • containing the radical Islamic threat;
  • promoting the Arab-Israeli peace process;
  • upholding core American values by supporting Israel as the sole democracy in the Middle East and as a haven for persecuted Jews from around the world; and
  • expanding economic opportunities in the region;

All of these interests have been threatened during the last half- century, and are liable to be threatened in the future. Israel has been -- and will continue to be -- America's most reliable partner in promoting our interests and facing the threats; U.S. assistance remains the most effective means of enabling Israel to stay the course. Maintaining the Free Flow of Middle East Oil

The Middle East holds more than two-thirds of the world's proven oil reserves. Our own economy -- and even more those of our most important allies -- depend on the free flow of Middle East oil, which serves not only the needs of transportation but also fuels industry, agriculture, and all other major economic activities; many millions of American jobs depend on the unimpeded supply of oil.

From 1952 to 1970, Middle East oil proven reserve grew from 51 percent to 62 percent of the world's total; during the same period, U.S. proven reserves fell from 26 percent to 6 percent of that total. Today, the Middle East holds over two-thirds of the world's proven reserves, and the United States under 3 percent (see Chart 1).

Consequently, U.S. dependence on Middle East oil has been high. In 1994, Persian Gulf oil imports accounted for nearly 20 percent of the United States' total oil consumption -- a share similar to that of 1973, when the Arab oil embargo caused major disruptions and gas lines in this country.

The trend of growing Middle East oil dominance will continue. In 1992, Persian Gulf oil production capacity was less than twice that of the United States (18.6 million barrels per day vis-a-vis 9.7 million b/d); by the year 2010, Persian Gulf oil production capacity will exceed that of the United States by more than four-to-one (35.9 million bid vis-a-vis 8.1 million b/d).

America's major allies are even more dependent on Middle East oil than we are. Japan, which has no oil reserves of its own, imports most of its off from the region. Other than Britain and Norway, which have significant oil reserves of their own, most European countries are also dependent on Middle East oil imports.

The free flow of Persian Gulf oil has been directly threatened on a number of occasions since the 1970s. There have been, moreover, many additional threats to regional stability, which is a prerequisite for the flee flow of oil.

During the 1973 war and its aftermath, the Arab oil states imposed an oil embargo upon the United States and its Western allies. The results were supply shortages and sharp increases in the price of oil, leading to gasoline lines, economic downturn, high inflation, and rising unemployment. The fall of the Shah of Iran in 1979 precipitated a similar round of gasoline shortages, oil price increases, and a downturn in the U.S. and other Western economies ensued.

The 1979 Soviet invasion of Afghanistan threatened the stability of the Persian Gulf, leading to the "Carter Doctrine" which declared that the U.S. would go to war, if necessary, to protect the supply to the West of Persian Gulf oil. The year after the invasion, the Iran-Iraq war broke out, threatening Gulf shipping. That led to the U.S. reflagging of oil tankers going through the Gulf and the beefed-up presence of U.S. Navy ships. U.S. military action against Iranian forces in the Gulf followed continued Iranian attacks on oil tankers.

The stability of the Arab states along the Persian Gulf has also been challenged. Saudi Arabia' s stability came under question when King Faisal was assassinated in 1975; when the Grand Mosque in Mecca was taken over by extremists in 1979; when Iranian-inspired riots erupted in Mecca in 1987; and when a powerful bomb exploded in Riyadh in 1995, killing five Americans. Iraq's occupation of Kuwaitin 1990 and the even more devastating possibility of an Iraqi takeover of Saudi oil fields invoked the specter of Western oil supplies coming under the control of anti-Western forces. Aside from wreaking economic havoc throughout the Western world, Iraqi control -- had it been allowed to continue -- would have been detrimental to vital Western political and strategic objectives.

The rise of U.S. oil imports means a growing dependence on Persian Gulf oil. But the threats to the free flow of this oil have not abated. In particular, the region's two rogue regimes -- Iran and Iraq -- are likely to continue endangering the much weaker oil-rich Gulf Arab monarchies as long as the Mullahs and Saddam Hussein remain in power. The possibility of another war would certainly threaten the flow of oil.

In building up its military, and particularly in developing unconventional weapons, Iran is seeking to become the undisputed Persian Gulf hegemon. Should it achieve this objective, it is likely to intensify its efforts to undermine the region's weak Arab regimes. Already, Iran is suspected of involvement in recent riots in Bahrain, and has abused Saudi Arabia's hosting of Iranian pilgrims in Islam' s holiest places to foment unrest there.

Motivated by dreams of grandeur, greed, and revenge, Saddam Hussein will almost certainly renew his efforts to take over neighboring oil- rich countries as soon as the sanctions against Iraq are lifted. Even the partial removal of the sanctions now being discussed may increase Saddam's appetite - and resources -- for fresh adventures.

The continued spread of radical Islamic fundamentalism in the Middle East poses a potential threat to Western interests. Islamist hegemony over the Persian Gulf would be antithetical to the U.S. interest in retaining free access to oil at a reasonable price, without political strings attached to such supplies. The riots in Bahrain show no sign of abating, and the recent attack on the U.S. installation in Saudi Arabia served as a warning of things to come.

