Israel: Major Issues and U.S. Relations

Changes from March 16, 2016 to July 26, 2016

This page shows textual changes in the document between the two versions indicated in the dates above. Textual matter removed in the later version is indicated with ~~red strikethrough~~ and textual matter added in the later version is indicated with blue.

Israel: Background and U.S. Relations Inin Brief

~~March 16~~July 26, 2016 (R44245)

Introduction
Overview of U.S.-Israel Relations

Key National Security Issues

Iranian Nuclear Deal and U.S.-Israel Implications

Overview

U.S.-Israel Negotiations on Aid Memorandum of Understanding (MOU)

Other U.S.-Israel Next Steps

Regional Threats from Hezbollah, Syria, and Elsewhere

Israeli-Palestinian Issues

Key U.S. Policy Considerations

Ongoing Violence: Another Palestinian Intifada?

Domestic Israeli Politics

Addressing Regional Threats

After the Iran Nuclear Deal

Ongoing Negotiations on Aid MOU

U.S.-Israel Security Cooperation

General Issues

Pending Security Cooperation Legislation

Current Israeli Government and Major Domestic Issues

Israeli-Palestinian Developments

Figures

Figure 1. Israel: Map and Basic Facts

Introduction

Israel's security has significant relevance for U.S. interests in the Middle East, and Congress plays an active role in shaping and overseeing U.S. relations with Israel. This report focuses on the following:

Recent dynamics in U.S.-Israel relations.

U.S.-Israel next steps following the July 2015 Iranian nuclear deal, including ongoing negotiations on a new U.S.-Israel aid memorandum of understanding.

Regional threats Israel perceives from Hezbollah (the Lebanese, Iran-backed Shiite group and U.S.-designated terrorist organization), Syria, and elsewhere.

Israeli-Palestinian policy considerations and ongoing tensions and violence.

~~Domestic political developments in Israel~~ and security cooperation.
Addressing regional threats Israel perceives, including via a new memorandum of understanding on U.S. military aid to Israel that is currently being negotiated.
Current domestic political issues, including on energy matters.

For additional information and analysis, see CRS Report RL33476, Israel: Background and U.S. Relations, by [author name scrubbed]; ~~and~~ CRS Report RL33222, U.S. Foreign Aid to Israel, by [author name scrubbed]; and CRS Report R44281, Israel and the Boycott, Divestment, and Sanctions (BDS) Movement, coordinated by [author name scrubbed].

Figure 1. Israel: Map and Basic Facts

Sources: Graphic created by CRS. Map boundaries and information generated by [author name scrubbed] using Department of State Boundaries (2011); Esri (2013); the National Geospatial-Intelligence Agency GeoNames Database (2015); DeLorme (2014). Fact information from CIA, The World Factbook; Economist Intelligence Unit; IMF World Outlook Database; Israel Central Bureau of Statistics. All numbers are estimates and as of ~~2015~~2016 unless specified.

Notes: UNDOF: United Nations Disengagement Observer Force. The West Bank is Israeli-administered with current status subject to the 1995 Israeli-Palestinian Interim Agreement; permanent status to be determined through further negotiation. The status of the Gaza Strip is a final status issue to be resolved through negotiations. Israel proclaimed Jerusalem as its capital in 1950, but the United States, like nearly all other countries, retains its embassy in Tel Aviv-Yafo. Boundary representation is not necessarily authoritative.

Overview of U.S.-Israel Relations

For decades, strong bilateral relations have fueled and reinforced significant U.S.-Israel cooperation in many areas, including regional security. Nonetheless, at various points throughout the relationship, aligning U.S. and Israeli policies has presented challenges on some important issues. Notable differences regarding regional issues—notably Iran and the Palestinians —have arisen or intensified since 2009, during the tenures of President Obama and Israeli Prime Minister Binyamin Netanyahu.¹ Israeli leaders have expressed some concerns about the U.S. posture in the region and the potential implications for Israel, while U.S. officials have periodically shown unease regarding the compatibility of some Israeli statements and actions with overall U.S. regional and international interests. However, both governments say that ~~overall~~ bilateral cooperation has continued and even increased by many measures in a number of fields such as defense, trade, and energy.

Israeli leaders and significant segments of Israeli civil society regularly emphasize their shared values and ongoing commitments to political, economic, and cultural connections with the United States and the broader Western world. However, the future trajectory of Israel's ties with the United States and other international actors may be influenced by a number of factors including geopolitics, generational change, and demographic trends.²

The longtime U.S. commitment to Israel's security and "qualitative military edge" in the region is intended to enable Israel to defend itself against threats it perceives, which in recent years have largely come from Iran and groups Iran supports~~—such as Hezbollah in Lebanon and Hamas in the West Bank and Gaza Strip~~. The political complement to this cooperation has been a long-standing U.S. effort to encourage Israel and other regional actors to improve relations with one another. U.S. policymakers have sponsored or mediated numerous Arab-Israeli peace initiatives since the 1970s, including Israel's peace treaties with Egypt and Jordan and interim agreements with the Palestine Liberation Organization (PLO). However, largely owing to lingering Israeli-Palestinian disputes and widespread Middle Eastern turmoil, ~~the objective of~~ formal political normalization for Israel within the region has ~~eluded successive Administrations~~been elusive. Such elusiveness may factor into what appears to have been a relatively less urgent U.S. approach to the issue in recent years.

