September 14, 2016 | Policy Brief

With MOU, U.S. and Israel Cement Strategic Relationship for Next Decade

The United States and Israel signed a new 10-year Memorandum of Understanding (MOU) today, capping almost a year of negotiations for a new security assistance agreement. The military aid package, which will begin in 2019, is the largest to any nation in U.S. history, totaling $38 billion over the next decade.

The current 10-year MOU was formalized under President George W. Bush and expires in 2018. The new memorandum is intended to give Israel a further technological edge against all potential adversaries, and to help Israeli war planners prepare for long-term and short-term threats in the world’s most volatile region.

The current round of MOU negotiations, which began in November 2015, was reportedly characterized by tough negotiations, with a number of disagreements over changes from the previous MOU.

One point of divergence was over the overall amount of the package, as Israel had hoped for a significant increase in the total annual defense aid. While the administration is offering an increase of over 20 percent, this amount includes funding for missile defense, which has traditionally been added on by Congress.

Another point of friction was the option of Offshore Procurement (OSP), which allowed Israel to spend roughly a quarter of the money in Israel. OSP will be phased out over the first six years of the MOU, allowing for the Israeli industry to adjust to the change.

Finally, Israel will be prohibited from asking Congress for additional funds. In the past, Congress has added substantial sums above the administration’s requested package. This restriction raises concerns that Jerusalem will not be able to approach Congress to address emerging threats, although the MOU reportedly includes a clause allowing for exceptions during times of significant conflict or a national emergency.

On balance, under the memorandum, the Israeli Ministry of Defense achieves greater budget certainty, knowing it will be guaranteed multi-year outlays. This allows for the implementation of the IDF’s five-year plan, the so-called Gideon Plan, which has been a long-term priority for the Ministries of Defense and Finance.

This new package is particularly important in the wake of the Iran nuclear deal. With the conventional arms embargo against Tehran expected to end in four years, the need for Israel to maintain its qualitative military edge takes on new urgency. And despite Israel’s objections to the deal, the MOU is tangible evidence that a strong U.S.-Israel strategic relationship is an enduring one.

John Cappello, a former B-1B pilot and Air Force Attaché to the U.S. Embassy in Israel, is a senior fellow at the Foundation for Defense of Democracies.