The United States and Israel have signed a deal that will provide $38 billion in foreign aid for Israel, all of it for defense spending, over a 10-year period beginning in 2017.
This averages out to $3.8 billion per year, which is about $700 million more annually than the $3.1 billion per year Israel received before the deal was signed.
The new agreement includes foreign aid appropriation for the first time, funds for missile defense, which in recent years was an additional appropriation of approximately $500 million, made by Congress on an annual basis. In total, the agreement seems to provide Israel with $200 million more per year, $3.8 billion versus $3.6 billion. It turns out that as the discussions between Israel and the U.S. were taking place, Congress had decided to appropriate $3.4 billion of regular foreign aid, plus an additional $600 million for missile defense in 2017, or $4 billion in total, $200 million higher than the level for 2017 and later years within the framework of the new memorandum of understanding.
The new deal contains a few provisions that are unique and certainly new in the history of U.S. military aid to Israel. One provision the Americans fought hard for was that all of the money allocated to Israel must be spent in the United States. The shift to 100% spending in the U.S. will be gradual: Under the current understanding, Israel was able to convert some 26% of the funds into shekels, to be used for procurement in Israel. Starting in the sixth year, however, that percentage will gradually decline, until by the 10th year Israel will have to spend all the funds in the U.S.
Israel’s chief negotiator, Jacob Nagel, said that if under the current memorandum of understanding some $7.8 billion could be spent in Israel, under the new understanding that number will drop to $5.6 billion. He stressed, however, that this will occur gradually, and that the defense establishment will continue to receive roughly the same amount of money from the U.S. that it has received up to now until 2026, which will give it plenty of time to prepare for the new reality.
The most remarkable provision in the new agreement concerns the limitations on Congress to appropriate any more money for Israel. Congress has the power of the purse, and the president can not send money to any country for foreign aid that Congress does not provide. The new agreement, however, requires Israel to refuse any additional funds that Congress might choose to appropriate for Israel in 2017 and 2018, beyond the memorandum of understanding limit of $3.8 billion per year.
Bloomberg columnist Josh Rogin argues that the limitation is unprecedented: “In an unprecedented arrangement, the White House and the Israeli government have found a way to prevent Congress from increasing U.S. aid for 2017 and 2018. The Israeli government has pledged to return any money given by Congress above the memorandum of understanding levels for those two years.”
The agreement does not provide such “reimbursement of the excess” language for the following eight years, but such a concept for even two years is not sitting well with some members of Congress, who see it as an attempt to shift power from Congress to the White House. If, for instance, Israel were to be drawn into another war with Hezbollah or Hamas in the next two years, Congress would almost certainly seek to provide the assistance Israel might require, beyond the current commitment, particularly for missile defense. The memorandum of understanding allows Israel to ask for more in the event of war, but the definition of a war could become an issue.
In general, there is more bipartisanship in Congress on spending money to help Israel than almost anything else on its table these days. Other issues concerning Israel have, by and large, also been historically bipartisan. Meanwhile, the 2015 Iran nuclear deal was unanimously rejected by Republicans and endorsed by 85% of Democrats, a quarter of whom boycotted Prime Minister Benjamin Netanyahu’s address to a joint session of Congress, including Tim Kaine, Hillary Clinton’s current running mate. It is unclear whether opposition to the two-year give-back provision will be one that members of both parties fight, or just the Republicans. One might think that a president pressuring an Israeli prime minister to refuse to accept financial support for his country’s military from Congress, which historically has been more consistently supportive of the U.S.-Israel relationship than the White House), would draw a sharp rebuke from members from both parties.