Beyond the Gulf itself, stability in the wider Middle East region is crucial for the free flow of Persian Gulf oil. Threats to the stability of moderate Arab governments throughout the Middle East and North Africa indirectly continue to threaten the oil-rich conservative Arab monarchies of the Persian Gulf, whose survival is essential for the unimpeded supply of oil to the West. Since the 1950s, anti-

American forces have brought down pro-Western governments in Egypt (1952), Iraq (1958), Yemen (1962), Syria (1963), Libya (1969), Iran (1979), and Sudan (1985).

Keeping Mass-Destruction Weapons from Rogue Mideastern States

As dangerous as the Soviet Union's vast arsenal of nuclear weapons was to the United States during the Cold War, the radical Mideastern states' emerging nuclear arsenals may become even more threatening:

Whereas Soviet leaders were cautious and rational, Middle Eastern leaders such as Saddam Hussein and Ayatollah Khomeini's successors are prone to adventurism and miscalculation. Furthermore, the hatred toward the West harbored by radical Mideastern leaders has far deeper historical roots than did the Soviet hostility to the West.The spread of nuclear weapons to dangerous regimes such as Iraq, Iran, and Libya would pose an intolerable threat to the United States and to its vital regional interests. The record shows that all three countries have made efforts to acquire nuclear weapons; they already have used chemical weapons against their enemies, and at least two of them have biological weapons. By the year 2000 -- a mere four years from now -- Israel could be targeted by as many as 2,000 ballistic missiles deployed primarily by Iran, Iraq, Syria, and Libya -- more than double what Israel may face today. Many of these missiles will have chemical, biological, and possibly nuclear warheads. They will be more accurate and longer-range than the Iraqi Scuds of 1991, thus representing a much greater threat.

Although Israel's destruction of the nuclear reactor near Baghdad in 1981 seriously impaired Iraq's nuclear weapons program, Iraq continued to engage in intensive work on the project. The UN has reported that had Desert Storm not occurred, Iraq would have completed the construction of a nuclear weapon by mid-1991. Saddam is still clearly bent on rearming Iraq. Unless sanctions are effectively maintained, Iraq could rebuild its former power in several years' time.' Baghdad could reproduce a nuclear device within 3 to 5 years and restockpile its deadly chemical agents in less than two years. Last year it was revealed that Iraq had produced germ warfare agents capable of killing the world' s population several times over. The UN believes much of this material may still exist because there are no records to support Iraq's claim that it has destroyed it. Although Iraq was forced to dismantle many of its remaining Scud missiles, it is believed many remain hidden.

Iran has embarked on a major effort to develop nuclear weapons. Although Vice President Mohadjerani's 1991 statement, "Yes, we are working on an Islamic bomb," has been strenuously denied, U.S. intelligence -- and the intelligence services of major European countries as well as of Israel -- are convinced that Iran is working on nuclear weapons and could develop one within five years with foreign support. Iran also has active chemical and biological weapons programs.

Libya, according to reliable reports, has sought to purchase nuclear weapons from China. It is building the world' s largest underground chemical arms plant, which the United States has described as a grave threat to world security.

No one doubts that Iran and Iraq will continue to seek nuclear and biological arms. The possession of such weapons would provide a nonconventional umbrella for either of the two outlaw regimes to engage in operations such as a new invasion of Kuwait. Confirmation that one of these states has a military nuclear capability would greatly complicate a U.S. decision to intervene. Rogue states such as Iran or Iraq, moreover, may actually use or threaten to use nuclear weapons and other mass destruction technologies, not only against Israel, but also against their Arab neighbors, Western Europe, Russia, or even the United States.

Combating Mideast-Originated International Terrorism

Five of the seven countries currently on the State Department' s list of state sponsors of terrorism (Iran, Iraq, Libya, Sudan, and Syria) are in the Middle East. Dozens of Middle Eastern groups are designated by the State Department as terrorist organizations. Since 1970, thousands of Americans have been killed, injured, or taken hostage in terrorist attacks originating in the Middle East. The World Trade Center bombing marked the first such major attack on American soil. Further attacks are likely to be perpetrated.American diplomats, military personnel, businessmen, and tourists have all been the victims of Middle East-originated terrorism throughout the World -- aboard airliners, at airports, on cruise ships, and even in discotheques.

Hundreds of U.S. military personnel in non-combat assignments have been the victims of terrorist attacks, including 241 U.S. Marines who were killed in 1983 in a Hezbollah attack on the Marine barracks in Lebanon, and U.S. Navy diver Robert Stetham, who was murdered by Hezbollah and his body was dumped onto the tarmac at the Beirut airport in 1985 during the hijacking of TWA 847.

There is a lengthy list of American civilian victims of Middle East terrorism, including 88 people killed in 1974 when a TWA airliner was blown up; 259 people killed in the bombing of Pan Am 103 over Lockerbie, Scotland; and 6 Americans killed and over a thousand injured in the World Trade Center bombing in New York.

