Israel – United States military relations
Israel has received more U.S. military assistance than any other country, both in terms of grant aid and military sales on a concessional basis. However, unlike other countries who receive military aid and are required to spend the money in United States, Israel may spend 25% on its domestic military projects.
Since 1987, the U.S. has provided an average of $1.8 billion annually in the form of Foreign Military Sales (FMS), Foreign Military Financing (FMF) and funds to support research and development.
A bilateral memorandum of understanding was signed in January 2001, at the end of the Clinton administration, under which defense aid was increased to $2.4 billion annually from $1.8 billion, while the $1.2 billion of economic aid would be eliminated. This was predicated on the basis of the defense aid being increased by $60 million per year until the full amount was reached in 2008, while the economic aid is decreased by $120 million per year until eliminated.
In 2007, the United States increased its military aid to Israel by over 25%, to an average of $3 billion per year for the following ten year period (starting at $2.550 billion for 2008, growing by $150 million each year). The package is scheduled to start October 2008, when regular economic aid to Israel's economy is to end. Officials have insisted the aid is not tied, or meant to balance, simultaneous American plans to sell $20 billion worth of sophisticated arms to its Arab allies in the region, including Egypt and Saudi Arabia. U.S. President George W. Bush assured Israeli Prime Minister Ehud Olmert that the U.S. would help keep a "qualitative advantage" to Israel over other nations in the region.