Despite a lack of formal normalization, in recent years Israel has made common cause to some extent with various Arab states. Mutual concerns regarding Iran and its regional actions have presented opportunities for Israel to work discreetly with some Arab states in attempts to counter Iranian influence. Additionally, Israeli and Arab leaders have expressed similar concerns about the nature and effectiveness of U.S. engagement in the region on behalf of traditional U.S. partners.³ Addressing Regional Threats

Currently, Israeli leaders and numerous other observers publicly identify Iran and two of its non-state allies—Hezbollah in Lebanon⁴ and Hamas in the Gaza Strip—as particularly significant security threats to Israel. Other potential threats include Palestinian attacks emanating from the West Bank and Jerusalem, threats from terrorist groups operating near Israel's borders with Syria and Egypt,⁵ potential instability of Jordan's monarchy, and the possibility that some Arab countries might consider using their advanced weaponry against Israel in the event of significant political change.⁶

Perceptions that the United States has become less interested in addressing problems in the region exacerbate Israel's anxiety over the extent to which it can rely on its geographically distant superpower partner to actively thwart potential threats Israel faces, and to do so in the manner Israel's government prefers. This concern is attributable in part to the argument some Israelis and others have made that the level and nature of influence the United States has in the Middle East has been reduced, due to a number of political and economic factors.⁷ Nevertheless, substantial U.S. military assets remain deployed in the region, and U.S. officials regularly reiterate commitments to Israel (and other regional allies) and reinforce these statements through tangible means such as aid, arms sales, and missile defense cooperation.⁸ Debate continues among Israelis over the urgency of a political resolution to Israel's disputes with the Palestinians, as well as the potential regional and international consequences—including possibly increased political and economic "isolation" (or, as some Israelis characterize it, "delegitimization")—if no resolution occurs.

Israel maintains conventional military superiority relative to its neighbors and the Palestinians, and in some respects regional turmoil since 2011 may have bolstered its security.⁹ Yet, it is unclear how shifts in regional order and evolving asymmetric threats may affect Israel's capabilities to project military strength, deter attack, and defend its population and borders. Israeli officials closely monitor U.S. actions and consult with U.S. counterparts in apparent efforts to gauge and influence the nature and scope of future U.S. engagement on and commitment to key regional issues.¹⁰

Some unconventional threats to Israel are seen to have been reduced because of factors such as heightened security measures vis-à-vis Palestinians; missile defense systems; and reported cyber capabilities. From a physical security standpoint, Israel has proposed and partially constructed a national border fence network of steel barricades (accompanied by watch towers, patrol roads, intelligence centers, and military brigades), which is presumably designed to minimize militant infiltration, illegal immigration, and smuggling from Egypt, Syria, Lebanon, and parts of Jordan.¹¹

After the Iran Nuclear Deal

Israeli politicians and security officials reportedly have a range of opinions regarding the largely U.S.-negotiated July 2015 international agreement on Iran's nuclear program. Most Israeli leaders and observers express concern that the nuclear deal and its implementation is facilitating greater Iranian influence in the Middle East and emboldening Iran and its allies to test Israel's political and military capacities for deterrence. Some leaders, such as Prime Minister Binyamin Netanyahu, have asserted that the deal also has legitimized Iran's aspirations to be a "nuclear threshold" state.¹²

Yet, some within Israel's security establishment have identified positive aspects in the deal's time-specific limits or rollbacks on Iran's ability to produce fissile material,¹³ perhaps believing that it has at least temporarily spared Israel from a decision regarding possible military action to prevent or delay Iran's acquisition of nuclear weapons.¹⁴ Lieutenant General Gadi Eizenkot, the Israel Defense Forces chief of staff, said in January 2016, "The deal has actually removed the most serious danger to Israel's existence for the foreseeable future and greatly reduced the threat over the longer term."¹⁵

A number of post-deal developments may affect Israel's "qualitative military edge" (QME) over regional threats, including

The prospect of greater Iranian capacity to affect the regional balance of power in the wake of the deal.¹⁶
An increase in U.S. arms sales to Arab Gulf states.¹⁷
Russia's decision to finally deliver on a long-delayed agreement to provide Iran with an upgraded air defense system known as the S-300.¹⁸

Considerations stemming from the Iran nuclear deal appear to be driving Israeli leaders to seek tangible measures of reassurance from their U.S. counterparts that the United States remains vigorously committed to Israel's security within the Middle East.¹⁹ This atmosphere influences Israeli statements calculated to encourage U.S. and international officials to strictly enforce the terms of the deal and punish any Iranian breaches.