In addition to killing American & Middle East-based terrorists have engaged in massive campaigns of terrorism designed to undermine America's regional allies. Israel -- America's closest and most reliable ally in the Middle East -- has borne the brunt of Arab terrorism. Thousands of Israelis -- including many women and children -- have been killed and many more wounded in countless terrorist attacks in Israel and abroad since Israel's creation in 1948. Nearly 200 Israelis were murdered during the last two years alone.

Another major Mideast U.S. ally -- Egypt -- has been terrorized by Islamic radicals for nearly two decades. President Anwar Sadat was assassinated in 1981, and numerous Egyptian government officials, security personnel, and civilians -- as well as foreign tourists (including 18 Greek tourists in a terrorist attack in Cairo earlier this month) -- have been murdered. In 1995, Egyptian Islamic radicals tried to assassinate President Hosni Mubarak in Ethiopia.

During the 1950s, 1960s, and 1970s, Jordan suffered major Palestinian terrorist campaigns. King Abdailah was assassinated in 1951, and numerous attempts on King Hussein's life were made. Senior government officials -- including a prime minister -- as well as security personnel, were murdered.

Terrorism has become a way of life in the Middle East. There is a broad consensus among observers that terrorism will continue for the foreseeable future.

U.S. experts are becoming increasingly alarmed by the possibility of Iraqi- or Iranian-backed terrorist attacks using biological or chemical weapons against U.S. targets. Such attacks could kill hundreds of thousands of people. Meanwhile, training camps in Iran, Iraq, Lebanon, Sudan, and Libya for Middle Eastern and Western terrorists are producing the perpetrators of future terrorist attacks.

U.S. troops in Bosnia already are threatened by Islamic radicals, led by the hundreds of Iranian Revolutionary Guards still present in the country. Today, the possibility that further Middle East originated terrorist attacks will occur in America is taken seriously by U.S. authorities.

Containing the Threat of Islamic Radicalism

Since the 1979 takeover of Iran by Khomeini and his supporters, Islamic radicalism has emerged as the most dangerous threat to pro- Western nations in the region. Islamic extremists have taken over Sudan and turned it into a terrorism center, instituting the most vicious oppression of Christians and animists anywhere in the word; they have murdered thousands of civilians in Algeria and are threatening to take over the country; and they have assassinated foreign tourists in Egypt and terrorized Israelis. Additionally, several other pro-Western countries in the region have active radical Islamic movements, including Turkey, Jordan, Saudi Arabia, Morocco, Tunisia, Bahrain, Oman, and Kuwait.

It is of particular concern that Islamic radicalism has reached America's shores. Islamic extremists perpetrated the World Trade Center bombing, and the radical Islamic Sheik Abdel-Rahman was convicted of participating in a conspiracy to blow up additional landmark targets in New York. The current leader of the Palestinian terrorist group Islamic Jihad came from the University of Florida.

The forces of Islamic radicalism will doubtless continue their relentless campaign to undermine the Middle East's pro-Western governments, thus destabilizing the entire region and endangering the free flow of Persian Gulf oil.

The replacement of the Shah by the anti-American fundamentalist regime of Ayatollah Khomeini replaced a pro-Western bastion and force for stability in the Gulf with an anti-Western -- anti-American (the "Great Satan") in particular -- force for revolutionary change. The 1979 Iranian taking of American hostages epitomized this change.

Similarly, the 1989 military coup in Sudan brought to power Islamic radicals who have supported terrorism against Americans and American allies, placing Sudan on the U.S. terrorism list. In 1996, the danger to American personnel compelled the United States to close its embassy and urge all Americans to leave Sudan.

Radical Islamic forces continue to threaten an Algerian takeover. Should they succeed, the continued existence of pro-Western regimes in northern Africa -- particularly Tunisia and Egypt -- would be seriously threatened. And even if the Islamic radicals fail to take over Algeria, the threat to Egypt will continue. Islamic terrorists earlier this month massacred 18 tourists in Cairo, and they are active in the south. Furthermore, the government's failure to deal effectively with Egypt' s crushing social and economic problems virtually ensures the perseverance of radical Islamic forces in the country.

Finally, the terrorist acts perpetrated by Islamic radicals have seriously disrupted the Arab-Israeli peace process. Unless these radicals are contained, their attacks may bring the process to a halt.

Promoting the Arab-Israeli Peace Process

Although the Soviet Union is no more, the Gulf war has demonstrated that regional wars can entangle the United States even if there is no superpower confrontation. Another Arab-Israeli war -which the forces of Islamic radicalism might precipitate -- is particularly dangerous. It could risk:

  • disrupting the stability of the entire region, thus creating internal and external threats to important allies and trading partners of the United States;
  • escalating to a point that forces direct American involvement, thereby putting U.S. lives at risk -- especially at a time when rogue states are acquiring unconventional weapons -- and generating billions of dollars in direct costs to the United States;
  • disrupting the supply and/or driving up the price of Middle East oil, with potential costs to the United States of tens of billions of dollars;
  • disrupting and destabilizing the global economy.

