On U.S. Military Aid Phase-Out for Israel, Go Smartly — Not Quickly

The United States and Israel announced on June 5 the launch of formal negotiations to replace the existing U.S.-Israel memorandum of understanding (MOU), which provides the framework for the annual provision of U.S. military assistance to Israel. The start of negotiations follows comments by Israeli Prime Minister Benjamin Netanyahu calling for a phase-out of U.S. military assistance to Israel.

Israel’s Ministry of Defense said that new framework would focus on joint investment in research and development, co-production, and a “transition from aid to a completely reciprocal partnership.” In the new agreement, Jerusalem and Washington should maximize these opportunities while avoiding an overly ambitious military aid phase-out schedule.

American Assistance Is Instrumental to Israeli Military Prowess

The current U.S.-Israel MOU provides Israel $3.3 billion per year in foreign military financing (FMF) from 2019 to 2028, as well as $500 million annually for cooperative missile defense programs. FMF has been instrumental in helping Israel become the preeminent military power in the Middle East, often taking the fight to America’s adversaries in the region, including Iran and its proxies.

The United States and Israel demonstrated an extraordinary ability during the 40-day war with Iran to conduct combined military operations, with Israel striking thousands of Iranian targets, thereby reducing the burden on the U.S. military. That would have been impossible without aircraft such as the F-35 and F-15 that FMF helped Israel purchase.

Israel Has a Big Economy and Bigger Defense Bills

Israel’s economy has grown, and that has helped it afford to spend more on defense. The country’s 2026 budget included approximately $49 billion for defense, representing a roughly 6 percent increase compared to 2025. Twenty years ago, FMF amounted to approximately 30 percent of Israel’s defense budget. That proportion then declined, hovering around 15-20 percent for the last decade before reaching approximately 35 percent in 2024 due to supplemental U.S. funding after the October 7, 2023, Hamas attack on Israel. In the absence of another supplemental, the percentage is now on track to fall below 10 percent after Israel’s 2026 budget increased defense spending.

However, a complete or quick phase-out of FMF could leave Israel with insufficient resources to defend interests it shares with Washington and counter common adversaries. Jerusalem already spends around 7 percent of its GDP on defense, a proportion that far exceeds what any NATO member spends. With unresolved conflicts in Iran and Lebanon, maintaining high spending without U.S. assistance could prove politically difficult. Following the multifront war that began on October 7, Israel must spend tens of billions of dollars to replenish and expand its arsenal of air- and ground-launched munitions and air defense interceptors. Additionally, Israeli procurement plans have apparently already spoken for more than $20 billion in FMF for the 10-year period starting in FY 2029. Israel’s security needs will require dozens of expensive but essential aircraft, including KC-46 refueling aircraft and additional squadrons of F-15 and F-35 aircraft, while also addressing ground force shortcomings revealed on October 7.

Congress Should Demand an Annual Certification

As the United States and its democratic partners confront an Axis of Aggressors consisting of China, Russia, Iran, and North Korea, Washington needs militarily capable allies and partners in Europe, Asia, and the Middle East. Israel is America’s most motivated and capable ally in the Middle East. U.S. FMF has helped make that true, and a premature FMF phase-out, or one that ignores continued threats and important military requirements, could hurt Israel and undermine U.S. interests.

Accordingly, Congress should adopt legislation that requires the administration to certify in writing, as part of the annual budget process, that any proposed reduction in U.S. FMF for Israel for the next fiscal year is in America’s national security interests. Specifically, the administration should certify that any reduction does not deprive Israel of the resources it needs to defend our common security interests and carry an increasing share of the security burden in the Middle East.

Justin Leopold-Cohen is a senior research analyst of FDD’s Center on Military and Political Power (CMPP), where Bradley Bowman is senior director. RADM (Ret.) Mark Montgomery is senior director of the Center on Cyber and Technology Innovation at FDD. For more analysis from the authors and CMPP, please subscribe HERE. Follow Justin on X @jleopoldcohen and Bradley on X @Brad_L_Bowman. Follow FDD on X @FDD and @FDD_CMPP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.