The MOU between the US and Israel benefits the leaders of both countries

The United States and Israel signed a ten-year Memorandum of Understanding on 14 September, under which Washington will provide $38 billion in military aid over the fiscal years 2019 to 2028. The new MOU extends the current one that was signed in 2007 and expires in 2018, enabling Israeli military planners to make even longer-term acquisitions and bolster their technological edge in a turbulent region. Among other things, the money will allow Israel to update its air force by purchasing additional F-35 joint strike fighters.

The MOU is an important signal of American support for Israel’s security in the years ahead; interestingly, the US has no comparable arrangement with any other country. The agreement is also a message to Israel’s adversaries that Washington’s support for its ally remains uniquely deep, despite recent policy disagreements.

The 2007 MOU allocated $30 billion over the course of a decade, which translates to $3.1 billion in foreign military financing (FMF) annually. Israel’s entire defence budget this fiscal year is $15.5 billion, so the US assistance is approximately a fifth of what Tel Aviv spends on its own military. According to a White House fact sheet, the new MOU figure is $3.8 billion per annum, “disbursed in equal increments of $3.3 billion in FMF and $500 million in missile defence funding each year for the duration of the understanding.”

Yet the missile issue has led to differing interpretations of the new annual funding level. Previously, Israel asked the US Congress for missile funding separately; this past year, US assistance totalled $3.7 billion when one factors in the $600 million for missile defence. In total, Washington has provided $1.3 billion for missile defence since 2011, covering most production costs of the Iron Dome system that was so important in preventing Israeli fatalities during its 2014 war against the Palestinians in Gaza. Once missile expenditure is taken out of the equation, some former Israeli officials question the significance of the new MOU’s increase in FMF from $3.1 to $3.3 billion. In a 15 September Washington Post article, for example, former Defence Minister Ehud Barak wrote that this is not an increase in “purchasing power” given the rise in weapons’ prices since 2007.

The Israeli prime minister’s office and American officials respond typically to such arguments by explaining that US assistance levels have remained constant in the past. Other US officials have gone further, insisting that this type of counting misses the mark and ignores context. Specifically, they refer to the ongoing clash between the administration and Congress over American defence spending, noting that the amount of global military assistance at the administration’s disposal is relatively limited and that Israel’s share towers over the next recipients; Egypt ranks second at $1.3 billion, with Jordan third at $300 million. Put another way, total US FMF to the entire world is $5.647 billion annually, and 83 per cent of it goes to Israel, Egypt and Jordan.

The new MOU will also phase out a provision called Off-Shore Procurement (OSP). This provision, which is not given to other states, has benefited Israel by allowing it to spend 26.3 per cent of US military aid in Israel; that’s about $815 million annually. Congress first allowed OSP after Israel cancelled development of the Lavi fighter jet in 1987, a project that the United States opposed. Yet while the aircraft’s cancellation hurt Israel’s fragile defence industry at the time, the situation has changed significantly since the 1980s. Judging by its $5.7 billion in annual exports, the industry is now the fifth biggest arms exporter in the world; some knowledgeable Israelis say that the figure is actually $7 billion. Its three leading companies – Elbit, Rafael and Israel Aerospace Industries (IAI) – are among the world’s top fifty defence exporters.

Congress likes to assert its authority, and other challenges to the new MOU will likely abound. For example, what if the current turbulence in Israel’s neighbourhood increases while still falling short of direct war? And if the MOU is not a treaty, will it be enforced equally by both countries when the Obama administration leaves office in a few months? In this regard, Israel insists proudly that it has not sought to change the FMF level during the period of the current MOU.

Last year’s Iran nuclear deal was a time of maximal political leverage for Israel, so it is natural to question the deal’s impact on the MOU. Defence Secretary Ash Carter travelled to Israel during the 2015 Iran debates, but Netanyahu pointedly refused to discuss US military assistance at that time, fearing potential perceptions that Israel was being bought off to soften its opposition to the nuclear deal.

Both Netanyahu and Obama had an interest in concluding the MOU talks now rather than later. For Netanyahu, who will be speaking at the UN General Assembly in New York next week, signing the MOU offers some respite from Israeli media stories questioning the vitality of the bilateral relationship. For Obama, signing the MOU reinforces his long-held view that support for Israeli security should be kept separate from any policy disagreements he might have with Tel Aviv on other issues. The move also enables him to shore up the pro-Israel wing of the Democratic Party before the upcoming presidential election.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.