The myth of the 'Miracle of Israel'; The External Financing of Israel

"The power of the Jewish fist comes from the American steel glove which covers it and the dollars which line it."

Source : Yeshavahou Leibowitz in "Judaism and Israel", p. 253 As far as the sums paid to the State of Israel by Gare concerned, I'll let Nahum Goldmann (the principal negotiator on the amount of reparations) speak. He gives the details in his "autobiography" which he kindly signed for me on 23 April 1971 to thank me for the work which I had carried out, at his request, two years earlier, with Nasser after the "SIX DAY WAR". "At the beginning of 1951 Israel entered the stage for the first time, sending two notes to the four allies in which the Jewish claim for compensation from the new Germany came to the sum of a billion and a half dollars of which one half should be paid by West Germany and the other by East Germany. This total was based on the following calculation :

Israel had taken in 500,000 Jews and the economic reintegration of a refugee cost about 3,000 dollars. Having saved these victims from the nazis, having personally assumed an enormous financial burden, Israel considered itself within its rights to make these demands in the name of the Jewish people, albeit without a legal basis, as the Jewish State didn't exist under the nazi regime." (p. 262)

It is in these circumstances that the Israeli Minister for Foreign Affairs contacted me, during the summer of 1951, as President of the "Jewish Agency for Palestine" and asked me to invite to a conference the big Jewish organizations of the U.S., of the countries of the British Commonwealth and of France, in order to support the Israeli claims and to find a way to have them accepted. (p. 263)

The negotiation which we had in mind would have to be of a very special nature. They had no legal basis whatsoever. (p. 268)

With a lot of courage and magnanimity the Federal Chancellor had accepted the sum of a billion dollars as starting point for the discussion but l knew that a group hostile to such a huge bill had already formed within the government, among the leaders of the political parties and in the world of banking and industry. It was repeated to me from very different quarters that it was useless to count on a sum even close to this.

In the first phase of negotiations between the Germans and the delegation of the Claims Conference a general agreement is reached on the matter of reparations and the legislation regulating it. We put off until another phase the issue of the global claim coming to five hundred million marks.

After long conversations, this series of meeting ended with the agreement of the German delegation which undertook to recommend to the government an Israeli claim of three billion marks (25% less than what we had asked for). (p. 272)

I had to return to Bonn on 3 July where I made the following concession: 10% of the five hundred million would be destined for the non-jewish victims of the nazis and distributed by the German government itself. (p. 282)

The agreement was signed on 10 September 1952 in Luxembourg: The Chancellor represented Germany, the Minister for Foreign Affairs, Israel, and myself, the 'Claims Conference'. (p. 283)

The German payments have been a decisive factor in Israel's economic boom over the last few years. I don't know what the fate of Israel would have been at certain critical moments in its economic development if Germany hadn't respected its undertaking. The railroads, the telephones, the infrastructure of the ports, the irrigation systems, whole sectors of industry and agriculture wouldn't be in their current state without the German reparations. Finally, hundreds of thousands of Jewish victims of the nazis have received, over the last few years, significant amounts under the indemnity law. (p. 286)

When, on the morning of my arrival, I went to the house of the Israeli Prime Minister, David Ben Gurion, he came to me solemnly: 'You and I have had the pleasure of experiencing two miracles: The creation of the State of Israel and the signing of the agreement with Germany. I was responsible for the first and you for the second'. (p. 284)

Source : Nahum Goldmann, "Autobiographie", Pub. Fayard, Paris 1969 In another one of his books, "The Jewish Paradox", Nahum Goldmann talks not only about his negotiations with Germany but also how he got reparations from Austria and from Chancellor Raab. He said to the Chancellor : "You must pay reparations to the Jews !" "But we were victims of the Germans !" said Raab.

And Goldmann replied : "In that case, I'll hire out the biggest cinema in Vienna and every day I'll show the film of the German troops and Hitler entering Vienna in March 1938."

Raab then said : "All right, you'll get your money !"

It was in the order of 30 million dollars. After a while Goldmann came back: "We need another 30 million !"

"But," said Raab, "we agreed on just 30 million."

"Now, you have to give more !", said Goldmann and he got it. He came back

a third time and got the same amount. (31.8507)

There were two other sources of financing of what some people call "the Israeli miracle" in the economic field and also of the enormous arsenal (including nuclear) of the State of Israel, which renders laughable the image so often used of a little David with his catapult facing the giant Goliath. In modern warfare strength is not measured in the number of soldiers mobilized but in the technical equipment of the army. Israel's, thanks to the flow of capital into the country, has an attack capability infinitely superior to that of all the Arab states together.

