U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends, and the FY2009 Request

U.S. Foreign Assistance to the Middle East:
Historical Background, Recent Trends,
and the FY2009 Request
Updated March 7, 2008
Jeremy M. Sharp
Specialist in Middle Eastern Affairs
Foreign Affairs, Defense, and Trade Division

U.S. Foreign Assistance to the Middle East:
Historical Background, Recent Trends,
and the FY2009 Request
Summary
This report is an overview of U.S. foreign assistance to the Middle East from
FY2004 to FY2008, and of the FY2009 budget request. It includes a brief history of
aid to the region, a review of foreign aid levels, a description of selected country
programs, and an analysis of current foreign aid issues. It will be updated periodically
to reflect recent developments. For foreign aid terminology and acronyms, please see
the glossary appended to this report.
For policymakers, foreign assistance plays a key role in advancing U.S. foreign
policy goals in the Middle East. The United States has a number of interests in the
region, ranging from support for the state of Israel and Israel’s peaceful relations with
its Arab neighbors, to the protection of vital petroleum supplies and the fight against
international terrorism. U.S. assistance helps to maintain the 1979 Camp David
peace accords between Israel and Egypt and the continued stability of the Kingdom
of Jordan, which signed its own peace treaty with Israel in 1994. U.S. funding also
works to improve Palestinian civil society, and aid officials have worked to ensure
that U.S. aid to the West Bank and Gaza Strip is not diverted to terrorist groups.
Since the attacks of September 11, 2001, the United States has established new
region-wide aid programs to promote democracy and encourage socio-economic
reform in order to undercut the forces of radicalism in some Arab countries.
U.S. aid policy has gradually evolved from a focus on preventing Soviet
influence from gaining a foothold in the region and from maintaining a neutral stance
in the Arab-Israeli conflict, to strengthening Israel’s military and economy and using
foreign aid as an incentive to foster peace agreements between countries in the
region. When adjusted for inflation, annual U.S. assistance to the Middle East in the
decades following World War II was only a small fraction of current aid flows.
However, beginning in the early 1970s, the United States dramatically increased its
foreign assistance to the Middle East. After the U.S. withdrawal from South
Vietnam, the Middle East as a whole began to receive more U.S. foreign aid than any
other region of the world, a trend that has continued to this day.

Contents
In troduction ......................................................1
Foreign Aid to Support Key U.S. Interests..........................1
Country Summaries................................................4
Israel ........................................................4
Overview ................................................4
Military Assistance........................................5
Egypt .......................................................5
Overview ................................................5
Economic Assistance.......................................6
Military Assistance........................................7
Jordan .......................................................7
Overview ................................................7
Economic Assistance.......................................8
Military Assistance........................................8
Palestinians — West Bank/Gaza .................................9
Overview ................................................9
Direct Aid to the Palestinian Authority........................10
U.S. Contributions to UNRWA..............................12
FY2008 Assistance and the FY2009 Request...................12
Lebanon ....................................................14
Other Recipients and Programs..................................15
Foreign Aid Issues................................................17
Promoting Democracy and Reform...............................17
The Millennium Challenge Account..........................17
The Middle East Partnership Initiative (MEPI)..................18
Restrictions on Aid to the Palestinians............................19
The Palestinian Anti-Terrorism Act of 2006....................20
USAID’s Anti-Terrorism Procedures.........................20
Auditing UNRWA........................................21
The Debate over U.S. Assistance to Egypt.........................22
Congressional Action on Aid to Egypt........................22
Historical Background.............................................24
U.S. Assistance to the Middle East Since 1950......................24
1950-1970 ..............................................24
1971-2001 ..............................................25
Appendix A. Glossary.............................................29

List of Tables
Table 1. A Decade of U.S. Assistance to the Middle East:
FY2000-FY2009 Request.......................................3
Table 2. U.S. Assistance to Israel, FY2004-FY2009 Request...............5
Table 3. U.S. Assistance to Egypt, FY2004-FY2009 Request...............7
Table 4. U.S. Assistance to Jordan, FY2004-FY2009 Request..............9
Table 5. U.S. Bilateral Assistance to the Palestinians,
FY2004-FY2009 Request......................................14
Table 6. U.S. Assistance to Lebanon, FY2004-FY2009 Request............15
Table 7. Other Regional Recipients, FY2004-FY2009 Request.............16
Table 8. Middle East Partnership Initiative Appropriations,
FY2003-FY2009 Request......................................19
Table 9. Total U.S. Foreign Assistance to the Middle East, 1950-1970.......25
Table 10. Total U.S. Assistance to the Middle East: 1971-2001............28

U.S. Foreign Assistance to the Middle East:
Historical Background, Recent Trends,
and the FY2009 Request
Introduction
This report is an overview of U.S. foreign assistance to the Middle East.¹ It
includes a brief historical review of foreign aid levels, a description of specific
country programs, and an analysis of current foreign aid issues.² Congress both
authorizes and appropriates foreign assistance and conducts oversight on executive
agencies’ management of aid programs. As the largest regional recipient of U.S.
economic and military aid, the Middle East is perennially a major focus of interest
as Congress exercises these responsibilities.
In the Middle East, the United States has a number of strategic interests, ranging
from support for the state of Israel and Israel’s peaceful relations with its Arab
neighbors, to the protection of vital petroleum supplies and the fight against
international terrorism. U.S. assistance was provided to support the 1979 Camp
David peace accords between Israel and Egypt and the continued stability of the
Kingdom of Jordan, which signed its own peace treaty with Israel in 1994. U.S.
funding also has attempted to improve Palestinian civil society, and aid officials have
worked to ensure that U.S. aid to the West Bank and Gaza Strip is not diverted to
terrorist groups. Since the attacks of September 11, 2001, the United States has
established new region-wide aid programs that promote democracy and encourage
socio-economic reform in an attempt to undercut the forces of radicalism in some
Arab countries.
Foreign Aid to Support Key U.S. Interests
Despite changing geopolitical conditions, U.S. foreign aid to the Middle East
has historically been a function of U.S. national security interests in the region. The
United States has pursued a foreign policy that seeks stability in a region with
abundant energy reserves but volatile interstate relationships. Policymakers have
often employed foreign aid to achieve this objective. Foreign aid has been used as
leverage to encourage peace between Israel and her Arab neighbors, while
strengthening bilateral relationships between the United States and Israel and

¹ For the purposes of this report, the Middle East region, or Near East, is defined as an area
stretching from Morocco in the west to the Persian Gulf in the east, but not including
Turkey.
² For assistance with foreign aid terminology and acronyms, please see the glossary
appended to this report.

between the United States and moderate Arab governments. Foreign aid has worked
to cement close military cooperation between the United States and governments in
the region, discouraging local states from engaging in uncontrollable arms races.
Economic aid also has had an underlying strategic rationale, as U.S. funds have been
employed to promote development in an attempt to undercut radicalism in partner
countries.
The degree to which foreign assistance has contributed to the achievement of
U.S. objectives in the Middle East is difficult to measure, but the consensus among
most analysts seems to be that U.S. economic and security aid has contributed
significantly to Israel’s security, Egypt’s stability, and Jordan’s friendship with the
United States. The promise of U.S. assistance to Israel and Egypt during peace
negotiations in the late 1970s enabled both countries to take the risks needed for
peace, and may have helped convince both countries that the United States was
committed to supporting their peace efforts. Excluding Iraq, Israel and Egypt are the
largest two recipients of U.S. aid respectively.
There is debate over using foreign aid more aggressively to pursue various
objectives in the Middle East. Some critics of U.S. policy would like to see
additional conditions placed on U.S. aid to Egypt, for example, to achieve greater
respect for democracy and human rights in that country. Others favor using the aid
program more assertively as leverage to restart the Middle East peace process. Some
might urge that aid should be conditioned on demonstrable progress in extending full
political and economic rights to women and religious minorities. Others, however,
assert that the overt use of aid — or the threat of aid reductions — to promote
democracy and reform in the Middle East region could lead to a backlash against the
United States.
Critics of U.S. aid policy, particularly some in the Middle East, have argued that
U.S. foreign aid exacerbates tensions in the region. Many Arab commentators insist
that U.S. assistance to Israel indirectly causes suffering to Palestinians by supporting
Israeli arms purchases. Another common argument asserts that U.S. foreign aid
bolsters autocratic regimes with similar strategic interests to the United States. Some
observers have called U.S. aid policy “contradictory,” accusing the United States of
bolstering its ties with autocratic regimes through military assistance, while
advocating liberalization in the region with less funds dedicated to reform and
development aid. As noted above, however, other analysts believe aid has helped
protect Israel’s security and stabilize the region.

Table 1. A Decade of U.S. Assistance to the Middle East:
FY2000-FY2009 Request
⁽^r^eg^u^l^ar^an^d^su^p^p^l^em^en^{tal ap}^p^r^o^p^r^iatioⁿ^s^{; cu}^r^r^en^{t y}^ear^$ⁱⁿ^m^illioⁿ^s⁾
^Fi^s^c^al^Y^e^ar^T^o^tal^s
^F^Y²⁰⁰⁰^6,648.300
^F^Y²⁰⁰¹^5,617.700
^F^Y²⁰⁰²^5,567.810
^F^Y²⁰⁰³^8,410.000
^F^Y²⁰⁰⁴^5,556.383
^F^Y²⁰⁰⁵^5,752.111
^F^Y²⁰⁰⁶^5,205.801
^F^Y²⁰⁰⁷^5,650.812
^F^Y^{2008 Es}^tⁱ^m^at^{e *}⁵^,236.322
^F^Y^{2009 R}^e^qu^es^t⁵^,127.133
^*^Do^{es n}^o^{t in}^clu^d^{e p}^o^ssib^l^{e su}^p^p^l^em^en^{tal r}^e^q^u^{ests f}^o^r^ad^d^itioⁿ^a^{l assistan}^ce.
When including funds for Iraq Reconstruction:
^Fi^s^c^al^Y^e^ar^T^o^tal^s
^F^Y²⁰⁰⁰^6,648.300
^F^Y²⁰⁰¹^5,617.700
^F^Y²⁰⁰²^5,567.810
^F^Y²⁰⁰³^10,646.000
^F^Y²⁰⁰⁴^23,995.383
^F^Y²⁰⁰⁵^11,448.727
^F^Y²⁰⁰⁶^10,615.501
^F^Y²⁰⁰⁷^7,767.074
^F^Y^{2008 Es}^tⁱ^m^at^e*^5,257.499
^F^Y^{2009 R}^e^qu^es^t⁵^,524.133
^*^Do^{es n}^o^{t in}^clu^d^{e p}^o^ssib^l^{e su}^p^p^l^em^en^{tal r}^e^q^u^{ests f}^o^r^ad^d^itioⁿ^a^{l assistan}^ce.

Country Summaries
The following section provides funding details on the largest regular aid
recipients in the Middle East: Israel, Egypt, Jordan, and the Palestinians. Each
country section features a table with a more elaborate breakdown of aid by account
over the last five fiscal years. For information on U.S. assistance for Iraqi
reconstruction, see CRS Report RL31833, Iraq: Reconstruction Assistance, by Curt
Tarnoff.
Israel³
Overview. Since 1976, Israel has been the largest annual recipient of U.S.
foreign assistance and is the largest cumulative recipient since World War II. Strong
congressional support for Israel has resulted in Israel’s receiving benefits that may
not be available to other countries. For example, Israel can use U.S. military
assistance for research and development in the United States and for military⁴
purchases in Israel. In addition, all U.S. foreign assistance earmarked for Israel is
delivered in the first 30 days of the fiscal year. Other recipients normally receive
their aid in staggered installments at varying times.
Former Israeli Prime Minister Binyamin Netanyahu told Congress on July 10,

1996, that Israel would end its dependency on U.S. economic assistance. At the time,

Israel was receiving $1.2 billion in grant economic assistance and $1.8 billion in
grant military assistance annually. In 1998, Israel and the United States agreed to
reduce U.S. economic assistance by $120 million per year and increase U.S. military
assistance by $60 million per year over a 10-year period beginning in 1999 leading
to a complete phase-out of economic assistance but increasing military assistance to
$2.4 billion by 2008.⁵
In August 2007, the Bush Administration announced that it would increase U.S.
military assistance to Israel by $6 billion over the next decade. The agreement calls
for incremental annual increases in FMF to Israel, reaching $3.1 billion a year by
FY2018. Military analysts speculate that the increase in U.S. assistance will facilitate
potential Israeli purchases of the most sophisticated U.S. equipment, including a
possible sale of the F-35 Joint Strike Fighter (JSF). Under the terms of the agreement,
Israel will still be able to spend 26% of U.S. assistance on Israeli-manufactured
equipment.

