Israeli financial matters have been under the spotlight in America’s capital this week. Washington DC has seen the signing of an agreement to improve Israel’s economic growth and stability with billions of dollars worth of financial assistance through the loan guarantee program.
With one eye on the election, the Obama administration have been keen to promote this agreement, showing undecided Jewish voters that they’re doing all they can to strengthen US-Israel relations.
The signing that should help to bring added global stability to Israel’s economy. The signatures of U.S. Treasury Secretary Timothy Geithner and Israeli Finance Ministry Director General Doron Cohen help put into practice a new framework for the recently extended Loan Guarantee program.
It’s an important moment for the continuing US-Israel relationship, allowing guarantees worth USD 3.8bn to be implemented. Secretary Geithner said it was a proud day for America.
Timothy Geithner, U.S. Treasury Secretary:
“Israel is a vital partner and ally of the United States. This is why the success of this program is so important to us. This loan guarantee program was originally established in 2003. These guarantees combined with the effective management of the government of Israel have helped support Israel’s ongoing and strong economic recovery.”
Sentiments echoed by his counterpart Mr Cohen.
Doron Cohen, Israeli Finance Ministry Director General:
“We want to say thank you because we believe that the existing guarantees together with the economic progam that was implemented contribute dramatically to the stability and growth of the Israeli economy. And we think that the continuing guarantees will continue to contribute to our stability and we take it as an act of trust.”
Earlier this summer President Obama signed an extension of the US loan guarantee program with Israel up until 2015. It’s a program designed to allow the Israeli government to raise money overseas by accessing private capital markets at more affordable rates. All of which is intended to help Israel’s economy grow.
By signing this new framework the United States is hoping to show its desire to help Israel, and their confidence in the country’s economy. But some in America believe the opposite is true. As part of his election campaign, Republican candidate Mitt Romney is arguing that President Obama has turned his back on America’s ally.
Romney recently visited Israel to show his support, even meeting with Prime Minister Benjamin Netanyahu. The Presidential hopeful’s argument is that he would do a better job of strengthening US-Israeli relations than President Obama.
Romney Israel advert:
“As President Barack Obama has never visited Israel and refuses to recognise Jerusalem’s as its capital. Mitt Romney will be a different kind of President. A strong leader who stands by our allies.”
And America’s position on the guarantees has at times been shaky. In 2010 the then US envoy George Mitchell said America may withhold loan guarantees to pressure Israel over the Middle East peace process.
Prime Minister Netanyahu shrugged off the suggestion that the loan program would be used as political leverage. But in 1991, President George H W Bush withheld USD 10bn of guarantees to try and pressure Israel into peace negotiations.
As part of a USD 9 billion commitment made by the U.S. in 2003, this new deal gives Israel access to up to USD 3.8 billion in future loan guarantees. Good news for Israel. But also for the Obama administration, coming at a time when the President, looking for re-election, is trying to prove he’s standing strong with America’s ally.