Ongoing Negotiations on Aid MOU

Israeli officials' interests in enhancing their country's security via additional U.S. measures also influence ongoing negotiations for a new 10-year memorandum of understanding (MOU) on annual U.S. military aid that is anticipated to become effective—pending congressional action—in FY2019. In addition to the $3.1 billion per year in Foreign Military Financing (FMF) Israel currently receives, the United States annually provides hundreds of millions of dollars from Defense Department accounts for missile defense programs based in Israel. As the two countries discuss future U.S. military aid to Israel, they are reportedly also contemplating a number of arms sales. Such sales include F-35 (Lightning II) next-generation fighter aircraft, and may also include V-22 Ospreys, as well as greater numbers and expedited delivery of advanced F-15s, refueling planes, and precision weapons.²⁰

A number of news reports speculate about the prospects for a new MOU before the end of the Obama Administration, as well as its possible terms. Any new MOU would be subject to congressional appropriations.

Reportedly, Israel has sought at least $3.7 billion in annual Foreign Military Financing (FMF), plus Administration-guaranteed funding levels for Israel-based missile defense programs that would also allow Congress to provide additional missile defense funding "as circumstances require."²¹ In April 2016, 83 Senators signed a letter to President Obama urging him to "conclude an agreement with Israel for a robust new MOU that increases aid while retaining the current terms of our existing aid program."²² According to a July 2016 report, the Administration responded to the April 2016 senatorial letter by communicating that it has offered to include missile defense funding in the MOU.²³ As part of any arrangement, U.S. officials reportedly want to increase the proportion of FMF spent on U.S.-manufactured weapons systems by (1) reducing or eliminating the allowance per the current MOU (as has been implemented in annual appropriations legislation) for Israel to use 26.3% of annual FMF for purchases from its own domestic manufacturers, and (2) reducing or ending Israeli use of FMF for fuel purchases.²⁴

The Administration's July response to the Senators reportedly justified moving away from special domestic procurement and fuel allowances for Israel because of an "especially challenging budgetary environment."²⁵ In a June 2016 interview on the ongoing negotiations, Speaker of the House Paul Ryan acknowledged budgetary constraints on U.S. discretionary spending, and said, "I don't know what the numbers are going to be—that's between the administration and the Israeli government."²⁶

Future FMF aid levels set forth in an MOU are likely to have some connection with anticipated U.S. arms sales to Israel, given that most of Israel's FMF would be used to purchase equipment from U.S. contractors. Another consideration regarding various regular U.S. budget accounts is that they are subject (through FY2021) to budget caps in connection with the Budget Control Act of 2011 (P.L. 112-25). For example, if increases in FMF to Israel were to be provided other than via an Overseas Contingency Operations (OCO) designation,²⁷ such increases could potentially raise conflicts with the overall caps absent either trade-offs within the non-defense discretionary budget or legislative changes regarding the caps.²⁸

Political considerations may also drive the MOU negotiations to some extent. According to a New York Times article:

Some analysts in the United States and Israel say that Mr. Netanyahu is calculating that he may reach a more advantageous deal with a future president, a charge that the Israelis strenuously deny. Others have suggested that Mr. Obama is pressing to finish the agreement in part to insulate himself against accusations that he has been too tough on Israel, especially if he decides later this year to pressure the country to accept a peace deal with the Palestinians that embraces a two-state solution.²⁹

U.S.-Israel Security Cooperation General Issues

Significant U.S.-Israel security cooperation exists in the realms of military aid, arms sales, joint exercises, and information sharing. It has also included periodic U.S.-Israel governmental and industrial cooperation in developing military technology.

U.S. military aid has helped transform Israel's armed forces into one of the most technologically sophisticated militaries in the world. This aid for Israel has been designed to maintain Israel's "qualitative military edge" (QME) over neighboring militaries, because Israel must rely on better equipment and training to compensate for a manpower deficit in any potential regional conflict.³⁰ U.S. military aid, a portion of which may be spent on procurement from Israeli defense companies, also has helped Israel build and sustain a domestic defense industry, and Israel in turn ranks as one of the top 10 exporters of arms worldwide.³¹

Foreign Military Financing (FMF) and Arms Sales. U.S. FMF to Israel represents approximately one-half of total U.S. FMF and 15%-20% of Israel's defense budget. The remaining two years of a 10-year bilateral memorandum of understanding (MOU) commit the United States to $3.1 billion annually from FY2017 to FY2018, subject to congressional appropriations.³² Israel uses approximately 74% of its FMF to purchase arms from the United States, in addition to receiving U.S. Excess Defense Articles (EDA).