³ In addition to U.S. foreign assistance, Israel also receives funds from annual defense
appropriations to support the research and development of new military technologies such
as the Arrow anti-missile system. See CRS Report RL33222, U.S. Foreign Aid to Israel,
by Jeremy M. Sharp.
⁴ In FY1977, the Israeli government, for the first time, received special permission to use
FMF for research and development in Israel on the Merkava tank. After this precedent was
established, Israel has been allowed to spend a set percentage of its annual FMF inside
Israel.
⁵ This agreement is noted in the conference report for the Security Assistance Act of 2000,
H.R. 4919/P.L. 106-280, October 6, 2000.

Military Assistance. Congress has taken measures to strengthen Israel’s
security and maintain its technological advantage over neighboring militaries.
Annual Foreign Military Financing (FMF) grants to Israel represent about 20% of the
Israeli defense budget. Israel also is eligible to receive Excess Defense Articles under
section 516 of the Foreign Assistance Act. For FY2009, the Administration has
requested $2.55 billion in FMF for Israel.
Since FY1988, Congress has allowed Israel to use approximately a quarter of
its FMF funds as cash grant to pay for Israeli defense purchases in Israel. Since 1990,
Congress has provided for Israel to receive its FMF aid in a lump sum during the first
month of the fiscal year, which allows Israel to invest the funds in U.S. Treasury
notes and earn interest similar to ESF early disbursements.
Table 2. U.S. Assistance to Israel, FY2004-FY2009 Request
(regular and supplemental appropriations; current year $ in millions)
^A^ccouⁿ^t^FY²⁰⁰⁴^FY²⁰⁰⁵^FY^{2006 FY}²⁰⁰⁷^FY²⁰⁰⁸^Estⁱ^m^a^t^e^FY²⁰⁰⁹^Request
^ES^F^477.168^357.120^237.6^120.0^—^—
^F^M^F²^,147.255^2,202.240^2,257.²²^,340.0²^,380.560^2,550.0
^R^e^f^u^g^ees⁵⁰⁵⁰⁴⁰⁴⁰^40.0³⁰
^Oth^e^r^aⁿ^/^aⁿ^/^a^.526^.240^—^—
^To^t^a^l^2,674.423^2,609.360^2,535.3²^,500.24^2,420.56^2,550.0
^Source:^{U.S. State Dep}^a^r^t^m^e^nt
^{a. T}^hⁱ^s^cat^eg^oryⁱⁿ^cl^u^d^es^f^uⁿ^d^s^f^o^{r cou}ⁿ^t^{er t}^e^rrori^s^m^,^{border con}^t^rol^,^an^{d t}^echⁿⁱ^cal^cooperatⁱ^oⁿ^.
Egypt⁶
Overview. Since 1979, Egypt has been the second largest recipient of U.S.
foreign assistance, receiving an annual average of close to $2 billion in economic and
military aid. In the past, Congress has earmarked aid to Egypt in annual foreign
operations legislation with an accompanying statement calling on Egypt to undertake⁷
further economic reforms in addition to reforms taken in previous years. In July
2007, as a part of a larger arms package to the region, the United States announced
that it would provide Egypt with $13 billion in military aid over a ten-year period.
Since Egypt has already been receiving approximately $1.3 billion a year in military
assistance, the announcement represented no major change in Administration policy
toward Egypt.

⁶ For additional information on U.S. aid to Egypt, see CRS Report RL33003, Egypt;
Background and U.S. Relations, by Jeremy M. Sharp.
⁷ In FY2006, Egypt’s FMF earmark was excluded from the Senate-approved version of the
annual foreign aid bill but was later reinstated by conferees.

Economic Assistance. The United States has significantly reduced its
economic aid to Egypt over the last decade, as many observers believe that U.S.
economic assistance may be phased out entirely in the years ahead. There are several
reasons for the reduction in U.S. assistance. Overall, U.S. economic aid to Egypt has
been trending downward due to a ten-year agreement reached in the late 1990s
known as the “Glide Path Agreement.” In January 1998, Israeli officials negotiated
with the United States to reduce economic aid and increase military aid over a 10-
year period. A 3 to 2 ratio similar to total U.S. aid to Israel and Egypt was applied to
the reduction in economic aid ($60 million reduction for Israel and $40 million
reduction for Egypt), but Egypt did not receive an increase in military assistance.
Thus, the United States reduced ESF aid to Egypt from $815 million in FY1998 to
approximately $411 million in FY2008.⁸
With the expiration of the Glide Path agreement, the continued expansion of
Egypt’s economy, a growing desire for more U.S.-Egyptian trade, and a reluctance
by Egypt to accept “conditions” on U.S. aid, U.S. and Egyptian officials have⁹
expressed a desire to “graduate” Egypt from U.S. bilateral economic assistance.
However, neither the United States nor Egypt seem to agree on how aid should be
reduced over the coming decade. Egypt would like to establish an endowment to
jointly fund development projects.¹⁰ Some analysts believe that the proposed
endowment, which reportedly would be matched by the Egyptian government on a
dollar-for-dollar basis, would serve as a substitute for the annual appropriations
process and shield Egypt from potential conditionality agreements mandated by
Congress. So far, the Administration has moved ahead with its own plans for
reducing economic aid to Egypt.
For FY2009, the Administration is requesting $200 million in ESF for Egypt,
a notable decrease from previous fiscal years. According to the U.S. State
Department’s FY2009 Congressional Budget Justification, “FY 2009 economic
assistance funds for Egypt will decrease from the FY 2008 level, reflecting a more
balanced, mature bilateral relationship consisting of foreign assistance and
commercial linkages.” Of the $200 million FY2009 ESF request, $110 million will
be used for education and health projects managed by USAID, $45 million will be
used for democracy programs, including direct grants to Egyptian NGOs, and $44
million will be provided to Egypt as a direct cash transfer to help Egypt further
liberalize its economy.

⁸ In FY2003, Egypt, along with Israel and several other regional governments, received
supplemental assistance as part of the FY2003 Iraq Emergency Supplemental
Appropriations Act (P.L. 108-11). It included $300 million in ESF for Egypt, which could
be used to cover the costs of up to $2 billion in loan guarantees. The loan guarantees were
to be issued over three years.
⁹ CRS conversation with U.S. and Egyptian officials, January 9, 2008.
¹⁰ The Senate version of the FY2008 Foreign Operations bill (H.R. 2764), contained an
amendment, entitled “The United States-Egypt Friendship Endowment,” that would have
provided up to $500 million in ESF to establish an endowment to “further social, economic
and political reforms in Egypt.”

Military Assistance. The Administration has requested $1.3 billion in FMF
for Egypt in FY2009 — the same amount it received in FY2008. FMF aid to Egypt
is divided into three general components: (1) acquisitions, (2) upgrades to existing
equipment, and (3) follow-on support/ maintenance contracts. According to U.S. and
Egyptian defense officials, approximately 30% of annual FMF aid to Egypt is spent
on new weapons systems, as Egypt’s defense modernization plan is designed to
gradually replace most of Egypt’s older Soviet weaponry with U.S. equipment. That
figure is expected to decline over the long term due to the rising costs associated with
follow-on maintenance contracts. Egyptian military officials have repeatedly sought
additional FMF funds to offset the escalating costs of follow-on support. Egypt also
receives Excess Defense Articles (EDA) worth hundreds of millions of dollars
annually from the Pentagon. Egyptian officers also participate in the IMET program
($1.3 million requested for FY2009) in order to facilitate U.S.-Egyptian military
cooperation over the long term.
Table 3. U.S. Assistance to Egypt, FY2004-FY2009 Request
(Regular and Supplemental Appropriations; Current Year $ in millions)
^A^ccouⁿ^t^FY²⁰⁰⁴^FY²⁰⁰⁵^FY²⁰⁰⁶^FY²⁰⁰⁷^FY²⁰⁰⁸^E^s^ti^m^a^te^FY²⁰⁰⁹^Request
^ES^F^571.608^530.720^490.050^455.0^411.639^200.0
^F^M^F¹^,292.330^1,289.600^1,287.⁰¹^,300.0¹^,289.470^1,300.0
^IMET^1.369^1.200^1.208^1.203^1.237^1.300
^Oth^e^r^a^--^1.029^1.545^3.545^4.100
^To^t^a^l^1,865.307^1,821.520^1,779.287^1,757.748^1,705.891^1,505.400
^Source:^{U.S. State Dep}^a^r^t^m^e^nt.
^{a. T}^hⁱ^s^cat^eg^oryⁱⁿ^cl^u^d^es^f^uⁿ^d^s^f^o^{r cou}ⁿ^t^{er t}^e^rrori^s^m^,^{border con}^t^rol^,^an^{d t}^echⁿⁱ^cal^cooperatⁱ^oⁿ^.
Jordan¹¹
Overview. In the last decade, U.S. aid to Jordan has more than tripled, from
a total of $223 million in FY1998 to an estimated $687.7 million in FY2008. After
the September 11, 2001 terrorist attacks, aid to Jordan increased significantly. Further
increases in U.S. aid to Jordan began in FY2003, in view of Jordan's support for the
war against terrorism and U.S. operations in Iraq. Since FY2003, Jordan's total
assistance package has averaged over $740 million per fiscal year. This higher figure
is due in part to large allocations for Jordan in subsequent supplemental
appropriations acts (a total of $1.5 billion since FY2003).¹² In addition to the

¹¹ For details on USAID’s Jordan program, see [http://jordan.usaid.gov/]. Also, see CRS
Report RL33546, Jordan: Background and U.S. Relations, by Jeremy M. Sharp.
¹² The following supplemental appropriations bills have contained bilateral assistance aid
to Jordan: FY2003 Emergency Wartime Supplemental Appropriations Act ($1.1 billion in
P.L. 108-11), FY2005 Supplemental Appropriations Act ($200 million in P.L. 109-13),
(continued...)

preceding funds specifically earmarked for Jordan, the last four emergency
supplemental bills have contained funds to reimburse Pakistan, Jordan, and other key
cooperation states for logistical expenses in support of U.S. military operations.
The Administration’s FY2009 request to Congress is $535.4 million for U.S. aid
to Jordan. This includes $263.5 in economic aid and $235 million in military
assistance. Jordan also is seeking additional FY2008 supplemental assistance to cope
with its struggling economy and the influx of Iraqi refugees. According to Jordan’s
Embassy in Washington D.C., “Jordan is seeking supplemental assistance of $500
million in 2008 to be able to assist in mitigating the impact the economic burden of
the doubling of oil prices and its impact on Jordan’s growth and poverty levels, the
pressing costs of security and military obligations, as well as the impact of the large
presence of Iraqis on the Jordanian economy.”
Economic Assistance. For FY2009, the Administration has requested
$263.5 million in ESF for Jordan, a figure consistent with previous funding levels.
The United States provides economic aid to Jordan as both a cash transfer and for
USAID programs in Jordan. The Jordanian government uses cash transfers to service
its foreign debt (approximately $7.4 billion). Approximately 45 percent of Jordan’s
ESF allotment each year goes toward the cash transfer. USAID programs in Jordan
focus on a variety of sectors including democracy assistance, water preservation, and
education. In the water sector, the bulk of U.S. economic assistance is devoted to
optimizing the management of scarce water resources, as Jordan is one of the most
water-deprived countries in the world. USAID is currently subsidizing several waste
treatment and water distribution projects in the Jordanian cities of Amman, Aqaba,
and Irbid.
Military Assistance. The FY2009 budget request includes $235 million for
the Jordanian military, close to the same amount it has received over the past several
fiscal years.¹³ U.S. military assistance is primarily directed toward upgrading Jordan’s
air force, as recent purchases include upgrades to U.S.-made F-16 fighters, air-to-air
missiles, and radar systems. FMF grants also provide financing for Jordan’s purchase
of U.S. Blackhawk helicopters in order to enhance Jordan’s border monitoring and
counter-terror capability. Jordan is currently the single largest provider of civilian
police personnel and fifth largest provider of military personnel to UN peacekeeping
operations worldwide.

