Middle East: U.S. Foreign Assistance, FY2002, FY2003, and Request for FY2004

Middle East: U.S. Foreign Assistance, FY2002, FY2003, and Request for FY2004

Order Code RL31774
Report for Congress
Received through the CRS Web
Middle East: U.S. Foreign Assistance, FY2002,
FY2003, and Request for FY2004
Updated April 16, 2003
Clyde Mark
Specialist in Middle Eastern Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

Middle East: U.S. Foreign Assistance FY2002, FY2003,
and Request for FY2004
Summary
The report provides data on United States foreign assistance to the Middle East
for FY2002, the FY2002 supplemental, allocated aid for FY2003, the FY2003
supplemental, and assistance requested by the President for FY2004. A narrative
section describes unique features of U.S. foreign assistance to some Middle Eastern
countries, such as Israel, Egypt, and the Palestinians. The report follows a broad
definition of “Middle East” to include countries affected by Middle Eastern events,
countries diplomatically engaged with Middle Eastern countries, and all the members
of the Arab League.
Table 1 lists assistance for each country with separate amounts for economic,
military, developmental, and some listings of special aid. Table 2 lists U.S.
assistance for regional programs.
The report will be updated as needed.
Other Congressional Research Service reports dealing with U.S. assistance to
the Middle East include:

CRS Issue Brief IB85066, Israel: U.S. Foreign Assistance
CRS Issue Brief IB82008, Israel-United States Relations
CRS Issue Brief IB93085, Jordan: U.S. Relations and Bilateral Issues
CRS Issue Brief IB93087, Egypt-United States Relations
CRS Issue Brief IB89118, Lebanon
CRS Issue Brief IB89140, Cyprus: Status of U.N. Negotiations
CRS Issue Brief IB92052, Palestinians and Middle East Peace: Issues for the
United States
CRS Report RL31342, Middle East: U.S. Foreign Assistance, FY2001, FY2002,
and FY2003 Request
CRS Report RL31311, Appropriations for FY2003: Foreign Operations, Export
Financing, and Related Programs
CRS Report RL31829, Supplemental Appropriations FY 2003: Iraq Conflict,
Afghanistan, Global War on Terrorism, and Homeland Security

Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Middle East Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Wye Agreement Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Israel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Loan Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Palestinians (West Bank/Gaza) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Egypt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Jordan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Lebanon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Iraq Supplemental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
List of Tables
Table 1. Middle East: U.S. Foreign Assistance FY2002, FY2003, and
FY2004 Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Table 2. U.S. Foreign Assistance to Middle East Regional Programs . . . . . . . . . . 9

Middle East: U.S. Foreign Assistance,
FY2002, FY2003, and Request for FY2004
Background
The following tables and explanations of U.S. foreign assistance to key
countries or activities in the Middle East include the actual amounts for FY2002, the
FY2002 supplemental, the allocated amounts for FY2003, the supplemental request
of March 25, 2003, and the President’s requested amounts for FY2004. The President
signed the FY2003 supplemental appropriations on April 16, 2003, P.L. 108-11.
Some countries not usually listed in definitions of “Middle East” are included here
because of their involvement with and proximity to other Middle Eastern countries
(such as Greece or Ethiopia), or because of their membership in the Arab League
(such as the Comoros or Mauritania). The figures are taken from the President’s
FY2004 budget presentation to Congress.
Middle East Cap
Beginning in FY1998, Congress set a spending ceiling or cap on aid to the
Middle East. The cap in Section 555 of H.R. 5410, the foreign operations
appropriations bill for FY2003, reported by the House Committee on Appropriations
(H.Rept. 107-663), was $5.467 billion for Israel, Egypt, Jordan, Lebanon, the West
Bank/Gaza Strip, the Israel-Lebanon Monitoring Group, the Multinational Force and
Observers, the Middle East Democracy program, the Middle East Regional
Cooperation, and the Middle East Multilateral Working Group. Section 555 was not
included in H.J.Res. 2, the omnibus appropriations bill, P.L. 108-7, signed on
February 20, 2003. (The President’s FY2004 request for the same countries and
programs is $5.248 billion.)
Wye Agreement Funding
Following the peace talks at the Wye River Plantation in October 1998,
President William Clinton proposed an aid package of $1.2 billion for Israel, $300
million for Jordan, and $400 million for the Palestinians. Congress added $25
million for Egypt. Congress included $100 million for Jordan in the 1999
supplemental and appropriated the remaining funds in the FY2000 foreign operations
appropriations bill. The funding was intended to be paid out over FY2001, FY2002,
and FY2003.

