Does Washington Have the Means to Impose a Settlement on Israel?
The issue of possible American economic and military sanctions against Israel is in the wind once again. For some time, Arab leaders have called upon Washington, which in the view of President Sadat holds “99 per cent of the cards in this game,” to use its considerable powers of persuasion to force Israel to make territorial and other concessions that it does not otherwise seem to be prepared to make. Recently, this argument has been taken up by some prominent members of the American foreign-policy elite, such as George Ball, and other influential opinion-makers like Edward R. F. Sheehan, who have argued that precisely because of Israel’s increased dependence on the United States and the leverage that this relationship carries with it, the United States holds the key to peace in the Middle East. Essentially, they advocate that the United States draw up an independent peace plan for a staged Israeli withdrawal to the pre-1967 lines in exchange for recognition by the Arab states, with a variety of alternative security arrangements and international guarantees to insure the stability of the settlement. Israeli officials have countered that the alternative security arrangements proposed would be no substitute for defensible borders which the Israeli army is able to protect on its own, and that international guarantees are not an acceptable substitute for a capacity for self-defense. But advocates of the Ball-Sheehan approach contend that Israeli diplomatic flexibility is paralyzed by a complex of unreasoning distrust and insecurity, rather than by any inherently unsolvable problems in devising alternative security arrangements, and therefore that it is in Israel’s own higher interest, not to mention that of the United States, for Washington to undertake bold initiatives to “save Israel in spite of herself.”
The Ball-Sheehan approach is debatable on many grounds, such as the ease with which it dismisses the difficulties of devising effective alternative security arrangements in place of defensible borders, the sanguine view it takes of the likely political character of the proposed Palestinian state, and other complex issues that are glossed over in the attempt to arrive at an immediate “solution” to a conflict that has festered for over fifty years. But one aspect of these formulas for imposed peace that has not received sufficient attention is the implied confidence that American sanctions would in fact be effective in securing Israeli withdrawal beyond the lines that the Israeli government would otherwise consider consistent with the vital interests of the Jewish state. The leading studies of past attempts to use economic and military sanctions to influence the policies of other states do not, in general, support the belief that sanctions are a particularly effective instrument of diplomacy. For example, a 1969 survey of attempts by the United States and other countries to use arms embargoes as a policy tool, conducted by the State Department’s Bureau of Intelligence and Research, concluded that in most cases a donor of aid can exercise some influence in marginal policy areas, but “aid does not provide enough leverage to force a recipient to take any actions contrary to his vital interests” and that, more often than not, embargoes aimed at vital interests “fail completely” and “have serious detrimental effects on the long-term relations between the supplying nation and the recipient.” In her book-length study of major modern cases of economic sanctions, Margaret Doxey concluded that “in none of the cases analyzed have economic sanctions succeeded in producing the desired political result.”
Those who believe that sanctions against Israel would be more effective seldom make explicit the analytical basis of their confidence. Reference is sometimes made to President Eisenhower’s success in securing Israeli withdrawal from Sinai in 1957 by threatening to cut off governmental assistance and private Jewish donations and bond purchases. But Sinai 1957 was not a typical case from which inferences are easily drawn. Sinai was not then, nor is it now, regarded by Israelis as a paramount interest in itself—indeed, in recent months, even the Likud has repeatedly declared its willingness to consider withdrawal from the peninsula if reliable alternative security arrangements can be instituted and the withdrawal is part of a general peace settlement. Nor is Sinai 1957 comparable to the present situation in other important respects. In 1957, Israel had a much smaller economic and military base; direct Soviet intervention seemed a real possibility; and Secretary of State Dulles’s commitment to keep the Straits of Tiran open in the future had a greater credibility than great-power promises today (particularly considering the subsequent failure of President Johnson to make good the Straits commitment when Nasser instituted the blockade of 1967).
But might sanctions against Israel be an exception to the general pattern, considering the unique dependency of Israel today on the United States, the tremendous military and economic strain that it is under, and its diplomatic near-isolation? Israel’s combined economic and military dependence would appear to make it one of the most vulnerable countries in the world. But a closer examination reveals significant and widely ignored limitations on the ability of the United States to apply pressure in each area. Moreover, an evaluation of Israel’s capacity and will to resist such pressures as might be applied raises questions about the efficacy of American sanctions in getting the Israeli government to go beyond concessions that it would otherwise make to the Arabs.