F-35s. In February 2015, Israel announced that it had reached agreement with the U.S.-based company Lockheed Martin to purchase 14 F-35 (Lightning II) next-generation fighter aircraft, which would add to the 19 it agreed to purchase in 2010. The 2015 agreement reportedly includes an option to purchase an additional 17 (which would bring the total to 50).³³ Israel has received U.S. approval to purchase up to 75 F-35s—potentially leading to as much as $15.2 billion in purchases if all options are exercised. As part of the F-35 deal, the United States agreed to make reciprocal purchases of equipment from Israeli defense companies estimated at $4 billion for these companies' participation in the F-35's manufacture.³⁴ In the fall of 2013, Israeli defense manufacturer Elbit Systems and its American corporate partner Rockwell Collins were awarded a contract to construct the helmets for all F-35 pilots.

In the spring of 2015, Vice President Joe Biden announced that Israel would receive its first shipment of F-35s in 2016. If the planes are delivered on schedule, Israel would be the first country outside the United States to receive the F-35. A May 2016 Israeli media report anticipated the arrival of the first two F-35s in December 2016, followed by another six through 2017. Israel will install Israeli-made C4 (command, control, communications, computers) systems in the F-35s it receives, and will call these customized F-35s "Adirs."³⁵ Israel's air force expects to have 50 F-35s in its squadrons by 2021.³⁶

Missile Defense. Congress routinely provides hundreds of millions of dollars in additional annual assistance for Israel's Iron Dome anti-rocket system³⁷ and joint U.S.-Israel missile defense programs such as Arrow and David's Sling. According to an Israeli source, the David's Sling system has already been delivered to the Israel air force, and it is expected to be declared operational in 2016.³⁸ David's Sling is designed to counter long-range rockets and slower-flying cruise missiles fired at ranges from 100 km to 200 km, such as those possessed by Hezbollah in Lebanon.³⁹ In July 2016, the United States and Israel announced that they had successfully conducted a special trial—the first of its kind in eight years—to test the connectivity of U.S.- and Israeli-controlled missile defense systems that are based in and around Israel.⁴⁰

Because Iron Dome was developed by Israel alone, Israel initially retained proprietary technology rights to it. As the United States began financially supporting Israel's further development of Iron Dome in FY2011, U.S. interest in ultimately becoming a partner in its co-production grew. Congress then called for Iron Dome technology sharing and co-production with the United States.⁴¹ In March 2014, the United States and Israeli governments signed a production agreement to enable components of the Iron Dome system to be manufactured in the United States, while also providing the U.S. Missile Defense Agency (MDA) with full access to proprietary Iron Dome technology. In May 2016, Israel's military said that it had successfully tested a naval version of Iron Dome (known as "C-Dome") and would begin deploying it to protect offshore gas rigs and other strategic assets. The system combines elements of the land-based Iron Dome system with naval radar.⁴²

Anti-Tunneling. Since Israel's summer 2014 conflict with Hamas and other militants in Gaza, Israel has sought U.S. assistance to develop, test, and produce systems to detect and destroy border-breaching tunnels Hamas had used during the conflict. The Consolidated Appropriations Act, 2016 (P.L. 114-113), included $40 million from Overseas Contingency Operations (OCO) funding for U.S.-Israel cooperation in developing anti-tunnel technology,⁴³ and Israeli leaders are reportedly seeking at least the same amount for FY2017 and FY2018.⁴⁴

Pending Security Cooperation Legislation

2017 National Defense Authorization Act (NDAA). The House-passed version of the NDAA (H.R. 4909) includes the following provisions:

Section 1250. Would authorize up to $25 million for U.S.-Israel cooperation in research and development of directed energy (laser) technologies to counter missiles, drones, mortars, and improvised explosive devices if the two countries can reach agreement on sharing costs and intellectual property rights.
Section 1259J. Would authorize assistance to Israel "to improve maritime security and maritime domain awareness" over a five-year period. Activities for which assistance would be specifically authorized include support for the David's Sling missile defense system, Israeli participation in joint maritime exercises with the United States, visits of U.S. vessels at Israeli ports, and research and development.
Section 1259N. Would require the Administration to report within 180 days to congressional committees on (1) defensive capabilities and platforms requested by Israel, (2) the availability of such items for transfer, and (3) steps the President is taking to transfer such items.

The Senate-passed version of the NDAA (S. 2943) does not include any of the above provisions, but includes a separate provision that would increase the annual amount authorized for U.S.-Israel tunneling cooperation (through calendar year 2018) from $25 million to $50 million if such funds are matched in the corresponding calendar year by Israel. Of any U.S. amounts used for this purpose in FY2017, not less than 50% would be for research, development, test, and evaluation activities in the United States.

