When To Say Yes To $3.7 Billion
May 12, 2016 § 2 Comments
Yom Ha’atzmaut (Israel’s Independence Day) is always a good time to celebrate Israel’s accomplishments, which are numerous. One of the most important of those accomplishments is independence itself. I do not mean independence in the obvious sense of having an independent state, but in the sense of not being influenced or controlled by anyone else. Israelis – and Israel – famously go their own way, and this is often reflected in Israeli policy. Whether it was ultimately counterproductive or not, Israel fought tooth and nail against the Iran deal despite the views of its Western allies and well beyond the point when it was clear that the deal was a fait accompli. Israel has not hesitated to act in its own best interest in the face of global opposition, such as with the strike on the Osirak nuclear reactor in Iraq in 1981 or the development of its own nuclear program. It is difficult to look at Israeli security or domestic policy and view it as being influenced or controlled by other states or world opinion, both for the good and the bad.
Of course, Independence Day is also a good time to reflect on the ways in which Israel’s survival is guaranteed precisely because of its relationships with others, since no country – including global superpowers – can ever truly survive by going it alone. The most important of these is of course the relationship with the United States, and it too is something to be celebrated as an accomplishment. The U.S. has seen Israel through different prisms over nearly seven decades, from Harry Truman’s sense of supporting Israel as biblically mandated to Richard Nixon’s view of Israel as a bulwark against Communism in the Middle East to Bill Clinton’s deep affinity for and identification with Israeli values and spirit. That Israel has through all of this maintained and institutionalized the connection to the U.S. across all levels of government, fostered bonds between American and Israeli society, intertwined the American and Israeli economies, and built a relationship with the U.S. that has withstood many trials and bumps and remained not only resilient but one of the strongest bilateral partnerships that exists is remarkable (and if you think this all exists solely because of a shadowy and nefarious lobbying campaign, you have some serious blind spots, to put it charitably).
One of the hallmarks of this relationship is currently in danger, and it is the annual military assistance that the U.S. provides to Israel. The current aid package is a ten year agreement that was signed in August 2007 and provides $3 billion per year, which is about 20% of Israel’s annual defense spending. While some, including Naftali Bennett and Elliott Abrams, have cogently argued that it would be best for Israel if military aid was to be reduced or even eliminated entirely, needless to say the defense assistance is currently a vital component of Israel’s security and contingency planning, and ensures Israel’s military primacy in the Middle East. Aside from shoring up the U.S.’s key military ally in the world’s most turbulent region, another benefit to the U.S. from this aid package is that the bulk of the funds are spent at home, providing an important stimulus to the American economy. As the current MOU is about to expire, the U.S. and Israel have been negotiating the next one and have run into a number of snags. While the two sides appear to be apart over the issue of the overall number – Israel was initially seeking as much as $4.5 billion annually and the U.S. is reportedly holding the line at $3.7 billion – the actual hang-up is in the details. The current MOU allows Israel to spend 26.3% of the funds on Israeli-made equipment rather than spending the entirety in the U.S., which is not a component of U.S. military assistance to any other country, and it also allows Israel to spend $400 million per year on gasoline. Reuters reported last week that the U.S. wants to eliminate both of these clauses going forward, and Israel so far has been reluctant to agree to these terms, arguing that to remove the nearly $800 million that is spent annually on the Israeli defense industry will fatally cripple it.
I have already made apparent my view that refusing to negotiate on the military aid package during the Iran deal debate, when Israel still had some leverage, was an epic strategic blunder on Prime Minister Netanyahu’s part, so there is no need to rehash the point. What is taking place now is also a bad misreading of the political environment, and Israel is again making a critical mistake. The reason for the 26.3% carve out in the last MOU was to give the Israeli defense industry a boost, as Israel has always viewed a strong homegrown defense technology and manufacturing sector as critical to Israeli security. The boost worked well; so well, in fact, that U.S. arms manufacturers are now competing with Israeli ones in the market for advanced weapons, particularly when it comes to drones and other aerial technology. It is now an election year in the U.S., at a time when people are worried about the uneven economic recovery and particularly about manufacturing jobs. Donald Trump and Bernie Sanders have both injected an enormous dose of economic populism into the national conversation, not to mention Trump’s ugly “America First” nationalism. Israel is already requesting a substantial increase in military assistance at a time when budget sequestration is still in effect in the U.S. and its own defense spending is being cut back. This seems like a particularly bad time to make a stand against American negotiators and members of Congress over an issue that will affect U.S. jobs, especially when it involves an industry where Israeli companies and American companies are directly competing. Imagine trying to convince a Republican congressman in Texas or South Carolina or Georgia that it is more important to maintain the 26.3% exception than it is to save jobs in his or her district, and you’ll see the limits of pro-Israel advocacy firsthand. This is also not an issue that will go away once the White House changes hands, as the fundamental disagreement here is not going to evaporate. It is entirely appropriate for Israel to make the case for higher levels of aid given the changed strategic regional environment it faces since the last agreement was negotiated, and this is particularly true when it comes to missile defense. The 26.3% carve out is, however, not quite as defensible, and Israel should not view it as a core benefit that is being taken away but as an added bonus that it enjoyed during a different economic era.
Israel’s security is not an issue that can be compromised. Were I advising the Israeli government, I would urge it to smile and say thank you to the American government for the generous and unprecedented offer on the table, and to find other ways to prop up Israeli defense firms. Whatever the final package turns out to be, make sure that it lives up to Israel’s security needs, and don’t spurn an offer hoping that a better one is around the corner. That mistake happened once before. It shouldn’t be repeated.