So you say to Israel, look, if you don't do this...what?
Mitchell: Under American law, the U.S. can withhold support on loan guarantees to Israel. President George W. Bush did so on one occasion. But we think the way to approach this is to try to persuade the parties what is in their self-interest
Charlie Rose talks to Mideast envoy George Mitchell and believes that the U.S. can leverage Israel with financial threats, but the truth is that the U.S. is in no situation financially to be making any kind of fiscal threats at all. In fact it is Israel that could be making financial threats to the United States
As of September 2009, Israel’s foreign debt totals $28 billion. Meanwhile, the State of Israel’s foreign currency reserves total $60 billion. Most of them are invested in US government bonds. That is, the Israeli government’s foreign debt stands at -$32 billion. Or in other words, at this time we, Israelis, are financing America’s debts – and not the other way around."
A lot of Israeli economists got a good laugh when US Special Middle East envoy George Mitchell threatened in a PBS interview last week to withhold Israel's loan guarantees. Sever Plocker explains why.
At this time too, the Israeli government is embarrassed to tell the US administration what needs to be said: Please, take back your loan guarantees. In the coming decade we probably will not need them, while you may very well need them. The Administration economists I met know this well.
People who still speak about “US economic pressure on Israel via loan guarantees” are completely disconnected from reality. Israel is now helping the US pay its deficits, and not the other way around. This is why we were laughing, the American economists and myself, when the issue of loan guarantees came up in our conversation. I was laughing happily; they were laughing somewhat sadly.
via ynetnews.com
