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The new US-Israel ten year MOU on military aid

Sep 22, 2016

Update from AIJAC

Sept. 22, 2016

Update 09/16 #04

This Update looks at the provisions and implications of a new Israel-US “Memorandum of Understanding” (MOU) which will guide US military aid to Israel for the fiscal years 2019-2028, signed last Wednesday, and provides for US$3.8 billion per year over that period.

It leads with a good general news analysis of the significance of its provisions from Ron Kampeas, Washington correspondent for the Jewish Telegraphic Agency. Kampeas says the MOU’s provisions can be understood as a message from outgoing US President Obama to Israel, namely, “I have your back, but on my terms.” Kampeas particularly concentrates on the provisions of the deal which attempt to exclude the US Congress from any future role in deciding military aid to Israel, and the protests this has sparked from Congressional Republicans. For this introduction to the deal’s provisions and their likely consequences, CLICK HERE

Next up is a more detailed examination of each of the key provisions of the MOU from BICOM (the British-Israel Communications and Research Centre). Four particular changes are scrutinised: the limits on Congressional involvement in funding, the permanent funding for missile defence, the ongoing guarantee of Israeli “qualitative military edge” in the region; and especially the phasing out of a previous arrangement allowing Israel to use a percentage of its US military aid to buy Israeli-produced defence equipment rather than solely from US suppliers, as is traditional with US military aid. The backgrounder also looks at what has changed since the last Israel-US MOU was signed in 2007, the disagreements in the negotiating process, and the messages this very public deal is intended to send. For all the details, CLICK HERE. Another good overall evaluation of the MOUs terms and implications comes from Washington Institute expert David Makovksy.

Finally, we include a more critical evaluation of the new MOU from Elliot Abrams, a former senior US official in the last US Administration. He argues, money-wise, the deal does not amount to increase in real aid, and that the provisions removing any Congressional role in funding and any concessions to allow Israel to spend the money on its domestic defence industry are a step backward. He argues that the next US President and Congress should ignore these elements of the agreement – just as the Obama Administration chose to ignore non-legally binding agreements reached between the Bush Administration and Israel on settlements. For his complete argument, CLICK HERE. A contrasting view to Abrams’ comes from Israeli academic Prof. Abraham Ben-Zvi, whio argues that the positive features of the deal far outweigh the potential weak spots in it. More on the deal comes from senior Israeli strategic expert Gen. Yaakov Amidror – who is due to visit Australia later this year.

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Article 1

Obama’s $38B aid package to Israel comes with caveats: It’s generous, but on his terms

By Ron Kampeas

JTA, September 14, 2016 5:53pm

Jacob Nagel, left, Israel’s acting national security adviser, signing a Memorandum of Understanding for $38 billion of U.S. defense assistance over 10 years with Undersecretary of State Tom Shannon, Sept. 14, 2016. (Embassy of Israel)

WASHINGTON (JTA) – President Barack Obama’s near parting gift to Israel, a guarantee of $38 billion in defense assistance over a decade, distills into a single document what he’s been saying throughout eight fraught years: I have your back, but on my terms.

The agreement signed Wednesday in the State Department’s Treaty Room here increases assistance for Israel over the prior Memorandum of Understanding signed in 2007 under the George W. Bush administration and guaranteeing Israel $31 billion over 10 years.

But it also substantially shrinks the role Congress plays in a critical forum shaping U.S.-Israel relations, defense assistance, and in so doing diminishes the influence of the mainstream pro-Israel community, a sector that at times has been an irritant to Obama.

Wrapped into the $38 billion memorandum is $5 billion in missile defense funding, with clauses placing tough restrictions on Israel’s ability to ask for supplements from Congress.

Under Obama and Bush, that’s been an arena where the pro-Israel lobby has flexed its muscle over the last decade or so, consistently asking Congress for multiples of the missile defense appropriations requested by each president – and getting it.