The reliance of Israel’s armed forces on equipment and supplies from the United States is the most conspicuous element of its dependence. This was never more visible than during the 1973 war, when the enormously high rate of consumption of equipment and supplies, averaging 6,000 tons of ordnance daily, depleted Israeli inventories to dangerous levels by the end of the first week. The United States responded with a massive resupply, although after a delay of eight days, without which Israeli forces would at best have been constrained severely in their tactics and operational effectiveness. Defense Minister Moshe Dayan summed up at the time:
The soldiers may not have been aware that the shells they fired today had not even been in Israel’s possession a week ago. . . . There is only one country . . . that is prepared to give us equipment, and that is the United States. Whoever proposes that we conduct this war in a split with the United States is . . . suggesting that we will not be able to win this war.
By early November, over 23,000 tons had been airlifted, in addition to supplies sent more slowly by sea: one of the largest emergency-supply operations in history.
Since the war, the United States has undertaken a huge replacement and reequipment program, replenishing stockpiles of expendables, building up inventories of armor, aircraft, and artillery, and providing more technologically advanced weapons than was the case before the war, including such items as precision-guided munitions (“smart” bombs, missiles, and projectiles), advanced combat aircraft, and sophisticated electronic-warfare systems. The Israeli defense forces import more than half of their annual procurement from the United States.
It is true that Israel has a large and growing indigenous arms industry, producing sophisticated aircraft (notably the Kfir C-2 supersonic fighter), tanks (the revolutionary Merkava), precision-guided missiles (Gabriel anti-ship, Shafrir air-to-air, Luz-1 air-to-surface, and, reportedly, a new infantry portable missile), boats, artillery, submachine guns, assault rifles, ammunition, and indeed a wider variety of military products than any but the largest of the great powers. However, its autonomy should not be exaggerated. For many of the larger systems, only 40-60 per cent of the product is Israeli-made, measured in terms of value added, and it is often the most sophisticated and essential components which are imported, such as the General Electric J-79 engines for the Kfir. Beyond this, at the top of the technological ladder, particularly in air-superiority fighters, key equipment such as the F-15 is wholly imported. So, while the Israeli arms industry is important in the total arms supply and contributes significantly to the domestic economy, it could not, on its own, maintain the Israeli defense forces at their present level of supply or technological sophistication.
It follows that Israel’s military dependence on American supplies will continue in the future, particularly if, as seems probable, other major producers of military goods and aircraft cannot be counted upon. This might appear to give the United States considerable leverage in terms of sanctions. But in practice, America’s freedom in using the instruments of arms restriction and embargo is hedged in by at least six limitations.
First, although U.S. sanctions need to hurt Israel enough to make it yield on issues regarded as critical to the national interest, at the same time Washington does not want to weaken Israel so much as to make it an inviting target for attack or to endanger its very survival. Unfortunately for its advocates, an arms embargo cannot be focused to affect only the policy area of the target state that the sanctioning state wishes to modify. A truly effective suspension or reduction of military supplies would diminish the overall combat strength of the Jewish state, and this fact sets an outer limit on what can be done without threatening Israel’s basic security.
It follows from this that, paradoxically, the arms embargo is likely to be only a peacetime option. If war breaks out, and Israeli forces are under duress, Washington will have to be prepared to lend assistance unless it is willing to see Israel go under. This leads to the second limitation on sanctions: if Israel’s stockpiles are reduced and its military capabilities are drawn down closer to the minimum level of viability as they would have to be to make an arms embargo effective, and a war does break out, there is an increased possibility that the United States will be forced once again to undertake an expensive emergency airlift or even more direct intervention if the tide turns against the weakened Israeli forces. Airlifts and interventionary actions enhance the likelihood of superpower confrontation; they strain U.S. relations with the Arab states; they increase the possibility of an oil embargo, punitive movements of petrodollars, and the deterioration of trade relations; and they heighten the risk that an American unit will be hit by an Arab shell. Overall, a policy of sanctions implicitly contradicts another objective of the American administration: the desire to maximize Israeli self-sufficiency in order to remove the United States to the greatest degree possible from direct involvement in a war and to protect its posture as a mediator, a third party credible to both sides. The point is well made by Riad Ashkar, a leading Arab strategist interviewed by the Journal of Palestine Studies:
. . . I think that the U.S. [wants] to arrive at this situation [where Israel has enough weapons to fight for at least three weeks without any help from the U.S.]; instead of sending the supplies during the war, it is sending the supplies before the war.