Middle East peace not only would avert these threats, but would also hold major benefits for the United States. It would: bring stability to the Middle East and help to reduce the threat of terrorism against Americans inside and outside the United States; isolate and decrease the influence of radical Middle Eastern countries such as Iran, Iraq, and Libya, thus reducing one of the biggest post-Cold War threats to American security; expand Middle Eastern markets for U.S. exports, providing new opportunities for U.S. investments, and reduce the chance of international crises disruptive to markets and commerce; encourage Arab governments to reallocate resources from military to civilian needs -such reallocations would help improve the Arab economies, thus undercutting extremists who feed on poverty and threaten U.S. regional allies; and facilitate the emergence of a bloc of moderate Middle Eastern states, including Israel along with Egypt, Turkey, Jordan and others, which could advance American interest in the long-term stability of the region.

Helping the Democratic State of Israel To Survive and Thrive

Since the Declaration of Independence, Americans have viewed the right of all people to democratic government as one of their most cherished values. Americans, moreover, have discovered that fellow democracies are reliable allies capable of making vital contributions to U.S. national security. Another core American value is the right of all persecuted people to a safe haven.

In the Middle East, Americans have looked with admiration at Israel's five-decade-old struggle to maintain itself as a Western democracy and as a haven for persecuted Jews from around the world in the face of repeated attempts by its authoritarian adversaries to defeat it. As the sole democracy in the region, Israel has also proved to be a vital and reliable U.S. ally, helping advance American interests at a relatively small cost.

Since 1948, Arab states have threatened Israel' s very existence by waging three major wars and amassing huge arsenals of conventional and unconventional weapons.

The immense military buildup of Arab armies since the 1970s has posed a grave threat to Israel. It is only thanks to U.S. military aid that Israel has been able to match Arab military power.

Israel continues to be threatened by the massive Arab and Iranian efforts to develop unconventional weapons, and missiles capable of hitting Israel with unconventional warheads. In particular, Israel's survival continues to be threatened by Iraq and Iran's nuclear, biological, and chemical weapons program. The 1991 Scud attacks on Israel demonstrated that Iraqi missiles are already capable of reaching Israel.

Expanding Economic Opportunities in the Region

With a rapidly-growing population of over 250 million, the Middle East could become a huge market for U.S. goods, creating millions of new American jobs. Today, the economy of Canada (population 30 million) is far larger than that of all Middle Eastern countries combined -- and U.S. exports to Canada greatly exceed U.S. exports to the entire region. Clearly, the potential for growth in U.S. exports to the Middle East is enormous.

U.S. economic opportunities are hampered by widespread poverty in much of the region. But other factors are at work as well. More than a third of the Middle East's population is ruled by anti-American rogue regimes -- Iran, Iraq, Sudan, and Libya -- where a U.S. economic presence is virtually non-existent. The need to defend themselves against the rogue regimes has squeezed the economies of conservative Arab nations, preventing them from fully developing their economies. The Arab-Israeli conflict also has drained the resources of important Arab countries. Islamic radicalism continues to threaten conservative Arab countries; should they come under its control, U.S. economic opportunities would further diminish.

II. AID TO ISRAEL:
A COST-EFFECTIVE INVESTMENT IN U.S. SECURITY
ISRAEL PROMOTES VITAL AMERICAN INTERESTS

The U.S .-Israel relationship has been cooperative in the nest, bipartisan sense of the word. Just after the Gulf war, then-Secretary of Defense Richard Cheney said that the crisis "has been a demonstration of the value of maintaining Israel's strength, and her ability to defend herself, and also the value of the strategic cooperation between our two countries." In 1994, Secretary of Defense William Perry stated that the U.S. strategic relationship with Israel is "as strong as it has ever been" and "is going to deepen...in the future." Just a few days ago here in Washington, Secretary Perry said that "we must not lose sight of the reality that it is only because of Israel's strength, and the strength of the U.S.-Israeli security partnership, that the Middle East has any prospects of a comprehensive peace." He added that as long as he was Defense Secretary, Israel's qualitative edge would be upheld. Finally, Senate Majority Leader Robert Dole (R-KS) declared in November, 1995, that it was time for the United States to establish a "newly-invigorated defense relationship" with Israel in order to deal with the mutual threats faced by the two allies.

The U.S.-Israel relationship is at the heart of realizing key U.S. objectives in the Middle East:

Protecting the Flow of Middle East Oil

During the CoM War, the vital American interest in the free flow of Middle East oil was repeatedly threatened by Soviet-backed Arab nationalist regimes seeking to undermine the Persian Gulf conservative Arab monarchies in whose countries the oil is found. The crushing military defeats Israel inflicted on these regimes stemmed the nationalist surge and helped curb its threat.Prior to 1967, Egypt's Arab nationalist President Abdel-Nasser made persistent efforts to undermine Saudi Arabia and other conservative, oil-rich Arab states. As a result of the June 1967 defeat, Egypt was forced into dependence on annual Saudi subsidies and gave up its radical campaign.

In September 1970, Syrian troops invaded much weaker Jordan. In close coordination with the U.S., Israel moved forces toward the Syrian border. The Syrian troops withdrew from Jordan. Had they succeeded in taking over the country, Saudi Arabia would have acquired a dangerous pro-Soviet neighbor on its border.