¹² (...continued)
FY2006 Emergency Supplemental Appropriations Act ($50 million in P.L. 109-234), and
the FY2007 Supplemental Appropriations Act ($85.3 million in P.L. 110-28).
¹³ In fiscal years 2002, 2003, 2005, and 2007 Jordan received supplemental FMF grants
totaling $600 million.

Table 4. U.S. Assistance to Jordan, FY2004-FY2009 Request
(Regular & Supplemental Appropriations; Current Year $ in millions)
^A^c^c^o^unt^F^Y^{2004 F}^Y²⁰⁰⁵^FY²⁰⁰⁶^FY²⁰⁰⁷^FY²⁰⁰⁸^E^s^ti^m^a^te^FY²⁰⁰⁹^Request
^ES^F^348.525^348.000^297.500^255.300^361.412^263.547
^F^M^F^204.785^304.352^207.900^252.900^298.380^235.000
^IMET^3.225^3.000^3.020^2.922^2.919^3.100
^CSH^{— —}^—^—^—^13.144
^Oth^e^r^a^{— —}^2.491^26.741^25.059^20.650
^To^t^a^l^556.535^655.352^510.911^537.863^687.770^b^535.411
^Source:^{U.S. State Dep}^a^r^t^m^e^nt
^No^te:^T^h^is^{table does}ⁿ^o^{t in}^clu^d^{e P}^{eace C}^o^rps^f^uⁿ^d^s^.
^{a. T}^hⁱ^s^cat^eg^oryⁱⁿ^cl^u^d^es^f^uⁿ^d^s^f^o^{r cou}ⁿ^t^{er t}^e^rrori^s^m^,^{border con}^t^rol^,^an^{d t}^echⁿⁱ^cal^cooperatⁱ^oⁿ^.
^{b. T}^hⁱ^s^fⁱ^g^u^r^{e does}ⁿ^o^tⁱⁿ^cl^u^d^{e pos}^sⁱ^bl^{e F}^Y^{2008 s}^u^ppl^em^en^t^a^l^as^sⁱ^s^t^an^ce.
Palestinians — West Bank/Gaza¹⁴
Overview. For the past two years, U.S. foreign assistance to the Palestinians
has fluctuated dramatically due to the ascension of Hamas in the Gaza Strip and its
contentious relationship with Palestinian moderates. After the 2006 Hamas victory
in Palestinian Authority (PA) elections, U.S. assistance to the Palestinians was
restructured and reduced. After Hamas. took over the PA in March 2006, the United
States halted direct foreign aid to the PA, but continued providing humanitarian
assistance and democracy promotion and private sector support funds to the
Palestinian people through international and non-governmental organizations
(NGOs). The ban continued during the brief tenure of the Hamas-led unity
government (from February until June 2007). U.S. policy makers demanded that
Hamas, a U.S. State Department-designated Foreign Terrorist Organization (FTO),
renounce, among other things, its commitment to the destruction of the state of Israel
and the use of terrorist violence. Hamas did not comply with these demands.
In June 2007, intense Palestinian infighting ended with Hamas in complete
control of the Gaza Strip; Abbas reacted by dissolving the unity government. The
Bush Administration and the Israeli government viewed the ouster of Hamas as an
opportunity to return to diplomacy, and the United States announced it was resuming
its foreign assistance program to bolster the Abbas-led Palestinian Authority in the
West Bank.

¹⁴ See also CRS Report RS22370, U.S. Foreign Aid to the Palestinians, by Paul Morro. For
details on USAID’s program in the West Bank and Gaza Strip, see [http://www.usaid.
gov/wbg/].

Most U.S. assistance to the Palestinians is provided through USAID’s West
Bank and Gaza program. U.S. assistance also reaches Palestinians through
contributions to the United Nations Relief Works Agency (UNRWA), which
provides humanitarian relief and basic services to Palestinian refugees living in the
West Bank, Gaza Strip, Jordan, Syria, and Lebanon.
Since the signing of the Oslo Accord in 1993, the U.S. government has
committed more than $2 billion in bilateral economic assistance to the Palestinians.¹⁵
Approximately 80% of U.S. funding for the Palestinians has been channeled through
USAID contractors and 20% through private voluntary organizations (PVOs).
According to annual foreign operations legislation, congressionally approved funds
for the West Bank and Gaza Strip cannot be used for the Palestinian Authority (PA),
unless the President submits a waiver to Congress citing that it is in the interest of
national security.¹⁶ U.S. assistance to the Palestinians has been averaging about $130
million a year since FY2002. During the 1990s, U.S. foreign aid to the Palestinians
averaged approximately $75 million per year.
Direct Aid to the Palestinian Authority. The United States has provided
direct assistance to the Palestinian Authority on seven occasions including the
following:
^!In1993-1994, the United States provided $36 million through the
Holst Fund at the World Bank for direct assistance to the Palestinian
Authority, and an additional $5 million in cash and equipment for
the Palestinian police.
^!On July 8, 2003, the United States announced that it would provide
$20 million out of a $50 million FY2003 Supplemental allocation as
direct aid to the PA for infrastructure projects.
^!On December 8, 2004, President Bush again approved $20 million
in direct assistance to the PA. The $20 million was used to pay off¹⁷
overdue Palestinian utility bills to Israeli companies.
^!Following PA President Mahmoud Abbas’ May 2005 visit to the
White House, President Bush announced that the United States
would transfer an additional $50 million from unobligated FY2005
ESF funds to the Palestinian Authority.¹⁸ However, after the

¹⁵ The USAID program in the West Bank and Gaza Strip provides assistance to the
Palestinian people through contractors and charities. The PLO, which represents the
Palestinian diaspora, has never received funds from the U.S. government.
¹⁶ See H.R. 3057 (P.L. 109-102), Foreign Operations Appropriations Act, FY2006,
Limitation on Assistance to the Palestinian Authority, sec. 550 (b).
¹⁷ See Presidential Determination No. 2005-10, available at
[ ht t p: / / www.whi t e house.gov/ news/ r el eases/ 2004/ 12/ 20041208-1.ht ml ] .
¹⁸ See Presidential Determination No. 2005-29, available at

surprising Hamas victory in Palestinian legislative election in early
2006, the Bush Administration withheld the delivery of $45 million
in remaining funds to the PA in order to pressure Hamas into
abrogating its official covenant and recognizing Israel.
^!In late 2006, the State Department notified Congress of the
President's intent to reprogram up to $86 million in prior-year
funding to support efforts to reform and rehabilitate Palestinian civil
security forces loyal to President Abbas.¹⁹ However, the House
Appropriations Committee placed a hold on these funds, seeking
more information on where and why the money was to be spent.
After the Palestinians reached agreement on the Fatah-Hamas power
sharing arrangement, other Members of Congress reportedly
expressed further doubts, fearing the money may end up with
Hamas. In March 2007, Secretary Rice told a House Appropriations
subcommittee that the Administration would instead seek $59
million for Abbas ($43 million for training and non-lethal assistance
to the Palestinian Presidential Guard and $16 million for
improvements at the Karni crossing, the main terminal for goods
moving in and out of Gaza). No holds were placed on this request.
^!In June 2007, President Bush issued a waiver to send $18 million in
direct assistance to the Palestinian Authority to be used for a variety
of purposes, including democracy assistance to the Palestinian
Central Election Commission and security assistance to officials at
the Palestinian Monetary Authority and Karni Crossing cargo
terminal .²⁰
^!In February 2008, President Bush issued a waiver to send $150
million in aid to the Palestinian Authority to “avert a serious and
immediate financial crisis.”²¹ Reportedly, U.S. aid may be used for
budget support. On March 4, 2008, several sources reported that
Representative Nita M. Lowey, chairwoman of the House
Appropriations Subcommittee for State-Foreign Operations
Appropriations, put a hold the $150 million in direct aid until the

¹⁸ (...continued)
[ ht t p: / / www.whi t e house.gov/ news/ r el eases/ 2005/ 07/ 20050714-7.ht ml ] .
¹⁹ See Presidential Determination No. 2007-11. This action transferred $86.3 million in
FY2006 ESF funds to the INCLE account. Under Chapter 8 of part I (section 481) of the

1961 Foreign Assistance Act (as amended), “Notwithstanding any other provision of law,

the President is authorized to furnish assistance to any country or international organization,
on such terms and conditions as he may determine, for the control of narcotic and
psychotropic drugs and other controlled substances, or for other anticrime purposes.”
²⁰ See Presidential Determination No. 2007-20, available at
[ ht t p: / / www.whi t e house.gov/ news/ r el eases/ 2007/ 06/ 20070601-16.ht ml ] .
²¹ A copy of the waiver is available at
[ ht t p: / / www.whi t e house.gov/ news/ r el eases/ 2008/ 02/ 20080228-6.ht ml ] .

Administration provides more details on how U.S. funds will be
spent.²²
U.S. Contributions to UNRWA. The United Nations Relief and Works
Agency (UNRWA) provides food, shelter, medical care, and education for many of
the three million Palestinian refugees²³
from the 1948-1949 Arab-Israeli war.Recent U.S. Contributions to
U.S. contributions to UNRWA comeUNRWA
from the general Migration and
Refugee Assistance (MRA) account
and also through the EmergencyFY2003$134 million
Refugee and Migration Assistance
(ERMA) account. The U.S.FY2004$127 million
contribution to UNRWA usually coversFY2005$108 million
22 to 25% of the UNRWA total
budget.²⁴ The United States is theFY2006$137 million
largest bilateral donor to the UNRWA
and second only to the EuropeanFY2007$130 million

Community as a contributor. U.S.
support for UNRWA is not treated as
bilateral economic aid to the
Palestinians, which is managed by USAID. According to the U.S. State Department,
U.S. contributions help fund 647 schools, 273 of which are in Gaza and the West
Bank and 125 primary health care facilities, including 54 health clinics and one²⁵
hospital in Gaza and the West Bank.
With Hamas now in control of the entire Gaza Strip, there are questions how
and whether the United States will continue to support UNRWA operations in the
Gaza Strip. After the United States announced in February 2008 its intention to
increase funding for UNRWA, Sam Witten, U.S. Acting Assistant Secretary for the
Bureau of Population, Refugees, and Migration, stated that “The United States is not
abandoning the people of Gaza and our additional contribution will be of assistance
to them.”
FY2008 Assistance and the FY2009 Request. For FY2008, the
Administration initially requested $63.5 million for the West Bank and Gaza and $10
million in Child Survival and Health Funds. Due to changed circumstances that
²² “Appropriator Wants Palestinian Authority Aid on Hold Until Accountability in Place,”
Congressional Quarterly, March 4, 2008.
²³ See CRS Report RS21668, United Nations Relief and Works Agency for Palestine
Refugees in the Near East (UNRWA), by Rhoda Margesson.
²⁴ U.S. contributions to UNRWA’s General Fund support its programs for Palestinian
refugees in all five fields of operation: Jordan, Syria, Lebanon, the West Bank, and Gaza.
USAID estimates that about 45 percent of UNRWA’s General Fund has supported West
Bank and Gaza programs since 2002.
²⁵ “United States Assistance to UN Relief and Works Agency,” Fact Sheet, Office of the
Spokesman, U.S. Department of State, Washington, DC, April 10, 2006.

