US, Israel sign largest-ever military aid agreement

Barack Obama and Benjamin Netanyahu

The amount allowable for procurement in Israel will be decreased gradually each year, with the axe falling in force in the seventh year.

After a long series of intensive discussions following President Barack Obama's visit to Israel three years ago, the US and Israel yesterday signed a memorandum of understanding that will serve as a legal basis for a new US aid package.

The package is the largest ever granted by the US to a foreign country - $38 billion over 10 years, or $3.8 billion a year. $33 billion of the package can be used only for military procurement in the US, and $5 billion is for development of anti-missile defense systems.

Acting Israel National Security Council head Yaakov Nagel and US Undersecretary of State for Political Affairs and Thomas Shannon signed the agreement at a ceremony in the US State Department Treaty Room in Washington attended by US National Security Advisor Susan Rice and Israeli Ambassador to the US Ron Dermer.

In a short speech, Rice stated that no administration had done as much for Israel as the Obama administration, saying, "Since the day he took office, President Obama has consistently provided Israel with all of the support it needs to defend itself in a dangerous neighborhood. Over the past eight years, the United States has provided Israel with almost $24 billion in military aid." She emphasized that the memorandum of understanding gave Israel the security, certainty, and stability of a signed written document, without negotiating with the US executive and legislative branches of government.

Rice noted that the new aid package was significantly larger than the current package, and would guarantee Israel all the support it needed to defend itself and maintain the IDF's qualitative edge.

"At a time when were tightening our belts across the board, with the harmful sequestration spending cuts set to return in just a couple years, this MOU nonetheless greatly increases our military assistance commitment to Israel. And thats not an accident. Its a reminder of the United States unshakeable commitment to Israels security," Rice remarked.

Rice added, "Finally, Ill note that this MOU is not just good for Israel, its good for the United States. Our security is linked. When allies and partners like Israel are more secure, the United States is more secure. Moreover, our Israeli friends will be able to buy more of the advanced capabilities produced by the United States, which will support American jobs. Like so many aspects of the U.S.-Israeli relationship, this MOU is a win-win."

Rice declared, "we also remain committed to Israels security over the long term, and thats why weve worked with our international partners to achieve an Iran nuclear deal that has closed off every one of Irans paths to obtaining a nuclear weapon, which we will continue to vigorously enforce. Thats also why we continue to press for a resolution to the Israeli-Palestinian conflict - two states for two peoples living side by side in peace and security. As the President has said, the only way for Israel to endure and thrive as a Jewish and democratic state is through the realization of an independent and viable Palestinian state."

"For as long as the state of Israel has existed, the United States has been Israels greatest friend and partner. That ironclad bond has endured ldor vdor - from generation to generation - across parties and administrations," Rice stated. She also said that President Obama and she were praying for former Israeli Prime Minister and President Shimon Peres, who "quite literally helped build the state of Israel," and who she said had been one of the architects of relations between Jerusalem and Washington.

In his speech, Nagel thanked President Obama and his administration, and especially Rice and Yael Lampert, who had headed the US team in the negotiations over the new aid package.

In a press briefing for Israeli reporters before the ceremony, Nagel said that Israel could not have hoped for a better agreement, in view of the US budgetary limitations. "I believe that what we received today was the maximum we could have obtained, given the state of the US economy. Maybe, and that is also doubtful, we could have gotten another $100 million - not more than that. He emphasized that there was almost "nothing negative in the new memoradum."

In response to criticism in Israel that a larger aid package could have been obtained had the negotiations taken place and been concluded during the negotiations between Washington and Iran over the nuclear agreement, Nagel said, "We would not have obtained a better agreement, even had we closed the deal when the US was bargaining with the Iranians. At no point before or after the signing of the nuclear agreement did US representatives mention a figure larger than $3.8 billion a year. That is a fact."

"I feel that a circle has been closed that, that we have attained an extremely important accomplishment," Nagel added. "Anyone who thinks he could have gotten more is invited to make the next agreement."

Dermer, who took part in the press briefing, noted the importance of signing the agreement with the Obama administration. He said that it showed that it was possible to argue with a president without affecting the soundness of relations between the two countries.

Nagel rejected the argument made in Israel that development work in Israeli defense industries would be negatively affected by the elimination of the existing procedure in which the Ministry of Defense had the right to spend 26% of US aid on Israeli defense industries. "Not even one shekel from the allocation for defense industries was spent on development work. It was used for procurement of products, and that only after approval from the US," Nagel said.

The US agreed to implement the elimination of the procedure gradually in order to give Israeli defense industries time to adjust to the new situation. As reported on Tuesday in "Globes," the transitional arrangement is a generous one. Nagel noted that during the decade starting in 2018, Israel would still receive $5.6 billion convertible into shekels - 70% of the amount Israel was allowed to spend in Israel under the current memorandum of understanding. The amount will be decreased gradually each year, with the axe falling in force in the seventh year, and will become zero in the 10th year.

Nagel emphasized that the cuts would not necessarily cause a wave of layoffs in the defense industries, adding that there were many ideas about how to prepare for the new situation.

Nagel also said that the US had demanded an appendix letter from Israel with a commitment not to ask for more money in the two years remaining in the current aid package beyond the amounts mentioned in the current memorandum of understanding. Nagel said that if Congress allocates more, Israel would return the extra amount to the US (Dermer pointed out that in the past, Israel had indeed refunded money to the administration).

In the new package, the parties had agreed on a clause stating that Israel and the US would not deviate from the amounts mentioned for foreign military sales (FMS) in the memorandum of understanding. There is no commitment to return to the US amounts deviating from those mentioned in the agreement (as a result of Congressional legislation). Asked whether Israel would return the money if this happens, Nagel told the questioner to ask him again if this happens.

On the other hand, the memorandum of understanding allows Israel to ask Congress for more aid for ballistic missile system (BMD) development - in other words, beyond $5 billion - in the event of war.

Published by Globes [online], Israel business news - www.globes-online.com - on September 15, 2016

Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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Barack Obama and Benjamin Netanyahu
Barack Obama and Benjamin Netanyahu
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