Landmark defense deal for Israel signed in Washington

On Tuesday, both countries concluded a landmark aid agreement worth at least $38 billion, the largest pledge to an ally in American history, which will govern their defense relationship through 2028.

Yaakov Nagel and Thomas A. Shannon sign the 10-year defense agreement (photo credit: ISRAELI EMBASSY IN WASHINGTON)
Yaakov Nagel and Thomas A. Shannon sign the 10-year defense agreement
Israel and the US signed on Wednesday an historic defense agreement worth $38 billion over 10 years, the largest such pledge in American history, hailed by both countries as a cornerstone of their alliance.
The deal incorporates several budget lines that have previously been negotiated and approved by the United States Congress each year, and requires Israel to abide by these terms over the course of the next decade, through 2029, without further lobbying of the US legislature for additional funds.
Israel will receive $3.1b. in foreign military financing next fiscal year, followed by $3.3b. in the subsequent years, plus $500 million designated to missile defense. Israel will return any money Congress may allocate in its 2017-2018 budget for Israel beyond the $3.1b., said Israel’s acting National Security Adviser Yaakov Nagel, who negotiated the deal on Israel’s behalf.
US President Barack Obama praised the agreement as an example of his “unshakable” commitment to the Jewish state.
“For as long as the State of Israel has existed, the United States has been Israel’s greatest friend and partner, a fact underscored again today,” he said, reemphasizing his belief that a two-state solution is equally important to ensuring Israel’s security as is Wednesday’s defense deal.
“Ultimately, both this MoU and efforts to advance the two-state solution are motivated by the same core US 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,” he said.
Nagel signed the agreement. Under Secretary of State for Political Affairs Thomas A. Shannon, Jr. signed it on the US side. Washington’s Ambassador Dan Shapiro and National Security Adviser Susan Rice and Israel’s Ambassador Ron Dermer attended the ceremony in the State Department’s Treaty Room.
Rice said the deal, technically a memorandum of understanding, ensures there will always be an Israel and an Israeli people – “today, tomorrow, and for generations to come.”
The agreement is a “win-win” for Israel and the US, she said, a pact that guarantees the security of the Jewish state, and the sustenance of America’s strongest ally in the region. Nagel said that the “generous” package provided to Israel “is not taken for granted.”
Rice took the opportunity to reiterate Obama’s long-standing position on Israel’s conflict with the Palestinians, which has at times put him at loggerheads with Prime Minister Benjamin Netanyahu.
Hillary Clinton, the Democratic presidential nominee, praised the MoU as a reaffirmation of the “common security interests, shared values and deep historical ties” that have forged the alliance over decades.
The agreement “sends a clear message to the region and the world that we will always stand shoulder to shoulder with Israel,” Clinton said, and “will help solidify and chart a course for the US-Israeli defense relationship in the 21st century as we face a range of common challenges, from Iran’s destabilizing activities to the threats from ISIS [Islamic State] and radical jihadism, and efforts to delegitimize Israel on the world stage.”
Netanyahu praised the deal on Wednesday as a clear demonstration of the strength of the US-Israel relationship.
“That does not mean that we do not disagree from time to time, but these are disagreements within the family,” he said. “They have no effect whatsoever on the great friendship between Israel and the US, and the friendship expressed in this agreement will help a great deal the fortification of Israel’s strength over the next decade.”
Netanyahu thanks US for record aid deal
Netanyahu thanked Obama and his administration for the “historic agreement.” He also thanked “our great many friends in Congress, and the American people, for their great support that crosses parties and spans the entire United States.”
Netanyahu said that many in the US understand that investing in Israel’s security strengthens the stability in an unstable region, and that this serves US interests, as well as Israel’s.
Israel provided the administration with a letter on Wednesday saying that if more money is allocated by Congress, Israel “will return the check.”
Nagel said that the principle behind the letter is clear: the MoU should be inviolable, not to be increased or decreased every year.
If the framework were broken and increased one year, the concern in Jerusalem is that perhaps in the future it would be broken and decreased.
Nagel broke the accord down into two components: the annual foreign military financing and the supplemental money for ballistic missile defense.
By comparison, under the MoU that will expire in 2018, Israel received an average of $3b. a year and an additional $440,000 in supplemental missile defense aid it requested from Congress each year. All together, that entire package came to 34.4b. over a decade.
Israel, Nagel said, has obligated itself not to ask Congress for additional funds for missile defense.
He said that a guaranteed $5b.
over the next decade for missile defense, however, makes it much easier for the defense establishment to plan.
Nagel also said that Israel can ask for additional funding in case of war, and that it also can ask for additional funding for other items, such as tunnel defense.
