Democratic Palestine : 15 (ص 31)
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- Democratic Palestine : 15 (ص 31)
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Economic aid first
It is telling that West Germany and ‘Israel’ enjoyed full-
blown economic and military relations for over a decade before
diplomatic ties were established. West Germany feared that
according full recognition to the Zionist state would jeopardize
relations with the Arab states and lead them to recognize the
German Democratic Republic. These considerations did not,
however, keep West Germany from providing ‘Israel’ with
massive economic aid. This started in 1952, parallel to West
Germany’s integration into the Western bloc (including NATO)
and the gradual abolition of its status as a defeated, occupied
power after World War II. This aid was not an entirely German
initiative; nor was it based on guilt feelings. Rather, according
to Feldman, «The US perceived a need for a German contribu-
tion to Western defense, especially after the outbreak of the
Korean War in June 1950» (p.50).
The special relationship began in the context of Israeli
demands for compensation to the Jews and their families who
had suffered under the Hitler regime. This demand was actu-
ally rooted in the nature of the Zionist state. Established as a
settler colony through war and expulsion of the native Palesti-
nians, ‘Israel’ needed massive external aid to maintain itself
and its army; it could not look to its neighbors for normal
economic relations. Shinnar, head of the Israeli delegation to
the initial talks with the West German government in 1952,
admitted: «There can be no doubt as to the importance of our
awkward economic situation in the decision to seek repara-
tions» (p.70). Just as the Zionist movement exploited the
holocaust to bring settlers to Palestine, so the Zionist state was
eager to solicit funds in the name of the victims, for strengthen-
ing itself as imperialism's forward base in the Middle East.
As a result of the complementary motives of the Zionist
and West German states, the two entered into talks in Was-
senaar in March 1952, which ended with the signing of the
Luxembourg agreement in September of the same year. West
Germany hereby agreed to pay 3.45 billion German marks in
reparations. Of this, 450 million were paid to the Conference of
Jewish Material Claims Against Germany, but by far the
greatest amount (3 billion) was paid directly to the state of ‘Is-
rael’ in goods and services «to help absorb 300,000 refugees»
(p.90). According to international law, ‘Israel’ could not claim
reparations, yet it was treated preferentially.
Parallel to the Wassenaar talks, West Germany
negotiated in London with 18 European countnes about repa-
rations and debt repayment. The agreement was signed with
‘Israel’ six months before the London talks reached agree-
ment. The Adenauer government promised 14.3 billion marks
to the 18 creditors who had brought their claims to London,
while the Zionist state alone got 3 billion marks. European
states wanting reparations had to postpone their claims until a
future peace treaty with a united Germany would allow a final
settlement. The Zionist state was the only country to receive
reparations. When reparations agreements were later con-
cluded with 12 European states, they had to pass the money
on to the individuals making the claim. Together, the 12
received 978 million marks, compared to 3 billion for ‘Israel’
alone.
Building Zionism’s industrial base
After the Luxembourg agreement, Bonn and Tel Aviv
undertook a series of measures to speed up payments, so that
by 1958 ‘Israel’ had received 95% of the amount due as of
1962. By the end of 1978, Israeli individuals had received
about 40% of the total compensation due - approximately 22
billion marks. Although the latter payments are not to the state,
they helped the Israeli economy, contributing to foreign cur-
rency reserves and reducing welfare costs.
In the first years after the Zionist state’s foundation, West
German funds were the most important. From the total of
unilateral transfers to ‘Israel’ in 1953-65, the West German
contribution was 47.2%; that of Jews around the world was
46.9%; and that of the US was 5.9%.
After 1965, the US became the only state to unilaterally
transfer funds to ‘Israel’, but the German government's trans-
fers to Israeli individuals continued. From 1970-8, 41-58% of
all transfers to Israeli individuals came from West Germany.
The benefits to the Israeli economy from these transfers can be
summarized as follows:
1.Capital imports from West Germany constituted over a quar-
ter of capital imports to ‘Israel’ over a 19 year period.
2.Of all the goods and services provided, 38% were invest-
ment goods; 24% raw materials, industrial and agricultural
products; 8% transportation goods and bank charges; and
30% oil. Approximately 80% of the total eventually went into
investments.
3.West Germany virtually built the Israeli commercial fleet, cru-
cial because of the lack of land access to other countries.
4.Industrial equipment which derived from the Luxembourg
agreement amounted to 14% of total Israeli investment in
industrial equipment.
9.From 1954-64, West Germany supplied about one quarter of
the total investment in power installations, a prerequisite for
industrialization.
6.Reparations paid one-fifth of the equipment imported for the
Mekorot Water Company in 1954-61, which helped the Israeli
irrigation program and consequently agriculture.
7.During 1954-9, West Germany supplied half of the invest-
ment in railways.
8.During 1954-9, one quarter of the capital investment in Haifa
port came from reparations.
9.In 1962, 12 % of the total assets of the telephone system
came from reparations (p.97).
West Germany’s contribution to the Israeli economy
through reparations was supplemented by other aid. When
West Germany started its Development Aid Program in the
early sixties, ‘Israel’ was among the first recipients, getting 560
million marks by June 1965. This is a unique case because
West Germany has never extended such aid to any other
country in the absence of diplomatic relations and written
agreements. In this period, ‘Israel’ ranked third (after India and
Turkey) among the 65 recipients of bilateral aid in absolute
terms, and first in per capita terms.
After diplomatic relations were established in 1965, a for-
mal agreement was signed in Bonn to «promote...economic
relations by means of continuous cooperation.» In 1966, ‘Is-
rael’ received 160 million marks as development aid and for
specific projects. Normalty recipients of development aid apply
for certain projects and have to review their request with the
Ministry of Economic Cooperation. For ‘Israel’, this procedure
was simplified and abbreviated; aid is generally granted with-
out negotiations.
In the years 1950-77, ‘Israel’ ranked in the top four among
about 100 countries receiving development aid from West Ger-
many, and first in per capita terms. Loans have been granted
to ‘Israel’ on better than average conditions. Not until 1977 was
the Zionist state regarded as a take-off country, which means
loans on somewhat less favorable terms.
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