100% of the money will be spent in the U.S., while Israel is presently able to spend 25% in Israel. This is a subsidy for U.S. defense industries and constrains Israel’s defense choices by forcing the IDF to exclude weapons from Europe and elsewhere.
Without the ability to spend some money in Israel, it will be harder for smaller defense and high-tech industries to keep up.
Israel will be prohibited from asking Congress for additional funds for ten years, effectively removing a bipartisan center of support for Israel’s security from the equation and reducing Israel’s flexibility in addressing rapidly emerging threats.
This could be particularly problematic: an administration that opposes missile defense in principle — as does the Obama administration — could effectively stifle Israel, which protects its people with a layered missile defense system.
A Memorandum of Understanding (MOU) is an agreement between two parties — in this case, the governments of Israel and the United States. It is less than a treaty, more than a handshake. The first MOU was signed in 1981, recognizing “the common bonds of friendship between the United States and Israel and builds on the mutual security relationship that exists between the two nations.” The current MOU, signed in 2007, represented a 10-year commitment. The Obama Administration and the government of Israel have been negotiating a new 10-year agreement that will come into effect in 2017.