2017 Department of Defense Appropriations Act. Following the pattern from previous years, both the House-passed (H.R. 5293) and Senate-introduced (S. 3000) versions of this act would provide funding for Israel-based missile defense systems beyond the Administration's budget request.⁴⁵ On June 14, 2016, in a document opposing a number of items in H.R. 5293, the Administration said that it "opposed the addition of $455 million above the FY 2017 Budget request for Israeli missile defense procurement and cooperative development programs."⁴⁶ In a June 15, 2016, daily press briefing, the State Department spokesperson explained the Administration's position by saying that $455 million "is the largest such non-emergency increase ever and, if it's funded, would consume a growing share of a shrinking U.S. Missile Defense Agency's budget." Some observers interpreted the Administration's position as possibly being linked to the ongoing MOU negotiations regarding the possible inclusion of missile defense funding.⁴⁷

Current Israeli Government and Major Domestic Issues

Prime Minister Netanyahu of the Likud party presides over a coalition government that includes six parties generally characterized as right of center. Netanyahu has been prime minister since March 2009, and also served as prime minister from 1996 to 1999. In May 2016, the Yisrael Beiteinu party joined the government, and its leader Avigdor Lieberman⁴⁸ became Israel's defense minister. Lieberman replaced Moshe Ya'alon (a Likud member) as defense minister. Rather than accepting another post such as foreign minister, Ya'alon resigned from public life partly due to disillusionment with Netanyahu.⁴⁹ He has since expressed his intent to challenge Netanyahu in the next national elections, which are due no later than 2019.

One commentator has said that Israelis keep returning Netanyahu to office "precisely because he is risk averse: no needless wars, but no ambitious peace plans either."⁵⁰ However, Netanyahu's position could be imperiled if an ongoing attorney general's corruption probe leads to a formal criminal investigation and possibly an indictment.⁵¹ Additionally, the varying interests of the current coalition's members and some intra-party rifts—particularly within Likud⁵²—contribute to difficulties in building consensus on the following issues:

How to address an interrelated set of concerns relating to national security, freedom of expression, competing ideologies, and international influence; and
How to promote macroeconomic strength while addressing popular concerns regarding economic inequality and cost of living.

Netanyahu's government has faced considerable challenges in connection with Israeli-Palestinian issues and their international ripple effects. In the fall of 2015, tensions connected with Jerusalem's Temple Mount/Haram al Sharif contributed to a wave of mostly "lone wolf" attacks by Palestinians against Jewish Israeli security personnel and civilians that intensified for several months. The violence had lessened in frequency after March 2016, but has picked up again in mid-2016, prompting Israel to tighten restrictions on movement in the southern West Bank where a number of attacks have occurred.⁵³ In early July, the prime minister's office announced that any amounts transferred by the PA to "terrorists and their families" will be deducted from the monthly tax revenues Israel transfers to the PA.⁵⁴ As a result of the violence, more than 30 Israelis and 200 Palestinians have been killed.⁵⁵

U.S. Grants and 2015 Israeli Elections

In July 2016, the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations published a joint staff report reviewing State Department grants totaling around $350,000 that were given in 2013 and 2014 to two regional NGOs known as OneVoice Israel and OneVoice Palestine to promote U.S.-led Israeli-Palestinian peace negotiations.⁵⁶

The subcommittee staff report concluded that the State Department administered the grants in accordance with U.S. law, and the NGOs complied with the terms of the grants by not directly using funds in political campaigns. However, the report also concluded that OneVoice Israel "deployed the campaign infrastructure and resources created using grant funds to support an anti-Netanyahu political campaign called V15" in the run-up to March 2015 Israeli elections.⁵⁷ The issue has been debated since it was first discovered during the 2015 campaign, and upon release of the report, some right-of-center Israeli politicians criticized what they characterized as State Department involvement in Israeli politics.⁵⁸

Some right-of-center politicians—including Netanyahu in some instances—have rebuffed top Israeli defense and military officials in 2016 for statements urging the prosecution of Israeli security personnel who use unjustifiable force, and for expressing opinions about signs of "intolerance" and "brutalization" in Israeli society.⁵⁹ Polarization between defense officials and some government leaders was exacerbated in the aftermath of a March 2016 shooting of a wounded, prostrate Palestinian attacker by an Israeli soldier in the West Bank.⁶⁰ Upon his resignation in May, former defense minister Moshe Ya'alon asserted that manifestations of extremism in Israel and the Likud party are "seeping into the army."⁶¹ The previous defense minister, Ehud Barak (who is also a former prime minister), has voiced alarm about what he calls "budding fascism" in Israel in connection with a number of developments, including some of the government's legislative proposals and what Barak characterizes as missed opportunities for negotiations on the Palestinian issue.⁶²

The Israeli public and international observers have vigorously debated two Netanyahu-supported bills in the Knesset that passed in July 2016. One new law requires non-governmental organizations (NGOs) receiving more than half their funding from foreign governments to officially declare the funding sources, and appears to disproportionately affect left-leaning organizations.⁶³ In a July 12 daily press briefing, the State Department spokesperson raised concerns about the "chilling effect that this new law could have on NGO activities." The second law amends Israel's Basic Law to allow a Knesset supermajority to expel a Knesset member if the member incites racism or supports violence against the state.⁶⁴ It appears to be tailored to address concerns among several Jewish lawmakers regarding Arab Knesset members.⁶⁵