“The MOU as it’s constructed seems to obviate the need for Congress’ traditional role in recent years,” said Jonathan Schanzer, the vice president of the Foundation for Defense of Democracies. “What this means is that the relationship between Congress and Israel will have to evolve. Members of Congress feel they are being pushed out of a role that they relish.”

Democrats in Congress praised the deal unequivocally, but Republicans had caveats.

Rep. Ileana Ros-Lehtinen, R-Fla., the chairwoman of the U.S. House of Representatives subcommittee for the Middle East, led passage of a congressional resolution urging an extension of the defense assistance – coincidentally, just hours after the sides announced a deal was in the offing on Monday. Ros-Lehtinen said she intended to subject the agreement to congressional scrutiny.

“It is important for Congress to conduct its oversight authority and examine the MOU closely in order to ensure that this agreement is mutually beneficial and meets the needs of both the U.S. and Israel,” she said in a statement.

Sen. Lindsey Graham, R-S.C., the chairman of the Senate Appropriations Committee’s subcommittee dispensing foreign aid, was infuriated by the arrangement.

“We can’t have the executive branch dictating what the legislative branch will do for a decade based on an agreement we are not a party to,” he told The Washington Post this week, and pledged to push more funds for Israel through Congress.

Jacob Nagel, the acting Israeli national security adviser who led talks ahead of the agreement, told reporters on Wednesday, before the formal signing, that the Israelis had asked Graham to back off.

“Senator Graham is one of the greatest supporters of Israel in Congress,” he said. “But everyone who spoke with him” on Israel’s team in the talks “said it was not a good idea – Israel is a country that honors its agreements.”

Indeed, written into the agreement is Israel’s pledge to return to the U.S. government any extra monies that Congress approves on top of the memorandum before it kicks in, October 2018. There is an exception for requests for emergency assistance in the event of “major conflicts,” and Nagel noted that the Obama administration has provided such additional assistance quickly.

There are other rollbacks in the deal demanded by Obama and his team, headed by Susan Rice, the national security adviser. Israel is currently the only country allowed to spend some of its defense assistance – up to 26 percent – on its own defense industries. That will be phased to zero by the end of the agreement, and all funding will be spent on U.S. suppliers and contractors.

Obama resented having to deal with intercessors in Congress and in parts of the pro-Israel community over his two terms when he clashed with Israel on critical issues like Israeli-Palestinian peace and the Iran nuclear deal.

Pitching the Iran deal in an August 2015 speech at American University, he referred derisively to critics who called the deal a “historic mistake,” assailing their “credibility.” Republicans in Congress and officials at the pro-Israel lobby AIPAC understood that they were the targets.

Those wounds were not entirely healed, as evidenced by Rice’s comments at the signing. The memorandum, the Iran deal and the 2013-14 Obama administration push for an Israeli-Palestinian peace deal were all part of the same commitment “to Israel’s security over the long term,” Rice said. Left unsaid was how unhappy Israel was with both initiatives.

Just months before Obama leaves office, the memorandum narrows the spectrum of the U.S.-Israel relationship to the two countries’ executive branches, a posture that could benefit Hillary Clinton, whom Obama hopes will succeed him as president. Clinton’s presidential campaign praised the deal.

“The agreement will help solidify and chart a course for the U.S.-Israeli defense relationship in the 21st century as we face a range of common challenges, from Iran’s destabilizing activities to the threats from ISIS and radical jihadism, and efforts to delegitimize Israel on the world stage,” the campaign’s statement said.

A JTA request for comment on the memorandum from the campaign of Donald Trump, the Republican presidential nominee, was not answered.

Ron Dermer, the Israeli ambassador to Washington who helped shape the agreement, said Obama’s imprimatur made it clear that the relationship had the backing of the U.S. political spectrum following two years of tensions between the government of Prime Minister Benjamin Netanyahu and the Obama administration.

