Israel and the US will soon finish negotiating a new US aid package to Israel. That package is for military aid for the next ten years, starting 2018.
When a new agreement is reached, both Israel Prime Minister Benjamin Netanyahu and US President Barack Obama will sign a Memorandum of Understanding (MOU). That MOU will offer Israel app 3.5-3.9 billion (USD) per year for ten years. By contrast, the current ten-year agreement, set to expire in 2018, has been for 3.1 billion a year (Curt Tarnoff, Marian L Lawson, Foreign Aid: An Introduction to U.S. Programs and Policy, Congressional Research Services (crs), January 29, 2016).
For this new agreement, Prime Minister Netanyahu has asked the US to increase its military aid to $5 billion annually. Netanyahu wants that amount to help offset the billions of dollars Iran will recover for signing the 2015 nuclear agreement with the P5+1. More than $120 billion dollars, once frozen because of sanctions against Iran, will be released to Iran according to the terms of that agreement. Netanyahu also asks for this increase to help offset military aid packages the US has signed with Saudi Arabia and Egypt which include weapons that could be used against Israel in a future war.
Israel is especially concerned about Iran. The $120+ billion dollars to be released to Iran worries Israel. Iran has vowed to exterminate Israel. $120 billion dollars can fund a lot of anti-Israel terror activity.
The US has refused to approve Netanyahu’s request for $5 billion a year. The US has said only that the aid package will be ‘around $4 billion’ a year.
The latest rumours coming from Washington suggest that the US will offer $3.8-3.9 billion to Israel (Eldad Benari, “American officials believe Netanyahu will sign MoU with Obama”, arutzsheva, July 11, 2016). But the new deal with come with two, perhaps three ‘catches’ (that we know about). First, it’s been rumoured that the US will demand that 100% of future aid be spent in the US. Currently, only 75% of US military aid to Israel has to be spent in the US; currently, Israel can channel the remaining 25% to its own defense industry.
This change means that income for Israel’s military manufacturers would drop by $700-$900 million dollars a year. That means thousands of jobs in Israel will evaporate. It means Israel will have less money available to continue developing world-class munitions and avionics.
These home-grown munitions and avionics are important. They give Israel a qualitative edge over any future enemy who also purchases American weapons. A deal that threatens this edge is a bad deal for Israel.
The second ‘catch’ concerns a supplemental dollar amount Congress has been allocating to Israel. This supplement has been allocated separately by Congress to Israel to pursue anti-missile research and development. This supplemental amount (app $400 million a year) goes to Israel on top of the 3.1 billion allocated in the basic aid package (Michael Wilner, Herb Keinon, “US: Defense deal to include first long-term missile aid pledge to Israel”, jerusalempost, June 15, 2016). Therefore, the real current aid package to Israel has been averaging 3.5 billion per year.
The ‘catch’ here is, the US wants to end this ‘extra’ funding. It also wants to drop the missile-development allocation from $400 million to app $145 million. And, it wants any missile allocation to be included as part of its basic $3.8-3.9 billion package.
This is a serious ‘catch’. It means significantly less money for missile development. It means an actual renewal increase of app 7% per year.
That doesn’t help Israel offset the billions Iran can spend to attack Israel. It doesn’t help Israel increase its defences to protect itself against arms the US sells to Egypt and Saudi Arabia. It doesn’t help Israel build an upgraded missile defense system to help protect its civilians against the 100,000 rockets Hezbollah claims it aims at Israel. This is a bad deal for Israel.
There may be one more catch: no more supplemental allocations (arutzsheva, ibid).
Netanyahu has to decide if he should sign an agreement with Obama or wait to negotiate with the next President. Given the probable candidates in November’s US election, conventional wisdom suggests that Netanyahu is safer to sign with Obama. That’s what he appears to be thinking.
Nevertheless, Netanyahu should not sign now. The Obama agreement cuts too deeply into Israel’s defense industry. It limits (or ends) future funding possibilities. It represents too small an increase relative to its enemies’ military build-up. It’s not a good deal.
Israel is on the verge of being isolated by everyone, including the US. It needs to sign a deal that will help itself to become more self-sufficient, not less so. It needs a deal that supports Israel’s commitment to its own defense industry, not America’s.
This deal makes Israel less self-sufficient. It hurts Israel’s national defense industry. It doesn’t help Israel confront the increased risks it faces in the region. It’s a bad deal.
Mr Netanyahu: don’t sign the Obama MOU.