News and analysis from Palestine, Israel and beyond.

Five Takeaways from the US-Israel MOU

Bibi Kerry

Israeli PM Benjamin Netanyahu and US Secretary of State John Kerry / Shutterstock

On Wednesday Israel and the United States finally signed a new Memorandum of Understanding (MOU), committing the United States to provide Israel with $38 billion in military aid over the ten years spanning 2019-2028. The sum includes $5 billion for missile defense, which Israel had previously had to lobby Congress for each year; and a $200 million per year increase in basic aid. The MOU makes some changes to the system by which the US provides aid to Israel, and was also unusually difficult to negotiate. Here are five takeaways:

Israeli Prime Minister Benjamin Netanyahu got less than he hoped. At one time, Netanyahu had been hoping for as much as $50 billion over a ten-year period. The increase in basic aid from $31 to only $33 billion over that period has to be a disappointment to him. While the US commitment to an extra $5 billion for missile defense (bringing the total package to $38 billion) gives Israel certainty for that funding, it also caps what Israel gets for missile defense. Congress had already included over $630 million in the Appropriations bill for FY 2017 for missile defense, so it is reasonable to think Netanyahu hoped to get more than $500 million per year in the new MOU.

The new MOU ends US support for Israel’s defense industry. Since the 1980s, when the Israeli economy was on the brink of disaster, Israel has been the only country that has been permitted to use part of its aid (26% of it) from the United States in its own country. Every other aid recipient must use the money to purchase arms from US manufacturers exclusively. The purpose was to help build up Israel’s private defense industry and by 2015, Israel was the eighth largest exporter of arms in the world. Rather than subsidizing a competitor in the global arms trade, the new MOU phases out this provision, providing a windfall for the US’ own arms industry, increasing by over $1.5  billion per year the amount that Israel will have to spend with US corporations. A big part of that increase comes from Israel agreeing to immediately cease using 14% of its annual aid on fuel for Israeli military vehicles. Thus, US corporations will eventually receive 100% of the aid the US taxpayers are providing to Israel rather than only a portion of it.

President Obama significantly reduced Congress’ role in the aid process. Obama got Israel to agree not to accept any money Congress might appropriate for them above the current MOU for two years and not to lobby Congress for additional funds over the course of the new MOU. Israel will be able to lobby for aid for programs not covered by the new MOU, such as tunnel detection technology and cyber security. Congress can oppose these limits, but it will be a difficult battle since Israel wrote the letter to the Obama administration outlining the agreement, not the other way around. Congress would have to sell the idea that they want to go against Israel’s plans for its own aid in order to send Israel more taxpayer money in an age of tightening federal budgets. That is not a battle they are likely to win, and the result will be that Congress’ role in the aid process will be diminished.

President Obama drew an explicit connection between US military aid to Israel and the Palestinian issue. Netanyahu and his supporters have worked very hard over the years to keep the U.S.-Israel strategic relationship separate from Israel’s nearly 50-year old occupation. Obama directly contradicted that notion in his statement on the MOU: “Ultimately, both this MOU and efforts to advance the two-state solution are motivated by the same core U.S. objective that has been shared by all administrations, Democratic and Republican, over the last several decades – ensuring that Israelis can live alongside their neighbors in peace and security… The only way for Israel to endure and thrive as a Jewish and democratic state is through the realization of an independent and viable Palestine.”

President Obama put into action a vision of supporting Israel’s security while opposing its policies. By increasing aid to Israel, Obama made it clear that the United States remains absolutely committed to Israel’s genuine security needs. But he also demonstrated that this commitment should not stop the international community from working to save the two-state solution and opposing policies that undermine it. While his own administration has not succeeded at that task, Obama is clearly accentuating the need for the effort to continue. It’s a blueprint that can be taken to heart by the next administration, other governments and civil society groups as well.