Apart from the "reparations", Israel benefits from an almost unlimited supply of arms and money coming, principally, from the U.S., where its all powerful lobby has shown itself to be particularly efficient, and also from the "diaspora".

Mr. Pinhas Sapir, at the time Minister for Finance, revealed in 1967 in Jerusalem at the "Conference of Jewish Billionaires" (sic) that from 1949 to 1966 the State of Israel received 7 billion dollars.

Source : "The Israeli Economist", September 1967, vol. 9 Doctor Yaakov Herzog, Director-General of the Israeli Prime Minister's cabinet, defined as follows the goal of these meetings: "To examine how to attract greater investment to Israel and to closely associate Jewish holders of capital resident abroad with the Israeli economy in such a way that they have an immediate feeling of responsibility and participation... We are now planning something else: a sort of dialogue on a grand scale on the identification of the Diaspora with Israel, in the framework of the struggle against assimilation abroad." The operation proved to be lucrative as American Jewish organizations sent, on average, a billion dollars each year to Israel. (These contributions, regarded as "charitable", are deductible from the income tax returns of the donor, in other words, they cost American taxpayers even if they go to support the Israeli "war effort".)

But the greatest share comes directly from the American State, whose "aid" amounts to more than three billion dollars each year. Almost half of this "official" aid consists of gifts and "loans" which are quickly "forgotten"... The rest is added onto the Israeli foreign debt, which is growing rapidly and is now approaching twenty billion dollars - that's to say, an unprecedented average of five thousand dollars per head of population.

The main part of this annual aid is made up of arms deliveries for which Congress, anxious to limit their dramatic nature and to avoid public criticism, organized a special means of finance through its Arms Export Control Act of 1976.

To measure the significance of these figures of external financial aid, we need only remember that the aid of the Marshall Plan, given out from 1948 to 1954 to western Europe, reached thirteen billion dollars. In other words, the State of Israel received for fewer than two million inhabitants, more than half of what two hundred million Europeans received. That means one hundred times more, per head of population, than the Europeans.

Second element for comparison: The average annual aid received by the "underdeveloped countries" for the period 1951 - 1959 didn't exceed 3.164 billion dollars while Israel with, at the time, 1.7 million inhabitants, received 400 million, in other words, with less than a thousandth of the population of the "underdeveloped" countries of the world, Israel received a tenth of the total. Two million Israelis received, per head of population, one hundred times more than two billion inhabitants of the third world.

If we take only the American contribution into account, we see that between 1945 and 1967, the United States gave 435 dollars to each Israeli and 36 dollars to each Arab, in other words that 2.5% of the population gets 30% of the aid attributed to the remaining 97.5%.

Source : Drawn from UN statistics published in "Le courant international des capitaux a long terme et les donations publiques" (1951-1959). Quoted by Georges Corm in "Les finances d'Israel" (IPS,1968) But the financing methods of the State of Israel are even more ambitious still: they tend to create, in favor of that State, a world financial network whose investments they orientate (On the occasion, in 1967, of the first "Conference of Jewish billionaires"). A recent doctor's thesis, presented at Paris II University by Jacques Bendelac, published under the title of "Les fonds extérieurs d'Israël" [examines different aspects of Israeli finances with precise information from impeccable sources].

Source : Jacques Bendlac : "Les fonds extérieurs d'Israël", Ed. "Economica". Paris, 1982 The author chiefly studies the relations between the contributions of the Diaspora and the direct aid of the American government. This is how he defines these relations: "If the Diaspora was, until recently (the 70s), the main supplier of Israeli capital, the present tendency indicates that American government aid (about 2 billion dollars per year) largely outstrips the financial contributions of the Diaspora (about 900 million dollars per year)."

Thus, for the tax year of 1980, the sale of one billion dollars in armament was authorized to Israel. But, immediately after these deliveries, half the sum five hundred million in the form of loans - was wiped out...and the remainder simply added to Israel's debt towards the American government...A debt with a delay for reimbursement of over ten years. Furthermore, taking into account the constant worsening of Israel's economic situation since 1973, these reimbursements are fictitious insofar as the payments are immediately compensated by an increase in U.S. Yearly aid.

Source : T.Stauffer. Christian Science Monitor, December 20th 1981 Already, at the time of the 1956 Israeli aggression against Egypt, the American aid in weapons was huge; the Zionist, Michel Bar Zohar, wrote: "From the month of June on, enormous quantities of weapons began to flow into Israel as a result of a top-secret agreement, and these deliveries would not be known about either in Washington or at the Anglo-Franco American organization in charge of watching over the balance of power in the Middle East, or by the Quai d'Orsay, jealously opposed to a rapprochement with Israel, regarded as too risky, which would compromise France's remaining links with its Arab clientele". Source: Michel Bar Zohar: "Ben Gourion, le Prophète armé", Ed. Fayard, Paris,1966, chapter 27.

