For most people, American aid to Israel is the measure of the "special relationship" between the two countries. AIPAC, the major pro-Israel lobby in the United States, considers its efforts to secure this aid its No. 1 priority. It was therefore surprising to hear senior Israeli officials in late May complain about American assistance, with one describing it as a drug addiction.
Their outburst centers around two innovations introduced into the 10-year Memorandum of Understanding (MOU), the official name for the American aid agreement, which was negotiated between the Obama and Netanyahu administrations in 2016. The deal, which pledges an unprecedented $38 billion to Israel over a 10-year period, insists on two Israeli concessions: 1. That Israel spend 100 percent of the aid in the United States (Israel had been allowed to spend roughly 26 percent of U.S. aid on its own defense industry); and 2. Israel can't go to Congress to ask for additional funds while the MOU is in effect.
Most prominent of the officials to attack the deal is Eyal Younian, the chief financial officer of government-owned Israel Aerospace Industries, who said in a radio interview, "Israel must withdraw from the U.S. aid agreement, because of the damage that it does to Israel's aircraft industry. Twenty-two thousand Israelis will be fired if it goes forward." He further warned: "If the agreement continues, we will lose the aircraft industry."
Younian bases his figures on those of Defense Ministry economist Zeev Zilber, who revealed them at a Knesset Finance Committee meeting on May 20. Zilber predicted Israel's military industries will lose $1.3 billion in annual revenue as a result of U.S. aid. The committee members were in accord that the deal needed to be renegotiated. Moshe Gafni, chairman of the committee, summed up: "Explain to the Americans that this harm to us is unacceptable."
Tough rhetoric aside, few want to eliminate American aid, perhaps explaining why the prime minister's office, Eyal Younian, and Moshe Gafni all declined to comment for this article. And the deal was greeted favorably at the time, minus a few warnings, notable among them a Weekly Standard op-ed by Elliot Abrams (‘Historic' in the Worst Way). Abrams, a former Reagan and George W. Bush foreign policy advisor, slammed the new agreement for the reasons that now make it a pressing concern to Israeli defense officials. The deal is set to go into effect this year.
The terms won't be simple to renegotiate, says Dr. Eran Lerman, vice president of the Jerusalem Institute for Strategic Studies and a faculty member at Shalem College. "It's not easy for Israel to make the argument that significant amounts of American aid should be spent on her domestic industries," he said, and still less so under President Trump, who promises to strengthen U.S. industry. Lerman, who served as a deputy security adviser to the Netanyahu government, doesn't doubt that the new rules will negatively impact Israeli industry and "tie Israel's hands."
Lerman sees foreign markets as the answer, especially in Asia. This excludes China, which is "off-limits," he says. Israel is once-bitten, twice shy after the United States forced her to cancel the sale of the Phalcon airborne radar system to China in 2000 for a loss of one billion dollars. In a less-noted coda to the scotched deal, Israel signed a memorandum spelling out procedures it would follow for future sales. The United States also provided a list of 23 "countries of concern" where Israel would need to consult with the United States first before selling weapons technology. Israel is expected to follow these procedures even if the weapons don't include American systems, says Gideon Israel, author of a 2013 policy paper on foreign aid and founder of the Jerusalem-Washington Center.
Such stipulations rankle some Israeli leaders. A new political party, Zehut ("Identity"), includes a plank in its platform calling for an end to U.S. aid to Israel. It is so far the only party to do so. "If Israel could have the United States no longer supply arms to the Middle East, neither to us nor to our neighbors, it would be the greatest help the United States could give us," the plank reads.
Zehut is led by Moshe Feiglin, who rose to prominence leading a grassroots movement against the Oslo Accords. He says American aid only benefits America. The assistance package is a shot in the arm to the U.S. defense industry. Israel is both locked-in as a customer and in turn helps sell U.S. weapons to others. "If Israel uses it, the world wants it," Feiglin said. Even when those weapons are no good, he says, citing the F-35 fighter jet, a project he calls "a big failure. There's no doubt in my mind the decision to buy it was purely political." He notes the F-15i can do much more than the F-35, which he says can barely reach Iran.
"Israel does pay for that aid. It pays with its sovereignty, its ability to make independent decisions," according to Feiglin. "Any move Israeli leaders make. Any action they take—there's this other component in the process. And I don't want it to be there." If it was his decision to make, he would swiftly bring an end to the aid. "Within one year, three at the most. Any longer and someone else will just bring it back," he says.
Dr. Eytan Gilboa, director of the Center for International Communication at the BESA Center for Strategic Studies, strongly disagrees with Feiglin both on the wisdom of cutting aid and the assumption that doing so will end U.S. pressure, noting, "You don't need U.S. aid as leverage to apply pressure." Gilboa argues for expanding military and intelligence cooperation with the United States now that a friendly Trump administration is in power. He insists his position is the majority one. "On aid you will find complete consensus in Israel."