The United States wants to be able to assume a political role which will allow it to claim that its hands are clean and that it is not helping the Israelis against the Arabs. It wants to get around the question of an oil embargo, and thinks that the Arab oil-producing countries will not have an excuse to impose an oil embargo if the United States refrains from sending arms to Israel while the fighting is going on.
Third, military sanctions that hurt enough to matter may have the unintended and unanticipated effect of driving the Israeli leadership to harder-line military and political options. Here again, the sanctions policy may be implicitly opposed to other American objectives. For example, the United States has sought to constrain the Israeli doctrine of preemption in situations where the Arab forces appear to be massing for an attack. An Israel with its back to the wall might well feel compelled to gain the advantages of the first strike if it perceives that war is inevitable. Going a step further, it might even feel compelled to resort to preventive war in a situation where the Arabs are not yet massing to attack but are building their forces to the point where they are bound eventually to achieve strategic superiority if Israel cannot keep up. An Israel deprived of critical American support and faced with the growing strength of the Arab coalition might even find it necessary to lean more heavily on strategic and tactical nuclear weapons in pursuit of self-sufficiency or at least as a last-resort deterrent. The United States goes to great lengths elsewhere to restrain the proliferation of nuclear weapons through such measures as the stationing of several hundred thousand troops to give a sense of security to the West Germans, the extension of security guarantees to Japan, and at least for the present, the maintenance of ground forces in Korea. Non-proliferation objectives in the Middle East would not be served well by a policy which enhanced Israel’s feelings of insecurity.
Less extremely, an Israel deprived of adequate weaponry might have to position its forces to take advantage of the strategic depth and topographical advantages conferred by the territories captured in 1967. This would imply reluctance to withdraw from Sinai and the Golan Heights in particular. Moreover, American sanctions today might hurt the reliability of future U.S. guarantees and assurances. Since the advocates of sanctions often postulate in their peace plans U.S. security guarantees that would be extended to Israel in lieu of the defensible borders that would be surrendered, actions that reduce the credibility of United States support for Israel and increase the value of the territories would appear to weaken the case for sanctions. In general, American military sanctions would enhance feelings of insecurity in Israel, weaken the voices of moderation, and strengthen the appeal of harder-line military and political options.
Fourth, and related to the last point, American sanctions against Israel would affect the credibility of the United States as an ally in other parts of the world. The firmness of America’s commitments to major and minor allies is already being questioned from Paris to Manila, and must be the subject of some speculation in Moscow as well. These doubts were exacerbated by the fall of Saigon (even among many who did not support the American Indochina policy in itself) and have been compounded by the profligate use of sanctions and admonishments against other allies, particularly in Latin America, for a wide variety of reasons. In Israel’s case, there is an explicit undertaking, in the United States-Israel Memorandum of Agreement accompanying the second-stage Sinai Disengagement of September 1975, Article 1, that
The United States government will make every effort to be fully responsive, within the limits of its resources and congressional authorization and appropriation, on an ongoing and long-term basis, to Israel’s military-equipment and other defense requirements, to its energy requirements, and to its economic needs.
The United States commitment to supply essential arms was reaffirmed by four senior officials in June and July 1977: President Carter reassured American Jewish leaders that, during a time of crisis, there would be no withholding of U.S. arms from Israel “while I am President.” National Security Adviser Zbigniew Brzezinski stated flatly that the United States would “stand behind” Israel in the event of another war: “It is a historical commitment which is unalterable.” Secretary of State Cyrus Vance said: “We have a deep commitment to Israel that we will provide to Israel the arms that are necessary for its self-defense, and we will abide by that without question.” And directly on the subject of sanctions, Vice President Mondale said:
We do not intend to use our military aid as pressure on Israel. If we have differences over military aid—and we may have some—it will be on military grounds or economic grounds, but not political grounds. If we have differences over diplomatic strategy—and that could happen—we will work this out on a political level. We will not alter our commitment to Israel’s military security.