Israeli-Palestinian Developments Official U.S. policy continues to favor a "two-state solution" to address core Israeli security demands as well as Palestinian aspirations for national self-determination. Continued failure by Israelis and Palestinians to make progress toward a negotiated solution could have a number of regional and global implications. Israeli actions regarding security arrangements and settlement construction in the West Bank and East Jerusalem could have ramifications for the resolution of final-status issues. Palestinian leaders support initiatives to advance their statehood claims and appear to be encouraging international legal and economic pressure on Israel in an effort to improve the Palestinian position vis-à-vis Israel. U.S. and international efforts to preserve the viability of a negotiated two-state solution attract skepticism because of regional turmoil and domestic reluctance among key Israeli and Palestinian leaders and constituencies to contemplate political or territorial concessions.

Meanwhile, Israelis debate whether their leaders should participate in international initiatives, advance their own diplomatic proposals, act unilaterally, or manage the "status quo." Netanyahu has publicly welcomed resuming negotiations without preconditions, but he and other Israeli officials have indicated or hinted that regional difficulties involving Iran and Arab states steeped in turmoil since 2011 forestall or seriously impede prospects for mutual Israeli-Palestinian concessions through negotiation. Additionally, several government ministers openly oppose a two-state solution.⁶⁶ Toward the left of the political spectrum, some Israeli politicians welcome the prospect of greater U.S. involvement in principle, claiming that regional challenges, Israel's international ties, and demographic changes make resolving the Palestinian issue a priority. Even so, proposals from center-left leaders such as Yitzhak Herzog of the main opposition Labor party seem to acknowledge that a two-state solution is unlikely in the near term.⁶⁷

In response to apparent Palestinian efforts to gather support for a U.N. Security Council draft resolution that would characterize Israeli West Bank settlements as illegal, 394 Representatives signed a letter to President Obama in April 2016. The letter said that Obama's commitment to "longstanding U.S. policy to veto one-sided UN Security Council resolutions remains fundamentally critical."⁶⁸ In July, the United States and other members of the Middle East Quartet (European Union, Russia, U.N. Secretary-General's office) published a report saying, among other things, that the "continuing policy of settlement construction and expansion, designation of land for exclusive Israeli use, and denial of Palestinian development is steadily eroding the viability of the two-state solution."⁶⁹ In publishing the report, the Quartet members may have been at least partly seeking to bolster regional and international confidence in their ability to facilitate a future resolution. France hosted a June 2016 conference of foreign ministers (including Secretary of State Kerry) that reportedly established working groups to craft terms of reference for a possible future resumption of negotiations.⁷⁰

Netanyahu apparently worries that President Obama may incorporate such terms of reference in a U.S. or international initiative before the end of Obama's term in January 2017. Netanyahu and Defense Minister Lieberman have welcomed efforts by Egypt to facilitate an initiative involving Arab states "which share security interests with Israel and have leverage on the Palestinians."⁷¹ However, some analysts assert that Arab states are distracted by other internal and regional concerns⁷² and are unlikely to use their leverage unless Israel shows a willingness to contemplate concessions envisioned in the 2002 Arab Peace Initiative.⁷³

Among various policy prescriptions on Israeli-Palestinian diplomacy, two former U.S. officials have proposed that Israel curb settlement building in some key places in possible exchange for more active U.S. diplomatic support to "stem the drift toward a binational state" and "blunt the delegitimization movement [against Israel] internationally."⁷⁴ Another commentator has stated that the region may be trending toward "a steady low-grade civil war between Palestinians and Israelis and a growing Israeli isolation in Europe and on college campuses that the next U.S. president will have to navigate."⁷⁵

Palestinian Authority (PA) President Mahmoud Abbas stated in late September 2015 in remarks before the U.N. General Assembly that the Palestinians were no longer bound by the 1990s "Oslo" agreements creating the PA,⁷⁶ contributing to some speculation about whether the PA might disband itself or collapse.⁷⁷ In recent months, debate has continued regarding the future of PA security cooperation with Israel, which appears to continue despite some tensions.⁷⁸ Questions persist regarding the aging Abbas's remaining tenure and what will happen when he leaves office.⁷⁹

Author Contact Information

[author name scrubbed], Specialist in Middle Eastern Affairs ([email address scrubbed], [phone number scrubbed])

Footnotes

1. See, e.g., Jeffrey Goldberg, "The Obama Doctrine," The Atlantic, April 2016

Key National Security Issues

Iranian Nuclear Deal and U.S.-Israel Implications

Overview

Israel's opposition to an international comprehensive agreement on Iran's nuclear program reflected deep and abiding Israeli concern over the issue. For years, Israeli leaders have described Iran and its reported pursuit of a nuclear breakout capacity as an extremely significant threat, though a range of views exist among Israeli officials and analysts regarding how to address the threat and its potential implications for Israel's security and international relationships.³