In October 1973, Egyptian and Syrian forces simultaneously invaded Israeli-held territories. Had they succeeded in defeating Israel, an unstoppable Arab nationalist surge would have ensued, almost certainly engulfing the oil-rich Arabian Peninsula. Israel defeated the invading forces, and a productive period of Arab-Israeli peacemaking followed.

As a result of a massive military buildup in the early 1980s, radical Syria was once again emerging as a dangerous regional power. The overwhelming defeat, in June 1982, of the Syrian air force -- which lost 80 jet fighters to Israel's 0 -- greatly reduced the potential Syrian threat to the oil-rich Arab nations.

The gravest -- and most direct -- threat to the oil-rich countries of the Arabian Peninsula came in August 1990, when Saddam Hussein's army invaded and occupied Kuwait. Had Iraq possessed nuclear weapons, the United States would almost certainly have avoided taking military action, leaving Iraq in control of Kuwait -- and possibly of the nearby Saudi oil fields shortly afterward; that would have been a unimaginable catastrophe for America and its Western allies. The reason Baghdad did not possess nuclear weapons in 1990 was the destruction of Iraq's nuclear reactor by the Israeli air force in 1981, for which then-Secretary of Defense Richard Cheney publicly thanked Israel after the Gulf war. Furthermore, Israel in effect guaranteed Jordan' s integrity by declaring that the entry of Iraqi forces into Jordan would be regarded as an act of war against Israel. Iraq was deterred from entering Jordan.

Today, Israel's battle against Islamic radicalism and international terrorism is helpful in preventing further destabilization of the region, which would endanger the free flow of oil.

Since the end of the 1991 Gulf war, the Arab-Israeli peace process has greatly contributed to the stabilization of the Middle East. Regional stability is essential for the security of Persian Gulf oil; the peace process has been made possible by Israel's willingness to take risks for peace.

Preventing Regional Nuclear Proliferation

In the only act of its kind in history, Israel took direct action to destroy the nuclear capability of a rogue state. In June 1981, U.S.- made Israeli jet fighters demolished the Osirak nuclear reactor near Baghdad, setting back Iraq's nuclear weapons program by more than a decade. After the Gulf war, then Secretary of Defense Richard Cheney publicly thanked Israel for this act. And President Clinton stated in November 1992, "If Israel had not conducted a surgical strike on Iraq's nuclear reactor, our forces might well have confronted a Saddam with nuclear weapons ten years later." Senior Israeli officials have stated that Israel will take similarly decisive action against Iran if its nuclear weapons program progresses too far.Israel has shared its unrivaled intelligence on the Arab world and Iran -- including on nuclear and other unconventional weapons programs -- with the United States and other Western allies. The detailed March 1995 briefing Secretary of Defense William Perry received in Israel on Iran's nuclear capabilities points to Israel's intelligence contribution to countering this dangerous threat.

Blocking Mideast-Originated Terrorist Threats

For more than two decades, Israel has been in the forefront of the Western world' s battle against Mideast-originated terrorism. Among many hard blows to international terrorism, Israeli commandos freed over a hundred passengers of an Air France airliner hijacked to Entebbe, Uganda, on July 4, 1976 - America' s Bicentennial. This bold act inspired other Western countries to take direct action: In 1977, German special forces freed the passengers of a hijacked German airliner in Mogadishu, Somalia, and in 1979 French police shot Palestinian terrorists preparing to massacre passengers at a Paris airport.

Israel's unparalleled experience in combating terrorism has been placed at the disposal of many other nations. Israeli training has been provided to anti-terrorism units of major Western countries, as well as a large number of Third-World nations. Seasoned Israeli experts continue to provide security services to many governmental agencies throughout the word. Moreover, Israeli law-enforcement authorities work closely with their American counterparts to track Middle East terrorism; Israel's skills, location and environment make its information on this threat of unrivaled value. For several years, the United States and Israel have been jointly engaged in the Counter- Terrorism Working Group, which develops a range of technologies applicable to the fight against terrorism.

Containing Islamic Radicalism

Having lost over 120 lives last year alone to terrorists of Hamas, Islamic Jihad, and Hezbollah, Israel stands at the forefront of the battle against this menace. As the originator of direct action against Islamic terrorists and as the source of unsurpassed intelligence on

Islamic radical activities, Israel has been an invaluable partner to the United States in countering Islamic extremism.

Israel's advancement of the peace process through its willingness to take risks for peace has brought tangible benefits to the Palestinians, greatly strengthening the supporters of peace at the expense of the Islamic radicals -- as witnessed by the successful Palestinian elections of January 20, 1996. There are indications that this reversal is beginning to generate positive reverberations throughout the region. The moderate Arab regimes are increasingly allying themselves with the United States and Israel against the forces of radicalism.

Promoting Arab-Israeli Peace

Israel' s demonstrable willingness to take risks for peace has made possible a quantum leap in the peace process, in which the United States has a vital interest, greatly reducing the chance of another major war that could entangle the United States. Israel has been able to take these risks thanks to American aid and support, whose continuation will keep Israel sufficiently strong to deal with the risks and deter Arab attacks on Israel.