A second financial source comes from the Israeli State Bonds, in dollars, that are sold abroad but are refunded in Israeli currency, as are the interests.

These bonds (of which 99.8% were sold in the United States in 1951, and still 80% in 1978) have placed more than 5 billion dollars at the disposition of the Israeli economy.

Source : State of Israel Bonds, Jerusalem-New York, American.Jewish yearbook 1972, p. 273 ; 1978, p. 205 ; 1980, p. 153 Between "gifts" and "bonds", the Zionist State received almost eleven and a half billion dollars between 1948 and 1982. Source : Statistical abstract of Israel (annual) and Bank of Israel, Annual Reports Such efficiency implies what Mr. Bendelac calls the"collusion between power and the world of finance" in the Zionist movement. He gives a striking illustration for 1982 : "Guy de Rothschild is president of the Unified Social Fund and the AUJF ;

David is treasurer of the FSJU and French member of the Administrative Council of the Jewish Agency;

Alain has been president of the Representative Council of Jewish Institutions of France and of the Israeli Central Consistory;

Elie is president of the executive Committee of the AUIF ;

Edmond is president of the European Organization of Israel Bonds ;

Finally, Alix de Rothschild was world president of the "Youth "Aliya"."

Source : Bendelac, op.cit.p.76. But dependence on the American government has been even greater, especially since the 70s. "At the time of the Six-Day War,the external deficit reached 700 million dollars, and exceeded one billion dollars at the beginning of the 70s. The financial contribution of world Judaism no longer sufficed to fulfill the needs in capital of the lsraeli economy ; it therefore became necessary to appeal to the American government for aid, which started off by supplying military credits, before extending its aid to the economic sector, after the Yom Kippur war. This contribution of capital by the American government led to a spectacular increase in Israel's foreign debt, which rose above 20 million dollars in 1982. Thus, the deterioration in the financial aid of the Diaspora since the early 70s can be analyzed in two ways regarding the economic dependence of Israel: American government aid and the weight of the foreign debt."

Source : Bendelac. Op.cit.p.79. Since 1948, American government aid to Israel has reached almost 18 billion dollars, equally divided between loans and gifts, two thirds of which were destined for military purposes. Source : until 1977: "Trésor, Division des échanges extérieurs" from 1978 to 1981, US Embassy (Tel Aviv) The acceleration of this aid is breathtaking: usually inferior to 100 million dollars in 1975, and 2 billion dollars in 1981. In January 1985, the State of Israel, demanded a further 12 billion dollars over eight years. As for the external debt, it rose from 6 billion dollars in 1973, 10 billion dollars in 1976, to 17 billions dollars by January 1st 1981, in other words a record figure of 4,350 dollars per inhabitant!

Aid increases with sub contracting deals, especially in the field of aviation (for example,Israel Aircraft Industries receives manufacturing contracts for elements for F4s and F15s).

Finally, economic aid includes facilities granted to Israeli exports to the USA, with preferential tariffs of developing countries, so that 96% of these exports (1 billion dollars) enters the USA tax-free.

In a word, only one figure is enough to define the nature of the Zionist State of Israel: the total official US aid which it receives corresponds alone to over 1,000 dollars per head, in other words as a bonus added to its national revenue, more than three times the net national income per inhabitant of Egypt or most African countries.

Professor Yeshayahou Leibowitz of the Hebrew University of Jerusalem, who wrote a major work on "the faith of Maimonides". (translated into French in 1992, in Paris, Editions du Cerf), and who edited the "Hebrew Encyclopedia" for twenty years, summed up the attitude of a Jew living in Palestine since 1934, whose religious Zionist faith has been outraged by political Zionism, in "Israel and Judaism", published in Hebrew at Jerusalem in 1987 :

"Our system is rotten at the core" (page 245). And this for two reasons:

1-"The misfortune comes from the fact that everything is articulated around the problem of the nation and the state." (page 182) "If the state and the nation are held to be an end in themselves, then "Judaism" is rejected since the State of Israel is the most important." (p.182) " Nationalism is the essence of the destruction of mankind." (p.182) "The State of Israel is not a state which possesses an army, but an army which possesses a state." (p.31)

2 - The dependence of this state on the United States :"here, total collapse could occur overnight: consequence of the total stupidity which makes our whole existence depend on American economic aid." (p.225) "The Americans are interested only by the idea of maintaining an army of American mercenaries here under the uniform of Tsahal." (p.226)" The strength ofthe Jewish fist comes from the iron glove of America which covers it,and from the dollars which cushion it." (p.253)

Adopted from the book: "The Founding Myths of Israeli Politics" by: "Roger Garaudy"