U.S.-Israel Memorandum of Understanding: An Unbalanced Deal

By Shoshana Bryen, Jewish Policy Center, August 11, 2016

A Memorandum of Understanding (MOU) is an agreement between two parties—in this case, the governments of Israel and the United States. It is less than a treaty, more than a handshake. The first MOU was signed in 1981, recognizing “the common bonds of friendship between the United States and Israel and builds on the mutual security relationship that exists between the two nations.” The current MOU, signed in 2007, represented a 10-year commitment. The Obama Administration and the government of Israel have been negotiating a new 10-year agreement that will come into effect in 2017.

It is hard to get the nuance right in a security arrangement between a superpower and a small country, even if the small country is a first-world democracy in terms of education, income, technology, and political structure. It is harder when large sums of money are involved, and harder still when the small country is, in military terms, a “security producer,” one that provides more security to a region than it requires in assistance, but is still uniquely threatened in the world.

The Obama Administration is making it harder, perhaps because one of the President’s goals has been to remove the United States from its role as security guarantor not only for Israel, but also for the region, and possibly, it seems, for the rest of the world, such as the South China Sea, Crimea and the Balkans.

The administration proposes somewhat more money for Israel—from $3.1 billion to close to $4 billion—but with important caveats:

1) 100% of the money will be spent in the U.S., while Israel is presently able to spend 25% in Israel.

This is a subsidy for U.S. defense industries and constrains Israel’s defense choices by forcing the IDF to exclude weapons from Europe and elsewhere. While some think of Israel as an expense to the U.S., the fact is that Israeli R&D innovations—shared with the U.S. by agreement—have helped mitigate the decline in the U.S. missile defense budget in an era of growing threats. Without the ability to spend some money in Israel, it will be harder for smaller defense and high-tech industries to keep up.

2) The total figure will include money for missile defense, which in this administration has been an add-on from Congress. That makes the increase substantially less than it appears to be.

This could be particularly problematic: an administration that opposes missile defense in principle—as does the Obama administration—could effectively stifle Israel, which protects its people with a layered missile defense system. As Iran continues to violate UN prohibitions on ballistic missile testing, and Hamas and Hezbollah increase their arsenals, the consequences could be devastating.

3) Israel will be prohibited from asking Congress for additional funds, effectively removing a bipartisan center of support for Israel’s security from the equation and reducing Israel’s flexibility in addressing rapidly emerging threats. This year, Congress wrote in $42.7 million for anti-tunnel cooperation—something that emerged as essential only after the 2014 Gaza war.

In deference to the outsized threats and acknowledging Israel’s status as an American ally, it has been U.S. policy for decades and law since 2008 that “Israel will be made capable of defending itself against and defeating any likely combination of conventionally armed adversaries.” This is known as Israel’s Qualitative Military Edge (QME).

It was simple once—Arab armies were Soviet equipped and trained. But the world has changed.

On the plus side, Jordan joined Egypt in making peace with Israel, and the Soviet Union disappeared. On other hand, the U.S. has been selling arms and equipment to Arab states that maintain a state of war with Israel. Israel still receives more cutting edge technology, but at some point, the quantity of oil-financed Arab purchases can tip the quality scales. Saudi Arabia spent $9.3 billion on U.S. weapons last year.

To be fair, Israel understands Saudi purchases to address the war in Yemen and the larger conflict with Iran, not aimed against Israel. Israeli-Saudi relations have thawed at least temporarily, but other threats, some conventional, some not, have increased.

ISIS, Hamas and Hezbollah are what former IDF Chief of Intelligence Amos Yadlin calls “substate actors”—terrorist organizations that have attributes of statehood, such as territory, populations, etc. Syria remains in a state of war with Israel and as the civil war continues, Iran and Hezbollah have forces and weapons close to the Golan Heights. Iran is only a decade away, if that, from the freedom to openly pursue its nuclear capability as the JCPOA ends.

It was the release of hundreds of millions of dollars by the U.S. to the Islamic Republic, destined to improve and enhance Iranian military capabilities, which added urgency to Israel’s request for missile defense and other capabilities.

The U.S., then, is on both sides of Israel’s security conundrum.

On one hand, U.S.-Israel security cooperation is embodied in QME joint R&D on missile technology, joint training and exercises (most recently a joint missile defense exercise in Israel), and Israel’s new diplomatic mission to NATO Headquarters.

But on the other hand, having to spend all the money on U.S. procurement, U.S. arms sales to countries still in a state of war with Israel, the transfer of hundreds of millions of dollars to Iran and removing Congress from its pivotal role as a security partner for Israel are all positions that clearly express administration weariness and irritation with Israel.

Israel, of course, does not have to sign. There is a new administration coming, and no doubt Israel can manage evolving bilateral relations with the U.S. under either party. There is, however, something to be said for the reassurance of a 10-year American commitment, even if the current terms are not ideal.

On balance, Israel is a strong, accomplished, and increasingly capable country with both military and civilian assets sought by countries around the world. It finds itself in a vastly improved international situation even as its neighborhood declines. It would have been in the larger interest of the United States to enhance those capabilities rather than trying to constrain them.