Security in Changing Times: The Future of US-Israel...
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Security in Changing Times: The Future of US-Israel Relations January 8-9 2012 The domestic-economic dimension Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, TelAviv University Slide 1 of 22
Transcript of Security in Changing Times: The Future of US-Israel...
Security in Changing Times: The Future of US-Israel
Relations
January 8-9 2012
The domestic-economic dimension
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 1 of 22
Introduction
There certainly are economic dimensions toUS-IL relations.
These are normally not important in shapingIsraeli public opinion on the US, but can beexpected to involve vested interests.
The basic economic aspects of US-ILrelations have not been significantly affectedby the recent global crisis.
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 2 of 22
Bilateral trade
Over the last 60 years Israeli imports ofgoods have been shifting away from the USto Asia.
Over the same period Israeli exports ofgoods have been shifting away from the EUto the US and Asia.
However, over the last decade IL exports ofgoods to US have slowed too.
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 3 of 22
Origin of IL imports of goods
0%
10%
20%
30%
40%
50%
60%
1950196019701980199020002010
EU
US
Asia
Source: Israeli CBS
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 4 of 22
Destination of IL exports of goods
0%
10%
20%
30%
40%
50%
60%
70%
1950196019701980199020002010
EU
US
Asia
Source: Israeli CBS
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 5 of 22
US share in IL trade in goods recent trends
R² = 0.85
R² = 0.3642
15%
20%
25%
30%
35%
40%
45%
19951996199719981999200020012002200320042005200620072008200920102011
IL EX
IL IM
Source: Comtrade (US reporter)
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 6 of 22
Bilateral trade
It seems that diamonds have come todominate IL-US trade in goods, and accountfor almost a half of it.
The US has remains a major market of IL cutdiamonds.
Since 1995 a growing share of IL imports ofraw diamonds has been routed through theUS too.
IL imports of electronics, aerospace andmachinery goods have been diminishing.
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 7 of 22
Bilateral trade
Israeli exports of pharmaceuticals to the UShave soured.
American VC investments in Israel Hi-Tech,and FDI M&A by American Multi-nationals inIsrael.
(GE, Buffett, Noble Energy, Apple-Waze)
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 8 of 22
IL imports from US by category
Source: Comtrade (US reporter) HS1992 (2 digit)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Pearls, precious stones, metals, coins
Nuclear reactors, boilers, mchy & mechappliance; parts
Electrical, electronic equipment
Aircraft, spacecraft, and parts thereof
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 9 of 22
IL exports to US by category
Source: Comtrade (US reporter) HS1992 (2 digit)
0%
10%
20%
30%
40%
50%
60%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Pharmaceutical products
Pearls, precious stones,metals, coins
Nuclear reactors, boilers,mchy & mech appliance;parts
Electrical, electronicequipment
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 10 of 22
Bilateral trade
US-IL trade in services is significant too, butmuch smaller than trade in goods:
2006 2007 2008
US Exports of services
4,879,371,887 5,720,746,017 6,310,759,673
US Imports of services
2,767,183,401 3,405,415,881 4,289,893,715
US Exports of goods
10,964,389,676 13,018,845,810 14,486,465,803
US Imports of goods
19,399,135,708 21,077,524,111 22,626,636,129
Source:
For services: UN Service Trade (US reporter)
For goods: Comtrade.
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 11 of 22
Bilateral trade
The main services traded are travel (20%),computer and information (20%), andbusiness services (25%).
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 12 of 22
US aid to IL
For many Israelis US governmental and non-governmental financial aid is a sign offriendship and alliance.
It also stimulates the Israeli defense industry(25% of aid can be spent on IL goods).
However, it forms an ever diminishingproportion of Israel’s GDP (USD bio 250-300).
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 13 of 22
US government aid to Israel (in % of IL GDP)
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
199719981999200020012002200320042005200620072008200920102011
Sources:
Aid (current USD): Zanotti, Jim (2012), 'Israel: Background and U.S. Relations', CRS Report for Congress, p.20.
IL GDP (current USD): World Development Indicators.
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 14 of 22
US aid to IL
There is also military-industrial bilateralcooperation, mostly involving thedevelopment of missiles.
In 2008, Israel’s IAI decided to beginproduction of the Arrow III with Boeing, andthe US agreed to co-fund its development.
This despite competition from LockheedMartin’s THAAD missiles, and Raytheon’sSM-3 interceptor.
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 15 of 22
Appropriations for US-IL Missile Defense Programs (in USD Millions)
Source: Sharp, Jeremy M. (2010), U.S. Foreign Aid to Israel', CRS Report for Congress, pp.8-12.
System Type FY2006 FY2007 FY2008 FY2009 FY2010 FY2011
Very short Range (Iron Dome) 205
Short-Range (David’s Sling) 10 20 37 73 80 47
Arrow (Arrow-2) 123 117 99 74 72 24
High Altitude (Arrow-3) 20 30 50 51
Total 133 137 156 177 202 327
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 16 of 22
US aid to IL
However, in contrast to practices of the past,Israel has not received any technologicalknow-how from the US in recent years.
And there is competition over exportmarkets. Forgone contracts in recent yearsdue to US pressure include:
Upgrading Venezuela’s F-16 fighter jets(2006, $100-million);
Integrating US technology into Saab fighterplanes sold to India (2009);
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 17 of 22
US aid to IL
Selling 12 reconnaissance UAVs to Russia,and constructing a UAV manufacturing plantin Russia (2010, $50 million, $200 million).
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 18 of 22
Israeli migrants in the US
Ever since the economic crisis in the USthere is anecdotal evidence of the return ofIsraelis who lived in the US.
They can be expected to engage in the Israelielite and strengthen the pro-American bias ofIsraeli policy making circles.
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 19 of 22
Israeli public opinion
Recently welfare issues have become moreprominent on the public agenda, to someextent as a result of the global crisis.
Public opinion on oil and gas exploration andproduction in the Mediterranean has focusedon a perceived exploitation by Nobel Energy.
The Labor Party seems increasingly to leanin anti-capitalist and perhaps anti-globalization direction.
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 20 of 22
Israeli public opinion
This is not framed as anti-US, but growingsuspicion of foreign investors and foreigntrade might affect US-Israeli relations.
Perhaps more important, this has come atthe expense of the peace process.
Labor is not pursuing a peace policy andseems unlikely to confront the settlermovement.
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 21 of 22
Israeli public opinion
Thus, the economic crisis has changed theIsraeli (and the US) political agenda.
However these effects are asymmetrical – ILand US policies towards the Palestinians willremain at odds.
Dr. Tal Sadeh, The Harold Hartog School of Government and Policy, Tel Aviv University Slide 22 of 22