“It shows that the strength of the relationship is in being able to weather disagreements,” Dermer said.

Alan Solow, a longtime Obama backer and a past chairman of the Conference of Presidents of Major American Jewish Organizations, said the deal should make it clear that Obama, contra his critics, always valued the relationship and the strategic assets Israel brought to it.

“This shows why making Iran a litmus test was wrong,” Solow said in an interview. “Here you have a prime minister and a president who disagreed quite strongly on the correctness and impact of the Iran deal, and yet they are able to reach a highly significant historical agreement on U.S.aid and Israel’s security.”

The group that was at the forefront of the Iran battle, the American Israel Public Affairs Committee, lauded the agreement.

“We commend President Obama and his administration for forging this landmark agreement,” AIPAC said. “It demonstrates America’s strong and unwavering commitment to Israel.”

Jonathan Greenblatt, the Anti-Defamation League CEO who attended the signing, said the stability of the agreement in a volatile Middle East outweighed whatever political price pro-Israel groups might pay.

“We have surging Islamic radicalism, we have an expansionist and hostile Iran,” he said. “We have a degree of dislocation and suffering we haven’t seen since the Second World War. Rather than try to game this, who’s up who’s down, who’s in, who’s out, what’s important is that this locks down a commitment that will persist not just with this administration, but the next one and the administration after that.”


Article 2

BICOM Briefing:New ten-year US-Israel Memorandum of Understanding

BICOM, September 2016


  • The United States and Israel have maintained a strong relationship for decades, based on a host of factors including a mutual commitment to democratic values and shared strategic goals for the region. US bilateral military aid to Israel is seen by both countries as an integral component of the relationship and of the US commitment to Israel’s security and is considered by many in Israel as vital to the country’s security.
  • The MOU between the United States and Israel, of which US military assistance is a key component, is required to be renewed every ten years. With the signing of their first ten- year MOU on security cooperation between Israel and the US in 1998, whereby the US committed to providing Israel with US$23bn in security assistance, several arrangements unique to Israel were introduced, including the practice whereby US assistance is typically dispersed to Israel within the first 30 days of the fiscal year. In addition, Israel is the only country that is permitted to utilise the cash flow to finance US arms purchases, and to negotiate arms deals directly with US defence suppliers, leveraging the financing coming from future aid payments.
  •  In addition to the ten-year bilateral military assistance agreements, supplementary funding has been available to Israel, in particular, related to congressional appropriations for bilateral missile defence programmes, as well as emergency assistance.

Israeli Chief of Staff Benny Gantz and his American counterpart Gen. Martin Dempsey in 2014: The agreement signals that the US-Israel security relationship remains “bulletproof”

Ten years on: what has changed?

Israel’s changing security environment: When the negotiations picked up in earnest in late 2015, the Israeli media reported that Israel entered the negotiations for the new MOU requesting US$50bn over ten years. The demand for increasing assistance was based on several factors, most notably, the belief that in the wake of the Iranian nuclear agreement, Israel needs to prepare militarily for the future, when key provisions on centrifuges and enrichment expire, as well as for the possibility that the deal falls apart beforehand.

Moreover, Israel remains concerned that as international sanctions on Iran are lifted (initial reports suggested that the lifting of sanctions would give Iran access to US$50bn in frozen assets), the influx of cash to Iran may find its way to the hands of Iran’s proxies, including Hezbollah and the Palestinian Islamic Jihad – a concern which has been acknowledged by the Obama administration. Other factors that compelled Israel to request an increase in military assistance include the increase in US military sales to Sunni Arab countries – to assuage their concerns with respect to the Iranian nuclear agreement – as well as the ongoing conflict in Syria and the growing presence of violent non-state actors on Israel’s northern and southern borders.

