During the final chapter of the Obama Administration, two challenging, interrelated key issues related to U.S.-Israeli relations remain: a new military aid agreement and Israeli-Palestinian negotiations. The current U.S.-Israel military aid agreement expires in 2017. It provided Israel with $3.1 billion annually, primarily for the purchase of U.S.-made weapons and joint U.S-Israeli weapon development projects, including missile defense systems. Negotiations to renew the agreement for another ten years began in late 2015. The Obama administration linked the aid package to diplomacy as related to both the Iran nuclear deal and the Palestinian conflict— the two most controversial issues in recent U.S.-Israeli relations.
The new aid package was first linked, militarily and politically to Israel’s battle against the Iran nuclear deal. The lifting of U.N.-imposed sanctions is expected to release to Iran about 120 billion dollars from frozen accounts. Given that the Iran deal did not address Iranian-sponsored terrorism, violence, and regime destabilization in the Middle East, Iran is likely to use substantial sums from the newly unfrozen accounts to modernize its conventional forces and finance terrorist proxies such as Hezbollah and the Islamic Jihad. Indeed, shortly after nuclear deal negotiations concluded, Russia and Iran signed a major military cooperation agreement.
The United States reassured Israel and its concerned Persian Gulf allies of its support in defending against potential Iranian terrorism, missile strikes, maritime threats, and cyber attacks by providing an arsenal of modern weapons. However, arming America’s Arab allies could be cause for Israeli concern, as the persistently volatile conditions in the Arab region could result in these new weapons falling into the wrong hands. Per Israeli congressional mandate, Israel must maintain a qualitative military edge over its regional adversaries – therefore it needs the United States to compensate with additional weapons in order to balance the increased military force of both Iran and other Arab countries.
U.S.-Israeli discussions regarding the aid package are highly political. During the final phase of the negotiations with Iran in the summer of 2005, Obama offered Israeli Prime Minister Benjamin Netanyahu a substantial increase in military aid-- from $3.1 billion annually to about $5 billion-- in return for an end to his fierce criticism of the emerging nuclear deal. Counting on Congress to reject the deal, Netanyahu rejected Obama’s offer, and continued his battle against the agreement.
Following the deal’s approval, Obama reduced his previous offer to about $3.7 billion, and added a new major restriction: Israel must refrain from seeking additional funds from Congress, which approved several special Israeli funding requests in recent years. Historically, the strong U.S.-Israel relationship justified this behavior, as U.S. military aid to Israel is viewed as an investment in peace and security. Additionally, in return for aid, Israel provides the United States with information about weapons effectiveness, develops innovative military technology like missile defense systems and border surveillance technology, and shares intelligence and battle-proven military doctrines.
Netanyahu must now choose to either accept Obama’s revised, much smaller offer or wait for a new U.S. president to assume office. Vice President Joe Biden’s visit with Netanyahu and Palestinian leader Mahmud Abbas in March 2016 illustrated the Obama administration’s intention to link the new aid package with diplomatic discussions – given that the aid could legitimize pressure on Israel to make concessions on negotiations with the Palestinians. After investigating Netanyahu’s position on both the aid package and negotiations with the Palestinians, Biden found that although Netanyahu wavered on whether or not to accept Obama’s aid package, he was ready to negotiate with the Palestinians without preconditions. Abbas, however, quickly rejected Biden’s plea for Israel-Palestine negotiations, as he had several times in recent years.
After his visit, Biden concluded that Netanyahu and Abbas do not have the political will to negotiate. Obama also does not anticipate any breakthrough negotiations during the rest of his term. Secretary of State John Kerry, however, stated that the administration would continue to seek ways to encourage Israel and the Palestinian Authority to resume talks. Netanyahu suspects that Obama actually intends to lead one final effort towards resolution, possibly via the U.N. or through a plan that the next president will not be able to ignore. Before leaving office, Obama may present a detailed official American plan to end the conflict that would include principles that Israel cannot accept, including security arrangements, the return to pre-1967 borders, and a division of Jerusalem. Obama may submit it to the U.N. Security Council for approval.
During most of Obama’s presidency, the Palestinian authorities were not interested in serious negotiations with Israel; instead, they initially wanted the United States to impose a solution to the Israel-Palestine conflict. When it became clear that this would not occur, the Palestinians switched their focus to the U.N. Security Council where they seek a resolution declaring the Israeli settlements in the West Bank illegal. In the past, such a resolution would be vetoed; particularly as the United States historically opposed one-sided, anti-Israeli resolutions. The Palestinians hope that Obama will not veto the resolution, which may very well go through. If this resolution passes, it will further exacerbate the already tense relations between the United States and Israel.
U.S. Republican presidential candidate, Donald Trump, continues to criticize Obama for his handling of Israel and Netanyahu, and promise to restore good relations between the two countries. Presumptive Democratic presidential nominee, Hillary Clinton, also noted that one of her first steps as president would be to invite Netanyahu to the White House in order to open a new page in U.S.–Israeli relations. On military aid, Clinton is likely to follow the Obama policy. Donald Trump, however, presents himself as the greatest “friend of Israel,” but also as potentially “neutral” in the Israeli-Palestinian conflict. In terms of military aid, he stated on March 21, 2016, that like other U.S. allies, such as South Korea, Japan and Germany, Israel should contribute funds to offset some of the costs of U.S. military aid. He has, however, since backtracked: "They (Israel) help us greatly.” and therefore, may warrant exception.
Diplomacy-related aid conditionality continues to challenge Netanyahu. In April, 83 Senators, both Republican and Democrat, signed a letter calling on Obama to increase aid to Israel and immediately sign an agreement on a new defense package. Yet Netanyahu fears that Obama – no longer facing election constraints – may take steps against Israel between the November U.S. presidential elections and his January 2017 departure from the White House.
The next U.S. president, whether Democrat or Republican, may not support a higher level of aid, leading American and Israeli politicians and experts to urge Netanyahu to conclude the aid agreement with Obama now. Regardless of the next U.S. administration, the total annual military package for the next decade will be around $4 billion, which falls between what Netanyahu wants and what Obama is currently offering. Ultimately, Israel’s dependency on the United States will likely be used by the next president as a diplomatic tool to pressure Israel to engage in diplomacy and make political concessions it may not otherwise consider.