Netanyahu's Gamble: Israeli Prime Minister Is in No Rush to Finalize U.S. Aid Package

The Israeli leader has got the White House and his own defense establishment waiting anxiously to wrap up the agreement with Washington on military assistance to Israel. Why is he stalling?

A Lockheed Martin official holds a model of the F-35 during its presentation at an Israeli Air Force facility in Herzliya, April 5, 2016.
Baz Ratner/ Reuters

The conflict that erupted this week in Washington between the White House and Congress, due to Congress’ intention of approving a special $455 million budgetary addition to Israel’s anti-missile defense program, is related to a political dispute between the administration and the Republican majority in Congress. The dispute involves the administration’s refusal to approve far larger budgetary items, totaling $16 billion, making the Israeli aid an entirely marginal issue.

But things would not have reached this point were it not for the fact that Prime Minister Benjamin Netanyahu delayed discussions on the agreements regarding U.S. military aid to Israel for the coming decade. The deliberate stalling for time by Netanyahu, whether for practical or political reasons, endangers the possibility of completing the agreement with the Obama administration before the U.S. presidential election in November. That is an outcome that is causing concern among senior officials in the Israeli defense establishment, who have found themselves excluded from the contacts with the Americans in recent months.

Several months ago former Defense Minister Moshe Ya’alon mapped Israel’s primary military needs for the coming decade with U.S. Secretary of Defense Ashton Carter. But a summary of the needs also requires budgetary support, and both sides believe that the annual assistance in the present agreement, about $3.1 billion, cannot meet those needs. The administration has already signaled its intent to increase aid, in light of Israel’s expectation of being compensated for the lifting of international sanctions against Iran (as part of the nuclear agreement signed with Tehran last July), and the accelerated arming of the Gulf states. Sums ranging from $3.4 – $3.8 billion dollars a year were mentioned in the Ya’alon-Carter talks and other security meetings.

The details

While the U.S. administration is ready to close the agreement, several practical disputes remain before it can be signed. The administration wants an “all inclusive” agreement – a sum that would be considerably higher than $3.1 billion annually, but would also include all the possible future additions. The idea is to avoid the method practiced in recent years when Israel received hundreds of millions of dollars in special assistance annually — whether in order to continue the development of missile-defense systems (the Arrow, Magic Wand and Iron Dome), to develop technology for locating tunnels, or to close gaps in the Israel Defense Forces inventory after rounds of fighting in Lebanon and Gaza.

Another critical issue is related to mutual acquisitions. In the previous agreement, about a quarter of the aid budget was spent in Israel, in acquisitions from Israel’s defense industry. The Americans, who naturally are concerned about jobs in their own industry, want the dollar acquisitions in the next agreement to be channeled to the United States only. The implications would be destructive for the Israeli defense industry. Among other things, the administration is also asking Israel to stop buying fuel for military needs from the aid money, so that the money can be used directly for acquisition of products from the American defense industry. The IDF has alternative sources of fuel, but the demand means that about $400 million will have to be added, this time in shekels, to the defense budget.

Bad blood

Another issue has cast a dark shadow over the postponement of the deal – the ugly relations between Netanyahu and U.S. President Barack Obama. The administration is keen on finalizing the agreement before the election in order to dispel the Republicans’ frequent accusations that Obama “threw Israel under the wheels of the bus.” In fact, as former Defense Minister Ehud Barak has testified, Obama’s administration has actually been the most generous ever in providing defense assistance to Israel.

For Obama, the optimal timing for signing the agreement would be at the Democratic convention next month — or soon after. But the prime minister doesn’t seem to be rushing, which has prompted suspicions on the part of the administration that Netanyahu prefers to wrap up the deal with the next president, whether it’s Donald Trump or Hillary Clinton.

Netanyahu calling the shots

Moreover, Netanyahu excluded the professional leadership of Israel’s defense establishment from talks concerning the agreement, which are being navigated by him alone through Israel’s ambassador to Washington Ron Dermer and the acting head of the National Security Council, Yaakov Nagel. Meanwhile, the American warnings and pleas to hurry to close the deal, even when they have come from the highest echelons, such as Vice President Joe Biden during his last visit to Israel, have been of no avail.

New Defense Minister Avigdor Lieberman believes that the agreement should be signed as soon as possible. On Saturday night he embarked on his first official visit to the United States, where he will meet with his counterpart Carter and participate in the ceremony of rolling out the first F-35 purchased by Israel from the Americans with the aid money. We can assume that Lieberman will try to advance the talks, but the key to the decision apparently remains in the hands of the prime minister.