Concerned about seeing that aid jeopardized, Gilboa expresses worry about trends in the Democratic party. "If you have the radical left led by Senators Elizabeth Warren or Bernie Sanders, then I see problems," he said. "Both are totally ignorant of what's happening here."
Gilboa may be in the minority in worrying about threats to the flow of U.S. aid. JWC's Gideon Israel says that in his discussions, Israeli officials are "not forward-thinking." One IDF representative expressed the general attitude to him: "Why should I starve now just because I'm worried about starving later?" Even Feiglin, whose policy prescription is to take an ax to U.S. military aid, admits he hasn't worked out a detailed plan for its elimination.
Perhaps the only person to work out a plan for the complete phase-out of U.S. military aid is Amb. Yoram Ettinger, a former consul-general to Houston in the 1980s who is best known for his research into Israeli-Arab demographics. "Support for foreign aid signals a misunderstanding of the nature of U.S.-Israel relations over the past 40 years. The more you highlight foreign aid the more you undermine the reality of Israel as a partner," he said.
It was Ettinger who helped influence Benjamin Netanyahu on the importance of weaning Israel off U.S. economic aid, meeting with him many times starting in the 1970s even before the latter entered politics. Ettinger recalls receiving a call from Netanyahu in 1996. "He said: ‘In 20 minutes, I'm going to be interviewed by Charlie Rose and I remember you talking to me about weaning ourselves off foreign aid. Could you give me some talking points?'" Netanyahu, before his first address to a Joint Session of Congress that same year famously called for the end of economic aid, which was completely phased-out by 2008. Ettinger admits Netanyahu has very different ideas about U.S. military aid. "He doesn't even want to discuss the possibility," he said.
Ettinger's plan calls for removing 10 percent ($380 million) of U.S. military aid each year for the next 10 years and investing it instead in bi-national foundations. Each foundation would focus on a specific scientific area, ranging from nano-science to water purification. Ettinger believes the result would be a windfall in terms of technological innovation and revenue for American and Israeli businesses.
If the plan sounds far-fetched, Ettinger bases it on two highly successful programs begun over 40 years ago: BIRD and BARD. BIRD, an acronym for Israel-U.S. Bi-national Industrial Research and Development, received initial seed money of $50 million. Since then, revenues from BIRD have exceeded a whopping $8 billion. BARD (Bi-national Agriculture Research & Development) started with identical donations by the U.S. and Israel of $40 million in 1978 (each country supplied another $15 million in 1984). BARD studied the monetary benefits of just 10 projects (of an estimated 200 that had a direct impact on U.S. and Israeli agriculture) and found they benefited both countries by an estimated $800 million. Ettinger notes a third fund, the Bi-National Science Foundation (BSF), focuses on pure research and the advancement of science and is not designed to generate revenue.
"I'm not advocating ground-breaking ideas," Ettinger said. "All I'm saying is, guys, pay attention to the track record. And if it was good, let's replay it in the future."
If BIRD and BARD are any guide, the financial upside of 10 new funds will be in the "mega-billions, maybe trillions," Ettinger says. Profits would mainly go to the U.S. America receives 70 percent of the proceeds generated by programs developed by the two existing funds.
Ettinger suggests major political benefits will accrue to Israel by shifting the current foreign aid system to a private initiative based on a foundational system. He says it will put the U.S.-Israel relationship on firmer footing, better reflect the true nature of the relationship, and boost Israel's image within America. It will also send a message of deterrence to Israel's enemies: That Israel is so powerful it can do away with American aid.
"Why not have more BIRD and BARD?" Ettinger said. "It's a more respectful relationship and in the long term much more productive."
For people like Ettinger and Feiglin the road is uphill. Not least among the obstacles to overcome is a psychological dependence, says Feiglin. "The average Israeli is taught—brainwashed—from an early age that Israel cannot exist without America," he said.
But even those who view U.S. aid positively, such as Lerman and Gilboa, hope one day to see Israel affluent enough to buy its own weaponry. Both argue that America benefits enormously from its assistance to Israel, in terms of weapons testing and development, military doctrines and intelligence. Gilboa even calls the aid a "bargain" for America.
Still, it's difficult to escape the perception in America that U.S. military aid is a kind of hand-out. In congressional papers, Israel is routinely referred to as "a leading recipient of U.S. foreign aid" or "the largest cumulative recipient of U.S. foreign assistance," reinforcing the idea of a one-way street in which America gives and Israel takes.
Proponents of a new system admit the political constellation necessary to overturn the old doesn't yet exist. Ettinger, undeterred, quotes a Talmudic saying: "The more intense the opposition, the more sublime the mission."
Published under: Israel