EXECUTIVE SUMMARY: Many believe that US financial and military support for Israel harms the interests of the US, especially in the Middle East and North Africa. One way to test this assumption is to explore whether US support for Israel has a negative effect on exports of the US to the countries of the region. It doesn’t. US exports to the region have grown. Fluctuations within that overall growth trend are easily explained by oil prices, the chief source of income of many of the consumer states – not by Israel’s “offenses” against Hezbollah and Hamas.
Modern advanced states and their citizens pride themselves on being scientific and rational, with opinions and convictions that are tested against facts. One widespread conviction among many State Department officials, academics, think tank professionals, and members of the informed public is that US financial and military support for Israel at the UN harms American interests, especially in the Middle East and North Africa. In this region, the majority of states take a dim if not openly hostile view towards Israel.
This is a hypothesis that can be tested. One avenue among many is to see if US support for Israel, which is certainly powerful at the UN and in other international fora, has a negative effect on exports of the US to the countries of the region.
This is a good test, because most states demand that imported goods identify their country of origin on the packaging. This means the purchaser – be it a government or a public or private consumer – has a clear choice whether or not to buy the product. The degree of choice involved is amplified by the fact that there are similar products available for almost all goods exported from the US to the Middle East. These alternative products are produced by other states, some of which vote the same way predominantly Muslim states do at the UN.
One would expect that US exports to the region would be adversely affected in the long run, and especially so during eras of conflagration between Israel and its enemies. These eras are easy to identify. They include the height of the second intifada (2001-04); the month-long Israel-Hezbollah confrontation in June 2006, better known as the second Lebanese War; and the three rounds of hostilities between Israel and Hamas: in December 2008-09, in October 2012, and in July-August 2014 (the longest “war” in the history of Israeli-Arab wars). All these rounds of conflict were extensively reported by the media, the last four by new media as well. Since most exports from the US to MENA are relatively sophisticated, one can safely assume that the buyers of these products form the media-attentive public in their respective countries. In other words, their purchasing choices cannot be said to have reflected their ignorance during and after these bouts of violence.
Surprisingly, it is not easy to chalk up the data. This is because, contrary to popular perception, the Middle East and North Africa is a small consumer market for products made in the US or indeed the rest of the world. Only 5% of total US exports are purchased by this vast region of 21 states. The leading regional importers of US products are Saudi Arabia, the United Arab Emirates, and Israel.
Only 1% of investments in the US economy are made by Middle East investors (mostly the sovereign funds of the oil- and gas-producing Arab states). Investors in the US are not particularly keen on investing in the Middle East, which attracts only 1% of their investments. The two leading beneficiaries are Egypt and Israel, the former because it is a relatively large, albeit poor, consumer market; the latter because it is attractive as a high-tech nation.
To investigate whether or not the US suffers by supporting Israel, let us look at the data for exports to OPEC (which includes a minority of non-Muslim countries) and for Saudi Arabia. In neither case is there any indication that US support for Israel has had any effect on Muslim and Arab consumers.
For starters, growth in US exports to the region has characterized the last sixteen years for which there are data. Exports to Saudi Arabia between 1999 and 2015 more than doubled, from US$8.3 billion to US$19.6 billion, and for all OPEC countries, it more than tripled (from US$20.6 billion to US$72.3 billion). The growth rate for both was greater than in other regions except for East Asia (mainly China), where exponential economic growth took place that brought with it a growing ability to buy American products (and of course imports from other countries).
Perhaps the Saudi public reduced its demand for US goods during Israel’s bouts with the Palestinians during the second intifada, or during its clashes with Hezbollah and Hamas? Again, there is little evidence that this occurred. In 2001, US exports slightly increased after a sharp fall in 2000, slightly decreased in 2009 after the first round between Israel and Hamas, increased greatly during the 2012 bout, and decreased again in 2014. The same lack of a political pattern holds true for the OPEC countries as a whole.
It is not politics but world oil prices that explain these yearly fluctuations. When oil prices dropped, so did demand for American products. In 2000, the world economic crisis and low oil prices brought about the drop. An increase in US exports took place the following year, when the world economy and oil prices made a comeback. In 2009, it was the world recession – not the Israel-Hamas standoff – that influenced energy prices and demand for US products. The sharp drop in oil prices from US$110 a barrel to half that in 2014 saw the purchase of American goods tumble by a hefty 25% in Saudi Arabia. The similarity in trends between Saudi Arabia and the OPEC countries, albeit of different magnitude, demonstrates that it was the wiles of the world economy and subsequent fluctuations in oil income that explain the demand for American goods, not politics, and certainly not the Israeli-US relationship.
The widely held conviction that the US’s relationship to Israel harms its interests is a myth. Its persistence relies on premises that no rational educated person should harbor.
Prof. Hillel Frisch is a professor of political studies and Middle East studies at Bar-Ilan University and a senior research associate at the Begin-Sadat Center for Strategic Studies.