by Liptin Matthews
Israelis do not feel entitled to American aid, and some of them want it to go.
America gives aid to many countries, but only its aid to Israel elicits controversy. The quarrel is odd because Israel is the recipient least suited to the standard case against aid. Foreign aid does not induce economic growth, and a country that depends on it for prosperity is placing its hopes in the wrong place. Israel never made that mistake. Its American aid is military, and it gave up the economic portion on its own initiative in 2008. Its economy has grown strongly since, to the point that U.S. military aid now amounts to about half a percent of GDP. Israel grew while shedding aid, and the argument over what remains is mostly noise.
Much of that noise comes from a mistaken idea of what American aid is. It is not an act of kindness, and the sources make it plain that it forms part of a long-term strategy in which the superpower strengthens its own position by strengthening its allies. Even the defenders of the aid insist that it be judged by American interests alone. A gift made for the giver’s own reasons creates no debt of gratitude, and no country should feel obliged to anyone for receiving it. The only real obligation hides in the conditions. Aid hands Washington leverage over Israeli policy, which narrows Israel’s freedom of action and makes it more sensitive to every shift in American politics. That lever has proved weaker than its critics imagine, since the cut in economic guarantees that America imposed over settlements was limited and ineffective. Still, a recipient that regards aid as a transaction rather than a favor keeps the freedom to walk away.
Israelis appear to understand this better than most, and it is in Israel that the case for reducing the aid is made most openly. Some voices there have argued that the country should stand on its own feet and give up military aid voluntarily, both to protect its independent image and to lessen the chance of American pressure. They point out that the aid is only about 1 percent of GDP and that Israel has already renounced the economic portion. The paper that reports these views treats them as unofficial, yet the debate has since climbed to the top. The prime minister has said he wants the aid reduced gradually over the coming decade, and analysts describe this as a move from technical haggling over the terms of an agreement to a principled argument about security independence and the dangers of prolonged reliance.
He has pictured a future in which assistance gives way to joint work in cyber capabilities, artificial intelligence, missile defense, and directed energy, and Israeli analysts propose a gradual passage from military aid to a business partnership. Even those who would keep the money argue from prudence rather than right. The aid covers about 15 percent of the defense budget, and refusing it would incur a multibillion-dollar cost over a decade. Their case concerns how to manage a dependence, not how to defend an entitlement. Israelis do not feel entitled to American aid, and some of them want it to go.
Egypt and Jordan show how ordinary the arrangement itself is. Egypt is the beneficiary of $1.3 billion in military aid each year, and Jordan receives nearly half a billion. Both are paid for services rendered in support of American policy. Egypt’s aid sustains its peace treaty with Israel and its steadying role in the region, while Jordan’s aid secures its cooperation on security and the fight against terrorism. In both cases, the money buys something Washington wants. Neither draws controversy. The erosion of consensus is peculiar to Israel. It arises among progressives in one party and among the radical wing of the other.
What distinguishes Israel is what America receives in return. The aid works largely as a purchase order placed with American industry. Of the $3.8 billion Israel receives each year, $3.3 billion is foreign military financing and $500 million supports joint missile defense, and nearly all of it is spent in the United States. Israel is the most important foreign operator of the F-35, which it buys from Lockheed Martin’s plant in Fort Worth, and the aircraft’s supply chain stretches across more than forty-five states. The ten-year structure of the aid gives American arms makers steady demand and the financial security to plan long production runs.
Indeed, aid to Israel comes at a cost. Aid deepens Israel’s strategic dependence on the United States and invites the misuse of that dependence. Following America’s concerns about Chinese activity in Israel, Israel set up an advisory committee in late 2019 to review the security implications of foreign investment. The terms also constrain Israel’s own defense industry. Most of its defense needs are met by American suppliers under the aid agreement, and Israel must weigh American wishes before it exports arms, which narrows its markets, an effect that grows as the share of aid convertible into shekels falls from $815 million in 2019 to nothing in 2028. The aid therefore does less than in previous years to bolster Israel’s domestic industry. It also gives Washington a justification for selling advanced weapons to Arab armies, which alters the regional balance. And it leaves Israel exposed to American domestic politics, since some Americans hold that direct military aid makes them partners in responsibility for Israel’s conduct.
The American side of the ledger becomes more favorable still as 2028 approaches. Historically, about 74 percent of Israel’s military financing had to be spent on American goods and services, while the remainder, up to 26 percent, could be spent in Israel’s own defense industry under an arrangement called Offshore Procurement. That exception is being retired, and by 2028 every dollar of foreign military financing must be spent in the United States. The schedule in the 2019–2028 agreement shows the convertible portion shrinking from $815 million in 2019 to $450 million in 2025, to $250 million in each of 2026 and 2027, and to zero in 2028, when the full $3.3 billion goes to American procurement. Additional research agrees that the option to convert aid into shekels is expected to vanish by 2028, leaving the aid channeled almost entirely toward purchases in the United States.
Set against these facts, the controversy looks badly out of scale. The aid comes to $3.8 billion a year, about 0.6 percent of the $649 billion the United States spent on defense in 2018, and for Israel it is about 0.5 percent of GDP. Meanwhile, the structure keeps drifting toward American industrial policy, because by 2028 all of the money will be spent at home. The real question, then, is not whether $3.8 billion is too much to spend on Israel, but whether Washington should continue treating military aid as an instrument of foreign policy when its economic benefits are increasingly directed toward domestic producers.
Liptin Matthews is a researcher and podcaster. He is a regular contributor to American Greatness. In addition, his work has been featured in Mises, The Federalist, Chronicles, American Thinker, Epoch Times, and other publications. He is also author of Busting African Delusions: Institutions, Human Capital, and the Path to Progress. He can be reached at lo_matthews@yahoo.com.
Source: https://amgreatness.com/2026/10/19/the-truth-about-us-aid-to-israel/
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