Israel's three agreements with the Palestinians (the September 1993 Declaration of Principles, known as "Oslo I"; the May 1994 Gaza- Jericho accord; and the September 1995 "Oslo II" Interim Agreement) greatly reduced the' value to radical Arab groups of the Palestinian issue as political ammunition. As a result, some of the most destabilizing radical groups in the region -- the Islamist organizations Hamas and Islamic Jihad, and the various secular radical Palestinian groups -- lost considerable power and influence.

Israel's October 1994 peace treaty with Jordan strongly bolstered that pivotal country's strategic position, giving its government the confidence to defy Saddam Hussein and carry out a rapprochement with Saudi Arabia and the other oil-rich Arab countries. This dramatic reconfiguration has enhanced the resilience and durability of all conservative Arab states.

The multilateral peace negotiations, in which Israel is a key participant, have brought most Arab countries and Israel together in pursuit of joint projects that would improve their economic and social infrastructures. Such improvements would greatly benefit their ability to cope with radical challenges.

Strengthening America's Strategic Regional Posture

Israel is a unique strategic asset for the United States in the Middle East. The two allies are currently expanding their long-standing partnership in key areas such as ballistic missile defense, counter- proliferation, and counter-terrorism. The U.S. armed forces make frequent use of Israeli facilities, hold joint maneuvers with their IDF counterparts, and procure a wide array of Israeli designed defense technologies produced here in the United States. As U.S. defense budgets and armed forces continue to shrink, making use of our allies' military capabilities becomes an increasingly important element of our national defense.

Israel and the United States are the world leaders in developing defenses against tactical and theater-range ballistic and cruise missiles. Current joint U.S.-Israeli efforts in this area, such as the Arrow missile, Boost Phase Intercept program, and Nautilus laser, can enhance deterrent capabilities and provide a shield for U.S. forces operating abroad, as well as civilian targets.

The U.S. armed forces continue to widely test and procure Israeli defense systems. As the Pentagon's R&D budget continues to shrink in coming years, buying proven high-tech Israeli systems "off the shelf" will become increasingly attractive. Israel specializes in a variety of technologies critical to the U.S. defense industrial base. Procurement contracts with Israeli defense technology firms can save the United States millions of dollars in development costs, with some projects emerging as large programs for U.S. and Israeli industries.

Intelligence cooperation with Israel played an important role during the 1991 Gulf war. Raw data on Iraq was provided to the United States, and Israeli-developed Unmanned Aerial Vehicles (UAVs) were used extensively by U.S. forces in the Gulf war to gather "real-time" information.

Israel provides facilities for the storage and maintenance of U.S. military material for American or Israeli use in a crisis situation. Up to $300 million worth of dual-use military supplies will be prepositioned in Israel. Israel' s Haifa harbor continues to be the favorite port of call for the U.S. Navy' s Sixth Fleet, accounting for roughly 50 percent of all visits in the Eastern Mediterranean. An average of 20 U.S. warships, including aircraft carriers, visit the port each year, many to utilize the harbor's excellent and unique repair and servicing facilities. Joint military maneuvers are routinely held between the Sixth Fleet, the U.S. Air Force or other American forces and their counterparts in the Israel Defense Forces (IDF). Last year, units of the IDF and American land, naval, and air forces conducted combined maneuvers in Israel's Negev desert and the Mediterranean Sea -- the largest joint exercises ever conducted between the two allies, underscoring the importance both sides attach to expanding the strategic relationship. Israel has also staged joint training with American special counter-terrorism forces. While intended primarily to protect the Israel from air attack and support the ground forces, the IDF could in particular circumstances join a coalition with the U.S. armed forces against a mutual threat.

Israel has taken the first steps toward participation in an anti- Islamist regional coalition. Its contacts with the Arab world have expanded dramatically since the signing of the Israel-PLO accord in September, 1993. These contacts have led to a full peace treaty with Jordan (in addition to the peace treaty with Egypt signed in 1979), and to the establishment of low-level diplomatic ties with Morocco, Tunisia, Oman, Qatar, and Mauritania, and warming relations with Bahrain, Yemen, and other moderate Arab nations concerned with Islamic radicalism.

Turkey, NATO's southeastern democratic bulwark which shares borders with Iraq, Iran, and Syria, and whose secular politicians only recently narrowly thwarted a bid for power by Islamic fundamentalists, has vastly upgraded its ties to Israel in the last two years. Just this month, Turkey and Israel signed landmark agreements to cooperate on intelligence, military training, and joint air exercises.

Maintaining and Expanding Democracy

U.S. support has helped Israel in its struggle to survive and to thrive as a Western democracy amidst hostile and authoritarian Arab regimes. It is doubtful, for example, if Israel could have defeated the combined Egyptian-Syrian attack of October 1973 if not for the U.S. airlift, which compensated for the earlier massive Soviet airlift to Egypt.

On January 20 of this year, the first free elections for a Palestinian legislative body took place in the West Bank and Gaza. These elections could -- and should -- serve as a model for the expansion of democracy in the region.