If, against all these assurances, a policy of large-scale military sanctions were undertaken, the consequence might well be what Admiral Elmo Zumwalt, the former Commander of U.S. Naval Operations, has predicted: “American abandonment of Israel could cause the virtual collapse of NATO through sheer distrust of our good faith by our European allies.”
Fifth, those who advocate reductions in U.S. military aid to Israel often overlook the fact that U.S. arms sales to Arab states substantially exceed those to Israel and that the margin of difference is growing. In fiscal year 1975, commercial and governmental military sales to Saudi Arabia, Jordan, and Kuwait totaled $1.8 billion, compared to $1 billion to Israel. In 1976, authorizations to Saudi Arabia alone totaled $7.5 billion. It is inconceivable that military sales to the Arabs could continue at such levels while aid to Israel was reduced. According to a Harris poll of February 1975, Americans favored military aid to Israel by a 66 to 24 per cent majority, while military aid in general was opposed by 68 per cent. With regard to Congress, a pre-election poll of Senate and House candidates conducted in October 1976 by the American Israel Public Affairs Committee found that 72 per cent of respondents opposed the sale of arms to Saudi Arabia, 70 per cent to Jordan, and 80 per cent to Kuwait. Once again, there is a contradiction between sanctions against Israel and other American objectives: a policy intended to pressure Israel and thereby enhance American relations with the Arabs would almost surely lead to reduced military sales to and therefore strained relations with the very countries which are meant to be its beneficiaries. The consequences for American military export industries could also be substantial.
Finally, it should be noted that an interruption in the flow of arms to Israel today would not be as effective as it might have been if sanctions had begun on October 25, 1973 when Israeli stocks were already severely depleted. Over the past four years, Israel has spent $5 billion to build up its military strength, augmenting its weaponry by about 60 per cent and its manpower by 40 per cent. According to figures given by former Defense Minister Shimon Peres, the Israeli Defense Forces now have 50 per cent more tanks. 50 per cent more aircraft, 55 per cent more naval craft, 100 per cent more self-propelled artillery, and 1000 per cent more armored-personnel carriers than before the build-up. In view of this vast reserve, even a total embargo by the United States would have only a marginal effect in the short term, while long-term sanctions would entail all the problems enumerated above. As early as September 1975, Israeli Chief of Staff Mordechai Gur asserted that Israel could wage a war without an airlift from the United States, though it would be subject to “many important conditions and restrictions,” seemingly including the necessity to preempt. More recently, an informed source in Jerusalem told the press that an attempt by the United States to “exert pressure on Israel by ‘turning off the weapons-supply taps’ would cause Israel some inconvenience, but it would not have a harmful effect on the IDF for some twelve to eighteen months.”
Some who concede the inefficacy of military sanctions against Israel believe that economic levers could be more successful. The London Economist of May 28, 1977, for example, dismisses proposals for arms pressure on the grounds that “an American cutoff would only marginally affect Israel’s strength for two or three years,” but sees much greater Israeli vulnerability in the fact that “its economy is a shambles: it has an inflation rate of 40 per cent a year and over; a foreign debt of nearly $10 billion; a budget deficit of nearly $1 billion. It is guesswork what would happen if Mr. Carter held back some of the official aid or if he reconsidered the tax-free benefits of the unofficial help.”
Any analysis of economic sanctions against Israel and their limitations should be derived from an understanding of the structural reasons for the country’s burgeoning balance-of-payments deficit since the October war and the resulting growth in economic dependency. Due to its poor natural-resource base and the burden of high defense expenditures, Israel has always depended on an import surplus to finance rapid economic growth and maintain a standard of living closer to European than to Levantine expectations. The country’s exports of goods and services have never exceeded 70 per cent of its imports, and in most years since the mid-1960’s imports have been nearly twice the size of exports. However, the absolute dollar difference between the two flows was, until 1973, approximately $500 million to $1 billion per year. It was possible to manage this deficit with only small amounts of American aid supplemented by world Jewish donations and purchases of independence and development bonds, German reparations, and a small inflow of foreign-capital investment.
