Israel looms large in the Ayn Rand Institute mind. A Google search for Israel on their website lists many hundreds of pages.  Israel was not as important to Ayn Rand: there is only one mention of Israel in all her written work. It occurs in “The Lessons of Vietnam,” The Ayn Rand Letter, dated August 26, 1974 but – the Letter being behind schedule – written in May 1975. The essay is reprinted in The Voice of Reason, published after her death.
At the time she wrote this essay the U.S. had just abandoned South Vietnam, which immediately fell to the North Vietnamese, who were backed by communist China. We will examine her mention of Israel in a moment, but since she will use the slippery term “isolationism” we first quote an earlier paragraph to make her reference clear:
“Observe the double-standard switch of the anti-concept of ‘isolationism.’ The same intellectual groups ... who coined that anti-concept in World War II – and used it to denounce any patriotic opponent of America’s self-immolation – the same groups who screamed that it was our duty to save the world (when the enemy was Germany or Italy or fascism) are now rabid isolationists who denounce any U.S. concern with countries fighting for freedom, when the enemy is communism and Soviet Russia.”Thus the Leftists, for such were all these “intellectual groups,” are inconsistent. They denounce the patriotic isolationists of WW II (Ayn Rand was one) and yet praise the new isolationists of the Cold War. In her next paragraph she castigates these new isolationists, and maintains that, contrary to them, the U.S. may properly aid another country if (to add a condition she makes elsewhere in the essay) such aid really is in the interests of America.
The next paragraph laments that this new isolationism plays on the American public’s legitimate anger over Vietnam, thus making the U.S. government afraid to get involved in foreign wars “not agreeable to Soviet Russia.” Now comes the part concerning Israel:
“The first intended victim of the new isolationism will probably be Israel—if the ‘antiwar’ efforts of the new isolationists succeed. (Israel and Taiwan are the two countries that need and deserve U.S. help—not in the name of international altruism, but by reason of actual U.S. national interests in the Mediterranean and the Pacific.)”The time she wrote the above, 1975, is important, because the context of her knowledge is important. And it turns out that that knowledge was incomplete and inaccurate. The above quote, as we shall show, is not Ayn Rand’s philosophy, it is an innocent misapplication of it.
Many times Ayn Rand praised isolationism in its old-fashioned, America First, sense. For example, in her essay “The Chickens Homecoming” (reprinted by her in The New Left) she attacked
“the premises that we owe a duty to the rest of the world, that we are responsible for the welfare of any nation anywhere on earth, that isolationism is selfish, immoral and impractical in a ‘shrinking’ modern world, etc.”Her attack is applicable not only to Europe and Vietnam but to any country.
Evidently – for we believe Ayn Rand was consistent – in 1975 she thought that foreign aid to Israel was in the interest of the U.S., that it was not an act of national self-sacrifice.
Specifically, judging from her answers to questions at talks she gave around this time, she supported Israel for two reasons. She believed that without U.S. support, Russia – which was supporting the Arabs – would control the Mediterranean and its oil. And she saw the fight between Israel and the Arabs as a fight between civilized men and savages.
Were these beliefs true? And if true, did they justify foreign aid to Israel?
Israel possessed no oil. Nor were the Arabs going to let Russia control Arab oil just because Russia gave them armaments. Later Russia could not even control Afghanistan by military force. The illusion that Russia could control the Mediterranean is a relic of Cold War thinking, a relic of the time when everyone believed “the Russians are ten feet tall.” Ayn Rand succumbed to this syndrome far less than most, but evidently not in this case. (Russia’s aid was not always against Israel, by the way. During Israel’s formative years Russia backed Menachem Begin’s terrorist activities against Britain and the Arabs.) Furthermore, only a small fraction of the world’s oil resides in the Mediterranean. In sum, Mediterranean oil vis-à-vis Russia was not an important issue.
As for America’s interests, its government had, and has, no legitimate interest in the Mediterranean. If American oil companies wish to risk drilling in that region of the world, that interest is their own and, as far as the government is concerned, theirs alone. Here it is worth noting that America’s “energy crisis” is entirely due to government interference with American industry.
