Great Expectations

Foreign aid, like other forms of aid, is a subsidy that distorts choice. The distortion takes many forms; for example, aid is sometimes put to uses unintended by the giver; it also lets the recipient pursue activities below their real cost. Since President Harry Truman launched the foreign-aid crusade, U.S. economic aid to developing nations has totaled about $300 billion. This subsidy has encouraged other nations to make choices they might not otherwise have made.

U.S. foreign aid has been doled out for economic development in poor nations and also to military allies. However, since money is fungible, U.S. funds directed toward one purpose sometimes enable countries to pursue policies and projects that might otherwise appear unaffordable. The economic and military aid provided to Israel over several decades has directly or indirectly defrayed much of the cost of Israeli settlements in occupied territories. U.S. aid to Israel has run between three and six billion dollars annually since President Jimmy Carter signed the Camp David accords. In 2000, Israel will receive 26 percent of all U.S. foreign aid, or $4.02 billion dollars. This past winter, Israel made an additional $64 billion in U.S. aid a condition of withdrawal from the Golan Heights.

Many Israelis and supporters of Israel in the United States believe that peaceful coexistence in the Middle East is impossible so long as Israel expands its settlements in occupied...

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