U.S. foreign aid to Israel: 2014 congressional report

Last updated: March 2, 2015

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The 2015 visit of Israeli prime minister Benjamin Netanyahu to address a joint session of Congress has opened up a rare split in the relations between the United States and Israel, its strongest ally in the Middle East. On its surface, the issue appears to be purely political: Netanyahu was invited by House Speaker John Boehner without consultation of the White House, an apparent violation of protocol. While Netanyahu intends to address what he says is the growing threat from Iran, President Obama expressed concerns that the visit could be an attempt to influence the upcoming election in Israel, and will not meet with the prime minister.
Still, if the past is any judge, U.S.-Israel relations will recover. Since it was founded in 1948, Israel has become the largest single recipient of U.S foreign assistance — a total of $121 billion, almost all of which has been in the form of military assistance. A 2014 report by the Congressional Research Service, “U.S. Foreign Aid to Israel,” highlights this historical support for Israel, as well as the current appropriations of defense funding and the key areas of military collaboration. (The report is an update of the 2012 edition, available here.)
The 2014 report’s findings include:

• In 2007 the Bush Administration established a 10-year, $30 billion Israeli military aid package for fiscal years 2009 through 2018. The Obama Administration budgets have held true to this commitment, with $3.1 billion allocated for FY2014 and the same amount requested for FY2015.
• This FY2015 foreign military financing (FMF) level would constitute roughly 55% of the United States’ total FMF funding worldwide and would finance 23% to 25% of the overall Israeli defense budget — percentages that clearly demonstrate the U.S. commitment to Israeli security and Israel’s dependence on U.S. support.
• Since 2008 Congress has required the executive branch to submit biennial reports on “maintaining Israel’s Qualitative Military Edge (QME) over neighboring militaries.” The report states that “the rationale for QME is that Israel must rely on better equipment and training to compensate for being much smaller geographically and in terms of population than its potential adversaries.”
• In addition to the $3.1 billion in FY2015 funding, the Obama Administration also requested $96.8 million for joint US-Israeli programs and $175.9 million for Iron Dome, Israel’s short-range anti-rocket system. This funding is provided in regular U.S. defense authorization and appropriations bills and does not formally constitute direct bilateral aid.
• The Iron Dome system has cumulatively received more than $704 million in U.S. financial support, with an additional $235.3 million appropriated in the FY2014 appropriations act and the $175.9 requested for FY2015. The U.S. has also assisted with the development of Israel’s David’s Sling long-range missile defense system, and since 1990, has contributed $2.365 billion to the Arrow Anti-Missile System, just under half of the program’s total cost.
• Up to 26.3% ($815.3 million in FY2014) of U.S. FMF to Israel may be used for procurement from Israeli defense companies, enabling Israel to build a domestic defense industry that ranks in the top 10 of arms suppliers worldwide. No other recipient of U.S. military assistance is granted this benefit.
• U.S. support isn’t limited to monetary gestures either. In 2008, the U.S. began the deployment of the X-Band Radar system on Israeli soil; an operation that remains U.S. owned and is staffed by U.S. troops. Not only is the X-Band system “far more capable of detecting incoming missiles than Israel’s natively produced radar system, but the United States has linked the X-Band to its global network of satellites in the U.S. Defense Support System.”
• The U.S. Defense Department also stores military supplies on Israeli bases in preparation for combat, and if needed, Israeli forces can request use of these supplies from the U.S. government in times of emergency, as happened in the 2006 conflict with Hezbollah. The value of the U.S. materiel stored in Israel increased to $800 million in 2010, with Congressional approval for up to $1.2 billion.
• The United States and Israel announced in 2010 that Israel will use $2.75 billion in FMF grants to purchase 19 F-35 Joint Strike Fighters. Originally expected to be delivered in 2015, the aircraft are now projected for a 2016-2017 delivery date. An advanced but extremely expensive aircraft, the F-35 has experienced technical and budgetary troublesfor more than a decade.

The United States also provides Israel with financial assistance not related to defense. This includes:

• Since 1973 Israel has received annual grants from the State Department’s Migration and Refugee Assistance program to assist with the resettlement of migrants in Israel. Funding levels, which were at $60 million annually as recently as 2003, have decreased in recent years, with FY2014 at $15 million and the Obama Administration requesting $10 million for FY2015.
• In 2003 Israel received $9 billion in loan guarantees over three years for economic recovery. The law authorizing the guarantees stated that they could only be used within Israel’s borders prior to June 5, 1967. The U.S. Department of State later reduced the FY2003 loans by nearly $290 million because Israel continued the construction of settlements in the occupied territories and other actions. In FY2005 the available funds were cut by nearly $800 million, and Israel has not borrowed any funds since that year.
• In 2012 Congress passed and the president signed a bill extending the loan-guarantee program until September 2015. “As of 2014, Israel is still authorized to issue up to $3.8 billion in U.S.-backed bonds. In general, Israel may view U.S. loan guarantees as a ‘last resort’ option, which its treasury could use if unguaranteed local and international bond issuances become too expensive.”