Following the war, the annual deficit in the balance of payments for goods and services leaped to approximately $3-$4 billion per year, amounts that could not be met by the usual sources of unilateral capital transfers, and the mechanism of large-scale dependence on American aid was set in motion. Needless to say, the tremendous increase in postwar military expenditures and arms imports contributed to this inflation of the deficit. But it is important to understand that direct defense imports before and since the war have accounted for only about 16 and 21 per cent respectively of the total import bill and that the arms trade alone does not account for the huge balance-of-payments deficit since the war. In fact, direct defense imports taken as a percentage of the deficit actually declined from 45 per cent in the years 1971-72 to 43 per cent in the years 1974-76. Annual direct defense imports tripled from the first period to the second, but imports other than direct defense, which account for 80 per cent of the total import bill, also more than doubled.
The enormous increase in the non-defense import bill is by no means explained by rapid economic growth or increased private consumption. In fact, the overall level of economic activity has been stagnant and the standard of living has declined. What accounts for most of the increase in the overall balance-of-trade deficit are two factors beyond the control of the Israeli government: (1) the global inflation of prices; and (2) a worsening in the terms of trade or ratio of prices between the commodities that Israel imports and those that it exports. If a country imports twice what it exports, and the prices of both imports and exports increase by 25 per cent, the ratio between imports and exports will be unchanged but the absolute gap between the two will increase. If, in addition, the prices that a country pays for a given volume of imports increase more rapidly than what it receives for a given volume of exports, the absolute deficit will widen still more rapidly, though its citizens may be just as hardworking and productive as before and enjoy no improvement in their standard of living. This is essentially what has happened to Israel since the war and, added to the defense burden, it has created a balance-of-payments disequilibrium that is exceedingly difficult to correct.
It is also important to understand that, quite apart from sanctions and even assuming that the United States continues to be willing to give approximately $1.8 billion per year indefinitely, the solution to Israel’s balance-of-payments crisis depends essentially on actions that the Israelis themselves will have to take to correct the basic imbalance between imports and exports. If this is not done, and the ratio between imports and exports remains at its present level, the absolute trade deficit will continue to worsen with world inflation and eventually will reach a level at which even the huge subsidy from the United States (now running at over $600 for every man, woman, and child in Israel and accounting for over a third of all United States foreign economic and military aid) will be insufficient to prevent a disaster for the economy. To illustrate: in 1976, Israeli imports of goods and services were $7-54 billion, exports were $4.1 billion, and the deficit was $3.44 billion. Total U.S. aid received in grants and loans was $1.725 billion; world Jewry gave $392 million and bought $244 million in bonds, and German reparations to individuals totaled $314 million. Most of the remaining $765 million deficit was made up by commercial borrowing, and Israel ended the year with all its bills paid—though only by raising the accumulated external (foreign-currency) debt to approximately $9 billion, effectively postponing some payments for future years.
Now, if we assume that import and export prices continue to increase, say, by 10 per cent a year, and that the ratio between imports and exports is unchanged, we arrive at the following: in the year 1980, imports will have increased to $11 billion, exports to $6 billion, and the deficit will be up from $3.4 billion to $5 billion. By 1985, on the same assumptions, the deficit would exceed $8 billion. To these figures must be added the annual debt-service burden, which already exceeds $1 billion per year and will automatically increase over time due to the mounting debt to banks and to the fact that over half of U.S. aid and almost half of world Jewish support are in the form of loans. Just to keep Israel afloat, receipts from the United States government would have to exceed $3 billion in 1980 and $5 billion in 1985. It is obviously unrealistic to expect that, even if Israel adopted the Rogers Plan or the Ball-Sheehan formulas tomorrow, the United States government would be willing or politically able to underwrite the Israeli economy at ever higher levels forever.