included the formation of the Fayyad government, the Administration later sought an
additional $410 million, including $100 million for direct budgetary support, $25
million for security sector reforms, and $35 million for emergency needs of
Palestinian refugees in Gaza, the West Bank, and Lebanon.²⁶ This amendment to the
original FY2008 request came before a December 2007 international donors’ meeting
in Paris to raise funds for the Palestinian Authority. In Paris, Secretary of State
Condoleezza Rice remarked that “The Palestinian Authority is experiencing a
serious budgetary crisis.... This conference is literally the government’s last hope to
avoid bankruptcy.”²⁷
P.L. 110-161, the Consolidated Appropriations Act, 2008, signed into law on
December 26, 2007, appropriates $218,500,000 in assistance for the West Bank and
Gaza, of which not more than $2 million may be used for USAID expenses. If the
President exercises his authority to waive the ban on providing funds to the PA
granted to him under the act, then not more than $100 million may be made available
for cash transfers to the PA until the Secretary of State certifies and reports that the
PA has established a single treasury account for all financing, has eliminated all
parallel financing mechanisms, and has established a single, comprehensive civil
service roster and payroll. None of the funds appropriated for cash transfer assistance
may be obligated for salaries of PA personnel located in Gaza, and none may be
obligated or expended for assistance to Hamas or any entity controlled by Hamas or
any power-sharing government with Hamas unless Hamas recognizes Israel’s right
to exist and accepts prior accords between Israel and the Palestine Liberation
Organization. None of the funds appropriated by the act may be provided to support
a Palestinian state unless its governing entity has demonstrated a commitment to
peaceful coexistence with Israel and is taking measures to counter terrorism and
terrorist financing in the West Bank and Gaza, among other conditions. The act also
contains provisions requiring that the Secretary of State ensure oversight of the use
of U.S. funds and audit procedures.
In the FY2008 supplemental, the Administration is requesting $75 million in
Economic Support Funds for the West Bank and Gaza. For FY2009, the
Administration is requesting $25 million in International Narcotics and Law
Enforcement (INLE) funds for the Palestinian security forces and $75 million in
Economic Support Funds.

²⁶ In his December 12, 2007 testimony before the Committee on House Foreign Affairs
Subcommittee on Middle East and South Asia, Robert M. Danin, Deputy Assistant
Secretary, Near Eastern Affairs, remarked “Our Fiscal Year 2008 request was sent to
Congress prior to the change in the PA government. Due to the new circumstances on the
ground that have created an unprecedented opportunity for peace, we are seeking an
additional $410 million in emergency supplemental funding for the Palestinians. First in
Annapolis, and now in Paris, we will be showing the world that the United States is fully
engaged and committed to providing the necessary support - both financial and political -
to assist the parties in resolving the Israeli-Palestinian conflict. A significant U.S.
contribution will send a signal to other donors that the time to assist the PA is now and a PA
government with the full and public support of the international community will help to
build a constituency for peace within Palestinian society.”
²⁷ “$7.4 Billion Pledged for Palestinians,” New York Times, December 18, 2007.

Table 5. U.S. Bilateral Assistance to the Palestinians,
FY2004-FY2009 Request
(regular and supplemental appropriations; current year $ in millions)
^A^c^c^o^uⁿ^t^F^Y^{2004 F}^Y²⁰⁰⁵^FY²⁰⁰⁶^FY²⁰⁰⁷^FY²⁰⁰⁸^E^s^ti^m^a^te^FY²⁰⁰⁹^Request
^ES^F^74.5^224.4^148.5^{50.0 217.896}^75.0
^P^.^L^.^{480 T}^{itle II}^-⁶^.0^4.4^19.488^-^-
^INC^L^E^--^-^-^-^25.0
^T^r^an^sitioⁿ^-^-^.343^-^--
^Iⁿ^itiativ^es
^T^o^tal^74.5^230.0^153.2^a^69.488^217.896^b^100.0
^Source:^{U.S. State Dep}^a^rtm^eⁿ^t^{, USA}^I^D.
^{a. F}^o^l^l^o^wⁱⁿ^g^t^h^e^f^o^rm^atⁱ^oⁿ^of^t^h^e^H^a^m^a^s^-^l^e^{d PA}^g^o^v^e^rn^m^eⁿ^tⁱⁿ^March^{2006, U}^S^A^I^D^s^u^s^p^en^{ded m}^o^s^t
^of^its^prog^ram^sⁱⁿ^th^{e W}^e^s^t^B^aⁿ^k^an^{d Gaza. How}^e^v^e^r,ⁱⁿ^order^to^allevⁱ^{ate a h}^u^m^an^itarian^cris^isⁱⁿ
^th^e^W^e^s^t^B^aⁿ^k^an^{d Gaza s}^t^em^mⁱⁿ^g^f^r^om^th^{e cu}^tof^f^of^{aid f}^r^om^W^e^s^t^ern^don^ors^,^th^e^State^Departm^eⁿ^t
^an^d^USA^I^{D r}^e^dⁱ^r^ected^{U.S. assistan}^{ce to}^t^h^e^P^a^l^e^s^tⁱⁿ^ian^g^r^o^u^p^sⁿ^o^{t af}^f^iliated^w^ith^Ham^a^{s. T}^h^e
^as^sⁱ^s^t^an^{ce cam}^{e f}^r^om^s^e^v^e^{ral f}^o^reigⁿ^{aid accou}ⁿ^t^s^an^d^f^uⁿ^d^s^appropriatedⁱⁿ^prior^y^ears^,^w^h^ich^w^e^re
^r^e^p^r^o^g^r^a^m^m^e^d^aⁿ^d^d^e^lⁱ^v^e^r^e^d^t^h^r^o^{ugh i}ⁿ^t^e^rⁿ^a^tⁱ^o^na^l^o^r^gaⁿⁱ^z^a^tⁱ^o^{ns suc}^h^a^s^t^h^{e U}ⁿⁱ^t^e^d^N^a^tⁱ^o^ns.^T^h^e^St^a^t^e
^Departm^eⁿ^t^als^o^tran^s^f^erred^approx^im^ately^{$35 m}^illionⁱⁿ^{appropriated FY2006 ESF f}^uⁿ^d^s^f^o^{r th}^e
^W^e^s^t^B^aⁿ^k^an^{d Gaza to oth}^e^{r f}^o^reigⁿ^{aid accou}ⁿ^t^s^.
^{b. T}^hⁱ^s^fⁱ^g^u^r^{e does}ⁿ^o^tⁱⁿ^cl^u^d^{e pos}^sⁱ^bl^{e F}^Y^{2008 s}^u^ppl^em^en^t^a^l^as^sⁱ^s^t^an^ce.
Lebanon
In order to support the Lebanese government, the United States has pledged to
devote more financial resources to reconstruction and military assistance. The
summer 2006 war between Hezbollah and Israel heightened the need for additional
economic aid, as the Lebanese government and its international and Arab partners
vied with Iran and Hezbollah to win the “hearts and minds” of many Lebanese
citizens who lost homes and businesses as a result of the conflict. From a military
standpoint, the war also highlighted the urgent need for a more robust Lebanese
military to adequately patrol Lebanon's porous borders with Syria and to prevent
Hezbollah's re-armament. P.L.110-28, the FY2007 Emergency Supplemental
Appropriations Act (entitled the U.S. Troop Readiness, Veterans' Care, Katrina
Recovery, and Iraq Accountability Appropriations Act, 2007), provided $770 million
in supplemental assistance for Lebanon, a noticeable increase in funding from
previous years.
U.S. military assistance to Lebanon has dramatically increased over the past two
years. In his testimony before the Committee on House Foreign Affairs
Subcommittee on the Middle East and South Asia, David Welch, U.S. assistant
secretary of State at the Bureau of Near Eastern Affairs, stated that:
^W^e^are^f^uⁿ^dⁱⁿ^g^a^{$60 m}^illion^prog^ram^{to train}^an^{d equ}ⁱ^{p L}^e^ban^oⁿ^`^s^In^tern^al^Secu^rity^Forces
^th^{at w}^{ill allo}^w^th^em^to^tak^e^o^v^er^p^o^lice^f^uⁿ^c^tioⁿ^s^tr^ad^itioⁿ^a^lly^car^rⁱ^ed^o^u^{t b}^y^th^{e m}^ilitar^y^{. W}^e
^h^a^v^e^als^o^m^a^s^sⁱ^v^e^lyⁱⁿ^creas^{ed ou}^{r as}^sⁱ^s^t^an^ce^to^th^e^L^e^ban^e^s^e^A^r^m^e^d^Forces^.^In^th^{e af}^term^ath
^o^f^t^h^{e s}^u^m^m^e^{r w}^a^{r, an}^{d w}ⁱ^t^h^t^h^{e s}^u^pport^of^t^h^{e C}^oⁿ^g^r^es^s^,^w^eⁱⁿ^creas^{ed ou}^{r s}^ecu^rⁱ^t^y
^as^sⁱ^s^t^an^ce^f^r^om^j^u^s^t^uⁿ^d^er^$1^m^illionⁱⁿ^{FY05 to $40 m}^illionⁱⁿ^{FY06 an}^{d ov}^{er $250 m}^illion
ⁱⁿ^FY0⁷^to^b^o^l^ster^th^{e cap}^ab^{ilities o}^f^th^{e L}^e^b^aⁿ^e^{se A}^r^m^e^d^Fo^r^ces.^T^h^is^assistan^ce^h^a^{s alr}^ead^y
^f^uⁿ^d^{ed s}^p^{are parts}^f^o^{r h}^e^licopters^,^v^e^hⁱ^cl^e^sⁱⁿ^c^l^udin^g^Hu^m^v^ees^{to h}^e^{lp th}^{e L}^A^{F patrol th}^e

^so^u^t^h^aⁿ^d^t^h^e^b^o^r^d^e^r^,^s^m^a^l^l^a^r^m^s^aⁿ^d^lⁱ^g^h^t^w^e^a^p^oⁿ^s^,^s^m^a^l^l^aⁿ^d^l^a^r^g^e^c^a^lⁱ^b^e^r^a^m^m^uⁿ^itioⁿ^,²⁸
^com^m^uⁿⁱ^cation^s^equⁱ^pm^en^{t, an}^{d train}ⁱⁿ^g^f^o^{r L}^A^{F of}^fⁱ^cers^.
The FY2009 request for Lebanon includes an estimated $75 million in military
aid from several appropriations accounts. According to the U.S. State Department,
“U.S. security assistance will promote Lebanese control over southern Lebanon and
Palestinian refugee camps, preventing them from being used as bases to attack Israel.
The U.S. Government's active military-to-military programs will enhance the
professionalism of the Lebanese Armed Forces, and reinforce the concept of
Lebanese civilian control. Assistance also will include training and technical
assistance for the Internal Security Forces, while funding will support the
implementation of international terrorism conventions.”²⁹
Table 6. U.S. Assistance to Lebanon, FY2004-FY2009 Request
(regular and supplemental appropriations; current year $ in millions)
^A^ccouⁿ^t^FY^{2004 FY}²⁰⁰⁵^FY²⁰⁰⁶^FY²⁰⁰⁷^FY²⁰⁰⁸^Estⁱ^m^a^t^e^FY²⁰⁰⁹^Request
^ES^F^34.794^39.720^39.600^334.6^44.636^67.5
^F^M^F^—^—^3.713^224.8⁶^.943^62.2
^IN^C^L^E^—^—^—^60.0^.⁴⁹⁶^6.0
^N^A^D^R^—^2.300^2.978^8.5⁴^.745^4.6
^IMET^.700^.700^.752^.905^1.428^2.130
^D^A^.400^.500^2.000^—^—^—
^T^o^tal^35.894^43.220^49.043^628.805^58.248^142.43
^So^urce^{: U.S. State Dep}^a^rtm^eⁿ^t^{, USA}^I^D.
Other Recipients and Programs
Excluding the region’s top recipients of U.S. assistance (such as Israel, Egypt,
and Jordan), the rest of the Middle East receives only a small portion of the total
bilateral assistance to the region. The following table provides aid figures for
individual countries not listed in the “country summaries” section.

