Israel: never a loan?

Thanks to Gorilla in the Room for this reminder of how America breaks its own laws to give aid to Israel.

friends of Israel never tire of saying that Israel has never defaulted on repayment of a U.S. government loan. It would be equally accurate to say Israel has never been required to repay a U.S. government loan. The truth of the matter is complex, and designed to be so by those who seek to conceal it from the U.S. taxpayer.

Most U.S. loans to Israel are forgiven, and many were made with the explicit understanding that they would be forgiven before Israel was required to repay them. By disguising as loans what in fact were grants, cooperating members of Congress exempted Israel from the U.S. oversight that would have accompanied grants. On other loans, Israel was expected to pay the interest and eventually to begin repaying the principal. But the so-called Cranston Amendment, which has been attached by Congress to every foreign aid appropriation since 1983, provides that economic aid to Israel will never dip below the amount Israel is required to pay on its outstanding loans. In short, whether U.S. aid is extended as grants or loans to Israel, it never returns to the Treasury.

The article is from 1997 and America has given more year on year support to Israel since then. No wonder Israel could be so generous over Katrina.