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SPECIAL RELATIONSHIPS

Israel, Egypt, and Jordan are among the world’s largest recipients of US foreign aid. Last month, President Joe Biden requested an additional $14.3 billion in assistance to Israel in the context of the war in Gaza. In 2023, Jordan received a total of $1.65 billion in foreign assistance from the US, while Egypt received $1.3 billion in military aid. 

In a 2009 chapter, FRIDA BERRIGAN examines the nature of US aid to Israel. 

From the text:

“Israel has been the largest recipient of US security assistance since the early 1970s, when the Nixon administration cemented the ‘special relationship’ that endures to this day. Most of this aid takes the form of Foreign Military Financing (FMF), which are US grants for weapons purchases. Crucially, Israel is the only country allowed to use a substantial portion of this money to build domestic military industry, a privilege that includes developing indigenous weapons systems based on US designs. While FMF is doled out to other countries in quarterly allotments, Israel receives all of it in one lump sum early in the year. This practice creates a loan burden, as it necessitates borrowing from the Treasury long before Congress actually releases the monies promised. Israel is one of few nations that enjoys ‘fast-track’ status for weapons sales, meaning it can bypass the Pentagon’s intermediary role. Between 1998 and 2008, the Israeli government devoted $75 billion to its military budget, of which FMF alone accounted for nearly $25 billion. The bulk of Israel’s current arsenal is composed of equipment supplied by the US, including 226 F-16 fighter and attack jets, more than 700M-60 tanks, 6,000 armored personnel carriers, and scores of transport planes, attack helicopters, and utility and training aircrafts. Israel is allowed to spend 26 % of FMF on weapons systems manufactured domestically. The US role in the Israeli defense industry is particularly significant because Israel is also a weapons-exporting nation. This poses the risk that US technologies will be transferred to other countries. To cite one example, the Chinese Air Force flies a Jian-10 fighter plane almost identical to the Israeli Lavi (or Lion), a joint Israeli-US design based on the F-16. Although the joint production of this fighter plane was canceled in 1987 because of cost overruns, the design and technology ended up in Beijing.”

+  “US security assistance to Egypt, whose nominal dollar amount hasn’t changed for the past 35 years, has lost most of its proportional economic value, causing the US to loose influence over the military regime’s domestic policies.” By Zeinab Abul-Magd. Link. And an interview with retired Maj. Gen. F.C. Williams about US military aid to Egypt. Link. 

+  “What explains the continuous growth of USAID’s ‘democracy promotion’ portfolio in Jordan—the biggest in the world, in absolute terms—considering the absence of any meaningful political liberalization?” By Benjamin Schuetze. Link. And Marta Vidal on US aid and Jordanian human rights violations. Link. 

+ “US assistance to Egypt, Jordan, and Israel has been central to the survival strategy of the aid recipient’s incumbent leaders, whether distributive or nondistributive.” By Anne Mariel Zimmermann. Link. 

NEW RESEARCHERS

Electoral rules

MOYA CHIN is an economist in the Western Hemisphere Department at the International Monetary Fund. In a recent paper, she explores the economic consequences of electoral rules.  

From the abstract:  

“Electoral rules determine how voters’ preferences are aggregated and translated into political representation. Using a regression discontinuity design, I contrast single- and two-round elections in Brazil. In two-round elections, the eventual winner must obtain at least 50% of the vote. I show that two-round elections provide incentives for candidates to secure a broader base of support and provide public goods more broadly. Candidates represent a more geographically diverse group of voters, public schools have more resources, and there is less variation in resources across schools. Effects appear to be driven by strategic responses of candidates, rather than differential entry into races.”

+ + +

+  “The Fed’s post-2008 monetary policy was effectively a massive bailout of the buyout fund business model.” New on PW, Carolyn Sissoko explains why “derisking” finance is an oxymoron. Link. 

+  “Fiscal rules form part of the infrastructure of contemporary capitalism, both in the global North and in the global South.” Also new on PW, a transcript of last month’s event on the politics of fiscal rules, featuring Max Krahé, Clara Zanon Brenck, Pedro Romero Marques, and Alexandros Kentikelenis. Link. 

+  “Insurance firms are finally starting to price those climate risks into premiums, which are rising nationwide.” By Jonathan Mingle. Link.

+   Renaud Lambert and Dominique Plihon on the threat to dollar hegemony. Link.

+  The 2023 Production Gap Report finds that “governments, in aggregate, plan to produce more than double the amount of fossil fuels in 2030 than would be consistent with limiting warming to 1.5°C.” Link.

+  “With the African state framed as corrupt, and African miners as unproductive criminals, the path was cleared for the en masse arrival of transnational mining corporations.” By Ben Radley. Link.

+  Two on Bolivia: Stasiek Czaplicki Cabezas on the political economy of forest fires; and Huáscar Salazar Lohman on growing schisms within Movement Towards Socialism (MAS). Link and link. 

+  “There is a well-established trend in the grocery industry that consolidation results in higher prices for consumers.” By Krista Brown. Link. 

+  “The Mesopotamians recorded their loans on clay tablets, which listed the names of creditor and debtor, the loan amount, the date of the loan and when repayment is due, and, in most cases, the amount of interest to be charged. Various types of collateral were demanded as surety for the loan and might take the form of houses, land, and slaves. In one case, the lender takes as collateral the wife of the borrower to live in his house—an early example of debt bondage. Credit transactions were commonplace in the Ancient Near East during the third and second millennia BC. Interest was generally paid in the same commodity as the loan, commonly silver or barley. It might also be paid in kind, with another commodity (dates, firewood, etc.) or labour services. Each tablet was marked with a seal and witnessed. Many loans were defaulted on, and disputes between debtors and creditors often ended up in court. In fact, since debt tablets were destroyed when loans were repaid, the archaeological record is of unpaid debts—of which there seem to have been a great number.” By Edward Chancellor. Link. 

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org