²⁸ Testimony of C. David Welch - Assistant Secretary of State, Bureau of Near Eastern
Affairs, Middle East and South Asia Subcommittee of House Foreign Affairs Committee,
“Smoke on the Horizon: The Coming Crisis in Lebanon,” November 8, 2007.
²⁹ See, [http://www.state.gov/documents/organization/101442.pdf]

Table 7. Other Regional Recipients, FY2004-FY2009 Request
(regular and supplemental appropriations; current year $ in millions)
^C^o^uⁿ^t^r^y^/^A^c^c^o^uⁿ^t^FY²^{004 F}^Y^{2005 FY}²⁰⁰⁶^FY²⁰⁰⁷^FY²⁰⁰⁸^E^s^ti^m^a^te^FY²⁰⁰⁹^Request
^Algeria^To^t^a^l^.722^1.405^.897^1.915^1.677^1.300
^N^A^D^R^—^.485^.065^1.075^.813^.500
^INCL^E^—^—^{— —}^.1⁹⁸^—
^IMET^.722^.920^.823^.840^.666^.800
^Bah^r^aiⁿ^To^t^a^l^25.250^20.987^19.005^17.345^5.837^20.950
^F^M^F^24.682^18.848^15.593^15.750^3.968^19.500
^N^A^D^R^1.489^2.761^1.240^1.250^.800
^IMET^.568^.650^.651^.640^.619^.650
^Ku^w^aⁱ^t^To^t^a^l^—^.814^.628^1.090^.014^.015
^NA^DR^—^.814^.628^1.070^—^—
^IMET^{— —}^—^.020^.014^.015
^Lⁱ^b^ya^To^t^a^l^—^.300^—^—^.633^1.100
^NA^DR^{— —}^{— —}^.300^.750
^IMET^{— —}^{— —}^.333^.350
^M^o^rocco^To^t^a^l^17.337^47.909^35.198^40.170^26.661^28.505
^ES^F^—^19.840^10.890^18.000^15.374^—
^F^M^F⁹^.940^15.128^12.375^12.500^3.625^3.655
^N^A^D^R^—^2.074^.775^1.295^1.317^.625
^IN^C^L^E^—^2.992^.990^1.000^.496^1.000
^D^A^5.400^6.000^8.284^5.400^4.136^21.500
^IMET^1.997^1.875^1.884^1.975^1.713^1.725
^Om^an^To^t^a^l^25.675^21.594^15.395^16.505^8.229^14.400
^F^M^F^24.850^19.840^13.860^14.000^4.712^12.000
^N^A^D^R^—^.654^.400^1.370^2.089^.950
^IMET^.825^1.100^1.135^1.135^1.428^1.450
^Qa^t^a^r^To^t^a^l^—^1.379^.⁹⁰⁶^1.493^.²⁸²^.015
^NA^DR^—^1.379^.906^1.493^.268^—
^IMET^{— —}^{— —}^.014^.015
^Sa^{udi Ara}^b^ia^To^t^a^l^.024^.985^1.576^.420^.113^.365
^N^A^D^R^—^.960^1.576^.400^.099^.350
^IMET^.024^.025^—^.020^.014^.015
^Tunisia^To^t^a^l^11.726^11.795^10.285^11.230^11.475^4.387
^F^M^F⁹^.827^9.920^8.413^8.500^8.345^2.262
^ESF^—^{— —}^—^.9⁹²^—
^N^A^D^R^—^—^.025^.755^.497^.425
^INCL^E^—^{— —}^—^.1⁹⁸^—
^IMET^1.899^1.875^1.847^1.975^1.713^1.700
^{United Ara}^b^—^.534^.961^1.335^.314^.940
^Em^ir^a^t^e^s^To^t^a^l
^NA^DR^—^.534^.961^1.335^.300^.925
^IMET^{— —}^—^—^.014^.015

^C^o^uⁿ^t^r^y^/^A^c^c^o^uⁿ^t^F^Y^{2004 F}^Y^{2005 FY}²⁰⁰⁶^FY²⁰⁰⁷^FY²⁰⁰⁸^E^s^ti^m^a^te^FY²⁰⁰⁹^Request
^Yem^eⁿ^To^t^a^l^27.228^29.098^18.700^25.336^20.731^28.275
^F^M^F^14.910^9.920^8.415^8.500^4.676^3.000
^ES^F^11.432^14.880^7.920^12.00^2.777^—
^N^A^D^R^—^3.198^1.441^3.751^4.034^2.525
^INCL^E^—^—^{— —}^.4⁹⁶^.7⁵⁰
^D^A^—^—^—^—^7.796^21.000
^IMET^.886^1.100^.924^1.085^.952^1.000
^So^urce^{: U.S. State Dep}^a^rtm^eⁿ^t^{, USA}^I^D.
Foreign Aid Issues
Promoting Democracy and Reform
The Millennium Challenge Account.³⁰ The Millennium Challenge Account
(MCA) is based on the premise that economic development succeeds best where it
is linked to free market economic and democratic principles and policies, and where
governments are committed to implementing reform measures in order to achieve
such goals. MCA funds are available on a competitive basis to a few countries which
have demonstrated a commitment to sound development policies and where U.S.
support is believed to have the best opportunities for achieving the intended results.
These “best-performers” would be selected based on their records in three areas --
ruling justly, investing in people, and pursuing sound economic policies.
Morocco was named eligible for Millennium Challenge Compact assistance on
November 8, 2005. In 2007, Morocco signed a five-year $697.5 million agreement
with the Millennium Challenge Corporation (MCC). At the time, this was the largest
compact agreement the MCC had ever awarded since its establishment in 2004.
According to the MCC’s 2008 scorecard for Morocco, the government scores below
the median in almost all areas related to political reform but performs better in fields
related to economic freedom and investments in people.³¹
The Compact agreement has multiple components, all aimed at increasing
private sector growth. These include efforts to increase fruit tree productivity ($300.9
million), modernize the small-scale fisheries industry ($116.2 million), and support
artisan crafts ($111.9 million). In addition, the Compact will fund financial services
to micro-enterprises ($46.2 million) and will provide business training and technical
assistance aimed at young, unemployed graduates ($33.9 million).
In FY2006, Jordan was listed by the Millennium Challenge Corporation (MCC)
as a threshold country in the lower middle-income bracket. On September 12, 2006,

³⁰ For more information on the MCC, see CRS Report RL32427, Millennium Challenge
Account, by Curt Tarnoff.
³¹ The MCC’s Morocco scorecard is available at
[ ht t p: / / www.mcc.gov/ document s / s cor e -f y08-mor occo.pdf ]

the MCC's Board of Directors approved up to $25 million in Threshold Program
assistance for Jordan. Even prior to the selection, the possible choice of Jordan had
come under severe criticism. Freedom House, the organization whose annual Index
of Freedom is drawn upon for two of the "Ruling Justly" indicators, had urged the
MCC Board to bypass countries that had low scores on political rights and civil
liberties. It argued that countries like Jordan that fall below 4 out of a possible 7 on
its index should be automatically disqualified. Jordan, however, did well on three of
the six other indicators in this category. Several development analysts further argued
that Jordan should not be selected, because the MCA is not an appropriate funding
source. They assert that Jordan already is one of the largest recipients of U.S. aid, has
access to private sector capital, and is not a democracy. In selecting Jordan, the MCC
Board appears not to have been swayed by these arguments.
Jordan’s Threshhold assistance is being used to accelerate political reforms and
allow Jordan to qualify for the MCC's larger Compact funding program. According
to the MCC, the Jordan Threshold Program will, among other things, provide
technical assistance and training to increase participation in local elections and
institute programs to improve relations and collaboration among municipalities,
citizens, and the private sector in 9 of Jordan's 99 municipalities. USAID is the main
U.S. government agency charged with implementing the Jordan Threshold Program.
Yemen is another Middle Eastern country eligible for MCC assistance. In
November 2005, the Millennium Challenge Corporation (MCC) suspended Yemen's
eligibility for assistance under its Threshold Program, concluding that corruption in
the country had increased after Yemen was named as a potential aid candidate in
FY2004. Yemen became eligible to reapply in November 2006 and had its eligibility
reinstated in February 2007, nearly six months after it held what some observers
described as a relatively successful presidential election.
On September 12, 2007, the MCC approved a $20.6 million grant to Yemen.
However, MCC head John Danilovich has postponed awarding assistance to Yemen,
as the MCC reviews funding proposals. In the 2008 MCC scorecard, Yemen scores
below the median in almost all categories.
The Middle East Partnership Initiative (MEPI). MEPI is a U.S. State
Department-run program that funds democracy promotion, economic development,
and education in the Arab world. In 2004, MEPI began issuing small grants directly
to NGOs in the Middle East in order to support political activists and human rights
organizations. Congressional action played a large role in facilitating MEPI’s small
grants program. The FY2005 Consolidated Appropriations Act (P.L. 108-447)
stipulated that U.S. funds for democracy and governance activities in Egypt were no
longer subject to the prior approval of the Egyptian government. Now, U.S.
government agencies can channel funds toward NGOs in Egypt in coordination with
an independent board of Egyptian political activists and experts. Consequently,
MEPI grants were awarded to some NGOs to help train election monitors for the
2005 presidential and parliamentary elections in Egypt. MEPI also provides grants
to fund political opposition activities in Iran and Syria.

Table 8. Middle East Partnership Initiative Appropriations,
FY2003-FY2009 Request
(regular and supplemental appropriations; current year $ in millions)
FY2003 FY2004FY2005FY2006 FY2007FY2008FY2009
EstimateRequest
ESF 90.000 89.400 74.400 113.800 50.000 49.595 87.000
^So^urce^{: U.S. State Dep}^a^rtm^eⁿ^t^{, USA}^I^D.
Restrictions on Aid to the Palestinians³²
Annual Foreign Operations Appropriations measures include several limitations
on funding for Palestinian organizations and institutions including the following
provisions:
^!Limitation on Assistance to the Palestinian Authority. Bans
direct U.S. assistance to the Palestinian Authority (PA) unless the
President submits a waiver to Congress citing that such assistance is
in the interest of national security. The waiver can be for up to one
year, and must be accompanied by a report to the appropriate
congressional committees on PA actions to stop terrorism.
^!Limitation on Assistance for the PLO for the West Bank and
Gaza. Bans aid to the Palestinian Liberation Organization (PLO) for
the West Bank and Gaza. No U.S. aid has ever been provided to the
PLO. This provision states that no funds may be provided to the
Palestine Liberation Organization for the West Bank and Gaza
unless the President has waived Section 307 of the Foreign³³
Assistance Act of 1961, as amended.
^!Restrictions Concerning the Palestinian Authority. Bans using
U.S. funds for a new office in Jerusalem for the purpose of
conducting diplomatic business with the “Palestinian Authority over
Gaza and Jericho.”
^!Prohibition on Assistance to the Palestinian Broadcasting
Corporation. Bans U.S. assistance to the Palestinian Broadcasting
Corporation (PBC). Israel accuses the PBC of inciting violence
against Israelis.

³² For additional detail, see CRS Report RS22370, U.S. Foreign Aid to the Palestinians, by
Paul Morro.
³³ Section 307 (P.L. 87-195. Section 307 is at 22 U.S.C. 2227) withholds a proportionate
share of U.S. contributions to international organizations for programs benefitting the PLO.
Section 3 of the Middle East Peace Facilitation Act of 1993 provided a presidential waiver
for Section 307 (extended in the Middle East Peace Facilitation Act of 1995) that is the
same waiver referred to in annual foreign operations appropriations bills.

