Israel should phase out American defense aid
As I'm sure you are aware, the Israeli and American governments inked a Memorandum of Understanding this week pertaining to the next tranche of defense aid starting in 2018. The deal is more or less the same as previous deals; over ten years, the US commits to providing Israel with $3.8 billion worth of weaponry annually, a modest increase from the last ten-year deal (about $300 million). The roots of this American largesse are complex, but have a lot to do with the Camp David Accords which capped peace negotiations between Egypt and Israel. Given that Israel was giving up a great deal of strategic depth in the land-for-peace deal with Egypt, the United States committed to guaranteeing Israel's strategic edge over its neighbors by the supply of high end weapons systems, including recently developed F-15 and F-16 fighters as well as sophisticated missiles and armaments. (As a corollary, Egypt moved out of the Soviet orbit and became a US client state, themselves receiving a hefty defense and economic aid package.)
Over the years, this aid has increased due to a variety of factors: first, US economic aid to Israel was phased out and replaced with further military aid as the Israeli economy grew stronger. Second, the increasing threat of ballistic and short range missile threats (first highlighted by Iraq in 1990/1991, followed by Hezbollah and Hamas) increased missile defense funding. Third, changing geopolitics - and the rising focus in the US on Middle Eastern instability and global terrorism - has dramatically increased supply of US arms to the region, resulting in a required increase in the quantity and quality of arms provided to Israel to maintains its technological advantage.
This latest arms deal is an extension of this logic - a modest increase in spending that more or less keeps pace with inflation, a gradual phaseout of the amount of US aid allowed to be spent on Israeli weaponry (currently about 1/4 of the money can be spent in Israel; after the phaseout all of it must be spent in the US), the missile defense funding is formally folded into the aid budget rather than a separate appropriation, Israel commits to refraining from asking Congress for additional funds outside of wartime, and the agreement no longer allows Israel to purchase up to $400 million in 'military fuels' (typically JP-8 aviation fuel) as part of the aid. So, more or less the same as always with some modest changes.
Both sides have had something to gain from this partnership - the US get frequent battlefield tests of their newest equipment, often against cutting edge Soviet bloc weaponry as well as leverage over an important regional ally (not to mention effective peace between Israel and her neighbors), while Israel got lots of free high end weapons systems and a boost to their economy. I have come to believe, however, that the US provision of arms to Israel is no longer in Israel's interests and they should aim to phase out US aid over the next ten years.
My reasoning may be familiar in some respects but newer in others. First, there is no doubt that the Israeli government would feel the pinch. The aid amounts to roughly 1% of Israeli GDP, which means the budget deficit would either need to increase by a commensurate amount, the size of the budget would need to decrease by said amount (I think it would be something on the order of 5% of the entire government budget), or revenues would need to increase. This would not be a pleasant transition, akin to a modest austerity plan over a few years as the cuts/revenues were phased in. But as a gross measure of its effect on the economy and the budget, I think it would be muted; Israel's economy is fairly robust, government debt continues to fall as a proportion of GDP (now in the low 60s, I believe), and the adjustment need not be that great. Furthermore, I would imagine that it is possible that the fiscal adjustment might not need to be so dramatic - the military might find it could subsist without some of the highest end weapons.
Secondly, I think the substitution effects of US aid on the domestic Israeli defense industry have been substantial. Israel has a highly sophisticated technology sector, including a number of well-respected defense firms, typically specializing in high-end electronics, radar systems, missile systems, cybersecurity, missile defense, and armored vehicles. They are conspicuously absent from combat aircraft, however, which is a major component of US aid to Israel. This is not because Israel does not have the resources or know-how to develop high performance combat aircraft - they extensively retrofit aircraft bought from the US (and from the French in the past) and had a domestic fighter jet project in the 80s - the IAI Lavi - that was cancelled due to pressure from the Americans to adopt the F-16 instead. Given the ongoing concern over the combat effectiveness of the F-35 as well as its ballooning price tag, one has to wonder if Israeli leaders are wishing they could instead focus their resources on lower cost and higher capability systems optimized for Israeli needs without needing much of the gadgets present on the F-35. For example, the F-35 is range-limited, can carry a very limited bomb load in stealth configuration, and has impenetrable software that Israel will not be able to modify. Israel's most pressing need for fighter aircraft is to act as close air support in uncontested airspace or against legacy air defense systems that they already have pretty solid EW countermeasures for (e.g. Syria). The one likely use for the F-35 might be deep penetration bombing raids, but the range limitations, poor ACM performance, and minimal weapons load make this a questionable buy. But Israel is likely to acquire at least 75 of the planes because, well, they are there and 'free'. Israel has a much more pressing need for (a) a low cost fighter-bomber as a souped-up F-16, (b) long range strike drones, and (c) an air superiority fighter with excellent BVR and ACM capabilities. All of these can be acquired at substantially lower cost, and likely domestically if the industry is allowed to develop. Some of these would likely be good export candidates, not to high end militaries like the US or UK focused on near-peer competitors, but to mid-range militaries that need cost-effective and high performance aircraft that are unlikely to be working in heavily contested airspace.
The same basic argument about substitution could be made about a lot of the Israeli defense industry, and I think it's a worthwhile discussion. It's already a decent import earner for the country, but freed from the flow of cheap US arms and US-imposed restrictions, the defense industry could get a real boost, which would in turn further mitigate the economic and budgetary impact of the reduced aid.
Third, I think Israeli military planners frequently plan for the wrong war because of the weapons they are given. Israel faces a lot of threats - strategic threats from near-peer and hostile neighbors, asymmetric threats from a variety of terrorist groups and quasigovernmental groups, as well as unconventional threats from Iran. Yet the Israeli military continues to be mainly built around high-intensity tank battles against Syrian and Egyptian forces. This isn't to say they should abandon this capability, but the value of a Merkava IV against Hezbollah or Hamas is limited at best, and utterly useless against Iran. Israel uses US solutions to a lot of their needs because, well, it's free, which means they often are stuck with weapons geared against near-peer adversaries. A rethink of their force structure might find space for substantial cost savings as well as opening up new discussions about how their defense posture should be established.
Fourth, it frees Israel (to an extent) from American leverage. There is always the constant threat, rarely acknowledged, in US-Israel relations that US weapons shipments could stop, tomorrow. That would indeed be a compelling challenge for Israel to cope with, and I understand how Israel often acts as a toady to the US (or, when they don't, are portrayed as ungrateful children). An alliance of equals, rather than of the US with a client state, would dramatically improve Israel's relationship with the US and would allow for frank discussions about issues unencumbered by the $3.8 billion elephant in the room. Furthermore, it might tame some of the criticism leveled at the US-Israel relationship; take out the weapons, and it could become a more traditional relationship with a close ally rather than a contentious and transactional one.
I am not suggesting that Israel and the US should cut ties - far from it. In reality, the US and Israel will continue to have a unique relationship - Israel is the only stable and democratic country in a massive region undergoing near-constant upheaval, and the US populace and government also feel a certain degree of responsibility and kinship with the country. So there will always be unique components to the relationship - US diplomatic cover in the UN, for example, close intelligence and military cooperation, close economic and cultural ties, etc. In fact, I have no doubt that Israel would continue to buy a wide variety of high-end American weapons because they are the best in the world, work well with Israeli systems and training, and meet important Israeli strategic needs. That's fine, and only to be expected. But if the military aid were phased out, they could start to interact as normal friends and allies, and the Israeli defense industry could develop what Israel needs, rather than what the US wants to sell.
