U.S. Foreign Aid to Israel

Summary

This Congressional Research Service report provides a comprehensive overview and historical analysis of U.S. foreign assistance to Israel from 1946 through FY2023. It details military financing under successive 10-year Memoranda of Understanding (MOUs), joint missile defense and counter-UAS cooperative development (including Iron Dome, David’s Sling, and Arrow systems), arms sales procedures, legal restrictions, and bilateral economic/scientific collaboration.

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Updated March 1, 2023

Congressional Research Service https://crsreports.congress.gov RL33222

Summary

U.S. Foreign Aid to Israel RL33222 March 1, 2023 Jeremy M. Sharp, Specialist in Middle Eastern Affairs

This report provides an overview of U.S. foreign assistance to Israel. It includes a review of past aid programs, data on annual assistance, and analysis of current issues. For general information on Israel, see Israel: Background and U.S. Relations in Brief, by Jim Zanotti.

Israel is the largest cumulative recipient of U.S. foreign assistance since World War II. Successive Administrations, working with Congress, have provided Israel with assistance reflective of robust domestic U.S. support for Israel and its security; shared strategic goals in the Middle East; a mutual avowed commitment to democratic values; and historical ties dating from U.S. support for the creation of Israel in 1948. To date, the United States has provided Israel $158 billion (current, or non-inflation-adjusted, dollars) in bilateral assistance and missile defense funding. At present, almost all U.S. bilateral aid to Israel is in the form of military assistance; from 1971 to 2007, Israel also received significant economic assistance.

In 2016, the U.S. and Israeli governments signed their third 10-year Memorandum of Understanding (MOU) on military aid, covering FY2019 to FY2028. Under the terms of the MOU, the United States pledged to provide—subject to congressional appropriation— $38 bi l l i o ninmi l i t a r y ai d ($ 33 billion in Foreign Military Financing (FMF) grants plus $5 billion in missile defense appropriations) to Israel.

Israel is the first international operator of the F-35 Joint Strike Fighter, the Department of Defense’s fifth-generation stealth aircraft, considered to be the most technologically advanced fighter jet ever made. To date, Israel has purchased 50 F-35s in three separate contracts, funded with U.S. assistance, and has taken delivery of 36.

For FY2023, Congress authorized $520 mi l l i o n f or j o in t U . S . - I sr a e l d e f e n se p r o g r am s (in c l u d in g$ 500 million for missile defense) in the FY2023 James M. Inhofe National Defense Authorization Act. Per the terms of the MOU, Congress appropriated $3.8 bi l l i o n f or I sr a e l (F M F an d mi ss i l e d e f e n se) in t h e F Y 2023 C o n so l i d a t e d A pp r o p r ia t i o n s A c t, an d a dd e d$ 98.58 million in funding for other cooperative defense and nondefense programs.

The foreign aid data in this report are compiled by the Congressional Research Service from a number of resources, including USAID’s U.S. Overseas Loans and Grants (also known as the “Greenbook”), CRS communications with the State Department and the United States Agency for International Development (USAID), and annual State Department and USAID Congressional Budget Justifications. For terminology and abbreviations used in this report, see Appendix A.

Contents & Visuals

Contents:

Background
U.S. Aid and Israel’s Advanced Military Technology
Qualitative Military Edge (QME)
U.S. Bilateral Military Aid to Israel
- The Current 10-Year Security Assistance Memorandum of Understanding (MOU)
- Foreign Military Financing (FMF) and Arms Sales
  - Cash Flow Financing
  - Early Transfer and Interest Bearing Account
  - Shorter Congressional Review Period
  - F-35 Joint Strike Fighter
  - KC-46A Pegasus
  - CH-53K Heavy Lift Helicopters
- Excess Defense Articles
Defense Budget Appropriations for U.S.-Israeli Missile Defense Programs
- Iron Dome
  - Co-production and U.S. Funding
  - Ukraine’s Request for Israeli Missile Defense Systems
- David’s Sling
- The Arrow and Arrow II
- High Altitude Missile Defense System (Arrow III)
  - Export of the Arrow III to Germany
- Emergency U.S. Stockpile in Israel
Defense Budget Appropriations for Anti-Tunnel Defense
Defense Budget Appropriations for Countering Unmanned Aerial Systems
Aid Restrictions and Possible Violations
- Arms Sales and Use of U.S.-Supplied Equipment
  - Section 502B of the Foreign Assistance Act
  - End-Use Monitoring
- Human Rights Vetting (Leahy Law)
- Use of U.S. Funds within Israel’s Pre-June 1967 Borders
- Israeli Arms Transfers to Third Parties
  - Israel and China
Other Ongoing Assistance and Cooperative Programs
- Migration and Refugee Assistance
- Loan Guarantees
- American Schools and Hospitals Abroad Program (ASHA)
- U.S.-Israeli Scientific & Business Cooperation (BIRD, BSF, BARD, BIRD Energy, Energy Center, BIRD HLS, BIRD Cyber)
- Other Congressionally Authorized Cooperative Endeavors