This is not to say that the Israeli economy is slipping inexorably into the abyss, but rather that corrective actions by the government of Israel are, in the long term, more important than fluctuations in the amounts of American aid. Those corrective actions that have already been taken have had a substantial effect. Austerity measures introduced so far have reduced the deficit from $4.037 billion in 1975 to $3.44 billion in 1976 (while world prices continued to increase): a cut of $600 million, equivalent to one-third of all U.S. economic and military aid. Further reductions will require painful adjustments in the domestic economy, including a decline in the standard of living and a shift of workers from service professions to export-oriented industries, but it is not impossible to expect that corrective actions can bring imports and exports into closer balance. The main function of American aid, in this context, is to provide a breathing space to allow the adjustments that inevitably must come to be undertaken incrementally rather than all at once.
The stark facts of international economic life and the need to engineer large-scale economic conversion are well understood by Israeli officials of all leading parties. Former Prime Minister Rabin warned the country in 1975 that U.S. aid would not continue at the rate of 20 per cent of Israel’s budget, and that it was time the public faced this fact. “It’s not a question of tightening our belts, as they’ll be tightened for us. What we must do is roll up our sleeves,” he said, stressing that the country’s future depended only on its own people, “not on the Arabs, UN decisions, or the government of the United States.” American officials have been equally candid. Former U.S. Ambassador Malcolm Toon warned the Israeli public in April 1976 that Israel would be unwise to expect as much aid in the future as it had received in the past, and the consistent message from administration officials in Washington has been not to count on large-scale aid in the next decade. President Ford said in 1975, “The United States cannot nor should it have to meet every budgetary deficit or foreign-exchange shortfall which another government may incui, and no such commitment has been made.”
Therefore, reductions in U.S. aid are to be expected in any case, particularly in terms of net inflow after repayments of past years’ loans are deducted. U.S. aid will decline as a percentage of Israeli GNP, as a percentage of the Israeli budget, and as a percentage of the Israeli balance-of-trade deficit under the best of circumstances. It is in this context that economic sanctions must be understood: as an acceleration or a catalyst of a process that is already under way.
Of course, economic sanctions would still hurt. But here again, there are widely ignored limits on the effective application of pressure against Israel. With regard to the military component of U.S. aid, large-scale reductions in grants and loans would have the effect of substantially reducing the flow of arms, with the adverse consequences already discussed. With regard to economic and security-supporting assistance, cuts are limited by specific and general undertakings in the United States-Israel Memorandum of Agreement accompanying the Sinai Disengagement of September 1975. Paragraph 4.a, for example, codifies an understanding that the United States will substantially offset the additional cost of oil imports Israel incurred when Jerusalem surrendered to the Egyptians the wells of Abu Rudeis and Ras Sudar (from which it had been obtaining 55 per cent of its oil needs). This understanding now accounts for $350-$400 million of the $785 million that Israel will receive in economic aid in 1978. Added to Article 1, which states that “the United States government will make every effort to be fully responsive . . . on an ongoing and long-term basis to Israel’s . . . economic needs,” this would appear to be a significant commitment limiting the ability of the United States to reduce economic aid.
Moreover, United States economic aid to the Arab countries now exceeds that to Israel. In 1978, Egypt alone will receive $750 million plus almost $200 million in food commodities. In addition, Jordan will receive $93 million and Syria $90 million in 1978. Much of the support for these allocations to the Arab states comes from friends of Israel in Congress, and their support is based at least partly on the understanding that strengthening Arab moderates helps Israel too. It is difficult to imagine circumstances under which aid to Israel could be cut significantly without at least commensurate cuts in aid to the Arabs. Indeed, it is believed by some observers of Congress that foreign aid in general has become quite unpopular and continues to receive congressional approval largely because of the critical role played by supporters of Israel. The depth of this support was illustrated during the struggle over the 1976 Transitional Year funding, when Congress appropriated more aid to Israel than the President was prepared to extend. For no other country does Congress increase rather than cut administration requests.
