PETRAS ESSAYS IN ENGLISH

April 30, 2002

Who Finances the State of Israel?

James Petras

In the face of Israel's defiance of world public opinion, and its refusal to permit any international humanitarian organization to examine the results of its murderous destruction of the towns and refugee camps in the Occupied Territories, who is financing the Israeli state and why does that financing continue in the face of world opprobrium?

The attempt by the United Nations to investigate Israel's total destruction of Jenin has evoked the hostility of the entire Israeli political class. Shimon Perez (the self-styled labor moderate in Sharon's government) accused the 170 plus member United Nations Organization of "blood libel" presumably including the U.S. which voted in favor of the resolution creating the investigatory commission.

The question of who is financing the Israeli state is basic because, Israel as we know it today, is not a viable state without massive external support. Billions of dollars are raised from a variety of Jewish and non-Jewish institutions to sustain the Israeli war machine, its policy of generous subsidies for Jews enticed to settle in colonies in the Occupied Territories and in Israel, and the high living standards of Israel's Jewish citizens. Without external aid Israel's economy would require severe cutbacks in living standards and working conditions, leading to the likely flight of most Israeli professionals, businessmen and recent overseas immigrants; the Israeli military budget would be reduced and Israel would be obligated to reduce its military interventions in the Arab East and the Occupied territories. Israel would cease being a rentier state living on overseas subsidies and would be obligated to engage in productive activity - a return to farming, manufacture and services minus the exploitation of low paid Asian maids, imported Eastern European farm workers and Palestinian construction laborers.

Europe continues to privilege the importation of Israeli exports and financial services, despite overt and malicious attacks by leaders of both parties in the Sharon regime. Prominent Jewish organizations in France and England, linked to both major parties have muted any efforts to use the "trade card" to pressure Israel to accept European Union or United Nations mediation. European trade and financial ties to Israel however are not the basic prop for the Israeli war machine. The principle basis for long-term, large-scale financial support is found in the U.S., among public and private institutions.

In the United States there are essentially four basic sources of financial, ideological and political support for the Israeli rentier economy:

1. Wealthy Jewish contributors and powerful disciplined fund-raising organizations.

2. The U.S. government - both Congress and the Presidency.

3. The Mass media - particularly the New York Times, Hollywood and the major television networks.

4. The trade union bosses and the heads of pension funds.

There is substantial overlap in these four institutional configurations. For example, Jewish supporters in the Israeli lobby work closely with Congressional leaders to secure long-term, large- scale U.S. military and economic aid for Israel. Most of the mass media and a few trade unions are influenced by unconditional supporters of the Israeli war machine and its rentier economy. Pro- Israeli Jews are disproportionately represented in the financial, political, professional, academic, real estate, insurance and mass media. While Jews are a minority in each and every one of these categories, their disproportionate power and influence stems from the fact that they are organized, active and concentrate on a single issue - U.S. policy in the Middle East, and specifically in securing Washington's massive, unconditional, and continuing military, political and financial support for Israel. Operating from their strategic positions in the power structure, they are able to influence policy and censor any dissident voices from circulating freely in the communications and political system.

In the political sphere, pro-Israeli politicians and powerful Jewish organizations have joined force with pro-Israel ultra right-wing mass based Christian fundamentalists and powerful political leaders tied to the military - industrial complex like Secretary of Defense Rumsfeld and Vice President Cheney.

Israel's unconditional support of Washington's Cold War and subsequent anti-terrorist military offensive has strengthened ideological and military ties between U.S. right-wing political leaders, pro-Israeli politicians and the leaders of the leading Jewish organizations. The politics of Washington's new imperialism coincides splendidly with the Sharon-Peres conquest and destruction of the Occupied Territories. It is not surprising that two of the leading Pentagon advocates of Washington's permanent war doctrine and Israeli aggression are Paul Wolfowitz and Richard Perle, both staunch supporters of right-wing Jewish organizations.

The mass media in the U.S., particularly the "respectable" New York Times has been in the forefront of propagandizing Israeli conquest and destruction as a "defensive", "anti-terrorist war". Not a single voice or editorial in the New York Times has spoken of the mass killing of Palestinians civilians and Israel's destruction of priceless historical and religious sites that go back over 2000 years. While Israel's war machine destroys ancient monasteries and the heritage of world culture, the pro-Israeli mass media in the U.S. focus their critical lenses on the scandals of the Catholic clergy. The Church's protests at the Israeli shelling of the Church of the Nativity and the murder of those seeking sanctuary are thus silenced.