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Israel
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. 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.
President Clinton requested and Congress appropriated $1.2 billion in military
assistance for Israel following the October 1998 Wye River Agreement. The Wye
funding was in addition to the regular foreign assistance of about $3 billion per year
and was intended to be paid out over three years, FY2001, FY2002, and FY2003.
President Bush requested and Congress passed a supplemental appropriation for
FY2002 (P.L. 107-206, August 2, 2002) that included a $200 million grant for Israel
for anti-terrorism. But the President withheld disbursing some of the supplemental
funds, including the $200 million scheduled for Israel. The House Appropriations
Committee added the $200 million to its foreign operations appropriations bill for
FY2003, H.R. 5410, but the Senate Appropriations Committee did not add the funds
to its bill, S. 2779 (S.Rept. 107-219). The $200 million was not included in H. J.
Res. 2, the omnibus appropriations bill passed by Congress and signed into law on
February 20, 2003, P.L. 108-7. Israel did not receive the $200 million. The $200
million is not included in the Economic Support Funds (ESF) for FY2003 in Table
1 at the end of this report, although the Department of State did include the $200
million in the ESF account for FY2003 in its presentation to Congress.
According to press accounts, Israeli Prime Minister Ariel Sharon requested $4
billion in military grants, and $8 billion in loan guarantees from the United States
during his October 2002 visit to the White House. The military grants are intended
to help Israel prepare for war against Iraq and to offset costs of the Palestinian
uprising in the occupied territories. The loan guarantees are intended to help the
failing Israeli economy. In the March 25, 2003, supplemental request to Congress,
the President asked for $1 billion in military grants and $9 billion in loan guarantees
for Israel.
Loan Guarantees. Israel received $600 million in housing loan guarantees
between 1972 and 1990, and received $10 billion in loan guarantees for settling
Soviet Jews over a 5-year period beginning in 1993. Under the loan guarantee
program, the United States underwrites private loans to Israel, but does not provide
funds directly. In 1993, Israel agreed to pay the administrative costs and the subsidy
(a fund set aside in a U.S. Treasury account held in case of default) of about 4% of
the $10 billion total. Israel agreed that none of the 1993 loan guarantees could be
used in the occupied territories and that the amount available for each of the five
years would be reduced by an amount equal to that which Israel spent on settlements
in the occupied territories. Of the $10 billion authorized, the United States deducted
$774 million as a penalty for Israeli settlement construction, leaving $9.226 billion
available to cover Israeli loans. Of that amount, Israel drew down about $7.5 billion
to cover commercial loans.

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The President’s March 25, 2003, supplemental request stipulated that Israel
could not use the requested $9 billion in loan guarantees in the occupied territories,
that the loan guarantees could be reduced by an amount equal to the amount Israel
spends in the occupied territories for settlements, that Israel will pay the
administrative fees and subsidy, and that the President would consider Israel’s
budgetary and economic reforms in approving annual loan guarantee allocations.
Palestinians (West Bank/Gaza)
No U.S. AID funds have gone to the Palestine Liberation Organization. In
1993-1994, the United States provided $36 million through the Holst Fund at the
World Bank for direct assistance to the Palestinian Authority, the elected Palestinian
government for the occupied West Bank and Gaza, and an additional $5 million in
cash and equipment for the Palestinian police. Since 1995, no U.S. assistance has
gone to the Palestinian Authority or any of its constituent bodies. Approximately
80% of U.S. funding for the Palestinians has gone through U.S. Agency for
International Development contractors, and 20% through private voluntary
organizations. Regular U.S. assistance has been averaging about $75 million per
year. In addition, the United States pledged $400 million over 3 years as part of the
negotiations leading up to the 1998 Wye agreement. The last installment of Wye
funding, $158 million, is expected to be obligated in FY2003.
In the FY2003 appropriations bill, Congress included $50 million in disaster
relief for the Palestinians following the May 2002 Israeli destruction in the
Palestinian refugee camp in the city of Jenin. It does not appear that the $50 million
in disaster relief was allocated to the Palestinians. The President requested $50
million for the Palestinians in the March 25, 2003, supplement request. It may be
surmised that the $50 million in the supplemental request was intended to replace the
$50 million in disaster relief that was not allocated. The $50 million for the
Palestinians requested by the President is not earmarked in the FY2003 supplemental,
P.L. 108-11. If the Administration intends to provide $50 million for the Palestinians
out of the FY2003 supplemental, the funds will have to be deducted from other
countries or programs because the FY2003 supplemental ESF account is over
committed. Note in Table 1 that $50 million appears in both the FY2003 allocated
and FY2003 supplemental and may be a double counting.
United Nations Relief and Works Agency (UNRWA) provides food, shelter,
medical care, and education for many of the 3 million Palestinian refugees from the
1948-1949 Arab-Israeli war.1 U.S. contributions to UNRWA are not included in
Table 2 because the Department of State does not list contributions separately. U.S.
contributions to UNRWA have been averaging around $80 million per year with an
additional $20 million annual contribution to meet crisis needs.
1 The 700,000 refugees from 1948-1949 have grown to over three million today.

