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Israeli officials are laying the groundwork to phase out a longstanding U.S. foreign aid model for a new framework based on joint investments, innovation and equal partnership.
“I believe Israel must be an equal among equals,” Likud MK Amit Halevi, who is spearheading the initiative, told The Press Service of Israel.
“Israel must first and foremost be a sovereign state that respects its sovereignty and breaks free from any framework or system that enables or imposes dictates on its policy,” insisted Halevi, who chairs the Knesset subcommittee on National Security Doctrine and Force Buildup.
Under the current Memorandum of Understanding, which was signed in 2016 and is in effect from 2018-2028, Israel receives $3.8 billion annually. While $500 million is earmarked for missile defense cooperation, the remaining $3.5 billion is used entirely within the U.S. defense industry.
But key Israeli figures told TPS-IL that this model no longer reflects Israel’s capabilities or the mutual benefits at stake.
Halevi, who convened a series of hearings on the issue, wants to emphasize bi-national funds and mega-projects reflecting joint strategic interests.
He suggested that models such as the Israel-United States Binational Industrial Research and Development Foundation (BIRD Foundation) and the U.S.-Israel Binational Science Foundation (BSF Foundation) be scaled to the defense and national strategy arena.
During a February visit to Washington, Halevi presented his principles to Republican and Democratic lawmakers. He told TPS-IL that his proposal was met with genuine interest, especially among conservative members who viewed it as a potential response to critiques of foreign aid.
‘Not Handouts’
“Too often, Israeli officials arrive on Capitol Hill thanking America for its generosity,” Yoram Ettinger, former Israeli ambassador and expert on U.S.–Israel relations told TPS-IL. “They should be reminding Congress that this is a win-win. The $3.8 billion remains in the U.S., supports American jobs, and boosts American security.”
The retired diplomat and researcher stressed, “These are not handouts. Israel is not a foreign aid recipient. It’s a battlefield laboratory for the U.S. defense industry. Every dollar ‘given’ to Israel returns hundreds in value to American taxpayers.”
He pointed to data from U.S. defense contractors Lockheed Martin and Boeing showing that Israeli feedback from combat use of American systems shortens R&D timelines, improves weapon effectiveness, and drives U.S sales.
“We are the luxury showroom of American military hardware,” said Ettinger.
The research of Dr. Raphael BenLevi has shaped much of the debate. BenLevi — the director of the Churchill Program for Statecraft and Security at the Argaman Institute, and a fellow at the Misgav Institute for National Security — told TPS-IL that Washington’s use of aid as both a carrot and stick has distorted decision-making and public perception.
“Since the 1970s, many Israeli territorial concessions were indirectly facilitated by aid packages — aid that was meant to ‘sweeten’ politically risky moves,” he explained. “We called it ‘land for peace,’ but it was often ‘land for aid.’”
BenLevi also warned that overreliance on U.S. procurement hollowed out Israel’s own production lines. The current Memorandum of Understanding (MOU) ended Israel’s ability to convert 26% of aid into local currency.
“We became addicted to Washington’s credits. Then came the war on October 7, and suddenly we needed ammunition we couldn’t manufacture fast enough at home,” said BenLevi.
According to BenLevi and Halevi, a ten-year phased transition would allow Israel to adjust its military budgeting and strengthen its industrial independence. By 2028 — when the current MOU expires — Israel could be “in position to negotiate a new framework based on joint innovation, not dependency.”
Halevi’s committee hearings revealed internal divisions. Some warned that reducing U.S. aid could endanger Israel’s security, with one academic calling the dependence as “existential.”
Opposition MK Moshe Tur-Paz added that while U.S. aid is 2% of Israel’s defense budget in peacetime, it surges to 16% during emergencies and must be preserved.
In response to those concerns, BenLevi told TPS-IL that that the aid currently represents only 0.7% of Israel’s GDP and roughly 2.5% of the pre-war national budget.
