Mairav Zonszein
International Crisis Group / August 12, 2026
The debate under way about U.S. military assistance to Israel is a barometer of bilateral relations. Israeli officials have accepted that the next deal could be the last of its kind, but they are also working toward interdependence that will be harder to unravel.
The Memorandum of Understanding that sets the terms for how much military aid Israel can expect from the United States over a ten-year interval is up for renewal. Though the document is not binding, and while Congress must approve the sums allocated on an annual basis, it provides an important framework for the U.S.-Israel relationship. The present memorandum expires in 2028, and the next one, which would extend for another decade, could be the last of its kind. It could also look markedly different from its predecessors: rather than perpetuating direct U.S. military assistance, it might well begin the process of phasing out the aid.
Negotiations about a new memorandum began in June. Their fate will be a barometer of sorts for the direction of U.S.-Israeli relations. In recent years, the relationship has endured several shocks: the images of devastation in Gaza wrought by an Israeli military campaign that relied on U.S. weapons; an ill-fated war with Iran that unfolded amid the closest military partnership ever between the two nations; intensifying violence by state-sanctioned settler militias in the West Bank; Israel’s increasingly illiberal governance and growing belligerence across the Middle East; and, largely as a consequence of the above, a precipitous decline in U.S. public support for Israel. The drop is especially pronounced among Democrats, but it is also visible among Republicans, driven by a mix of hostility toward both foreign assistance and military entanglements. Together, these developments have raised questions about the traditional model of U.S. military assistance to Israel.
Discussions of the memorandum have stalled, presumably due to a combination of the U.S.-Israeli war with Iran and uncertainty surrounding the shape of the eventual deal. Israeli Prime Minister Benjamin Netanyahu likely hoped to conclude the talks before Israel’s 27 October parliamentary elections, but that goal now appears out of reach. Whether a new agreement will be concluded remains unclear, as does the form it will take, given several factors including President Donald Trump’s unpredictability. What is apparent is that the rhetoric emanating from Israel, together with the tone of debates in both countries, reflects shifting currents in the bilateral relationship and an Israeli effort to prepare for a different security dynamic with its principal partner.
Understanding the memorandum
U.S. military aid to Israel is distinct in both its sheer size and its terms. Most has been given in the form of grants known as Foreign Military Financing (FMF), which usually require the recipient country to spend the full amount on purchases from U.S. arms manufacturers. Until recently, Israel had been given a partial exemption, however, allowing it to invest a portion of the money in its own defence industry. This carveout, in turn, has made Israeli firms more competitive in the arms export market. The assistance includes another important feature, cash flow financing, which allows Israeli payments to be spread out across several years, as opposed to being made up front. Cash flow financing has proven particularly useful in helping Israel acquire major defence articles such as the F-35 or F-15E fighter aircraft.
For three decades, the memorandum of understanding has established the framework for this support and been a pillar of the U.S.-Israel relationship.
For three decades, the memorandum of understanding has established the framework for this support and been a pillar of the U.S.-Israel relationship. Beyond codifying the terms for financing Israel’s acquisition of much of its advanced weaponry, the agreement has helped cement Israel’s status as a U.S. strategic partner, the largest recipient of its foreign assistance globally and the strongest military power in the Middle East. As a former senior Israeli official told Crisis Group, “The memorandum said to the world, ‘America is with Israel’. It tied us to the U.S. defence industry and positioned us in Congress. Where the Americans put their money is where they are invested”.
There have been changes along the way. The first memorandum of understanding, signed by Prime Minister Ehud Barak and President Bill Clinton in 1999, came a few years after the Oslo accords that many hoped would bring peace between Israel and the Palestinians. At the time, Barak and Clinton stated that it expressed a “new partnership designed to underpin their joint effort to put an end to the Arab-Israeli conflict and achieve a comprehensive peace in the Middle East”.
The second memorandum, signed by President George W. Bush and covering the period 2009-2018, came in the aftermath of the 9/11 attacks, the U.S. war in Iraq and Israel’s second Lebanon war. This agreement, which raised the amount of total military assistance from $24 to $30 billion, or $3 billion per year, was linked to a wider arms package provided by the U.S. to Egypt, Saudi Arabia and other Gulf Arab states, even as it was designed to safeguard Israel’s “qualitative military edge”. (The commitment to preserve this edge, enshrined in U.S. law, says Washington will ensure that Israel retains sufficient armaments to prevail over any combination of regional foes.)