Expanding U.S. Economic Opportunities

American assistance to Israel continues to make good business sense; American aid dollars and loan guarantees get returned many times over to the United States in the form of American exports to Israel of both civilian and defense goods. In fact, over 80 percent of this aid is spent in the United States.

America is Israel's largest trading partner. Both countries are reaping the fruits of the Free Trade Agreement (FTA), which facilitated a large increase in trade between the two countries. In 1995, this trade amounted to an estimated $11 billion. The two allies enjoy a balanced trade relationship, in which Israel exported $5.4 billion in 1995 to the U.S. while importing $5.7 billion, according to U.S. Department of Commerce statistics. Over 100,000 American jobs depend on exports to Israel.

Israel also is America's most developed market in the region, second only to Canada in terms of per-capita imports of U.S. products by our major trading partners. Among Middle Eastern countries, Israel is first in per-capita imports and second only to Saudi Arabia in overall imports.Along with increases in trade, greater cooperation in research and development between the United States and Israel is now occurring. Many U.S. companies invest in Israel to take advantage of Israeli high-tech research and development. By combining American capital and manufacturing with Israeli research capabilities and technology, Americans firms are able to increase their competitiveness. In fact, some of the most important technologies used in the world today were developed in Israel by U.S. companies that invest there.

A recent State Department report cited numerous recent efforts by the Government of Israel to facilitate the purchase of U.S. goods and services as Israel promised at the time U.S. loan guarantees were extended. To begin with, Israeli government agencies have been ordered to inform the U.S. Embassy when large tenders are offered so that American companies can compete. Second, the Israeli Government is funding half of the costs of American trade exhibitions in Israel to highlight U.S. companies. And finally, the Government of Israel is actively promoting imports from the United States. In 1995, for example, the late Prime Minister Rabin ordered that the engine size limit on government vehicles be changed to encourage the purchase of U.S. made vehicles.

U.S. ASSISTANCE KEEPS ISRAEL A STRONG AND AN EFFECTIVE AMERICAN ALLY

I want to thank in particular the members of this Subcommittee for the consistent, strong support you have provided in legislating the aid package to Israel throughout the years. Assistance to Israel has been one of America's most effective foreign assistance programs, helping to bring economic and military stability to Israel and to achieve the extraordinary progress we have seen in the peace process to date.

Indeed, although aid to Israel has lost, since 1986, over a third of its value because of inflation, the absolute amount of this aid is substantial. But it is comparatively one of the most cost-effective investments that the United States makes in support of its international interests. At less than 3 percent of the costs of stationing and supporting U.S. troops in key areas of the world, aid to Israel helps protect vital American interests in the Middle East. And we get a good return on our money to Israel. As President Clinton stated just prior to his election: "I support the current levels of military and economic assistance to Israel .... This vital aid encourages long-term stability in the region." Elaborating on this same point, the Pentagon's Principal Deputy Assistant Secretary for International Security Affairs, Fred Smith, stated before the House Foreign Affairs Europe and the Middle East Subcommittee on April 13, 1994: "The U.S. commitment to Israel's security has long been the cornerstone of our policy in the Middle East. Our primary interest lies in securing a just and comprehensive peace between Israel and its Arab neighbors, which in turn will lead to increased security and stability in the eastern Mediterranean and Middle East. Israel's security must not be in doubt, if it is to feel confident to engage in bilateral and multilateral peace efforts." And, on the next day, Secretary of State Warren Christopher stated: "I want to make it unmistakably clear that the United States will continue to stand with Israel ....For more than four decades, the United States has stood with Israel, because it reflects our ideals and because it reinforces our interests .... Working together as partners and as allies and friends, we'll continue our search for peace and security until we've achieved all of our objectives."

U.S. Assistance Keeps Israel Strong

The U.S. assistance program to Israel has been remarkably successful. It has had a critical impact on the security of the Jewish state as it continues to face myriad regional threats. The Foreign Military Funding program has enabled Israel to build a cutting-edge air force equipped with the latest U.S.-made jet fighters and combat helicopters; Israel's air force has been the key element in making Israel a formidable U.S. ally and in ensuring its survival in a hostile environment. Thanks to these U.S. funds, Israel has been able to supplement its air force with powerful ground forces and an effective navy.

Nevertheless, Israel' s defense requirements continue to exceed available budgetary resources, and the IDF has been forced to reduce the readiness of some units and limit defense research & development investment in order to pay for the top-priority weaponry needed to counter the emerging threats. For example, state-of-the-art F-15 fighter-bombers have been purchased to give Israel a longrange capability to deal with Iran and Iraq. In recent years, the IDF has been faced with a severe budget crisis. Funds for procurement of needed weapons systems and research and development on new capabilities has been slashed in order to cover the costs of current operational readiness and critical maintenance. Military costs have risen across the board, while the demands of security, such as countering more dangerous arms at greater distances, have risen. In the last two years, the IDF has been forced to pare its multi-year development plan by approximately $200 million -- a major cutback. This makes U.S. military aid to Israel a crucial component of that nation's ability to defend itself. In order for Israel's qualitative edge to be maintained, it is paramount that the United States continue current levels of security assistance.