Another difference in this MoU, as opposed to the previous one, has to do with the provision regarding the spending of the funds in Israel.
Under the current MoU, Israel was able to convert some 26% of the funds into shekels, to be used for procurement in Israel.
Under the new MoU, that percentage will, starting in the sixth years, gradually decline, until by the 10th year all the funds will have to be spent in the US.
Nagel said that if under the current MoU some $7.8b. could be spent in Israel, under the new MoU that number will drop to $5.6b. He stressed, however, that this will be done in a gradual manner, and that the defense establishment will continue to get roughly the same amount of money from US aid that it has received up until now until 2026, which will give it plenty of time to prepare for the new reality.
Nagel, who stressed that the negotiations over the deal began soon after Obama visited Israel in 2013, disputed those saying that Israel could have received an even more generous offer had Netanyahu not fought with Obama over the Iran deal.
Nagel said that when he began the talks three years ago – before the sharp disagreement over Iran – Netanyahu said that if he could bring a deal where the military financing was $3.5b. or $3.6b. a year, he would get a gold medal; if he could get $3.3b. he would earn a silver medal; and if the level remained at $3b. – as it is now – he would earn a bronze.
“I told him last week he owes me a silver medal,” Nagel said.
Nagel did not characterize his talks with the administration as “negotiations,” saying that this assistance is a gift, and the two sides were engaged in talks about the terms of the gift.
He said that there was a “firewall” between talks about the aid package and the Palestinian issue, stressing that at no time did anyone link the two issues.
Netanyahu faced criticism at home from Zionist Union MKs who said he could have gotten a better deal had he built better relations with the Obama administration.
“By politicizing US-Israel relations, Netanyahu harmed Israel’s qualitative military edge and its military industries,” said former defense minister Amir Peretz (Zionist Union). “Thousands of workers will lose their jobs, because of narrow politics between Netanyahu and the president of the United States.”
Peretz accused Netanyahu of harming Israel with his March 2015 speech to Congress, by forming a right-wing government, and interfering in the 2012 US election.
“The weakness of the agreement is a personal failure of Netanyahu and requires an alternative way of thinking to enable the defense industries to continue to function as they have,” he said.
Zionist Union MK Shelly Yacimovich said Netanyahu’s speech to Congress cost Israel $7b., money that the defense system depended on.
“The money went up in smoke because of the brutal behavior of Netanyahu toward the American administration,” she said.
“The Americans proposed giving us much more, but Netanyahu’s arrogance and irresponsibility removed any influence on the agreement with Iran and harmed our economy.”
Speaking at the Brookings Institution in Washington, MK Erel Margalit said that “Netanyahu has apparently forgotten that the United States is Israel’s natural ally and best suited to lead political negotiations, not Russia or Putin.”
He said the defense package was another indication of “Netanyahu’s ongoing harmful activities that are hurting Israel’s foreign relations, for his personal and political gain.”
Criticism was also on offer in Washington from at least one US lawmaker, who said the agreement was deserving of respect but still wanting in critical areas.
“Congress is not a party to this agreement, nor is this agreement binding on future Congresses,” said Republican Sen. Lindsey Graham, chairman of the Senate subcommittee on foreign aid. “Congress has an independent duty to make a decision about the proper level of support for Israel or our other allies.”
Graham saved particular criticism for the phaseout of Israel’s exceptional offshore procurement provision.
“Israel’s homegrown defense technology is some of the best in the world,” Graham said in his statement. “Under our old agreement Israel was allowed to develop cutting-edge military technology and was required to share this technology with the United States.
“I’m proud to say that many of these advancements helped protect the lives of American service members in uniform,” he continued, adding: “I do not believe this new provision will serve the interests of the United States or Israel.”
But the White House characterized Israel’s offshore procurement provision as an “anomaly” that “no longer serve our mutual interests,” and asserted that maintaining Israel’s qualitative military edge was ensured by spending that money on US defense companies – not Israeli ones.
Graham has already earmarked more aid to Israel this upcoming fiscal year than the MoU calls for, by roughly $300m. He also questioned why the MoU – which incorporates missile defense aid for the first time – lists only $500m. for that cause, when missile threats against the state are only increasing. Congress last year offered Israel $600m. for defense aid.
This is the sort of earmarked money that Israel will have to return.
Several members of Congress hailed the agreement as a historic achievement unprecedented in scope, as did a number of American Jewish organizations, including the American Israel Public Affairs Committee, the American Jewish Committee and the Anti-Defamation League.
But in AIPAC’s laudatory statement, it said that it expects the agreement to be subject to annual congressional approval.