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Egypt
Egyptian officials maintain that the United States agreed to a three-to-two ratio
in aid to Israel and Egypt at the 1978 Camp David peace conference. U.S. officials
deny that the United States agreed to a three-to-two ratio. In keeping with a three-to-
two ratio, Congress reduced economic aid to Egypt by $40 million per year beginning
in 1999 when Egypt’s economic aid was $815 million per year. (Israeli economic
assistance is reduced by $120 million per year, and its military assistance is increased
by $60 million, for a net reduction of $60 million; two-thirds of $60 million is $40
million.) Military assistance to Egypt was not changed.
The FY2003 supplemental request included $300 million in ESF and $2 billion
in loan guarantees for Egypt. Egypt will pay all administrative fees and subsidies for
the loan guarantees. In addition, the request stated that $379.6 million in previously
committed funds for Commodities Import Program, export financing, and other
programs, could be converted to grants for cash transfers to the Egyptian government.
Jordan
In addition to increasing annual assistance, Jordan received $300 million in the
FY2000 Wye Agreement funds, including $100 million in the FY2000 supplemental,
and the remaining $200 over fiscal years 2001, 2002, and 2003. The President
requested $406 million in FMF, and $700 million in ESF for Jordan in the FY2003
supplemental. Of the ESF, $250 million is for budget support, and $450 million is
to offset Iraqi aid that disappeared after the March 19, 2003, U.S. invasion of Iraq.
Lebanon
Section 1224 of H.R. 1646, P.L. 107-228 of September 30, 2002, the foreign
relations authorization act, states that the United States should withhold $10 million
of the funds available for Lebanon in FY2003 if the Lebanese armed forces have not
deployed to the internationally recognized border with Israel. Lebanon has not
deployed its armed force to the border because it claims that Israel occupies Lebanese
territory along the border at Shabaa farms. Israel claims the Shabaa farms area is
occupied Syrian territory, not subject to the agreement under which Israel withdrew
from Lebanon. The total aid for Lebanon for FY2003 is $33.2 million.
Iraq Supplemental
The United States invaded Iraq on March 19, 2003. On March 25, President
Bush sent to Congress a request for supplemental appropriations that included $2.853
billion for humanitarian aid and for reconstruction and rebuilding Iraq. Some of the
funds were intended to repay other accounts from which the Administration had
withdrawn funds to meet immediate needs in anticipation of the war. For a full
breakdown of the funds requested for Iraq, see CRS Report RL31829, Supplemental

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Appropriations FY2003: Iraq Conflict, Afghanistan, Global War on Terrorism, and
Homeland Security. The President signed the supplemental appropriations into law
on April 16, 2003, P.L. 108-11.
For assistance for other Middle Eastern countries included in the supplemental,
see the FY2003 Supplemental column, Table 1, following.
Abbreviations Used in the Following Tables
CT = Counter Terrorism
DA = Development Assistance
ERF = Emergency Response Funds
ESF = Economic Support Funds
FMF = Foreign Military Financing
IMET = International Military Education and Training
Loan Guar. = Loan Guarantees
ME = Middle East
MINURSO = United Nations Mission for the Referendum in Western Sahara
R & M = Refugee and Migration Account funds for settling Soviet and other Jewish
migrants in Israel
Suppl = Supplemental
UNDOF = United Nations Disengagement Observer Force (Golan Heights)
UNFICYP = United Nations Peacekeeping Force in Cyprus
UNIFIL = United Nations Interim Force in Lebanon
UNIKOM = United Nations Iraq-Kuwait Observation Mission
UNMEE = United Nations Mission in Ethiopia and Eritrea

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Table 1. Middle East: U.S. Foreign Assistance FY2002, FY2003,
and FY2004 Request
(millions of dollars)
Country/
FY2002
FY2002
FY2003
FY2003
FY2004
Program
Actual
Suppl.
Allocated
Suppl.
Requested
Algeria IMET
.067
-
.550
-
.550
Bahrain Total
.395
28.500
.450
90.000
25.600
FMF
-
28.500
-
90.000
25.000
IMET
.395
-
.450
-
.600
Comoros IMET
-
-
.050
-
.050
Cyprus ESF
15.000
-
14.900
-
7.500
Djibuti Total
.163
1.500
.185
30.000
2.225
FMF
-
1.500
-
5.000
2.000
IMET
.163
-
.185
.225
ESF
-
-
-
25.000
-
Egypt Total
1,956.217
-
1,903.752
2,300.000
1,876.200
FMF
1,300.000
-
1,291.550
-
1,300.000
ESF
655.000
-
611.002
300.000
575.000
IMET
1.217
-
1.200
-
1.200
Loan Guar.
-
-
-
2,000.000
-
Eritrea Total
6.148
-
5.519
-
1.790
FMF
.250
-
.500
-
.500
DA
5.558
-
4.619
-
.840
IMET
.340
-
.400
-
.450
Ethiopia Total
20.895
2.000
19.104
-
21.508
FMF
.250
2.000
.500
-
.500
ESF
-
-
-
-
5.000
DA
20.200
-
18.104
-
15.438
IMET
.445
-
.500
-
.570
Greece IMET
.499
-
.600
-
.600
Iraq Total
25.000
-
50.000
-
-
Opposition ESF
25.000
-
10.000
-
-
Contingency
-
-
40.000
-
-
Israel Total
2,848.000
-
2,742.245
10,000.000
2,690.000
FMF
2,040.000
-
2,086.350
1,000.000
2,160.000

