An MOU and an IOU? Israel’s $38 billion payday may not come for free
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AnalysisWary of Trump, Netanyahu seems to decide to play it safe

An MOU and an IOU? Israel’s $38 billion payday may not come for free

Jerusalem’s unprecedented defense aid deal with US looks like a big win for PM, though it’s not all he wished for, and it could hand Obama room for Palestine-related initiatives

Raphael Ahren is the diplomatic correspondent at The Times of Israel.

US President Barack Obama (right), IDF ex-chief of staff Lt.-Gen. Benny Gantz (left), ex-defense minister Moshe Ya'alon and Prime Minister Benjamin Netanyahu against the backdrop of an Iron Dome anti-rocket battery, March 20, 2013 (Avi Ohayon/GPO/Flash90)
US President Barack Obama (right), IDF ex-chief of staff Lt.-Gen. Benny Gantz (left), ex-defense minister Moshe Ya'alon and Prime Minister Benjamin Netanyahu against the backdrop of an Iron Dome anti-rocket battery, March 20, 2013 (Avi Ohayon/GPO/Flash90)

Starting in October 2018, the US administration will give more than $10.4 million per day to its small, embattled ally in the Middle East.

The new American-Israeli memorandum of understanding, being signed Wednesday in the State Department’s Treaty Room, pledges the sum of $38 billion for the next 10 years in “security assistance” to the Jewish state. That is $7,230 per minute, or $120 per second.

Both sides hailed the MOU as the “single largest pledge of bilateral military assistance in US history,” pointing to an increase from about $3 billion a year in the previous agreement to $3.8 billion in the current deal. This staggering sum is both a testimony to strong US-Israel ties, which remain solid despite a tense relationship between the countries’ leaders, and a not insignificant achievement for Prime Minister Benjamin Netanyahu.

Having angered the administration not only by his adamant refusal to stop expanding settlements, but mostly by his vociferous opposition to the nuclear deal with Iran — which included a controversial speech to Congress seen by many as a blatant slap in the face of President Barack Obama — Netanyahu nonetheless delivered on his promise to bring home the largest-ever amount of US military aid.

Throughout the whole process, US officials vowed never to gamble on Israel’s security, but many analysts, this writer included, argued last year that Netanyahu’s anti-Iran deal agitation was hardly conducive to a friendly atmosphere in which to conduct negotiations over increased military aid.

Though naysayers will always be able to claim that he could have gotten an even better package had he trodden more carefully, by securing a 10-year deal that brings in more money than ever before Netanyahu in some sense vindicated his aggressive anti-Iran deal lobbying. It plainly didn’t dent, much less doom, US military support. And yet, the final judgment on his policy vis-a-vis the White House can only be made after a new US president is inaugurated on January 20.

After all, handing Israel the largest-ever military aid package gives Obama much more potential room to support Palestine-related initiatives, say at the United Nations, right after the presidential elections (when such moves can no longer harm Hillary Clinton, the Democratic candidate). Before the MOU was finalized this week, usually well-informed Israeli sources predicted that Netanyahu would not sign the deal before Inauguration Day. To do so, they argued, would enable the current administration to deflect any criticism of potential moves on the Palestinian front with the argument that it had taken very good care of Israel’s security needs.

The David’s Sling missile defense system undergoes a final round of tests on Dec. 21, 2015 in Israel. (AP Photo courtesy of Israel Ministry of Defense/via JTA)
The David’s Sling missile defense system undergoes a final round of tests on Dec. 21, 2015 in Israel. (AP Photo courtesy of Israel Ministry of Defense/via JTA)

What’s in the package

Looking at the fine print of the MOU, several observations are in order.

For a start, it is misleading to speak of an $800 million increase per year, since the new deal includes $5 billion for missile defense systems, which were not part of the previous arrangement but were covered in separate payments. Under the new MOU, Israel will be barred from asking for additional funding, except in wartime. That means that, yes, actual military assistance (without missile defense) is still increasing, but only from $30 billion to $33 billion.

