This bill, designed to strengthen the U.S.-Israel relationship in various new ways, is predicated on the notion that political upheaval in the Middle East could negatively affect Israeli security.
It extends both loan guarantees to Israel and Israel’s right to use ‘obsolete or surplus items’ from U.S. war reserve stockpiles (established in 1990 and intended for use by the U.S. or Israel in emergency situations) at Israeli military bases. It also creates a new reporting mechanism to explore new ways to aid the Israeli military.
This iteration of the loan guarantee program was created in 2003 to address an economic recession in Israel brought on by the second intifada (see H.R. 1559 of 4/2/03 for details). It originally authorized up to $9 b. in guarantees. Of this, $3.8 b. remained available to Israel, but the program expired on 9/30/11. This bill authorizes the remaining $3.8 b. to be available for Israel until 9/30/15.
Israel is permitted to use loans backed by this program only to refinance its debt and not for activity beyond its 6/5/1967 borders. Any funds used for settlement activity can be deducted from the remaining loan guarantees; since 2003, $1.0853 b. has been deducted for settlement activity and for building the separation wall.
Loan guarantees between states act the same way as between individuals. In this case, an American loan guarantee to Israel is a promise from the U.S. to pay off the balance of Israel’s loans if Israel cannot. Loan guarantees from the U.S., a reliable financial entity, enable Israel to obtain lower interest rates. While Israel has not used guarantees since 2005, simply having them improves its credit rating and reduces its interest rates. Most famously, the George H. W. Bush admin. used loan guarantee conditionality as part of the incentive package that persuaded a then-financially desperate Israel to take part in the Madrid Conference of 1991.
The bill requires the president to submit 2 reports to Congress and installs congressional oversight procedures on all the measures listed above. The first report will assess the status of Israel’s qualitative military edge ‘in light of current trends and upheaval in the region.’ The second will detail the president’s actions to improve the cost efficiency and timely delivery of F-35 fighter aircraft to Israel; expand cooperation with Israel on security, energy, and other areas; and integrate Israel into the defense of the Eastern Mediterranean.
The bill also contains nonbinding language identifying specific ways the U.S.-Israel alliance could be strengthened. These include strengthening efforts to prevent weapons smuggling into Gaza, offering the Israeli Air Force additional training opportunities in the U.S., allowing Israel to make more purchases directly from U.S. weapons manufacturers, encouraging an expanded role for Israel in NATO, extending loan guarantees to Israel, and expanding intelligence cooperation, including an expansion of Israeli access to U.S. satellite intelligence.
This bill, introduced the day Benjamin Netanyahu arrived in the U.S. to speak at the 2012 AIPAC conference, was a major focus of AIPAC’s lobbying efforts. Indicative of the importance of Israel support in the 2012 presidential race, Pres. Obama signed the bill into law the day before presidential candidate Mitt Romney left for a trip to Israel.
72 cosponsors (36D, 35R, 1I)
See also: H.R. 4133 of 3/5/12
Last major action: 7/27/12 became public law 112-150 (7/17/12 passed in House by voice vote; 6/29/12 passed in Senate by voice vote).