“That’s not existential. We can fund these purchases ourselves, and gain flexibility in choosing suppliers, investing in domestic capabilities, and forming new partnerships—without undermining our bond with America,” BenLevi said.
Reciprocity
Marc Zell, chairman of Republicans Overseas Israel, explained to TPS-IL that many conservative voices in Washington are wary of unconditional U.S. foreign aid, and that a new model for stressing reciprocity would appeal to policymakers.
“U.S. assistance to Israel is not a one-way street. It’s an investment. Israel is not a welfare case—we’re a critical ally that gives back more than we get,” Zell told TPS-IL. “This shift in messaging can neutralize criticism on the right—and highlight how this alliance serves American interests.”
This debate was reignited when President Donald Trump introduced trade tariffs affecting more than 90 countries. Israel was hit with a 17% tariff on products.
“Don’t forget, we help Israel a lot. We give Israel $4 billion a year. That’s a lot… But we take care of our friends,” Trump told reporters during a joint Oval Office appearance with Prime Minister Benjamin Netanyahu in April. In Jerusalem, Trump’s remarks were viewed as patronizing.
In contrast, U.S. Ambassador to Israel Mike Huckabee, speaking in Jerusalem later in April, struck a different chord.
“It is not that Israel benefits so greatly because of its relationship to America. America benefits greatly from its relationship to Israel… From intelligence and military tech to life-saving medical innovations, what we get is invaluable,” Huckabee said.
Said Halevi to TPS-IL, “This isn’t about walking away from America. It’s about maturing the alliance. About freeing ourselves from structural pressures. About standing tall and saying—we are equals.”
Halevi is busy drafting a formal policy paper outlining a practical roadmap to gradually replace the current aid model with bilateral investment frameworks and strategic cooperation mechanisms.
His plan is expected to feed into Israel’s preparations for the next Memorandum of Understanding negotiations.
worldisraelnews.com
Israeli officials are laying the groundwork to phase out a longstanding U.S. foreign aid model for a new framework based on joint investments, innovation and equal partnership.
“I believe Israel must be an equal among equals,” Likud MK Amit Halevi, who is spearheading the initiative, told The Press Service of Israel.
“Israel must first and foremost be a sovereign state that respects its sovereignty and breaks free from any framework or system that enables or imposes dictates on its policy,” insisted Halevi, who chairs the Knesset subcommittee on National Security Doctrine and Force Buildup.
Under the current Memorandum of Understanding, which was signed in 2016 and is in effect from 2018-2028, Israel receives $3.8 billion annually. While $500 million is earmarked for missile defense cooperation, the remaining $3.5 billion is used entirely within the U.S. defense industry.
But key Israeli figures told TPS-IL that this model no longer reflects Israel’s capabilities or the mutual benefits at stake.
Halevi, who convened a series of hearings on the issue, wants to emphasize bi-national funds and mega-projects reflecting joint strategic interests.
He suggested that models such as the Israel-United States Binational Industrial Research and Development Foundation (BIRD Foundation) and the U.S.-Israel Binational Science Foundation (BSF Foundation) be scaled to the defense and national strategy arena.
During a February visit to Washington, Halevi presented his principles to Republican and Democratic lawmakers. He told TPS-IL that his proposal was met with genuine interest, especially among conservative members who viewed it as a potential response to critiques of foreign aid.
‘Not Handouts’
“Too often, Israeli officials arrive on Capitol Hill thanking America for its generosity,” Yoram Ettinger, former Israeli ambassador and expert on U.S.–Israel relations told TPS-IL. “They should be reminding Congress that this is a win-win. The $3.8 billion remains in the U.S., supports American jobs, and boosts American security.”
The retired diplomat and researcher stressed, “These are not handouts. Israel is not a foreign aid recipient. It’s a battlefield laboratory for the U.S. defense industry. Every dollar ‘given’ to Israel returns hundreds in value to American taxpayers.”
