The ‘moral hazard’ of Israel subsidies


In recent editorials such as Alex Gordon’s Nov. 7 piece in The RECORD, the divestment campaign has been characterized as anti-Semitic, imperialistic and now “intellectually lazy.” The ad hominem flows so freely that perhaps the best starting point for debate is where Gordon and I agree: “Israeli settlers who intimidate and beat people…are not entitled to their criminal behavior.” We diverge over whether U.S. taxpayers and Harvard must continue to subsidize this criminal behavior, to the tune of over $3 billion a year in official aid and unknown millions in private aid.

While it is facile to claim that divestment singles out Israel and should include Palestinian and other violators as well, the fact is that Israel controls access to U.S. official aid to the Palestinian Authority, just as Israel controls access to official offices of the PA. When Egypt incarcerated a human rights activist on trumped-up charges last year, President Bush responded by denying further aid. When China slaughtered thousands in Tiananmen Square, the U.S. responded by at least raising the possibility of denying most-favored nation trade status. Iraq, Sudan, Syria, Libya and Iran are already under strict sanctions. Only Israel is immune to any official U.S. criticism.

This has not always been the case. President George H.W. Bush temporarily denied loans to Israel in 1991 without a guarantee that the money would not fund settlements in the occupied territories. He was also branded anti-Semitic by Israeli cabinet members, and aid to Israel has remained unquestioned by any major U.S. official ever since.

It is odd that subsidies to American minorities, farmers and manufacturers can be challenged, but not subsidies to Israel. In these other cases, the fear of moral hazard is a recurring thread. In the case of Israel, the issue never arises.

Gordon presents the most superficial answer as to why Palestinian innocents are unjustifiably killed: Israeli’s war against terrorism requires military strikes. Just as wars of repression were conducted against Native Americans because “savages” among them attacked white settlers, attacks on Palestinians are, in Gordon’s rhetoric, justified because of terrorists among them.

The U.S. government subsidized white settlers in numerous ways, including the use of military force to quell “hostiles” whenever they threatened whites. As in the case of Israel/Palestine, the vast majority of America turned a blind eye to the impact of this support, which encouraged settlers to manufacture spirals of violence that would be quelled by the army whenever the “natives were restless.” The parallels are uncanny and disturbing to anyone who has spent extended time in both reservations and refugee camps.

Ending American aid and investment in Israel will not destroy Israel, the most powerful state in the region. That is not the intent. Instead, divestment eliminates the moral hazard inherent in current U.S. policy, which promotes militants on both the Israeli and Palestinian sides. In view of the blank check from the U.S., Palestinian militants have no incentive to negotiate with Israel because there is no possibility of achieving parity. Israeli militants likewise can conduct their outrages with impunity, because if the Palestinians retaliate, Israeli militants gain not only increased moral and financial support from America, but political advantages in the Israeli electorate as well.

The only time the blank check from America was even questioned, Israelis rejected a militant leader and elected Yitzhak Rabin, thus permitting a peace process that might have yielded a solution. Sadly, as Palestinians and Israelis learned that the temporary delay of 1991 was an exception, radicals on both sides worked to undermine any possible peace. By challenging U.S. subsidies to Israel, the divestment campaign seeks to restore balance, in part because Israel, unlike other regimes in the Middle East, is likely to respond to moral suasion and economic loss.

It is unacceptable that hundreds of Israelis have been killed by Palestinians, just as it is unacceptable that thousands of Palestinians have been killed by Israelis. It is equally unacceptable that American subsidies help fuel the hostilities by which both are killed. Absent the blank check from America, Israeli society will rein in their own radicals, desist with the construction of settlements, and perhaps then a real solution may emerge.

It is an odd form of anti-Semitism to respect Israelis enough to believe that they will end the occupation once outsiders refuse to provide moral and financial support to it. As in the case of South Africa, where Bishop Desmond Tutu finds parallels to Israel/Palestine that American professors overlook, once outsiders refuse to provide economic and moral support to blatant injustice, insiders can act responsibly and resolve it.

Perhaps Gordon believes that maintaining the status quo that produces the violence will ultimately lead to a peaceful resolution. One wonders if that is not itself intellectually lazy, not to mention irrational.

Editor’s Note: Gordon’s piece may be found online at:

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