A final constraint on the reduction of aid is the fact that approximately half of the assistance to Israel is given in the form of loans rather than grants. The reverse flow of payments of interest and amortization of principal from Israel to the United States grows each year. Debt service to the U.S. government is already approximately a half-billion dollars per year, and if, hypothetically, allocations to Israel continue but remain at their present level indefinitely, the day will come when Israel’s repayments will exceed the flow from Washington to Jerusalem. Any reduction in aid will bring about this result sooner. Eventually, Israel is likely to ask Washington to forgive a large portion of the accumulated debt on the grounds that it was emergency aid given in support of national survival. Ample precedents exist in the Soviet Union’s forgiveness of Vietnam’s debts and the United States’ willingness to write off most allies’ war debts after World War II. If the United States refuses to do this and also reduces the annual allocation of new aid, Israel may be forced to default on some portion of the past debt or to declare a unilateral moratorium on repayments. This would further worsen relations between the two countries and would have wider repercussions in diplomatic and financial circles. The costs to Israel of such an imbroglio would undoubtedly be greater than those to the United States, but the chance of setting in motion this train of events must be taken into account by those whose primary concern is the larger national interest of the United States.
In bringing together the arguments against the efficacy of large-scale sanctions, we do not mean to imply that there is nothing that the United States could do to apply pressure on Israel. Even if all of the foregoing limitations were accepted, there are milder but nonetheless significant forms of pressure that are still available. In the military sphere, the United States can reduce the quantities of arms transfers marginally but in ways that will be felt; it can withhold particular weapons systems and technologies that the Israelis would like to have but that are not indispensable to basic defense; and it can release marginally larger quantities of equipment and more sophisticated weapons to the Arab states. Israel’s indigenous arms industry can be affected by denying co-production rights and technology licenses that are requested; by refusing to authorize the release of particular American components for Israeli-made weapons and aircraft; and by denying “third-party-transfer” rights for American components in Israeli-made systems, effectively reducing Israel’s arms exports and thus limiting the economies of scale that might be achieved by its own military industries. In the area of economic relations, Washington can reduce the grant component and increase the loan share of a given volume of aid; it can reduce the concessionary element of the interest rates that apply to intergovernmental loans; it can refuse to forgive past debts or to allow moratoria on repayments during financial crises; it can alter the tariff preferences that now apply to trade between the United States and Israel; and it can alter the favorable tax treatment accorded to private Jewish donations to Israeli philanthropies. In the political sphere, American officials can reduce support for Israel in international forums; they can begin to have direct contacts with or accord recognition to the PLO; and they can put greater verbal pressure on Israel and enhance the feelings of isolation that are already apparent in the Jewish state. Undoubtedly, this does not exhaust the list of milder sanctions that have been identified in contingency plans within the American bureaucracy.
But what these lower-intensity and lower-visibility sanctions have in common is that they can only, by definition, nibble at the edges of Israel’s interests without affecting the essential security or economic viability of the state. They can cause considerable inconvenience and difficulty, but the question remains whether they can do what the proponents of sanctions claim for a policy of pressure against Israel: namely, alter the diplomatic position of the Israeli government on the key questions of a settlement and, most importantly, force territorial concessions to the Arabs and the establishment of a state controlled by the PLO in the areas relinquished. It is certain that a rational Israeli government would do everything possible within its conception of the vital interests of the Jewish state to accommodate the United States’ point of view and avoid the imposition of the congeries of low-intensity sanctions which might be applied. But in order to maintain good relations Israel would be strongly inclined to make concessions to Washington that did not threaten vital interests even without the imposition of sanctions. Conversely, Israeli concessions which go beyond the marginal areas and affect the vital interests of the Jewish state cannot be forced by a concatenation of small punishments. In short, most of what could be accomplished by small-scale sanctions could be accomplished without them. As one Israeli official recently said, “We’ll do as much as we can without any need for pressure—and what we can’t do we won’t do, even with pressure.”
Can large-scale sanctions achieve more? What if the United States government put aside some of the limitations and applied stronger measures? Would the Israeli economy collapse? Undoubtedly, a reduction in American aid would make life considerably more difficult for the already hard-pressed Israelis, but literally, the idea of the economy “collapsing” is meaningless. A cutoff of aid would necessitate additional and drastic austerity measures; substantial additional cuts in imports and private consumption and therefore a further reduction in the standard of living; higher prices, mostly as a result of cuts in basic commodity-subsidy programs; a decrease in public expenditures, services, and investment; a rise in unemployment; and a drop in the GNP. But though the imposition of economic sanctions would make life difficult, it would by no means make it impossible. Under reasonable worst-case assumptions, Israel would continue to be able to feed, clothe, and house its population and maintain an austere but tolerable standard of living for a considerable period. Under an emergency regime, there might very well be a renaissance of the pioneering spirit of the early years of statehood.
