Perhaps even worse is how U.S. “assistance” further inflates Israel’s already bloated government. Government-to-government “aid” has expanded the overbearing, money-wasting regulatory state around the globe. Israel is no different.
Without this aid, it stands to reason that the government would be forced to reduce the public sector in size, through defense budget cuts, restructuring and increased efficiency in other frameworks. This would direct many more resources toward the private sector, which would be motivated to seek creative and growth-oriented solutions, involving personnel, financing, as well as land and other resources currently held by the government.
Encouraging a larger and less efficient government naturally reduces Israel’s economic strength, which is necessary to maintain an effective defense. More broadly, he argues, “the Government of Israel’s reliance on the American taxpayer sets a negative example which acts to encourage a culture of dependence.”
Gazit worries about the intangible moral damage to Israeli society. He recognizes that budget pressures in America eventually may affect financial aid to Israel. Then unilateral cuts would be seen as weakening the commitment to Israel, yet “if the same move was the outcome of an agreement between the two countries, at Israel’s initiative, Israel’s situation would not be impaired.” Overall, he predicts that “the economic and strategic damage to Israel as an outcome of American aid will only increase.”
The financial trials facing America will worsen in coming years. Instead of continuing to borrow to subsidize other countries, Uncle Sam needs to admit that he’s broke and stop giving away money he doesn’t have. Heavily indebted Spain just announced that it was ending development assistance for Latin America. Washington should do the same, including to Israel. Far from hurting Israel, ending “aid” would be doing America’s ally a favor. Israel is likely to achieve its full potential only after it ends its unnatural dependence on Washington.
Doug Bandow is a senior fellow at the Cato Institute. A former special assistant to President Ronald Reagan, he is the author and editor of several books, including Foreign Follies: America’s New Global Empire (Xulon) and Perpetuating Poverty: The World Bank, the IMF, and the Developing World (co-editor, Cato Institute).