US aid to Israel mostly – but not totally - safe in coronavirus recession

American economic activity has declined in recent weeks at a rate not seen since the Great Depression.

AN IDF SOLDIER stands next to an entrance to a cross-border attack tunnel dug from Gaza to Israel, near Kissufim last year.  (photo credit: JACK GUEZ)
AN IDF SOLDIER stands next to an entrance to a cross-border attack tunnel dug from Gaza to Israel, near Kissufim last year.
(photo credit: JACK GUEZ)
Former prime minister Levi Eshkol once said that “when the US sneezes, Israel gets pneumonia.” With the US expected to enter a recession because of businesses shutting down due to the coronavirus pandemic, Israel may need to hold back requests for additional military aid, some experts have speculated.
American economic activity has declined in recent weeks at a rate not seen since the Great Depression, and the International Monetary Fund predicted last week that the world is heading for a recession greater than the one in 2008 due to the coronavirus shutdown.
Combine that with a US political climate in which foreign aid and involvement in the affairs of other countries has fallen out of favor, and this could mean Israel will not be able to rely on the US as much as it has in the past.
“Whenever Israel had a crisis, we could get help from the US,” recounted Lior Weintraub, a former chief of staff of the Israeli Embassy to the US. “This is a crisis where it will be very hard to ask America for things it may not be able to afford to give, and we don’t know how long it’ll continue.”
In theory, US defense aid to Israel is locked in. The 2016 Memorandum of Understanding (MOU) is a pledge from the US to provide $38 billion in military aid to Israel over a decade, beginning in 2018. Israel is to receive $3.3b. in military financing per annum. In addition, rather than have Israel ask each year for missile defense aid as it did in the past, the MOU designates an additional $500 million each year for that purpose.
Plus, the only time that American aid to Israel was cut in recent years was when there were across-the-board budget cuts following Hurricane Katrina in 2006.
If Washington ends up making across-the-board budget cuts like it did in 2006, Israel plans to behave as it did then and not ask for an exemption to the rule, which means that appropriations to Israel would likely be cut. However, no policy decisions have been made about other possible US responses to a recession.
NEARLY ALL of the experts The Jerusalem Post spoke to believe the aid stipulated in the MOU is likely safe.
However, despite the MOU being a 10-year policy, there are some variables: The process by which the aid is provided involves the executive branch of government – currently, the Trump administration – asking Congress to approve the package each year.
In addition, the MOU states that under exceptional circumstances – like a major Israeli military operation or war – the US can exceed the $500m. cap for missile defense contributions.
Each year there are also smaller yet significant aid items, such as a $2 million homeland security grant in 2019, and $5m. for migrants in Israel this year and last year.
Plus, there is the matter of US funds going to Israeli-manufactured equipment. In the 2007 MOU, Israel was allowed to spend up to 26.3% of US aid on production in Israel, but the new memorandum phases out what the US calls “off-shore procurement” by the end of the decade, slowly for the first five years and then sharply after 2023. This year, Israel may spend less than 25% of the aid locally.
A Trump administration source said that Israel does not need to worry about military aid, saying that they feel the US gets an excellent return on its investment in Israeli defense. Putting money into Israel’s security means the US needs fewer troops on the ground in the Middle East, the source added.
The source said that even if there is a depression – which he did not anticipate – the US would still have to spend on defense, and Israel is its best investment in the Middle East.
Former ambassador to the US Michael Oren, who represented Israel in Washington from 2009-2013, thought that “people will be loath to cut aid [because] almost all of it – and in an increasing amount now – is spent in the US, which means tens of thousands of jobs.”
But at the same time, Oren said “I wouldn’t be counting on plus-ups now,” meaning additions to the regular MOU package.
More broadly, Oren said “it is axiomatic that a weakened US is a security danger for the State of Israel. We have an interest in a strong America; now it’s been weakened. We’ve been weakened, too – don’t know to what degree.”
SALLAI MERIDOR, Israel’s ambassador to the US in 2005-2009, recounted that during the 2008 recession, he opposed making any extra aid requests for two reasons.
The 2008 recession was one in which “the US was suffering more than Israel in relative terms. Even if there had been no [MOU] signed in 2007, I would have been against making special financial requests at the time, given the crisis,” he said.
In addition, Meridor argued that “we had just concluded a 10-year agreement on US security assistance for Israel and it was clear to us that we should honor the nature of the deal, which was that this was all we were getting. My position was that we should abide by the spirit of the agreement… Unrelated to the recession, I would have been opposed to any special requests.”
Meridor said he thinks both reasons stand today.
“Even if Israel is hurting, this is not the moment to ask the US for anything more in terms of financial assistance,” he argued. “The US is providing an unprecedented [stimulus] package to its citizens. This is not the time to ask for anything that would cost American taxpayers more.”
The former ambassador pointed out that the current global health crisis is unprecedented, and Israel has had to rely on help from countries other than the US to weather it.
“In terms of Israel’s defense, we always had hope, which was substantiated, that if we were lacking military equipment, the US is likely to supply it to Israel in order to help Israel defend itself,” Meridor recounted. “We never had a situation since the founding of Israel, in which Israel was at war and the US was at war and there was a shortage of equipment at the same time… It was always a situation where it was easy for the US to give, and it was a policy decision for the US.”
Now, though, countries need medical equipment and personal protective equipment, and there is a severe global shortage.
“Each country is giving first priority to serving its own people,” Meridor said. “As a result, we are getting help from China and India, which are much less committed to the well-being of Israel and cannot be compared at all with the US, but are better positioned to give supplies.
“It doesn’t mean their value as a strategic partner compares to the US, but it’s an odd circumstance,” he said.
Meridor expressed hope that, “even though we are in a moment where everybody is more focused inwards and their first priority is one’s own citizens… the US-Israel relationship is strong enough – and there is good reason to believe that this will not hurt it long-term.”