U.S. Assistance Enables Israel To Pursue the Peace Process

The annual $3 billion aid to Israel has come to symbolize the immutability of the U.S.-Israel alliance. It has signaled to Israelis and Arabs alike that the relationship is rock-solid. The aid also helps offset the costs of redeployment from the territories which Israel is now incurring as part of the peace process. These are expected to total several hundred million dollars.

The constancy of the U.S.-Israel relationship -- as reflected in the constancy of the foreign-aid figure -- has been and continues to be indispensable for the peace process and regional stability. On the one hand, while Israel is, of course, engaged in the process for its own sake, it can only take risks for peace if it is confident of unwavering U.S. backing and assistance for its security. In the words of President Clinton (October 27, 1994), "Now that you are taking risks for peace, our role is to help you to minimize the risks of peace. I am committed to working with our Congress to maintain the current levels of military and economic assistance." On the other hand, only an unshakable U.S.-Israel link can persuade the Arabs that the United States will neither "deliver" Israel nor allow them to attack it, thereby leaving the Arabs no other option but to engage in serious negotiations. As President Clinton also stated on June 1, 1994: "I want to make it clear that the Clinton Administration stands firmly behind Israel's quest for peace. Whatever doubts and uncertainties accompany this quest, Israel should never question or doubt the United States' unshakable commitment to its security and well-being. We have stood by Israel in the face war. We have stood by Israel in the pursuit of peace. And we will continue to stand by Israel until her people achieve the peace and security they have so long been denied."

U.S. Assistance Is Relatively Low-Cost

Compared to the enormous costs of upholding U.S. security interests in Europe and the Far East, Israel offers America a far less costly defense of these interests in the equally important Middle East:

The United States maintains 135,000 American soldiers in Europe, spending annually $80-$110 billion on NATO; and there are 100,000 American soldiers in Asia and the Pacific region, with annual U.S. expenditures of $30-$50 billion. By comparison, the United States does not maintain any troops in Israel, and spends $3 billion per year in aid to Israel. Of this total aid package, the $1.2 billion in economic assistance is used to repay old military debts, and Israel spends $1.425 billion in the United States out of its $1.8 billion U.S. military assistance.

Reducing U.S. Assistance Would Jeopardize the Program's Effectiveness

Any reduction in the $3 billion aid package to Israel has the potential to seriously endanger the peace process. It would demonstrate to the Israeli public -- without whose support no Israeli compromises are possible -- that for all its generous peace proposals and success in restoring good personal ties with Washington, Israel is unable to preserve the U.S. aid level which had previously been maintained for seven years in a row.

Concomitantly, even a small reduction in aid to Israel would be perceived by Arab parties as a signal that the U.S.-Israel bond is eroding. Such a perception would encourage them to believe that Washington might be amenable to Arab demands that the U.S. press Israel to make unilateral concessions. This would reduce their incentive to negotiate seriously with the Israelis -- and may even tempt some radical regimes to once again consider the military option.

A reduction would also erode Israel' s qualitative military edge, without which the Israelis cannot seriously consider taking risks for peace. It would, for instance, make it more difficult for Israel to pay approximately $2 billion for the 21 advanced F-lSI jet fighters it has decided to procure in order to deal with the potential threats of the 21st century. At a time of economic challenge and deep cuts in its defense budget, Israel needs to develop an answer to the emerging threat of Iranian and Syrian missiles equipped with unconventional warheads, in addition to constantly upgrading its defenses against a conventional attack by rapidly growing Arab armies. Since the 1973 war, the nations of the Middle East have expended approximately $500 billion on their armed forces, despite a corresponding period of stagnant economic growth. Even after the destruction of much of Iraq's military might, the Arab states and Iran now outnumber Israel eight- to-one in manpower, seven-to-one in tanks and armored fighting vehicles, and more than four-to-one in aircraft. Even with the full U.S. aid package, Israel will find the preservation of its security a daunting challenge.

CONCLUSION

The deep, broad-based partnership between the United States and Israel continues to flourish. The democratic elections in Israel, which in 1992 led to the peaceful transfer of power from the governing party to its most bitter rival -- an occurrence unknown in the Arab world -- served to remind us of the extent to which the Israelis share our most fundamental values. A new era is dawning that holds great promise for both countries, and bodes well for the future of U.S.-Israel relations. For the first time in over four decades, there is real promise in a negotiating process which already has brought an end to the state of war that has existed between Israel and many of its Arab neighbors -- one of the major foreign policy goals of the United States since World War II. The United States was instrumental in creating the process and will be instrumental in its ultimate success. The United States will also be one of the major beneficiaries of the enhanced regional stability that will result from a successful conclusion of the peace process. As Israel takes the formidable risks inherent in any such negotiation, it is imperative that the United States remain steadfast in its support for the Jewish state. This Subcommittee, by voting for $3 billion in military and economic assistance to Israel and the existing terms of that aid for FY 1997, will be helping to ensure that steadfastness and strength which have always worked to the benefit of both countries.



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