He pointed to data from U.S. defense contractors Lockheed Martin and Boeing showing that Israeli feedback from combat use of American systems shortens R&D timelines, improves weapon effectiveness, and drives U.S sales.
“We are the luxury showroom of American military hardware,” said Ettinger.
The research of Dr. Raphael BenLevi has shaped much of the debate. BenLevi — the director of the Churchill Program for Statecraft and Security at the Argaman Institute, and a fellow at the Misgav Institute for National Security — told TPS-IL that Washington’s use of aid as both a carrot and stick has distorted decision-making and public perception.
“Since the 1970s, many Israeli territorial concessions were indirectly facilitated by aid packages — aid that was meant to ‘sweeten’ politically risky moves,” he explained. “We called it ‘land for peace,’ but it was often ‘land for aid.’”
BenLevi also warned that overreliance on U.S. procurement hollowed out Israel’s own production lines. The current Memorandum of Understanding (MOU) ended Israel’s ability to convert 26% of aid into local currency.
“We became addicted to Washington’s credits. Then came the war on October 7, and suddenly we needed ammunition we couldn’t manufacture fast enough at home,” said BenLevi.
According to BenLevi and Halevi, a ten-year phased transition would allow Israel to adjust its military budgeting and strengthen its industrial independence. By 2028 — when the current MOU expires — Israel could be “in position to negotiate a new framework based on joint innovation, not dependency.”
Halevi’s committee hearings revealed internal divisions. Some warned that reducing U.S. aid could endanger Israel’s security, with one academic calling the dependence as “existential.”
Opposition MK Moshe Tur-Paz added that while U.S. aid is 2% of Israel’s defense budget in peacetime, it surges to 16% during emergencies and must be preserved.
In response to those concerns, BenLevi told TPS-IL that that the aid currently represents only 0.7% of Israel’s GDP and roughly 2.5% of the pre-war national budget.
“That’s not existential. We can fund these purchases ourselves, and gain flexibility in choosing suppliers, investing in domestic capabilities, and forming new partnerships—without undermining our bond with America,” BenLevi said.
Reciprocity
Marc Zell, chairman of Republicans Overseas Israel, explained to TPS-IL that many conservative voices in Washington are wary of unconditional U.S. foreign aid, and that a new model for stressing reciprocity would appeal to policymakers.
“U.S. assistance to Israel is not a one-way street. It’s an investment. Israel is not a welfare case—we’re a critical ally that gives back more than we get,” Zell told TPS-IL. “This shift in messaging can neutralize criticism on the right—and highlight how this alliance serves American interests.”
This debate was reignited when President Donald Trump introduced trade tariffs affecting more than 90 countries. Israel was hit with a 17% tariff on products.
“Don’t forget, we help Israel a lot. We give Israel $4 billion a year. That’s a lot… But we take care of our friends,” Trump told reporters during a joint Oval Office appearance with Prime Minister Benjamin Netanyahu in April. In Jerusalem, Trump’s remarks were viewed as patronizing.
In contrast, U.S. Ambassador to Israel Mike Huckabee, speaking in Jerusalem later in April, struck a different chord.
“It is not that Israel benefits so greatly because of its relationship to America. America benefits greatly from its relationship to Israel… From intelligence and military tech to life-saving medical innovations, what we get is invaluable,” Huckabee said.
Said Halevi to TPS-IL, “This isn’t about walking away from America. It’s about maturing the alliance. About freeing ourselves from structural pressures. About standing tall and saying—we are equals.”
Halevi is busy drafting a formal policy paper outlining a practical roadmap to gradually replace the current aid model with bilateral investment frameworks and strategic cooperation mechanisms.
His plan is expected to feed into Israel’s preparations for the next Memorandum of Understanding negotiations.
Israel moving to replace U.S. aid with ‘win-win’ investment model
Many conservative voices in Washington are wary of unconditional U.S. foreign aid, and a new model for stressing reciprocity would appeal to policymakers.
worldisraelnews.com
