Thursday, January 15, 2009

Obama To Annouce $1 Billion In Cuts From Israel Loan Guarantees?

This is from Ha'aretz, so it should taken with a grain of salt, but given whom Obama has around him it's at least plausible:

The United States administration plans to cut about $1 billion from the balance of its loan guarantees to Israel because of its investments in the settlements. The balance currently stands at $4.6 billion.

Washington has not officially informed Jerusalem of the cut. The assumption is that the announcement, and the decision over the exact extent of the cut, will come only after Barack Obama is sworn in as president next Tuesday.

Israel has used about $4.4 billion of the $9 billion in loan guarantees extended by the U.S. in 2003 in the wake of the war in Iraq and to help shore up the Israeli economy. The guarantees have assumed greater importance recently in light of the global economic crisis and the Finance Ministry intention to use the guarantees to secure foreign loans to help pay for the expected government budget deficit.

The loan guarantees arrangement specifies that the U.S. will reduce the guarantees by the amount the Israeli government spends on settlements in the West Bank. The U.S. embassy in Tel Aviv monitors that spending and the administration informs Jerusalem of the amount it is holding back from the guarantees.

In the past two years no such announcement was made, but in unofficial talks held recently U.S. officials indicated that the cut would be about $1 billion.

I the US planning on cutting aid to the Palestinian Authority based on the amount it sends to Hamas, or uses to pay the salaries of the terrorist Al-Aksa brigades?

Somehow, I don't think so...

Hope n'change!

hat tip to Carl


Anonymous said...

The US government is not really in a very good position to make loan guarantees for anyone right now. Also, I fully expect aid to the "Palestinians" to be cut drastically very soon. As the Government seeks spending cuts, the first things to be cut are those things that are the easiest. Reducing loan guarantees to Israel is much easier politically than reducing payments to the "Palestinians" is. That's why the cuts to Israel are coming before cuts to the "Palestinian" Authority come.

I want it to be fully understood that I despise the "Palestinians" and their "authority." I fully support Israel. I'm just explaining what is likely happening here.

Frankly, I think both Israel and America are better off without these "loan guarantees." Israel needs to be able to operate completely independent of America and America desparately needs a strong self sufficient ally in the War against Islamic Terrorism. Israel would achieve this very quickly, if only the US Government would GET OUT OF THE WAY!!

Oh well the US government is going to have to get out of the way whether it likes it or not. The funds are unavailable for US Government meddling and the IDF is superior to the US military in most ways that matter.

Freedom Fighter said...

Hi Poster,
Based on your comment, I don't think you realize what the loan guarantees actually are.

They are not funds paid out by the US government ( as the aid to the Palestinain Authority is). They are guarantees backed by the full faith and credit of the United States that allow Israel to borrow money on its own at advantageous intersst rates and terms for economic development and things like weapons purchases from American companies.

What the Obama administration is reportedly going to announce is that these guarantees are going to be reduced by the amount Israel spends on Jewish communities outside the pre 1967 borders - including East Jerusalem.

If this is true, the Obama Administration is making a political decision to penalize both Israel and US companies that deal with them financially in order to endorse the Saudi Peace Ultimatum and 'grow' the territory Israel gives up to the Palestinains.

It's a uniquely bad decision if this is how it goes down.


Anonymous said...

Freedom Fighter,

Thanks for the reply to my post. I agree with you that it is a bad idea to be opposed to Israeli settlements. These settlements that many in the American and Western European governmnents decry as illegal are Israel's most important buffer against and enemy that is trying to destroy them. They are also important to us and to Western European nations as well. Israel is our most important buffer against Islamic terrorists. If Israel were not there, the weapons being deployed against Israel would be deployed elsewhere, probabaly against America and Western Europe.

As such, smarter policy would be to do all we can to encourage these settlements. Actually we can do very little at this point. The military is worn thin from its continued deployments in Afghanistan, Iraq, and elsewhere in the war against Islamic terrorism. The American government faces massive debt and the economy is in a slump. The only thing we can really do at this point is to STAY OUT OF ISRAEL'S WAY!! Actually this would be a substantial improvement over our current policy. Fortunately for us and Israel necessity will mean such a policy will have to be implemented whether anyone likes it or not.

I think I understand the loan guarantee system. Unfortunately the US has very little "full faith and credit" right now. Its debt is massive. Very soon it is going to have to restructure. This is going to mean massive spending cuts. With a slumping economy raising taxes is not going to be a viable option.

Iarael and America would both be better off without these guarantees. The US government is in horrible financial shape right now. If Israel is going to need the US Government to act as a loan guarantor when it is in horrible financial shape itself, we are all in worse shape than I thought possible.