Was socialist Israel our ally against communist Russia?  During the Cold War Israel packaged itself as a bulwark against communism, an enemy of our enemy, the Soviet Union. As it turned out, Israel was pulling the wool over our eyes. For examples of Israel’s treachery read about the Pollard Affair and other betrayals in This is Our Ally? on this website. Israel was against Russia only to the extent that Russia helped Arabia, otherwise Israel helped Russia if Russia helped Israel. Ayn Rand evidently believed Israel’s propaganda about it being our ally against Russia, not realizing the propaganda was lies.
She also evidently believed that Israel had a more civilized government than it did. When Ayn Rand spoke at the Ford Hall Forum she frequently got asked about Israel – whose supporters are anything if not vociferous – during the question and answer periods, which were open to any question. Her reply would go along the following lines: I support Israel; though Israel is a socialist country, in that region of the world Israel is the vanguard of civilization.
In other words, the gray of Israel is white compared to the surrounding near-black of Arabia. [2a] There is something to be said for that kind of argument, but of course it fails when the gray gets dark enough. Did Ayn Rand know how dark Israel really was? The year she wrote her essay, 1975, was long before Israeli torture came to light in the 1993 New York Times exposé, over ten years after her death. 1975 was long before Israel’s massacre of Beirut in 1982, the year of her death. 
Ayn Rand thought that Israel was America’s ally. Did she know how treacherous Israel really was? 1975 was long before the exposure of the Pollard Affair in 1985, three years after her death. Not to mention the USS Liberty attack (though it occurred in 1967 it was not made public until 1980), and many other acts by Israel against America.  And long before the publication of such exposés as Victor Ostrovsky’s By Way of Deception (1990) and Ari Ben-Menashe’s Profits of War (1992).
It is far more probable that Ayn Rand was ignorant of Israel’s brutality and deceit than that she thought Israel’s brutality and deceit were comparatively unimportant.
Still, she must be held partly responsible for her ignorance. With some effort even in 1975 one could break through the cloud of propaganda thrown out by Israel and its worshippers. Her mistake was surrounding herself with people like Leonard Peikoff, and – very likely – relying on their research, or lack of it. 
Even if Israel were truly civilized and our ally, it would not justify forcing American citizens to pay for Israel’s support. Ayn Rand did not have John Galt say:
“I swear – by my life and my love of it – that I will never live for the sake of another man, nor ask another man to live for mine ... uh ... except in the case of Israel.”Israel is no exception, and one would like to think Ayn Rand did not make it one. She was mistaken about the nature of Israel and sincerely believed that helping the Israeli government was in our interest. A mistake preserved in amber which ARI’s supporters bring forth at every opportunity. 
If you know the facts and apply Ayn Rand’s principles consistently you will oppose foreign aid to Israel, not to mention to all other Third World countries. And certainly oppose getting involved in their wars. Early in the same essay containing the reference to Israel, Ayn Rand writes:
“It [the Vietnam War] was a shameful war ... shameful because it was a war which the U.S. had no selfish reason to fight, because it served no national interest, because we had nothing to gain from it, because the lives and the heroism of thousands of American soldiers (and billions of American wealth) were sacrificed ...”Today one could say exactly the same about the U.S. wars in the Middle East, which are really Israel’s wars.
What about private philanthropy, is it proper for individuals or private groups to aid Israel? If Israel really were the bastion of freedom and the ally that the so-called Ayn Rand Institute makes it out to be, then private philanthropy would be unobjectionable, even praiseworthy. But considering the history of Israel’s treatment of the U.S., giving to Israel is a traitorous act. 
How do Israel-worshippers reply to all this? Guilt by association figures prominently. They argue: “Horrid group ‘X’ brings up the Pollard Affair and so on, therefore you belong to ‘X’. This argument is as valid as: “A thief said 2 + 2 = 4 and so do you, therefore you are a thief.” Or: “Thomas Szasz criticizes the psychiatric profession, therefore Thomas Szasz is a Scientologist.”
Supremely stupid, yes, but that doesn’t stop them.