^!Auditing USAID’s West Bank and Gaza Program. Calls for
annual audits of all U.S. assistance to the West Bank and Gaza Strip
in order to ensure that funds are not being diverted to terrorist
groups. This provision also states that the Secretary of State shall
certify to Congress that the Comptroller General of the United States
has access to financial data on the Economic Support Funds (ESF)
for the West Bank and Gaza. And, the Secretary of State “shall take
all appropriate steps” to ensure that no U.S. assistance is provided
to any person or group engaged in terrorism. The Section states that
the USAID Administrator should ensure that all contractors and sub-
contractors are audited annually, and sets aside ESF funds for the
USAID Inspector General to conduct audits.
^!Palestinian Statehood. Bans U.S. assistance to a future Palestinian
state unless the Secretary of State certifies, among other things, that
the leadership of the new state has been democratically elected, is
committed to peaceful coexistence with Israel, and is taking
appropriate measure to combat terrorism. The President can waive
the certification if he determines that it is important to U.S. national
security interests.
The Palestinian Anti-Terrorism Act of 2006. In 2006, Congress passed
new legislation governing U.S. assistance to the Palestinians, the Palestinian
Anti-Terrorism Act of 2006. On December 21, 2006, President Bush signed into law
S. 2237 (P.L. 109-446), the Senate version of the Palestinian Anti-Terrorism Act of
2006. The law bars aid to the Hamas-led Palestinian government unless, among other
things, it acknowledges Israel's right to exist and adheres to all previous international
agreements and understandings. It exempts funds for humanitarian aid and
democracy promotion. It also authorizes $20 million in FY2007 funding to establish
a fund promoting Palestinian democracy and Israeli-Palestinian peace. P.L.109-446
also features extensive certification requirements on U.S. assistance to the West Bank
and Gaza through USAID. The law limits the PA's representation in the United
States as well as U.S. contact with Palestinian officials. In a signing statement, the
President asserted that these and several other of the bill's provisions impinge on the
executive branch's constitutional authority to conduct foreign policy, and he therefore
viewed them as "advisory" rather than "mandatory." The original House version of
the bill (H.R. 4681, passed on June 23, 2006) was seen by many observers as more
stringent as it would have made the provision of U.S. aid to the PA more difficult
even if Hamas relinquishes power. In March 2007, Representative Ileana
Ros-Lehtinen introduced H.R. 1856, the Palestinian Anti-Terrorism Act
Amendments of 2007, which would amend the original Act to further restrict contact
with and assistance to the PA.
USAID’s Anti-Terrorism Procedures. In 2007, there were several reports
that U.S. economic assistance was indirectly supporting Palestinian terrorist groups.
In March 2007, a Washington Times article charged that USAID had been providing
funds to Palestinian universities (Islamic University and Al Quds University) which

were either under Hamas’s control or had a significant Hamas presence.³⁴ After
additional accusations surfaced, USAID conducted an internal audit of its anti-
terrorism procedures and concluded it cannot “reasonably ensure” that its money does
not wind up in terrorist hands.³⁵
In response to continued demands by Congress that USAID tighten its vetting
procedures, the agency is revamping its oversight of U.S. assistance programs to the
West Bank and Gaza Strip.³⁶ USAID has increased its use of intelligence databases
for clearance of all contracts and funds. According to Henrietta Fore, USAID
Administrator and Director of US Foreign Assistance:
^Cu^r^r^eⁿ^tly^{, th}^{e p}^r^o^g^r^a^m^th^{at w}^e^h^a^v^e^f^o^r^th^e^W^e^st^B^aⁿ^kⁱⁿ^clu^d^{es in}^{it th}^{e v}^e^ttin^g^o^f^th^{e to}^p
^f^e^w^b^o^a^r^d^m^e^m^b^e^r^s^f^o^r^aⁿ^y^c^oⁿ^t^r^a^c^t^t^h^a^tⁱ^s^g^oⁱⁿ^g^t^o^be^receivⁱⁿ^g^m^oⁿ^e^y^.^S^o^t^h^e^c^u^r^r^eⁿ^t
^v^e^t^tⁱⁿ^g^s^y^s^t^em^h^a^s^t^hⁱ^sⁱⁿⁱ^t^,^an^{d y}^o^u^r^s^t^ron^g^s^u^pport^an^d^vⁱ^gⁱ^l^aⁿ^ce^h^a^s^en^cou^r^ag^{ed t}^h^at^{. T}^h^e
ⁿ^e^w^v^e^ttin^g^s^y^s^t^em^th^{at w}^e^{are n}^o^w^talkⁱⁿ^g^w^ith^m^e^m^b^ers^of^C^oⁿ^g^r^es^s^,^s^t^af^f^an^{d th}^{e priv}^ate
^vo^l^unt^a^r^y^o^r^gaⁿⁱ^z^a^tⁱ^oⁿ^c^o^m^m^uni^t^y^a^b^o^u^t^w^o^ul^d^b^e^e^v^eⁿ^st^r^o^nge^r^,^w^hⁱ^c^{h i}^s^w^h^y^o^u^rⁱⁿ^t^e^ntⁱ^oⁿ
^w^o^u^l^d^b^e^to^b^e^gⁱⁿ^{a p}^ilo^{t, an}^d^to^b^e^gⁱⁿ^{it in}^W^e^{st B}^aⁿ^k^.^I^t^{is im}^p^o^r^tan^t^th^{at w}^e^r^o^{ll th}^{is o}^u^t
ⁱⁿ^th^{e area of}^hⁱ^g^h^e^s^t^ris^k^{. Ou}^{r cu}^rren^{t prog}^ram^s^{, th}^{e I.G. h}^a^s^com^e^back^to^look^at^a^s^econ^d
^tim^e,^an^d^f^eel^th^{at th}^ey^{are adequ}^a^{te cu}^rren^tly^{, bu}^{t w}^e^thⁱⁿ^k^th^{at w}^e^w^o^u^l^d^lik^e^to^g^o^a^s^t^ep
^{deeper. W}^e^a^r^e^a^l^s^o^w^o^rkⁱⁿ^g^w^ith^oth^e^{r ag}^en^cies^{, Departm}^eⁿ^t^of^{State an}^{d oth}^e^{r f}^e^deral
^ag^en^cies^{, becau}^s^e^w^e^{, as}^th^{e Un}^{ited States}^g^o^v^e^rn^m^eⁿ^t^{, w}ⁱ^s^h^{to h}^a^ve^t^h^e^s^a^m^e^s^t^ron^g
^g^uⁱ^delin^es^,^s^o^th^{at w}^e^{are bein}^g^s^m^{art an}^{d capable in}^both^s^earchⁱⁿ^g^ou^{r databas}^e^s^,^as^w^e^ll
ⁱⁿ^th^{e r}^e^strⁱ^ctioⁿ^s^th^{at w}^e^ar^{e p}^u^ttin^g^oⁿ^f^o^r^w^h^o^g^e^{ts f}^uⁿ^dⁱⁿ^g^w^ithⁱⁿ^ar^{eas o}^f^hⁱ^g^h^e^{st r}ⁱ^sk^{. W}^e
ⁿ^eed^to^h^a^v^e^{a f}^u^{ll to}^o^l^k^it.³⁷
Auditing UNRWA. Some U.S. lawmakers are concerned that U.S. donations
to the United Nations Refugee Works Administration (UNRWA), which has
provided services to Palestinian refugees since 1948, could be used to support
individuals who also are terrorists. Over the past several years, Congress has
demanded that an independent audit be conducted of UNRWA’s finances.

³⁴ “'Careful vetting'? ; How Taxes Fund Palestinian schools,” Washington Times, March 23,

2007.

³⁵ “Audit: Terrorists got U.S. aid; Agency's Screening Called Inadequate,” Chicago Tribune,
November 16, 2007.
³⁶ In the past, USAID had taken several precautions to ensure that funds for Palestinian
NGOs in the West Bank and Gaza Strip are not used to support terrorism. According to a
USAID factsheet on aid to the Palestinians, all NGOs that receive U.S. funding are required
to sign an anti-terrorism certification. USAID personnel also are required to vet all grantees
in order to ensure that U.S. assistance does not benefit those who have committed terrorist
acts. NGOs also must submit quarterly financial reports to USAID on how U.S. economic
assistance funds are spent.
³⁷ Testimony of Henrietta Fore, USAID Administrator and Director of US Foreign
Assistance, House Appropriations Subcommittee on State, Foreign Operations, and Related
Programs Holds Hearing on the Fiscal 2009 Budget for the U.S. Agency for International
Development, February 27, 2008.

The Debate over U.S. Assistance to Egypt³⁸
In recent years, Egypt's aid program has drawn increasing scrutiny from some
lawmakers concerned over Egypt's poor human rights record. Some lawmakers
believe that U.S. assistance to Egypt has not been effective in promoting political and
economic reform and that foreign assistance agreements must be renegotiated to
include benchmarks that Egypt must meet to continue to qualify for U.S. foreign aid.
Others have periodically called for restrictions on U.S. aid to Egypt on the grounds
that Egypt's record on religious freedom is substandard.
The Administration and Egyptian government assert that reducing Egypt's
military aid would undercut U.S. strategic interests in the area, including support for
Middle East peace, U.S. naval access to the Suez Canal, and U.S.-Egyptian
intelligence cooperation. U.S. military officials argue that continued U.S. military
support to Egypt facilitates strong military-to-military ties. The U.S. Navy, which
sends an average of close to a dozen ships through the Suez Canal per month,
receives expedited processing for its nuclear warships to pass through the canal, a
valued service that can normally take weeks for other foreign navies. In addition,
some U.S. lawmakers argue that cutting aid, particularly military assistance, harms
the United States since all of Egypt's FMF must be spent on American hardware and
associated services and training.
Congressional Action on Aid to Egypt. Since the 108^th Congress, there
have been several attempts in Congress to reduce U.S. assistance to Egypt including
the following:
108^th Congress
^!An amendment offered on July 15, 2004, to the House FY2005
foreign operations bill (H.R. 4818) would have reduced U.S. military
aid to Egypt by $570 million and increased economic aid by the
same amount, but the amendment failed by a vote of 131 to 287.
109^th Congress
^!An amendment offered on June 28, 2005, to the House FY2006
foreign operations bill (H.R. 3057) would have reduced U.S. military
aid to Egypt by $750 million and would have transferred that amount
to child survival and health programs managed by USAID. The
amendment failed by a recorded vote of 87 to 326.
^!H.R. 2601, the FY2006/FY2007 House Foreign Relations
Authorization bill, would have reduced U.S. military assistance to
Egypt by $40 million for each of the next three fiscal years, while
using the funds to promote economic changes, fight poverty, and
improve education in Egypt. There was no comparable provision in
the Senate’s Foreign Relations Authorization bill (S. 600).

³⁸ See CRS Report RL33003, Egypt: Background and U.S Relations, by Jeremy M. Sharp.