Key Tables:

Table 1. Total U.S. Foreign Aid Obligations to Israel: 1946-2023 ($158,665.110 million total)
Table 2. Selected Notified U.S. Foreign Military Sales to Israel
Table 3. U.S. Contributions to the Arrow Program ($4,501.811 million total)
Table 4. Defense Budget Appropriations for U.S.-Israeli Missile Defense: FY2006-FY2023 ($8,616.853 million total)
Table 5. U.S.-Israeli Anti-Tunnel Cooperation ($320.0 million total)
Table 6. U.S.-Israeli Anti-Drone Cooperation ($88.0 million total)
Table 7. Migration and Refugee Assistance Funding Levels for Israel ($609.3 million FY2000-FY2023)

Background and Qualitative Military Edge (QME)

The United States and Israel have maintained strong bilateral relations based on a number of factors, including robust domestic U.S. support for Israel and its security; shared strategic goals in the Middle East; an avowed mutual commitment to democratic values; and historical ties dating from U.S. support for the creation of Israel in 1948. Total aid from 1946-2023 reached $158.665 bi l l i o n (es t ima t e d$ 260 billion in constant 2021 dollars).

U.S. military aid is designed to maintain Israel’s Qualitative Military Edge (QME) over regional adversaries, formalizing access to top-tier defense technology, shorter review periods, and custom military hardware. Under the 2008 Naval Vessel Transfer Act (P.L. 110-429) and AECA, assessments are codified to ensure U.S. defense sales do not impair Israel’s QME.

10-Year Memorandum of Understanding (MOU) & Major Weapons Systems

The current 10-year MOU covering FY2019-FY2028 commits the U.S. to request $38 bi l l i o ninmi l i t a r y ai d ($ 33 billion FMF, $5 billion missile defense). The agreement phases out Off-Shore Procurement (OSP) by FY2028, leading Israeli defense contractors to establish U.S. subsidiaries.

Major platforms procured through U.S. funding and partnerships include:

F-35 Joint Strike Fighter: 50 aircraft purchased, 36 delivered as of early 2023, customized with Israeli C4 systems and weapons integration.
KC-46A Pegasus refueling tankers: 4 aircraft contracted under a $927 million agreement.
CH-53K King Stallion Heavy Lift Helicopters: 12 on order to replace the aging CH-53D Yasur fleet.
War Reserve Stockpile Allies - Israel (WRSA-I): U.S.-owned pre-positioned munitions valued up to $4 billion stored in Israel, which Israel may access in emergencies.

Joint Missile Defense and Cooperative Programs

The U.S. and Israel co-develop multi-layered defense architectures:

Iron Dome: Short-range rocket and artillery interceptor (Raytheon-Rafael co-production, SkyHunter/Tamir).
David’s Sling: Medium-range missile interceptor utilizing the Stunner missile.
Arrow II & Arrow III: High-altitude and exo-atmospheric ballistic missile interceptors developed with Boeing and IAI.
Anti-Tunnel and Counter-UAS Programs: Specialized R&D and deployment for border security, subterranean detection, and drone defense.
Binational Foundations: Scientific and commercial R&D programs including BIRD, BSF, BARD, BIRD Energy, and BIRD Cyber.

Legal Restrictions, Human Rights, and Oversight

U.S. arms transfers and assistance are subject to compliance under U.S. law:

Arms Export Control Act (AECA) and Mutual Defense Assistance Agreement limiting arms use to legitimate self-defense.
Foreign Assistance Act Section 502B regarding gross human rights violations.
Leahy Law (Section 620M of FAA) vetting security units receiving U.S. funds.
End-Use Monitoring (EUM) and Third-Party Transfer (TPT) restrictions.
Geographic limitations regarding assistance activities within pre-June 1967 borders and scrutiny over Israeli defense technology interactions with China.

Appendixes and FY2023 Legislation Overview

Appendix A provides cumulative annual breakdown tables of bilateral economic and military assistance from 1946 to 2020. Appendix B details FY2023 authorizations under the James M. Inhofe NDAA (P.L. 117-263) and appropriations under the Consolidated Appropriations Act, 2023 (P.L. 117-328), providing $3.3 bi l l i o nin F M F g r an t s,$ 500 million for joint missile defense programs, and additional appropriations for cooperative initiatives. Appendix C details common acronyms (AECA, DOD, DSCA, ESF, FAA, FMF, FMS, HFAC, IDF, LOA, MOU, MRA, NDAA, OSP, QME, SFOPS, SFRC, UAE, USAID, WRSA).