When the Iranian nuclear deal was announced in July 2015, Prime Minister Netanyahu said that it was a "historic mistake"⁴ and that Israel would "not be bound" by it.⁵ Israeli leaders voice concern that the agreement and the sanctions relief it might provide for Iran could lead to increased material support for Hezbollah and other Iranian allies.⁶ This prospect of greater Iranian capacity to affect the regional balance of power in the wake of the deal, along with an expected increase in U.S. arms sales to Arab Gulf states (also related to the nuclear deal), could potentially affect Israel's "qualitative military edge" (QME) over regional threats.⁷ Israeli officials also express concern that the deal, by preserving much of Iran's nuclear infrastructure, legitimizes Iran's aspirations to be a "nuclear threshold" state.⁸

Netanyahu's criticism of the agreement is widely shared across the Israeli political spectrum. However, some former officials from Israel's security establishment have publicly asserted that the deal has positive aspects,⁹ and some of them voiced concerns about possible damage that continued Israeli opposition to the deal might do to U.S.-Israel relations. With the deadline for Congress to pass a resolution of disapproval of the deal having expired in September 2015, some Israeli military leaders reportedly urged Netanyahu "to begin working on a joint U.S.-Israeli strategy based on the deal's premise that Iran's nuclear program will be indeed be frozen for 15 years."¹⁰ The deal went into effect in January 2016.¹¹ After Iran conducted tests of ballistic missiles in March 2016 that reportedly bore markings calling for Israel's destruction, Israel's foreign ministry claimed that the tests violated U.N. Security Council Resolution 2231 and called for "concrete punitive steps" from the Security Council.¹² Some Israeli analysts asserted that neither the nuclear deal nor Resolution 2231 "expressly proscribes development and testing" of these missiles.¹³ In a March 9 daily press briefing, the State Department spokesperson said that "obviously we condemn all threats to Israel, and we stand – will stand with Israel to help it defend itself against all kinds of threats."

Considerations stemming from the Iran nuclear deal are presumably driving Israeli leaders to seek tangible measures of reassurance from their U.S. counterparts. During its successful effort to avoid a congressional resolution of disapproval regarding the deal, the Obama Administration sent letters to several Members of Congress stipulating ongoing or planned steps to help Israel defend itself and counter Iran's destabilizing regional influence.¹⁴ Before the comprehensive agreement was announced, Israel and the United States reportedly began preliminary consultations on an aid and arms sales package to assuage Israeli concerns regarding the deal.

U.S.-Israel Negotiations on Aid Memorandum of Understanding (MOU)

In connection with negotiations for a new 10-year Memorandum of Understanding (MOU) on annual U.S. military aid (the current MOU expires at the end of FY2018), Israel reportedly asked for this aid to be boosted to $5 billion.¹⁵ Currently, Israel receives $3.1 billion per year in Foreign Military Financing (FMF) and hundreds of millions from Defense Department accounts for missile defense. While the two countries discuss future U.S. military aid to Israel, they are reportedly also contemplating a number of arms sales. Various sources indicate that such sales may include greater numbers and expedited delivery of fighter aircraft (advanced F-15s and F-35s), V-22 Ospreys, refueling planes, and cruise missiles, as well as more funding for various rocket and missile defense programs.¹⁶

Some recent news reports speculate about the prospects for a new MOU before the end of the Obama Administration, as well as possible terms of an MOU.¹⁷ One report suggested that a February 2016 Administration proposal could anticipate more than $40 billion in U.S. military funding to Israel over 10 years, starting at around $3.8 billion per year and phasing in increases over the agreement's duration.¹⁸ The article said that the Administration offer would be 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,"¹⁹ implying that unlike the current MOU signed in 2007,²⁰ a new MOU might address accounts beyond FMF. One Israeli commentator has asserted that Netanyahu may have canceled his planned March 2016 trip to Washington, DC, for various reasons, including differences with U.S. officials regarding funding levels over the MOU's duration, and possible concerns about how the timing of an MOU signing might affect U.S. policy on the Palestinian issue.²¹

Any new MOU would be subject to congressional appropriations. One media report claimed that the February proposal from the Administration anticipated increases in overall funding levels under the condition that Congress would not boost annual amounts beyond these levels except for "extreme emergency cases."²² Generally, Congress has provided significant annual increases to the amounts suggested in Administration budgets to fund Israeli or U.S.-Israeli missile defense programs.²³ Given that Congress has the authority to appropriate funding levels for Israel in any particular annual budget cycle, the Israeli reference to a possible end to annual "plus-ups" on missile defense or other items presumably anticipates overall Israel-Administration-Congress willingness to implement the terms of such an MOU in the event it is agreed upon. A former senior Israeli official said that the predictability of such an arrangement would benefit Israel's long-term planning, but would have a downside in precluding additional funding absent compelling justification.²⁴ In response to a question during a February 24, 2016, hearing before the House Appropriations Subcommittee on State, Foreign Operations, and Related Programs, Secretary of State John Kerry claimed that he was not aware that a potential MOU might constrain Congress's ability to "address crises and emergency provisions," and said that he would inquire further within the executive branch on the matter.