The state of the US economy: When the Bush administration negotiated the last military aid package between the US and Israel in 2007, the US government agreed to raise the annual Foreign Military Financing (FMF) grant to US$3.1bn, through to fiscal year 2018. The current negotiations, however, have occurred in the wake of a global economic downturn, and amid calls from many in the US demanding that the government curb foreign spending, and implement deficit reduction. Yet despite the economic downturn in the US and the global economy, the new MOU of US$3.8bn per year will be the largest aid package ever allocated by the US, and Israel will remain the top recipient of US foreign aid and security assistance.

Disagreements during the negotiations

  • Immediately after the signing of the Iranian nuclear agreement, US president Obama offered additional military assistance to Israel, and expressed a willingness to swiftly conclude negotiations for the new MOU that would take into account Israel’s concerns related to the deal. At the time, reports suggested that the administration was prepared to increase the annual FMF grant, with some reports indicating the president was willing to sign off on an aid package that would amount to somewhere between US$4bn and US$5bn in annual assistance. However, disappointed by the terms of the Iran deal, Prime Minister Netanyahu rejected the administration’s offer, a move that has been subsequently criticised by former Israeli security officials. Netanyahu further angered the Obama administration in February 2016 when he suggested that his government might opt to withhold signing the aid package until after Obama left office, indicating that the terms Israel would receive might be better under the next administration.
  • On April 25, a bipartisan group comprised of 83 US Senators signed a public letter in support of signing a “robust new MOU” that “increases aid while retaining the current terms of our existing aid programme”. The White House publicly rejected the letter, and this prompted Netanyahu to reach out to the Obama administration, through a private backchannel, to distance the Prime Minister’s office from the Senate letter. While the negotiations were reportedly concluded in August, news broke on September 12 that the announcement was being held up by US Senator Lindsey Graham (R.-S.C.). The White House was troubled by the fact that Graham, in his role as chairman of the Senate subcommittee overseeing the foreign affairs budget appeared to be working to undermine the administration’s negotiations with their Israeli counterparts, by marking up an appropriations bill that would provide funds to Israel exceeding what the administration was offering. It remains unclear whether the administration’s disagreement with Graham had been resolved when the deal was announced on September 13.
  • Developments in US domestic politics may have led the Prime Minister to decide to complete the negotiations and sign a deal during Obama’s tenure. Thus far in the election cycle, the Republican Party’s nominee for president, Donald Trump, has sent mixed messages with respect to what a Trump administration’s policy would be with respect to Israel. While he has publicly affirmed the importance of the US-Israel relationship he has also demonstrated isolationist tendencies and suggested that US allies would have to pay their share in exchange for American support. Meanwhile, the Democratic presidential candidate Hillary Clinton is unlikely to offer more than her predecessor. For Netanyahu, signing the deal before the end of Obama’s tenure in office may also be an attempt to silence his domestic critics, who have repeatedly claimed that he has mismanaged the US-Israel relationship.


What does it mean? Key components of the deal

Maintaining Israel’s Qualitative Military Edge (QME): Since the 1970s, the US has pledged to assist Israel with maintaining its QME over neighbouring countries and this commitment on the part of the US remains unchanged, evidenced by the administration’s willingness to sign a new MOU with Israel at an increase of around US US$10bn over the decade, as well as by the fact that the Obama administration has, over the years, provided more aid funding and security assistance than his predecessors. Apart from executive actions, Congress too has taken steps to reaffirm the US commitment to Israel’s security. Aside from fulfilling annual requests for supplemental funding and providing emergency assistance to Israel during 2014’s Operation Protective Edge, in 2012, Congress passed the United States- Israel Enhanced Security Cooperation Act, which reaffirmed the commitment of the US to maintaining Israel’s QME.

Advancing joint programmes: For the first time, the new FMF grant incorporates funding for missile defence, allocating nearly US$500m to be spent in Israel on cooperative missile defence programmes such as Iron Dome, the new anti- tunnel initiative, and a host of other pre-agreed joint Israeli-American programmes. Previously, funding for missile defence was allocated on an ad hoc basis by Congress.