Wealthy and organized Jewish organizations, compliant Congressional representatives and right-wing fundamentalist organizations are not the only financial supporters of Israel. U.S. taxpayers have been funding the Israeli war machine with over $3 billion a year of direct assistance for over 35 years (over $100 billion and continuing). Rank and file trade union members might be surprised to learn that their pension funds have been invested in Israel bonds with below normal rates of return and higher risk. Despite the poor investment quality of Israel bonds, some of the U.S. largest trade unions, employee pension funds and major multi- national corporations have collectively loaned billions of dollars to the Israeli regime. In all cases, the decisions to purchase a foreign government's bonds are made by the trade union bosses and corporate fund managers without consulting the membership or stockholders.

Nathan Zirkin, a financial director of the Retail, Wholesale and Department Store Union when asked if his union would continue to purchase Israel bonds despite Israel's repression and arrest of Palestinian trade unionists and activists, replied "Absolutely. The Palestinians didn't have a damn thing until Israel came in." The bonds proceeds are used to fund Jewish settlements in the West Bank and Gaza. Most of the rest of the bond revenues are transferred to the ordinary budget to be spent on the military and the Israeli intelligence agencies.

Many of the trade unions who are purchasers of Israeli bonds are controlled or influenced by the Mafia. The teamsters unions is the biggest purchaser of Israel bonds; it is also the union which has seen more senior officials indicted for Mafia ties, illicit use of union funds and massive robbery of membership pension funds. In this case the trade union Mafioso were buying favorable propaganda from the mass media and support from the "respectable" Jewish organizations via the purchase of Israel bonds.

Union pension funds have also been used by trade union bureaucrats to purchase Israel bonds. The most notorious case is the former International Ladies Garment Workers Unions (ILGWU), now called UNITE, a union whose workers are 95% Black, Hispanic, and Chinese, earning at below the minimum wage. UNITE's leadership and staff is overwhelming Jewish and earning between $100,000 to $350,000 a year plus expenses. By channeling over $25 million in pension funds to Israel, the U.S. workers are deprived of access to loans for housing, social services, legal defense, etc. Clearly the Jewish trade union bosses have a greater affinity for the state of Israel and its oppression of Palestinian workers, than it has with its own poorly organized workers, employed under some of the worst working conditions in the U.S.

Israeli bond promoters, with support from Mafia -influenced corrupt trade union bosses, have sold hundreds of millions of dollars of Israel bonds to 1500 labor organizations at interest rates below those of other available securities and well below what most investors would expect from loans to an economically troubled foreign government like Israel.

Three factors account for the U.S. trade union bosses channeling their members pension funds and union dues into Israel bonds: political protection and respectability in being associated with Israel and its lobbyists - this is especially important to Mafia-linked and corrupt officials. Ideological and ethnic ties between Jewish trade union leaders and Israel. Thirdly, the use of Israel bonds to launder funds obtained illicitly by union bosses. The main organization selling Israel bonds managed to settle money laundering accusations brought by the U.S. Securities and Exchange Commission "out of court."

Accomplices to Genocide

In April 2002, over 100,000 mostly Jews and Christian fundamentalists marched in support of the Sharon regime in the midst of the siege of Jenin. In Israel two out of three Israelis (65%) polled in late April 2002 supported Sharon and almost 90% believed the regime's propaganda that the U.N. commission to investigate Israeli devastation of the Occupied Territories "will not be fair to Israel." The Israeli public, the U.S. trade union bosses, and political and financial elites who finance Sharon are accomplices to the crimes against the Palestinian people. Obviously the shrinking minority of Jews in Israel who oppose the military machine have little or no influence in policy, in the media and in securing overseas financial support.

The wealth and powerful overseas Jews gravitate toward Sharon. Seven of the eight billionaire Russian Mafia Oligarchs have donated generously to the Israeli state and are on excellent terms with Sharon and Shimon Peres and have no use for dissident military reservists.

Conclusion

Because of powerful unconditional external financial and military support primarily from influential Jews in the U.S., Christian Fundamentalists, the military industrial complex, the Pentagon extremists, and corrupt U.S. trade unionists, Israel is able to defy world public opinion, slander humanitarian organization and human rights leaders, and brazenly continue its genocidal policies. Israeli leaders know "their people": they know they have unconditional supporters who have already been tested. They know that their bankers, professionals and fundamentalists will back them up to the last murdered Palestinian: the march of the 100,000 in Washington in the midst of the Jenin massacre proved it.