The current memorandum, the third and largest ever, was concluded in 2016 with the Obama administration to cover the period 2019-2028. It provides $3.8 billion annually in U.S. security assistance: $3.3 billion in FMF grants and a precedent-setting $500 million in defence appropriations for joint missile programs. The third memorandum came about under significantly different circumstances than the first two. The Israeli-Palestinian peace process was moribund; U.S.-Israeli tensions over it were acute; and the U.S. had just signed the 2015 nuclear deal with Iran, which Netanyahu (then also prime minister) fiercely opposed. The deal was widely seen as President Barack Obama’s way of reassuring Israel that the U.S. remained fully committed to Israel’s security despite the nuclear agreement. Though it contained provisions less favourable to Israel than its predecessors, notably the gradual end of Israel’s ability to spend its FMF domestically, the overall package was viewed as a success for Netanyahu. Moreover, it put no ceiling on U.S. support: since the 7 October 2023 Hamas attack that triggered a multi-front regional war, U.S. military aid to Israel has far exceeded the sum laid out in the memorandum.
From assistance to interdependence
Netanyahu, who is well attuned to U.S. political mood swings, has long harboured a preference for greater Israeli economic independence from Washington. In 1996, in a speech to the U.S. Congress during his first premiership, he said, “In the next four years, we will begin the long-term process of gradually reducing the level of your generous economic assistance to Israel. I am convinced that our economic policies will lay the foundation for total self-reliance and great economic strength”. At the time, Israel was privatising swathes of its once large public sector and undergoing a start-up boom that he championed. That approach helped lay the groundwork for the first memorandum of understanding, which phased out U.S. economic aid over a decade while providing significant amounts of military aid in the form of FMF.
Thirty years later, Netanyahu again appears intent on being ahead of the curve.
Thirty years later, Netanyahu again appears intent on being ahead of the curve. In the aftermath of Hamas’s 7 October 2023 attack, when his rival Benny Gantz joined an emergency coalition, the two men sought to kickstart early negotiations, hoping to secure a new military assistance deal under the Biden administration. According to Israeli sources, Netanyahu worried that if Trump were to return to the White House in 2025, he might resist sustaining past levels of aid, despite being viewed as more staunchly pro-Israel than Biden, given the presumptive Republican candidate’s hostility to foreign assistance. This effort did not get off the ground, however.
In the wake of Israel’s twelve-day war with Iran in June 2025, Netanyahu began advocating a gradual phaseout of FMF by the end of the next memorandum of understanding. “Netanyahu decided to give up on the [current model] over a year ago”, a former Israeli security official told Crisis Group. “He understood that the idea that U.S. taxpayers are handing over money to Israel has become anathema”. The prime minister planted the seeds in September 2025 remarks known as the “Sparta speech”, in which he said Israel’s economy would need to become more “autarkic” (or self-sufficient). In this speech, he laid out a vision of Israel as a “super Sparta” that, even if increasingly isolated, would be strong enough to thrive on its own. He was more explicit in an interview with The Economist the following January: Israel, he said, should “taper off” U.S. military assistance over the following decade. In its place, he has suggested joint U.S.-Israel research on and development of weapons, missile defence and advanced technology, with equal investment from both sides.
For Israel, the memorandum of understanding now matters less for the money it provides than for what it signifies: a gauge of the depth and durability of U.S. support. To be sure, FMF has enabled Israel to build up its military power without fully bearing the cost, and phasing out this assistance would impose real burdens. Israel would have to pay for critical U.S. weapons from its own budget. Yet, with its annual GDP now exceeding $700 billion and defence spending above $40 billion, Israel has found increasing difficulty in arguing that it requires an additional $3.3 billion each year for military purchases. As a former official at Israel’s National Security Council put it, “Money is important, but we can manage [without it] if we have to. We give the ultra-Orthodox and settlements way more”. According to Israeli media reports, Netanyahu has asked the finance ministry to allocate billions of dollars in additional funding for the defence budget over the next decade, a large portion of which would be earmarked to procure U.S. fighter jets, on the assumption that Israel will no longer receive the funds necessary for these purchases from Washington.