At the time of President Ford’s “reassessment” between March and September 1975, when large-scale sanctions against Israel seemed a real possibility, 70 per cent of Israelis in various polls opposed a return to the 1967 borders even under “strong American pressure.” Rabin was supported by 91 per cent of poll respondents when he rejected the original terms of the Sinai II agreement in March 1975—though he was also supported by a margin of 58 per cent to 26 per cent when he accepted what were reported to be improved terms in September of that year. Rabin asserted in June 1977 that “Israel is in a strong position to stand up against any attempt by the U.S. administration to . . . try to force us to accept views inimical to our security.” Peres’s aide, Gad Ya’acobi, pointed out at the time of Ford’s reassessment that “Israelis are ready to live with a 20 per-cent lower living standard so as not to endanger themselves and their future.” Undoubtedly, this does not describe the mood of the entire public, and it is reasonable to assume that further austerity measures would encourage some to leave the country in pursuit of economic opportunity else-where and discourage others who might have come to Israel from doing so. However, while the impact of aliyah emotionally and symbolically continues to be important, its demographic impact and consequences for the economic and military viability of the state are declining over time. Also, some increase in aliyah may occur if the state is perceived by world Jewry to be threatened and alone. In any case, the will of the new government to resist American pressure in areas regarded as vital to the national interest is, beyond doubt, greater than that of its predecessor.
American pressure may even have the reverse effect of hardening Israeli attitudes toward negotiations. In many ways, the victory of the Likud was a reaction to pressures from Washington and reflected a belief among the electorate that Labor was too weak to stand up to the Americans. This was conceded by Rabin after the election: “I can’t say that President Carter’s remarks [on future borders and negotiations] were helpful to the Labor party.” Another reflection of the rebellious mood of the Israeli electorate was the victory of Flatto-Sharon, a minor independent candidate who ran for the Knesset to gain parliamentary immunity and thus prevent his extradition to France where he was wanted for financial crimes. Running on a platform of “Remember Abu Daoud,” he managed to get more Jewish votes than all the “peace parties” willing to return to the pre-1967 lines put together.
This is not to say that a majority of Israelis stand firmly behind the Likud’s commitment to “redeem Judea and Samaria” by annexing the West Bank. In fact, available poll data indicate that over 60 per cent of Israelis would be prepared to surrender the Arab-populated centers of the West Bank provided that something like the Allon plan for Israeli security lines along the Jordan River could be instituted and if the arrangements were part of a general and complete peace settlement. But if the alternatives are reduced to either the present situation or a complete return to the indefensible borders that existed before 1967, a majority of Israelis will stand behind Begin. More generally, outside pressure is likely to enhance the support for the new government and to force even the opposition to rally behind it. This was reflected in a post-election statement by the defeated Rabin:
I hear that the U.S. might try to delay some military supplies for Israel in the wake of the election results. I think that every Israeli, no matter what his party, must stand up against any attempt to link safeguarding Israel’s security and military strength with the character and composition of the Israeli government.
There is a mood of profound impatience behind the proposals of George Ball and Edward R. F. Sheehan for an immediate settlement of the Arab-Israeli conflict and their ideas for economic and military sanctions against Israel to achieve one. But there are no easy solutions in the Middle East. Effective diplomacy must take into account the vital interests of the parties most affected by various proposals. No useful purpose is served by asking either side to take actions to which it cannot agree.
There is, in fact, a curious similarity between the beliefs of today’s “solutionists” that blunt pressures will force Israel to yield and the beliefs of those who argued in 1968-70 that stepped-up bombing of North Vietnam would bring the Communists to the bargaining table on American terms. Blunt instruments of pressure tend to be attractive to those who hold a simple stimulus-response theory of the relationship between punishment and behavioral modification. But a more complex understanding of the world shows this view to be dubious as psychology and futile as diplomacy.