^!On May 25, 2006, the House Appropriations Committee in a voice
vote rejected an amendment to cut $200 million in military aid to
Egypt during markup of H.R. 5522, the FY2007 Foreign Operations
Appropriations Bill. In June 2006, the House narrowly defeated an
amendment (198-225) to the bill that would have reallocated $100
million in economic aid to Egypt and used it instead to fight AIDS
worldwide and to assist the Darfur region of Sudan. Many
supporters of the amendment were dismayed by the Egyptian
government’s spring 2006 crackdown on pro-democracy activists in
Cairo. Representative David Obey of Wisconsin sponsored both
amendments.
^!In report language (H.Rept. 109-486) accompanying the House
version of H.R. 5522, the FY2007 Foreign Operations
Appropriations Bill, appropriators recommended that the
Administration rescind $200 million in cash assistance funds
previously appropriated but not yet expended. The Senate version
recommended rescinding $300 million from prior year ESF
assistance for Egypt.
110^th Congress
^!On February 15, 2007, Congress passed H.J.Res 20, the FY2007
Revised Continuing Appropriations Resolution (P.L. 110-5).
Section 20405 of the act rescinds $200 million in previously
appropriated economic assistance to Egypt.
^!H.R. 2764, the FY2008 State, Foreign Operations, and Related
Programs Appropriations bill, would have withheld $200 million in
FMF for Egypt until the Secretary of State certifies that Egypt has
taken concrete steps toward implementing a new judicial authority
law protecting the independence of the judiciary; reviewing criminal
procedures and train police leadership in modern policing to curb
police abuses; and detecting and destroying the smuggling network
and smuggling tunnels that lead from Egypt to Gaza.
^!Section 690 of P.L. 110-161, the Consolidated Appropriations Act,
FY2008, withholds the obligation of $100 million in FMF until the
Secretary of State certifies, among other things, that Egypt has taken
concrete steps to “detect and destroy the smuggling network and
tunnels that lead from Egypt to Gaza.” This withholding of FMF
represents the first time that Congress has successfully placed
conditions on U.S. military assistance to Egypt.

Historical Background
U.S. Assistance to the Middle East Since 1950
1950-1970. Even when adjusted for inflation, annual U.S. assistance to the
Middle East in the decades following World War II was only a small fraction of
current aid flows to the region. Under vastly different geopolitical circumstances,
U.S. policy was geared toward supporting the development of oil-producing
countries, maintaining a neutral stance in the Arab-Israeli conflict while supporting
Israel’s security, and preventing Soviet influence from gaining a foothold in Iran and
Turkey. U.S. policymakers used foreign aid in the 1950s and 1960s to support these
objectives.
U.S. aid to Israel was far less in the 1950s and 1960s than in later years.³⁹
Although the United States provided moderate amounts of economic aid (mostly
loans) to Israel, at the time, Israel’s main patron was France, which supported Israel⁴⁰
by providing it with advanced military equipment and technology. In 1962, Israel
purchased its first advanced weapons system from the United States (Hawk⁴¹
antiaircraft missiles). In 1968, a year after Israel’s victory in the Six Day War, the
Johnson Administration, with strong support from Congress, approved the sale of
Phantom fighters to Israel, establishing the precedent for U.S. support for Israel’s
qualitative military edge over its neighbors.⁴²
Between 1950 and 1967, the United States courted Egypt using foreign aid as
a bargaining chip. Cold War competition for Egypt was fierce during this time
period, as Egypt received a steady stream of surplus U.S. wheat shipments under the
Food for Peace Program (P.L.480). Despite these measures, offers of additional
economic aid failed to convince Egypt to abandon a parallel relationship with the
Soviet Union, as Egypt pursued a strict Arab nationalist and neutral policy that
shunned close alliances with Western powers and cooperation and peace with Israel.
Internationally, after 1955, Egypt obtained military aid mainly from the Soviet Union.
Beginning in 1965, foreign assistance levels to the region began to decline
considerably, culminating in an almost 80% drop in economic aid to the Middle East
by 1970. A host of factors, most notably the June 1967 War and the rising cost of the
war in Vietnam, led Congress to cut funding for a number of countries. Egypt, which
had already seen its annual aid reduced, lost food aid entirely after it severed relations
with the United States during the 1967 War. Jordan and other Arab states also saw

³⁹ In 1948, President Harry Truman, who sympathized with the plight of Israel in its early
days, placed an arms embargo on Israel and her Arab neighbors in order to keep the United
States neutral in the ongoing Arab-Israeli conflict.
⁴⁰ France supplied Israel with military equipment mainly to counter Egyptian power in the
region. In the 1950s and early 1960s, Egypt antagonized France by providing arms and
training to Algerian fighters in Algeria’s war for independence against France.
⁴¹ “America’s Staunchest Mideast Ally,” Christian Science Monitor, August 21, 2003.
⁴² Section 651 of P.L. 90-554, The 1968 Foreign Assistance Act, expresses the sense of
Congress to see the United States negotiate the sale of supersonic aircraft to Israel.

their aid reduced. By 1970, annual appropriations to Iran were close to being phased
out, as many policymakers considered Iran to be a middle-income state that was
economically self-sufficient.
Table 9. Total U.S. Foreign Assistance to the Middle East,
1950-1970
(Loans & Grants; Current Year $ in millions)
Country/RegionEconomic MilitaryTotal
Ir an 750.9 1,396.7 2,147.6
Is rael 986.0 277.3 1,263.3
Egyp t 884.1 0.0 884.1
J ordan 601.0 95.0 696.0
Libya 220.6 17.4 238.0
Lebanon 111.0 9.6 120.6
Ir aq 45.2 50.0 95.2
Total Near East
(including other5,610.42,244.47,854.8
recipients not listed)
^Source:^{U.S. A}^g^en^cy^f^o^{r In}^tern^ation^a^{l Dev}^e^lopm^en^{t (US}^A^I^D⁾^,^O^v^ers^eas^L^o^an^s^an^{d Gran}^ts^,
^O^b^lⁱ^gatⁱ^ons^{and L}^{oan Aut}^horⁱ^z^atⁱ^ons^Jul^y^{1, 1945 - Sept}^em^ber^{30, 2001.}^T^h^{e r}^e^p^o^r^{t is co}^m^m^oⁿ^l^y
^kⁿ^o^wⁿ^at^U^S^A^I^D^as^“^T^h^e^G^r^een^book^.”

1971-2001. The decade of the 1970s witnessed a dramatic increase in U.S.

foreign assistance to the Middle East. After the U.S. withdrawal from South
Vietnam, the Middle East as a whole began to receive more U.S. foreign aid than any
other region of the world, a trend that has continued to today. U.S. foreign aid
programs became more comprehensive in nature driven by large assistance packages
to Israel and later to Egypt and other Arab governments.
Large-scale U.S. assistance for Israel increased considerably after a series of
Arab-Israeli wars created a sense among many Americans that Israel was continually
under siege.⁴³ Consequently, Congress, supported by broad U.S. public opinion,
committed to strengthening Israel’s military and economy through large increases in
foreign aid. In 1971, the United States provided Israel with military loans of $545
million, up from $30 million in 1970. Also in 1971, Congress first designated a
specific amount of aid for Israel (an “earmark”). Economic assistance changed from
project aid, such as support for agricultural development work, to the Commodity

⁴³ Between 1967 and 1973, Israel and its Arab neighbors fought the June 1967 War, the
ensuing War of Attrition (1969), and the October 1973 War. Israel also was engaged in
continual low level guerrilla warfare with the Palestinian Liberation Organization and other
guerilla groups, which had bases in Jordan and later in Lebanon. The 1974 emergency aid
for Israel, following the 1973 war, included the first U.S. military grant aid.

Import Program (CIP) for the purchase of U.S. goods.⁴⁴ In effect, the United States
stepped in to fill the role that France had relinquished after French President Charles
De Gaulle refused to supply Israel with military hardware to protest its preemptive
launch of the June 1967 War. Israel became the largest recipient of U.S. foreign
assistance in 1976. From 1971 to the present, U.S. aid to Israel has averaged over $2
billion per year, two-thirds of which has been military assistance.
Just as Israel’s long-standing relationship with the United States was in its
incipient stages, Egypt, its economy in desperate need of investment and capital after
two wars, began to look to the United States to help stimulate economic growth.
Egypt’s new leader, Anwar Sadat, who had been eager to rid Egypt of excessive
Soviet influence and embark on a program of economic liberalization, improved
U.S.-Egyptian relations in the mid 1970s, leading to a resumption in economic aid
in 1975, and the signing of two disengagement agreements with Israel concerning the
Sinai desert. To a lesser extent, the United States significantly increased its
economic and military aid to Jordan after the 1970-1971 civil war, in which the
Jordanian Armed Forces expelled Palestinian guerrillas from Jordan where they had
seriously threatened stability.
The 1979 Camp David Peace Treaty between Israel and Egypt ushered in the
current era of U.S. financial support for peace between Israel and her Arab neighbors.
In exchange for a complete cessation of hostilities and Israel’s return of the Sinai
Peninsula, the United States provided a total of $7.3 billion to both parties in 1979.
The “Special International Security Assistance Act of 1979” (P.L. 96-35) provided
both military and economic grants to Israel and Egypt at a ratio of 3 to 2,
respectively.⁴⁵ From the Egyptian standpoint, U.S. funds helped to subsidize its
defense budget and upgrade its aging Soviet hardware. Egypt became the second
largest recipient of U.S. aid after 1979.
Since the Camp David Accords, U.S. assistance levels have remained relatively
consistent, and the United States has continued to support the peace process and the
strengthening of Israel. Israel and Egypt have been the top two regional recipients
of U.S. aid for more than two decades, while Jordan became a leading recipient in the
1990s. Notable events involving significant transfers of U.S. aid since the 1979
Camp David Accords include the following:
^!In 1985, Congress approved a $2.25 billion supplemental funding
package for Israel, Egypt, and Jordan to help stabilize their
deteriorating economies.
^!In 1991, Egyptian support for the U.S.-led international coalition
against Iraq’s invasion of Kuwait led Congress to authorize the
cancellation of Egypt’s $6.7 billion military debt. Congress also

⁴⁴ The Commodity Import Program for Israel ended in 1979 and was replaced with direct,
unconditional cash transfers.
⁴⁵ This ratio is not found in the text of the 1978 and 1979 Camp David agreements. U.S.
officials have not officially recognized the ratio. The Egyptian government claims that a 3
to 2 ratio between Israel and Egypt was established during the negotiations.

provided Israel $650 million in emergency ESF grants to pay for
damage and other costs from the war. In addition, Israel was given
Patriot missiles during the Persian Gulf war. Aid to Jordan was
reduced significantly (nearly 75% overall decrease) after the late
King Hussein was unwilling to join the allied coalition against Iraq.
^!In October 1992, Congress approved $10 billion in loan guarantees
for Israel to help it absorb a massive influx of Jews from the former
Soviet Union.⁴⁶ The approval of the loan guarantees was delayed due
to disagreements between the first Bush Administration and Israel
over use of U.S. funds in the West Bank and Gaza Strip. Of the $10
billion authorized, the United States deducted $774 million as a
penalty for Israeli settlement construction in the West Bank and
Gaza Strip, leaving $9.226 billion available to cover Israeli loans.
^!In September 1993, after Israel and the Palestinian Liberation
Organization (PLO) accorded mutual recognition of each other in a
step intended to lead to a future peace agreement, the United States
offered $500 million ($125 million in loans or loan guarantees and
$375 million in grants) over five years for economic development of
the Palestinian entity.⁴⁷
^!In 1994, in recognition of Jordan’s signing a peace treaty with Israel,
President Clinton asked Congress to pass legislation to forgive
Jordan’s $702.3 million debt to the United States (approximately
10% of Jordan’s worldwide debt). Congress appropriated a total of
$401 million in subsidies, which under pertinent budgetary
procedures were sufficient to forgive the entire $702.3 million owed
to the United States at the time.
^!In November 1999, Congress approved $400 million in grants for
the Palestinians, $300 million for Jordan, and $1.2 billion for the
Israelis in 2000 to fund the implementation of the Wye River
Agreem ent .⁴⁸

⁴⁶ The U.S. loan guarantee to Israel is not a direct transfer of U.S. government funds to
Israel’s treasury. Rather, it is a guarantee on a commercial loan between the borrower
(Israel) and a private lender. A U.S. subsidy may be appropriated and set aside in a Treasury
account, held against a possible default or may be paid by the borrower (Israel). The subsidy
usually is a percentage of the total loan based in part on the credit rating of the country.
⁴⁷ See CRS Report RL33530, Israeli-Arab Negotiations: Background, Conflicts, and U.S.
Policy, by Carol Migdalovitz.
⁴⁸ Signed on October 23, 1998, the Wye River Memorandum delineated steps to complete
the implementation of 1993 Oslo Peace agreement between Israelis and Palestinians. See
CRS Report RL33530, Israeli-Arab Negotiations: Background, Conflicts, and U.S. Policy,
by Carol Migdalovitz.