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Country/
FY2002
FY2002
FY2003
FY2003
FY2004
Program
Actual
Suppl.
Allocated
Suppl.
Requested
ESF
720.000
-
596.100
-
480.000
R & M
60.000
-
60.000
-
50.000
CT ERF
28.000
-
-
-
-
Loan Guar.
-
-
-
9,000.000
-
Jordan Total
227.012
125.000
448.400
1,106.000
458.900
FMF
75.000
25.000
198.000
406.000
206.000
ESF
150.000
100.000
248.000
700.000
250.000
IMET
2.012
-
2.400
-
2.900
Lebanon Total
36.168
-
35.970
-
33.200
ESF
35.000
-
34.770
-
32.000
DA
.600
-
.500
-
.500
IMET
.568
-
.700
-
.700
Mauritania IMET
.130
-
.100
-
.125
Morocco Total
10.307
-
13.113
-
17.150
FMF
3.500
-
4.900
-
10.000
DA
5.766
-
6.713
-
5.400
IMET
1.041
-
1.500
-
1.750
Oman Total
.481
25.000
20.250
61.500
26.000
FMF
-
25.000
19.500
61.500
25.000
IMET
.481
-
.750
-
1.000
Saudi Arabia IMET
.024
-
.025
-
.025
Somalia DA
2.267
-
2.700
-
.965
Sudan Total
10.631
-
22.000
-
64.613
DA
10.631
-
22.000
-
49.613
ESF
-
-
-
-
15.000
Tunisia Total
4.513
-
6.400
-
11.750
FMF
3.500
-
4.900
-
10.000
IMET
1.013
-
1.500
-
1.750
Turkey Total
2.756
248.000
20.300
9,500.000
255.000
FMF
-
28.000
17.500
-
50.000
ESF
-
200.000
-
1,000.000
200.000
IMET
2.756
-
2.800
-
5.000
ERF
-
20.000
-
-
-

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Country/
FY2002
FY2002
FY2003
FY2003
FY2004
Program
Actual
Suppl.
Allocated
Suppl.
Requested
Loan/Loan Guar.
-
-
-
8,500.000
-
West Bank/ Gaza
72.000
-
124.500
50.000
75.000
Strip Total
ESF
72.000
-
74.500
50.000
75.000
Disaster Relief
-
-
50.000
-
-
Yemen Total
5.488
23.000
12.450
-
31.000
FMF
-
20.000
1.900
-
15.000
ESF
5.000
3.000
9.900
-
15.000
IMET
.488
-
.650
-
1.000
Note: The FY2002 supplemental funds were in addition to the FY2002 funds. FY2003 supplemental
funds are in addition to the FY2003 allocated funds.

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Table 2. U.S. Foreign Assistance to Middle East Regional
Programs
(millions of dollars)
Regional Program
FY2002
FY2002
FY2003
FY2003
FY2004
Actual
Suppl.
Allocated
Suppl.
Requested
ME Regional
-
-
28.161
-
-
ME Partnership
-
20.000
-
200.000
145.00
Initiative ESF
ME Democracy
5.00
-
4.000
-
-
ESF
ME Multilaterals
3.000
-
2.900
-
3.000
ESF
ME Regional
5.000
-
4.900
-
5.000
Cooperation ESF
ME
-
-
-
30.500
-
Television/Radio
U.S.-North Africa
4.000
-
3.000
-
-
Economic
Partnership ESF
Multinational
16.015
-
16.400
-
16.400
Force and
Observers
UN Guards in Iraq
-
-
-
-
.700
UNDOF
10.454
-
8.365
-
10.065
UNIFIL
18.831
-
33.520
-
30.795
UNIKOM
4.595
-
4.479
-
4.784
MINURSO
13.324
-
11.792
-
10.785
UNIFCYP
5.964
-
5.219
-
5.809
UNMEE
67.648
-
55.594
-
53.504
Note: The FY2002 supplemental funds were in addition to the FY2002 funds. FY2003 supplemental
funds are in addition to the FY2003 allocated funds.