A critical feature of the memorandum that Israel wants to maintain is the cohesion that it creates between the U.S. and Israel. Its ten-year length, combined with cash flow financing, has bound the two countries and their defence establishments within a durable framework, enabled Israel to engage in long-term planning and, to an extent, helped insulate the U.S.-Israel relationship from annual legislative battles in the U.S. Congress. Netanyahu’s approach has thus been to advocate a gradual phaseout of FMF, trumpeting Israel’s self-reliance, while simultaneously seeking to preserve its privileged status by making the bilateral military relationship ever more intertwined.
This logic explains some of the new proposals emerging from Israel and some of its closest allies in the U.S. Congress. One is the U.S. Israel Defense Technology Cooperation Initiative, part of the National Defense Authorization Act, which the House of Representatives passed in late July but the Senate has yet to vote on. It would require the Pentagon to synchronise “cooperative efforts between the United States and Israel”. The initiative, if enacted into law, would not necessarily replace the memorandum of understanding. Nor would it predetermine the contours of a new military aid deal. But it could lead to greater defence technology coordination between the two countries, recasting the relationship, in both substance and appearance, as one of partnership rather than patronage. Insofar as the focus would be on cooperation as opposed to assistance, and thus might not be subject to the notification, transparency and accountability requirements that, in theory at least, attach to the latter, the transition could weaken Congressional oversight. It could also boost Israel’s defence industry by letting those companies bid for portions of the $1 trillion U.S. defence budget. In that sense, it might serve Israel’s long-term strategic interests better than a diminishing aid package.
Israeli officials favour a new [MOU] that emphasises joint research and cooperation in cybersecurity, autonomous systems and advanced technology.
Beyond this legislative effort, Israeli officials favour a new memorandum of understanding that emphasises joint research and cooperation in cybersecurity, autonomous systems and advanced technology. Such an arrangement might well offer Israel less discretion than previous agreements: FMF allowed it considerable freedom to decide what to purchase, whereas a partnership would give Washington a larger voice. Basic questions remain, including how each side’s contributions would be allocated and where production would occur. But Israeli officials appear to accept that changes in the U.S. political climate may well dictate a move away from pure assistance toward deeper military, intelligence, industrial and technological integration. They understand that the next memorandum may not resemble the last one, but they hope it may lead to a form of interdependence that will be harder to unravel.
Israeli officials also argue that sustaining U.S. support for Israel’s security and qualitative military edge at a time when the U.S. public is increasingly questioning the relationship requires Israel to offer reciprocal benefits. These might include increased cooperation in artificial intelligence, quantum computing and energy technologies – components of what some Israeli officials dub the country’s “qualitative technological edge”. They might also take the form of closer cooperation in handling Middle East crises and sharing of lessons from Israel’s extensive experience of years-long multi-front wars.
This overall logic was clearly reflected in a 29 June speech delivered by Amir Baram, director general of Israel’s Ministry of Defense charged with preparing Israel’s force buildup – and the lead Israeli negotiator for a new memorandum of understanding. He said: “As the United States operates under an America First approach, our partnership cannot rest on shared values alone. It must also rest on hard interests: a strong, independent and proactive Israel that stabilises the Middle East is the very asset that allows the United States to redirect resources toward Asia”.
The U.S.-Israeli war with Iran should be viewed in this light, as an effort to destabilise (and perhaps topple) the Islamic Republic and degrade its military capacity, of course, but also as a preview of how the U.S. and Israel might work together in the future. The war witnessed unparalleled military collaboration, brought the bilateral relationship directly onto the battlefield and may have set a precedent for de facto strategic integration and operational unity between the U.S. and Israel.
