It’s Not American Aid, It’s a Security Deal

American assistance is no less beneficial to the United States than it is to Israel, and that fact sheds a different light on the idea of “aid.” Continued reference to U.S.-Israel cooperation as a form of “charity” weakens Israel’s negotiating position when it comes to financial relations between the two countries.

The security relationship between the United States and Israel is worth much more to the Americans than the amount they currently send to Israel — about $3 billion per year — but in order to prevent Israel from negotiating according to the true economic worth of those relations, they define it as aid or charity. Israel’s behavior on this front is like that of a tramp rattling the gates to the mansion, with the state raising all kinds of arguments, from Iran to the Holocaust, why it should receive more money.

The truth is that the Americans have no problem with such Israeli conduct because it diverts the essential discussion into the realms of emotion where “any amount is welcome,” whereas the truth is that the sum transferred to Israel is rather minimal compared to the real value of the security relationship between the two countries.

In order to understand the real economic worth hovering between the two, it’s worth coming to grips with the actual fabric of security relations woven together between Israel and the United States. We can quantify this worth by looking at American defense expenditure in parallel projects.

– Military platform: The state of Israel serves as a frontline platform for the U.S. Armed Forces, which rely on Israel in a variety of fields. There’s a well-known saying from Alexander Haig, which goes as follows: “Israel is the largest American aircraft carrier in the world that cannot be sunk.”

According to American calculations, the cost of operating an aircraft carrier is $6.5 million per day, i.e. $2.35 billion in a year. In addition, the cost of building an aircraft carrier starts at $4.5 million.

Haig was speaking in 1982, long before the American radar station in the Negev, which holds 120 U.S. soldiers and covers the whole of the Middle East, was built. Israel has no access to American radar data, but it’s reasonable to assume that its contribution to American military capabilities is worth at least half a billion dollars.

– Development platform: The Americans “assist” Israel in different ways through a variety of development projects, one of the most well-known of which is Iron Dome. One could be forgiven for thinking that American support for Israel stems only from concern about its safety, but that isn’t the case.

In actuality, the Americans buy up all Israeli advances, getting hold of any new Israeli technology, without any of the development risks. In each and every one of the projects the Americans invest in, they receive everything they need in order to create the same product themselves back home.

In light of the fact that the Americans invest around $3 billion a year in the development arm of the U.S. Department of Defense, the Defense Advanced Research Projects Agency, and given that the latter’s advancements are hardly more impressive than those of its Israeli counterparts, we can estimate that the value of coordinated development projects is at least $1.5 billion.

– The reduction in the Israeli security industry: Over the years, the Americans had a veto over Israeli security exports and sometimes even over domestic production (see Lavi aircraft, which caused controversy with the U.S. government due to competition with American jets on the export market and was ultimately cancelled). The most infamous example is the Falcon deal, in which Israel wanted to sell to China but cancelled due to American pressure. It took Israel a long time and a lot of money to repair the relationship with China in the aftermath.

There are a number of other instances in which America utilizes its veto right not to obstruct the arming of its enemies, but rather simply to ensure its likelihood of winning big contracts in the world market without the bother of having to compete with Israeli companies. Additionally, in passing to the Americans all the creative knowledge developed within its borders, Israel prevents its own companies from being able to sell advanced products in the United States and reduces their sales potential.

The privilege extended to American companies in the world market at the expense of their Israeli counterparts, along with the veto on weapons shipments to those countries America doesn’t like, are worth billions of dollars to United States coffers.

– Intelligence cooperation: The American military intelligence budget is estimated at around $17 billion. For upwards of 40 years, Israel has waged joint intelligence operations with the Americans. That cooperation began with access granted by Israel to the Russian MiG-21 fighter jet it acquired covertly in 1966, and since then, Israel keeps the United States involved in intelligence it obtains.

Some of that intelligence pertains directly to positive threats to American forces, while some of it is more general. According to various reports, the Americans have no agents on the ground in Middle Eastern countries, with Israel being the only power that runs human intelligence operations in the region.

Furthermore, it is well-known that Israel’s Unit 8200 shares the signals of the intelligence it gathers from a variety of sources with the Americans. That sharing of intelligence also serves Israeli interests — Israel is keen to garner U.S. support internationally for the various operations it undertakes, but in any case, it seems fair to state that if the Americans needed to obtain such intelligence on a day-to-day basis, it would cost them a cautious estimate of approximately 10 percent of their military intelligence budget (their nonmilitary intelligence budget is more than $50 billion).

– Israel does not really receive any money: In truth, the big winner from the whole story of financial “aid” to Israel is none other than the United States. Israel doesn’t receive any cash but rather gets the possibility to buy from American industry at a certain price (occasionally we can pay a small amount in shekels, but in such cases, that amount has to be backed up by a reciprocal procurement deal).

American companies do pretty well from this arrangement, while Israel generally doesn’t receive any money, and on top of that, gets to finance thousands of American jobs. We can argue that a significant portion of those pushing for aid to Israel are the American defense contractors, who are coincidentally some of the most powerful lobbyists in the United States. That money spent in the U.S. fuels the wheels of the American economy and remains with the American taxpayer, while the only things really transferred to Israel are platforms for waging war on a battlefield that is already dangerous enough as it is.

– Even those platforms don’t really reach Israeli hands: The Americans restrict Israeli ability to make use of the tools and equipment paid for by “aid” money. For example, Israel cannot use weaponry for offensive warfare, which in turn leads it to avoid employing enterprising initiatives that could strengthen defense; instead, we have to simply wait for a threat to come along that is large and unambiguous enough to warrant turning to American weaponry. The fact that weapons doesn’t actually pass into Israeli hands is illustrated best of all by the deal to purchase the F-35 jets, in which the Americans were keen to find a way of incorporating a system that would notify them of the location of all the Israeli jets at any given moment.

If we were to summarize the economic worth of relations between the two countries, we would find that if Israel were truly interested in extracting the monetary value of every one of the services it provides, it would be sending the Americans an invoice of at least $10 billion.

It’s true that continuing American support for Israel in the international arena and their commitment to maintaining a substantial Israeli military advantage (something over which there are certainly question marks, from time to time) are also worth no small amount of money. But the fact that American assistance to Israel benefits the providers directly, while the productive output of that beneficial assistance is achieved without any risk to American life, places the idea of “aid” in a different light.

In my experience, often the most important phase in determining how a deal will look and what exactly each party should expect to receive is the phase of structuring the deal. Continuing to talk of American “aid” immediately weakens Israel at the negotiating table over the financial relations between the pair.

I hope that in structuring the deal, Israel will have enough sense not to define our financial relationship with the U.S. as one of aid, but rather as a security deal, in which each party brings to the table a list of services it provides to the other, and that at the end of the proceedings, whoever supplies less will be required to make up the difference in cash. Within such a framework, I am sure that Israel could obtain far better terms.

The writer is founder and CEO of the company Lishtot.