Prime Minister Benjamin Netanyahu has said Israel intends to scale down, over time, the US security assistance package that currently stands at $3.8 billion a year, a move that surprised many Israelis but was coordinated with senior defense officials and delivered with their backing.
These officials say they understand for some time that a new model will be needed as Washington shows stronger isolationist tendencies, while Israel seeks greater independence for its defense industries. They stress the process is being managed, and claim this may be the right moment to design an alternative to the existing memorandum of understanding (MOU) that could ultimately bring significant funds into Israel's defense sector and, later, the broader economy.
The current MOU, signed with the Obama administration in 2016 and implemented from 2018, is due to expire in 2028. Before the agreement took effect, Israel would often submit ad hoc requests for additional funding that required congressional approval. The Obama administration chose to consolidate those requests into a single framework, under which Israel also committed not to seek further exceptional aid from Congress, a commitment that did not prevent the Biden administration from approving an additional assistance package after Oct. 7.
Israeli officials describe two conflicting currents inside the US administration. On the one hand, parts of the US defense establishment view Israel as a kind of proving ground where American systems demonstrate battlefield performance. Platforms such as the F-35, which Israeli officials say has performed strongly in wartime, then become more attractive to other customers worldwide.
On the other hand, voices in Washington argue that Israel is a strong state and that there is no justification for continuing to invest vast sums when Israel's economy is capable of financing its own security needs.
A middle path
Israeli officials believe the reality lies somewhere in between. To avoid unnecessary friction with Washington while adapting to new political winds, Israel is working on a new aid model through joint teams, as Netanyahu said in an interview.
On Israel's side, the effort is being led by Defense Ministry Director General Maj. Gen. (res.) Amir Baram, alongside representatives of the Defense Ministry, the Israel Defense Forces and the National Security Council. Under the emerging approach, Israel would gradually "wean" itself off direct US cash assistance.
According to the Israeli concept, the first five years of a new arrangement would include increased aid, with the amount not yet determined, to fund accelerated procurement. The shopping list discussed includes an additional fighter squadron (either F-35s or F-15s), two additional aerial refueling aircraft on top of the six tankers purchased under the previous agreement, one or more Apache helicopter squadrons, reflecting wartime lessons and the aging of Israel's existing Apaches, as well as additional advanced CH-53K helicopters. Israel would seek to exercise an option to buy six more CH-53Ks beyond the 12 already purchased.
After five years, the plan envisions replacing the current cash-based aid with deeper industrial cooperation between the US and Israel's defense companies. Israeli firms would integrate into US-based development and production of weapons, including air defense, such as the "Golden Dome" program announced by US President Donald Trump, as well as counter-drone programs and other projects.
Israeli officials describe these as "astronomical" scale programs. They believe that if integration proceeds as planned, Israel's net gain could exceed the benefits of the existing MOU, partly through higher tax revenues from defense industry activity, major inflows to research and development and lower unit costs for systems acquired by the IDF.
But the downsides are substantial. If the shift goes ahead, Israel's next fighter purchases, beyond deals already in motion, would have to be funded in shekels rather than dollars, implying a dramatic increase in the Israeli defense budget.
Defense officials argue that state tax revenues generated by Israeli defense industry participation in the US market could cover the gap. Still, annual budget battles between the Defense Ministry and the Finance Ministry are fierce, and there is no mechanism guaranteeing that such tax revenues would be earmarked for defense procurement.
Tradeoffs
In practical terms, the picture is mixed. A key opportunity is that the more Israeli defense industries develop systems without US funding, the less Israel will need Washington's approval to sell those systems to third countries.
With US political dynamics increasingly emphasizing the need to "receive, not only give," Israeli defense officials argue this is the right direction. They highlight the scale of the US market and assess that Israel's defense establishment could reap significant additional dividends, while strengthening the independence and resilience of Israel's defense industries.