“I would give [the new agreement] a more modest description than what I find in certain newspapers — like the ‘largest ever,’ an ‘exceptional achievement’ for Israel,” former Israeli peace negotiator Gilead Sher told Politico. “It is almost exactly, precisely the very same figures.”

Indeed, the new MOU heralds a relatively modest increase, especially when compared to the sum Netanyahu was seeking when the negotiations started. According to various reports, the prime minister was aiming at more than $40 billion, some even speculated he was asking for a number closer to $50 billion.

Given that Israel faces more challenging security threats today than it did a few years ago, chief among them the strengthening of Iran and its proxies on Israel’s borders as a consequence of the US-brokered nuclear pact, Jerusalem could — or perhaps should — have gotten a better deal.

Furthermore, the last MOU, which elapses in late 2018, allowed Israel to spend a quarter of the sum on purchases from the Israeli defense industry (the rest needed to be spent in the US). According to the new deal, this arrangement will fade out in a few years, dealing a heavy blow to the local arms industry. Netanyahu initially refused to agree to this clause but eventually folded.

“Israel drove a hard bargain for months in negotiations with the United States over the terms of a new military aid deal, pushing for more funding and other concessions. But in the end, Prime Minister Benjamin Netanyahu backed off,” opined Foreign Policy’s chief national security correspondent, Dan De Luce.

Of course, Netanyahu would doubtless say that his bid to obtain a still better package was part of the routine of negotiating, and that he knew he was never going to get quite as much as he ostensibly sought. His former national security adviser Ya’akov Amidror insisted on Tuesday that no figure higher than $38 billion was ever on the table.

US President Barack Obama and Prime Minister Benjamin Netanyahu pose with military personnel next to an Iron Dome battery at Ben Gurion Airport, March 20, 2013 (Avi Ohayon /GPO/ Flash90)
US President Barack Obama and Prime Minister Benjamin Netanyahu pose with military personnel next to an Iron Dome battery at Ben Gurion Airport, March 20, 2013 (Avi Ohayon /GPO/ Flash90)

Why do the deal now?

In the run-up to and immediately after the Iran nuclear pact signing last year, Netanyahu refused to even discuss the MOU, arguing that accepting an increase would signal tacit approval of that deal, which the prime minister considered (and still considers) a historic mistake. He insisted on delaying the negotiations, presumably hoping that ahead of the US elections Obama would be reluctant to offer Israel a lousy deal lest the Democrats be seen as an anti-Israel party.

Why did Netanyahu now fold and agree to a deal that falls short of his initial hopes? The answer might have to do with a person who primarily sees himself as a negotiator: Donald Trump, the Republicans’ presidential candidate. Though he presents himself as staunchly pro-Israel, Trump raised eyebrows in Jerusalem in March when he said he expects Israel to pay back the security assistance it receives from the US.

Republican presidential candidate Donald Trump speaks at the 2016 American Israel Public Affairs Committee (AIPAC) Policy Conference at the Verizon Center in Washington DC, Monday, March 21, 2016. (AP Photo/Evan Vucci)
Republican presidential candidate Donald Trump speaks at the 2016 American Israel Public Affairs Committee (AIPAC) Policy Conference at the Verizon Center in Washington DC, Monday, March 21, 2016. (AP Photo/Evan Vucci)

Netanyahu has painstakingly sought to avoid taking sides in the current US election campaign. But the fact that he is now rushing to sign the MOU with the current administration suggests that he is unwilling to take the risk of leaving it open ahead of a Trump presidency.

Aware of The Donald’s unpredictability, Netanyahu seems to have decided to play it safe by concluding the agreement now, even if he had wished for a better deal, and despite the fact that it allows the current unloved administration to portray itself as unprecedentedly generous to Israel.

What could be more worrying, from the prime minister’s perspective, is that the successful conclusion of the negotiations now gives Obama, as the unprecedentedly generous backer of Israel’s security needs, plenty of room for initiatives aimed at advancing the peace process.

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