The war also revived discussion of a more permanent U.S. military presence on Israeli soil, perhaps including bases – a notion that Israel has historically resisted due to concern that it would lose strategic and operational autonomy in its military decisions. These conversations derive in part from the substantial damage inflicted by Iran on U.S. assets in the Gulf and the contrasting success (at least tactically) of Israel’s multi-layered defence system and of U.S.-Israeli joint military action in Iran. Already, the U.S. stockpiles weapons in Israel and places sensitive facilities there, including an early warning radar installation in the Negev desert. Since October 2023, it has expanded its footprint, beginning with the Civil-Military Coordination Center in Kiryat Gat that is charged with overseeing the Gaza ceasefire. Amid the war with Iran, dozens of U.S. fuel tankers have been at Ben Gurion airport and Israeli military bases for months. On 28 July, Israeli Defense Minister Israel Katz went so far as to say that the U.S. had launched strikes on Iran from Israeli bases.
Permanently stationing active U.S. troops in Israel would nevertheless mark a dramatic departure. While it could further intertwine the two countries’ security postures and strengthen Israeli deterrence, it would be controversial on both sides. U.S. critics of the security partnership would see it as a manifestation of deepening support for and entanglement with Israel. In Israel, it would sit uneasily with Netanyahu’s appeal for greater self-reliance, since a larger U.S. presence could tie Israel’s hands. His domestic critics would point to it to bolster their charge that the prime minister is subordinating the national interest to Washington as Trump presses him to observe ceasefires in Gaza, Lebanon and Iran. A former commander of the Israeli air force told Crisis Group that “anyone suggesting putting U.S. bases in Israel has no idea what they are talking about”, arguing that it would curtail Israel’s freedom of operation.
The illusion of self-reliance
Whether or not a new memorandum of understanding is signed, and regardless of its content, the uncertainty surrounding it reflects the reality that military aid to Israel – long a cornerstone of both U.S. policy and Israel’s national security – is in flux. The U.S. bipartisan consensus underpinning it is fraying. At the same time, for Israel, the fact that novel ideas are being discussed, including more integrated co-production, joint research and development and operational fusion, exposes an uncomfortable truth: that Netanyahu’s call for Israel to become a self-reliant “super Sparta” is divorced from reality.
Nearly three years of quasi-continuous warfare – in which Israel has been targeted by 1,200 surface-to-surface missiles and over 70,000 drones fired from across the Middle East – have led its leaders increasingly to invoke the need for freedom of action but also made the nation more dependent than ever on U.S. support. The transition from short campaigns to long wars – and thus the heavy reliance on ammunition stockpiles and their replenishment – is highly consequential. As a former high-level Israeli military official put it, “short wars are about military punch; long wars are about endurance. Israeli reliance on the U.S. has increased because of the endurance factor. It can only wage long wars thanks to the U.S., or by paying prohibitive costs at home”.
Netanyahu and defence ministry officials speak of turbo-charging domestic production, but Israeli industry can only do so much. A former Israeli general who served as director general in the defence ministry told Crisis Group, “There aren’t enough Israeli hands devoted to production. There is a shortage of manpower and of raw materials. There is no capacity to get sufficient production lines going, and doing so would cost a lot of money”. As virtually all Israeli security professionals concede, there is no circumventing the need for U.S. assistance. As one put it, “You can increase stockpiles and production in Israel, but it won’t be enough. That will not turn us into ‘super Sparta’”.
As for the memorandum’s fate, much will depend on developments over coming months: whether Netanyahu is still in office when a deal is struck; how the next U.S. Congress is composed and what appetite it retains for sending funds to Israel; and whether the U.S.-Israeli operational cohesion forged during the war with Iran translates into more permanent institutional arrangements. What is already clear is that neither government is approaching the memorandum’s renewal as routine. Both are using the occasion to ask harder questions about the nature of the relationship amid a rapidly changing Middle East and a U.S. political climate that has profoundly changed since the days of Bill Clinton.
For Israel, the long-term political challenge may prove the greatest. As a former high-level Israeli official put it, “I’m more concerned about the U.S. than I am about Europe. We can recover public opinion faster in Europe than in the U.S. The damage is great”. A new security framework may temporarily foster greater cooperation between the two nations’ defence establishments. It is unlikely on its own to restore the foundation that undergirded not only the old memoranda of understanding, but also the bilateral relationship as a whole.
Mairav Zonszein – senior analyst, Israel at the ICG