Foregoing supplemental funding via Congress: Two key provisions promoted by the Obama administration contributed to prolonging the negotiation process. The first is the requirement that Israel forego – barring an extreme emergency – lobbying Congress to request supplemental funding. According to one estimate, supplemental funding provided to Israel since the start of the last MOU in fiscal year 2009 exceeds US$1.9bn in Pentagon budget requests. This includes the allocation of US$40m for a joint US-Israel tunnel detection programme, as well as US$487m for joint missile defence programmes. The latter earmark was part of an omnibus spending bill passed by the US Congress in December 2015.

Phasing out the Off-shore Procurement Policy (OSP): The second source of disagreement relates to the phasing out of the OSP. The policy, established in the late 1980s and unique to Israel, allowed the Israeli government to allocate 26.3 per cent of its annual FMF grant to be spent on procurement from Israeli (rather than American) defence companies. In effect the OSP acted as a subsidy to Israel’s now robust defence industry, placing it on par with that of the US. Per the terms of the new MOU, the parties have agreed to a gradual phasing out of the OSP, over a six-year period, beginning in 2020.

The US Administration maintains that while the OSP was initially established under the Reagan Administration to subsidise the Lavi project – a US funded Israeli air force programme that was terminated 30 years ago – it was never intended to be an open-ended entitlement programme. At present, the policy’s terms, combined with allowances for Israel’s spending on fuel for its air force, allow for nearly 38.7 per cent of the military aid (US$1.2bn annually) to be spent in Israel rather than on US material. During the negotiations for the new MOU, Netanyahu agreed to end the provision regarding using US FMF funds for military fuel purchases.

The gradual phasing out of the OSP would bring US assistance to Israel in line with similar arrangements with other countries, wherein the money would now have to be spent in the US. However, in the wake of reports that the new FMF will result in a loss of funding for local research, development and procurement, the Israeli defence industry is bracing for massive layoffs while concern exists that phasing out the OSP may ultimately impair Israel’s ability to maintain its QME.

The continuing importance of Israel-US Relations

  • While the newly signed agreement is scheduled to come into effect in fiscal year 2018, concluding the agreement before the end of the Obama administration reaffirms the importance of the US-Israel relationship for both countries. First, it will prevent the issue of US military assistance to Israel from  becoming a political football – one that either government can exercise to mobilise domestic supporters during election period. Second, while recent polling data suggests that support for Israel among certain segments of the American population is slipping, the signing of a ten-year military assistance agreement by a liberal US president would indicate that US- Israeli security cooperation remains, as one analyst recently noted, “bulletproof”.
  • Signing the agreement before the end of the Obama administration also sends a strong message to detractors that while the two leaders may not have a strong personal relationship, the US government continues to view its relationship with Israel as a strategic priority.


Article 3


‘Historic’ in the Worst Way

By Elliott Abrams

President Obama and his defenders are trumpeting the new aid agreement with Israel as proof that he is the best friend Israel ever had in the White House. In fact, it’s a bad deal and should be treated the same way Obama treated prior agreements he didn’t like: It should be forgotten by the next president. The White House may be saying this is the greatest deal ever, but in Israel many observers are saying that Obama did no favors for the Jewish state. That’s the conclusion Israeli journalists have all reached. They’re right.

The current aid agreement is for $3.1 billion a year. The new one is for $3.8 billion, but the increase is almost entirely illusory. Congress already appropriates hundreds of millions of dollars beyond the base $3.1 billion level for Israel’s missile defense, so the current aid level is actually about $3.5 billion. That means the total increase is roughly $300 million a year. But given inflation in the costs of military items, and the greater threat to Israel due to Obama’s Iran nuclear deal, the net result is at best continuation of the current aid agreement.