Table 10. Total U.S. Assistance to the Middle East: 1971-2001
(loans and grants; current year $ in millions)
Count ry/Region Economic Military Total
Is rael 28,402.9 50,505.7 78,908.6
Egyp t 25,095.8 27,607.0 52,702.8
J ordan 2,440.1 2,137.2 4,577.3
Lebanon 470.5 273.7 744.2
Palestinians 703.4 0.0 703.4
Syria 539.0 0.0 539.0
Total Near East
(including other
recipients not listed)62,449.882,519.2144,969.0
^Source:^{U.S. A}^g^en^cy^f^o^{r I}ⁿ^t^e^rⁿ^a^t^ion^a^{l Dev}^e^lopm^en^{t (USA}^{ID), Ov}^ers^eas^L^o^an^s^an^{d Gran}^ts^,
^O^b^lⁱ^gatⁱ^ons^{and L}^{oan Aut}^horⁱ^z^atⁱ^ons^Jul^y^{1, 1}^{945 - Sept}^em^ber^{30, 2001.}^T^h^{e r}^e^p^o^r^{t is co}^m^m^oⁿ^l^y
^kⁿ^o^wⁿ^at^U^S^A^I^D^as^“^T^h^e^G^r^een^book^.”

Appendix A. Glossary
^B^ilater^a^{l assistan}^ce^Ecoⁿ^o^m^{ic aid}^p^r^o^v^id^ed^b^y^th^{e Un}^ited^{States d}ⁱ^r^ectly^to^{a co}^uⁿ^t^r^y^o^r
^t^h^r^o^{ugh r}^e^gi^oⁿ^a^l^p^r^o^g^r^a^m^s^t^o^b^e^ne^fi^t^oⁿ^e^o^r^m^o^r^e^c^o^unt^rⁱ^e^s
ⁱⁿ^dⁱ^r^ectly^.
^Dev^e^lopm^en^{t as}^sⁱ^s^t^an^ce^Aⁱ^{d prov}^{ided u}ⁿ^d^{er C}^h^apters^{I an}^{d 10 of}^th^{e Foreig}ⁿ^A^s^sⁱ^s^t^an^{ce A}^c^t
^(DA⁾^pri^m^ari^l^y^desⁱ^gⁿ^e^{d t}^o^redu^{ce pov}^ert^y^an^{d prom}^ot^{e econ}^o^mⁱ^c
^gr^o^w^t^h^.
^Econ^omⁱ^c^S^u^pport^F^uⁿ^d^Aⁿ^{appropriation}^accouⁿ^t^f^o^{r f}^uⁿ^dⁱⁿ^g^econ^o^mⁱ^{c as}^sⁱ^s^t^an^{ce to}
⁽^E^SF)^co^uⁿ^t^rⁱ^{es b}^a^sed^oⁿ^coⁿ^s^id^er^atioⁿ^s^o^f^sp^{ecial eco}ⁿ^o^mⁱ^{c, p}^o^{litical o}^r
^s^ecu^rityⁿ^eeds^an^{d U.S. in}^teres^t^s^.
^Fo^r^e^{ign A}^ssistaⁿ^c^e^A^c^t,^T^h^{e prim}^ary^,^perm^an^en^{t au}^th^orization^f^o^{r con}^d^u^c^tin^g^{U.S. f}^o^reigⁿ
^{1961 (F}^A^A⁾^as^sⁱ^s^t^an^{ce prog}^ram^s^.
^Fo^r^e^igⁿ^Militar^y^T^h^{e m}^a^j^o^r^{U.S. m}^ilitar^y^aid^p^r^o^g^r^a^m^ex^ten^dⁱⁿ^g^cr^ed^{its o}ⁿ^{a g}^r^an^t
^Fi^na^ncⁱ^{ng (}^F^M^F⁾^basⁱ^s^{to f}ⁱⁿ^aⁿ^{ce U.S. ov}^ers^eas^arm^s^tran^s^f^ers^.
^Iⁿ^terⁿ^atioⁿ^a^{l Militar}^y^A^{U.S. m}^ilitar^y^aid^p^r^o^g^r^a^m^p^r^o^v^idⁱⁿ^g^g^r^an^{t m}^ilitar^y^tr^ainⁱⁿ^g^to
^E^d^uc^a^tⁱ^o^{n a}ⁿ^d^T^r^aⁱⁿⁱ^ng^selected^f^o^r^e^igⁿ^m^ilitar^y^an^d^civ^ilian^p^e^r^s^oⁿⁿ^e^l.
^(IMET⁾
^{Iraq R}^e^lⁱ^e^f^an^d^A^catch^-^a^{ll dev}^e^lopm^en^{t an}^{d s}^ecu^rity^accouⁿ^t^con^t^{rolled by}^th^e
^Re^c^o^nst^r^uc^tⁱ^o^{n Fund}^P^r^esid^en^{t co}ⁿ^t^ainⁱⁿ^g^f^uⁿ^d^{s f}^o^r^r^ecoⁿ^s^tr^u^c^tioⁿ^activ^{ities in}^I^r^a^q^.
^(IR^R^F⁾
^Mⁱ^d^d^l^e^E^a^st^P^a^r^t^ne^r^s^hi^p^A^{State Dep}^a^r^t^m^eⁿ^t^p^r^o^g^r^a^m^to^en^co^u^r^ag^{e p}^o^{litical, eco}ⁿ^o^mⁱ^{c, an}^d
^Iⁿ^itiativ^{e (}^M^EP^I⁾^edu^cation^a^{l ref}^o^rm^sⁱⁿ^A^r^{ab cou}ⁿ^t^ries^.
^Mu^ltilater^a^{l assistan}^ce^A^ssistan^{ce w}^h^ich^th^{e Un}^ited^{States p}^r^o^v^id^{es to}^d^e^v^e^lo^pⁱⁿ^gⁿ^a^tioⁿ^s
^thr^o^{ugh m}^u^ltila^te^r^a^{l d}^e^ve^lo^p^m^eⁿ^{t b}^a^nks,^Unite^d^Na^tio^{ns a}^g^eⁿ^cⁱ^e^s^,
^an^d^o^t^h^e^rⁱⁿ^terⁿ^atioⁿ^a^{l o}^r^g^aⁿⁱ^zatioⁿ^s^w^ith^d^e^v^e^lo^p^m^en^{t p}^u^r^p^o^s^es.
^N^o^n-go^ve^rⁿ^m^e^nt^a^l^Org^aⁿⁱ^zatioⁿ^s^th^{at are in}^d^e^p^eⁿ^d^en^{t o}^f^g^o^v^e^rn^m^eⁿ^t^{. NGOs are}
^o^r^g^aⁿⁱ^zatioⁿ^s^(NGOs)^f^r^eq^u^eⁿ^tly^u^s^ed^to^im^p^l^em^en^{t f}^o^r^e^igⁿ^aid^p^r^o^g^r^a^m^s^.
^P^a^lestin^ian^A^u^th^o^r^ity^T^h^{e P}^a^lestin^ian^Natioⁿ^a^{l A}^u^th^o^r^ity^{is a sem}ⁱ^-^a^u^t^oⁿ^o^m^o^u^{s q}^u^asi-^state
ⁱⁿ^stitu^tioⁿⁿ^o^mⁱⁿ^a^lly^g^o^v^e^rⁿⁱⁿ^g^th^{e P}^a^lestin^ian^sⁱⁿ^W^e^{st B}^aⁿ^k^an^d
^th^{e Gaza Strip}
^Pⁱ^pelin^e^T^h^e^am^ouⁿ^t^of^econ^o^mⁱ^{c as}^sⁱ^s^t^an^{ce th}^{at h}^a^s^been^oblig^{ated by}^U.S.
^ag^en^cies^bu^{t h}^a^sⁿ^o^{t y}^e^{t been}^ex^pen^d^ed.
^P^.^L^.⁴⁸⁰^R^e^f^e^rs^{to th}^{e A}^g^ricu^ltu^{ral T}^r^{ade Dev}^e^lopm^en^{t an}^{d A}^s^sⁱ^s^t^an^{ce A}^c^{t of}
^{1954, w}^hⁱ^c^h^g^o^v^e^rn^s^admⁱⁿⁱ^s^t^ratⁱ^oⁿ^of^t^h^{e U}^.^S^.^f^{ood ai}^{d prog}^ram^.
^T^h^{e Departm}^eⁿ^t^of^A^g^ricu^ltu^{re m}^aⁿ^a^g^e^s^{title I of}^P^.^L^.^{480 (f}^{ood aid}
^p^r^o^v^id^ed^oⁿ^coⁿ^cessioⁿ^{al lo}^an^ter^m^s)^an^d^USA^I^{D m}^aⁿ^a^g^e^{s title I}^I
^(f^{ood g}^r^an^t^s^provⁱ^d^{ed f}^o^{r dev}^e^l^opm^en^t^an^{d h}^u^m^anⁱ^t^a^ri^an^pu^rpos^es^).
^P^r^iv^{ate Volu}ⁿ^t^ary^N^o^n-p^r^o^fⁱ^t^,^t^a^x-e^x^e^m^p^t^aⁿ^d^no^ngo^ve^rⁿ^m^e^nt^a^l^o^r^gaⁿⁱ^z^a^tⁱ^o^ns
^O^r^gaⁿⁱ^z^a^tⁱ^o^{ns (}^P^V^O^s⁾^es^t^a^blⁱ^s^h^e^{d an}^{d g}^o^v^e^rn^{ed by}^{a g}^r^ou^{p of}^pri^v^at^{e ci}^tⁱ^zen^s^w^h^os^e
^pu^rpos^{e is}^{to en}^g^a^g^eⁱⁿ^v^o^luⁿ^t^ary^ch^{aritable an}^{d dev}^e^lopm^en^t
^as^sⁱ^s^t^an^{ce operation}^s^ov^ers^eas^.
^Un^ited^Natioⁿ^s^Relief^U^N^R^WA^provⁱ^d^es^relⁱ^e^f^an^{d s}^o^ci^al^s^e^rvⁱ^ces^{, i}ⁿ^cl^u^dⁱⁿ^g^f^ood,
^an^{d W}^o^rk^s^A^g^en^cy^f^o^r^h^o^u^sⁱⁿ^g^,^clo^t^hⁱⁿ^g^,^an^d^b^a^{sic h}^ealth^an^d^ed^u^catioⁿ^to^o^v^er⁴^.¹^m^illioⁿ
^P^a^lestin^{e Ref}^u^g^ees^r^e^gⁱ^ster^ed^P^a^lestin^{e r}^e^f^u^g^{ees liv}ⁱⁿ^g^m^o^stlyⁱⁿ^th^{e W}^e^{st B}^aⁿ^k^an^d
^(UNR^W^A⁾^{Gaza Strip, bu}^{t als}^oⁱⁿ^J^o^rdan^{, L}^e^ban^oⁿ^,^an^{d Sy}^ria.
^{U.S. A}^g^en^cy^f^o^r^Aⁿⁱⁿ^depen^d^en^{t g}^o^v^e^rn^m^eⁿ^t^ag^en^cy^uⁿ^d^{er th}^{e direction}^of^th^e
^Iⁿ^terⁿ^atioⁿ^a^l^Secretary^of^{State th}^{at m}^aⁿ^a^g^e^s^m^o^s^t^{U.S. bilateral econ}^o^mⁱ^c
^D^e^v^e^l^opm^en^t^(U^S^A^ID⁾^as^sⁱ^s^t^an^{ce prog}^ram^s^.