Expanded Top Line Funding Aims to Avoid Annual Haggling, Plus Ups

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TEL AVIV — To facilitate Israel’s long-term planning and spending needs, US President Barack Obama's administration is offering Prime Minister Benjamin Netanyahu a consolidated aid package that essentially guarantees expanded top-line funding from State Department and Pentagon accounts each year for the next decade, starting in 2018.

The proposed package, a follow-on to the $30 billion, 10-year memorandum of understanding signed in 2007, would grant Israel more leeway – including reprogramming authority – over a considerably larger amount of grant aid than that provided in the current agreement.

There’s just one catch: Israel will have to forgo annual plus-ups to the president’s budget from Congress except for extreme emergency cases.

“The benefit is we won’t need to haggle every year, first with the administration and then with Congress. We’ll have a pretty much guaranteed top-line that will help us enormously in long-term planning,” a recently retired senior Israeli security official said.

“The downside, of course, is we’ll lose the ability for annual plus-ups on missile defense, anti-tunnel capabilities and other programs funded by the Pentagon in all but the most-extreme cases,” he added.

Israel is the largest recipient of US security assistance, taking in about 55 percent of the State Department’s Foreign Military Financing (FMF) budget worldwide. US aid accounts for about 25 percent of Israel’s overall defense budget.

In recent years, congressional plus-ups for Israeli aid have exceeded the president’s budget request by much more than 100 percent. US sources calculated that since the start of the current 10-year agreement in fiscal year 2009, congressional plus-ups to Israel exceeded Pentagon budget requests by some $1.9 billion.

Last December, for example, Congress passed an omnibus spending bill that appropriated $487 million for US-Israel missile defense programs — more than three times the amount contained in the Pentagon’s budget request.

It also appropriated $40 million in funding for a new US-Israel tunnel detection program that had not been included in the Pentagon budget.

The American Israel Public Affairs Committee (AIPAC), in a published statement on the omnibus appropriations bill for the 2016 fiscal year, commended Congress “for key provisions to help Israel address critical security challenges.”

The premier pro-Israel US lobbying group noted that the bill provided $3.1 billion in FMF as stipulated under the current MoU; added an additional $400 million over two years to the more than $1 billion in US materiel prepositioned in Israel; and extended Israel’s ability to use existing US loan guarantees for an additional four years. The bill also “expressed support for negotiating a new US-Israel memorandum of understanding,” according to the AIPAC statement.

Under the consolidated, two-track package proposal, Israel would continue to receive an as-yet-undetermined annual amount of FMF grant aid, which is funded through the State Department’s Foreign Ops account.

Israel’s annual FMF under the current MoU is $3.1 billion, which is dispersed in one lump sum at the beginning of each fiscal year. Israel is required to spend all but 26.3 percent of that amount in the US; a caveat that will not change in the follow-on MoU, sources here said.

In parallel, it would receive another as-yet-undetermined top-line amount for R&D and procurement programs traditionally earmarked as distinct line items within the Pentagon’s budget.

An Israeli cabinet minister told Defense News that the Obama administration’s proposed package would start at $3.8 billion for the first two or three years and grow incrementally until it reached a combined 10-year total of “more than $40 billion.”

His numbers could not be confirmed by other Israeli or US officials, who declined to discuss details other than to acknowledge that the sides have not yet reached agreement on ultimate funding levels.

“We’re committed to concluding a package that meets Israel’s very real security requirements and addresses our very real budgetary constraints,” a US official here told Defense News.

“Without getting into numbers, I can assure you it will be the largest single pledge of military assistance to any country in US history. The president has pledged to support Israel’s security needs and it’s in our interest that we do so,” he added.

Early last week, Israel’s Ha’aretz newspaper reported that Netanyahu told his security cabinet that wide gaps remained between the American offer and the amount needed to meet Israel’s expanded security requirements. If negotiators could not reach a top-line funding level satisfactory to Israel, Netanyahu reportedly said he would wait to conclude a deal with the president who succeeds Obama.

Israeli reports in recent months have cited $5 billion per year as the amount needed to preserve Israel’s congressionally mandated qualitative military edge (QME) over regional adversaries, especially Iran.

Israeli officials have publicly and repeatedly cited the lifting of sanctions associated with the so-called P5+1 nuclear deal with Iran, which will enable Tehran to reinvest in arming its own military and that of its regional terrorist proxies. Moreover, concern over a resurgent Iran is driving accelerated military modernization in Saudi Arabia and other Sunni Gulf states, something officials here say Israel must take into account regardless of the unofficial thaw over the common Iranian threat.

“Yes, there’s a convergence of interest on some key issues between us and many of the Gulf states. But that doesn’t mean we can ignore the tremendous amount of sophisticated military hardware that is flowing into a region where instability is rife and regimes can change,” said an Israeli Foreign Ministry official.

At the World Economic Forum in Davos, Switzerland, last month, Netanyahu said whatever aid levels Israel manages to negotiate with Washington would pale in comparison to the funds available to Iran as a result of the nuclear deal.

“Iran’s going to get about $100 billion now,” Netanyahu told CNN's Fareed Zakaria. “The American assistance to Israel is about $3.1 billion and we’re talking about a bigger package. But remember that even over a 10-year period, it pales in comparison to the enormous funds Iran gets.”

Netanyahu did not mention, nor did Zakaria clarify that funds to become available to Iran as a result of the nuclear deal were Iranian funds frozen due to sanctions.

“This is a real discussion that’s taking place as we speak about a follow-on aid package for Israel … We’re talking about military support, not the economic support; I’ve ruled that out. In fact, in my first term as prime minister, I ruled out economic aid and said we’ll be able to carry our own weight. We don’t need economic welfare. We know how to build our own economy. But in terms of protecting Israel … I think we’ll probably reach a successful agreement; I hope in the coming months,” Netanyahu said.

In a Feb. 8 interview on Israel Army Radio, Zeev Elkin, a cabinet minister from Netanyahu’s Likud party, said Israel still awaits a “realistic” offer from the US.

“When the accord with Iran passed, the US president pledged that he would do everything to provide a proper response for Israeli security,” Elkin said. When pressed, Elkin acknowledged the “possibility” that Netanyahu would wait for the next president to conclude the follow-on deal.

“Without the right number, we won’t sign,” a former Cabinet member told Defense News. “But if the number is good enough, we should conclude the agreement with this administration. We started with them and we should try to finish it with them.”

In response to the Ha’aretz report, former two-term US ambassador Martin Indyk tweeted, “Always dangerous to think next president will give you a better deal. That was one of [Yasser] Arafat’s mistakes!”

Email: bopallrome@defensenews.com.

Twitter: @OpallRome

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