But Obama imposed two additional conditions that had never existed before and are absent in the aid agreement George W. Bush made with Israel in 2007. First, Israel must spend every dime in the United States after a phase-in period, meaning it cannot use the funds to purchase any military equipment made in Israel. Second, Israel has agreed that it will not go to Congress to seek additional funding under any circumstances.

The latter condition is a big deal and is why Sen. Lindsey Graham is so opposed to what Obama has wrought. It’s “not binding on the Congress,” he said this week. “I’m offended that the administration would try to take over the appropriations process. If they don’t like what I’m doing, they can veto the bill. We can’t have the executive branch dictating what the legislative branch will do for a decade based on an agreement we are not a party to.” And Speaker Paul Ryan’s spokeswoman said, “We will continue to appropriate the funds that we determine are necessary to meet the needs of our shared security interests in the Middle East.”

There is another condition in this agreement that is more absurd, and belies Obama’s claims of deepest friendship for the Jewish state. As the price for concluding the deal, Obama forced Israel to agree that if Congress appropriates additional funds in 2017 or 2018, Israel will not accept the aid and will return the money. This is a first in American history and constitutes a deliberate undermining of the constitutional power of Congress to determine foreign aid levels.

The agreement has been signed, and presumably Prime Minister Benjamin Netanyahu concluded he was better taking this from Obama now than seeing a long period of uncertainty as a new administration got to work next year. But what is this “agreement”? It isn’t a treaty, and Congress had no role in it whatsoever. As Ryan’s aide said, nothing stops Congress from appropriating what it thinks proper in future years—with Obama’s conditions or without them.

What to do? Obama has shown us the way forward. On April 14, 2004, Israeli prime minister Ariel Sharon and President George W. Bush exchanged letters in which each made pledges to the other. It was a bargained-for exchange where the United States provided support for Sharon’s decision to get out of Gaza. As part of that exchange, Israel and the United States reached an agreement on the hot topic of settlement expansion. Sharon agreed he would create no new settlements and provide Israelis with no financial inducements to move to a settlement. New construction in settlements would be within already-built-up areas and settlements would expand in population but not in land area. Sharon referred publicly to these commitments over and over again: They were clear. And the American commitments were equally clear: On Aug. 21, 2004, the New York Times reported that “the Bush administration .  .  . now supports construction of new apartments in areas already built up in some settlements, as long as the expansion does not extend outward.”

Bush and Sharon in 2004: The Obama Administration treated their deal on settlements as non-binding on their successors and “That’s precisely the way future administrations should treat this Obama-Netanyahu deal”  Abrams argues.

And after Bush and Sharon exchanged these commitments, Congress weighed in: In June 2004 the House voted 407 to 9 to approve House Concurrent Resolution 460, which said that Congress “strongly endorses the principles articulated by President Bush in his letter dated April 14, 2004, to Israeli Prime Minister Ariel Sharon.”

The Obama administration simply ignored the letters. They were treated as at best a private, personal exchange between two men. Bush was after all gone, and so was Sharon, and of course the conditions were not binding in the sense that a treaty is. That’s precisely the way future administrations should treat this Obama-Netanyahu deal: binding on the two men, perhaps, but not on the two countries.

Consider the alternative: A senator or congressman visits Israel in 2017 or 2020 and says to its minister of defense or IDF chief of staff, “Do you have the funding you need for program X, given the changes in Syria and the way Hezbollah is building up and how Iran is acting?” And the Israelis are supposed to reply, “I can’t talk to you about that; I’m not allowed to speak to Congress about anything related to funds.” It’s absurd and constitutes an unacceptable interference with the ability of Congress to do its critical appropriations work.

So despite the way the White House is applauding itself, this deal is no cause for celebration. It should be seen as the best Obama could bring himself to do, but not as an agreement binding for a decade on Israel, the United States—and above all on Congress, whose only role was to read about it in the newspapers. The effort to prevent communications between Israel and Congress on funding matters should be understood as just another Obama usurpation of congressional prerogatives and disregarded after January 20, 2017.




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