Future FMF aid levels set forth in an MOU are likely to have some connection with anticipated U.S. arms sales to Israel, given that around 74% of FMF would be used for this purpose. Another consideration regarding various regular U.S. budget accounts is that they are subject (through FY2021) to budget caps in connection with the Budget Control Act of 2011 (P.L. 112-25). For example, if increases in FMF to Israel were to be provided other than via an "overseas contingency operations" (OCO) designation,²⁵ such increases could potentially raise conflicts with the overall caps absent either trade-offs within the non-defense discretionary budget or legislative changes regarding the caps.²⁶

Other U.S.-Israel Next Steps

The ongoing U.S.-Israel consultations on aid and arms sales appear to reflect a shift by Israeli officials away from opposing the nuclear deal, and toward insisting on its enforcement. During Prime Minister Netanyahu's November 2015 visit to the United States, he said:

I think that what is important is not merely President Obama's commitment to bolstering Israel's security for the next ten years, but also his commitment to maintain Israel's qualitative military edge so that Israel can defend itself by itself against any threat. That is the most important commitment. And despite our disagreement over the nuclear deal with Iran, I believe that America and Israel can and should work together now to ensure Iran complies with the deal, to curb Iran's regional aggression and to fight Iranian terrorism around the world.²⁷

Additionally, although some Israeli defense officials have hinted that a unilateral Israeli military strike against Iranian nuclear facilities remains an option to prevent Iran from acquiring a nuclear weapon, most analysts assert that such an option is less viable and likely than in the past.²⁸

In the years before the agreement, Israel reportedly undertook a number of covert actions aimed at delaying or impeding Iran's progress toward a nuclear weapons capability—some with reported U.S. collaboration. According to one media report, current and former Israeli officials have said that Netanyahu "reserves the right to continue covert action," raising questions about how the United States might view and respond to such action in a post-deal environment.²⁹

Regional Threats from Hezbollah, Syria, and Elsewhere

Israeli officials identify various other threats in the region. Regarding Hezbollah, a number of regional developments may affect Israel's deterrence posture. These include the following:
Events in Lebanon and Syria.

The Iranian nuclear deal and its implementation.

Developments providing potential insight into U.S.-Israeli resolve and closeness, such as international responses to possible Iranian violations of the nuclear deal or the anticipated Israeli deployment (as early as 2016) of the Hezbollah-focused David's Sling missile defense system.
At various times during the conflict in Syria, Israel has reportedly fired on targets in Syria or Lebanon in response to attack or threats of attack, or in attempts to prevent arms transfers to Hezbollah in Lebanon.³⁰ However, Israel's ability to operate in or around Syrian airspace appears to have become more constrained since Russian aircraft became directly involved in Syria in the fall of 2015.³¹ Israel and Russia have sought to establish a joint mechanism for preventing misunderstandings,³² but it remains to be seen whether and how the mechanism can reliably mitigate risks.³³ Russia's reported deployment of an S-400 air defense system in Syria (in response to Turkey's downing of a Russian aircraft in late November 2015) may complicate Israeli efforts to prevent or mitigate the supply of arms to Hezbollah via Syrian territory. In the context of international discussions contemplating some kind of cease-fire in Syria, Israeli Prime Minister Netanyahu said:

We will not agree to the supply of advanced weaponry to Hezbollah from Syria and Lebanon. We will not agree to the creation of a second terror front on the Golan Heights. These are the red lines that we have set and they remain the red lines of the State of Israel.³⁴

Israeli officials have sought to draw attention to Hezbollah's weapons buildup and its alleged use of Lebanese civilian areas as strongholds.³⁵ In highlighting these issues, Israel may be aiming to bolster the credibility of its threat of massive retaliation against a Hezbollah attack, at least partly to spur key international actors to work toward preventing or delaying conflict.³⁶ Observers debate the extent to which Hezbollah's involvement in the Syrian conflict in support of the Asad regime has weakened or strengthened the group, as well as whether Hezbollah's domestic profile and the profusion of international and non-state actors in the region make near-term conflict with Israel more or less likely.³⁷

Sunni Salafi-jihadist activity in the region since 2014—particularly involving the Islamic State organization (IS, also known as ISIS/ISIL, or by the Arabic acronym Da'esh)—has also deepened Israeli concerns regarding Israel's border security³⁸ and the security of neighboring Jordan. In September 2015, Israel began constructing a security barrier along its border with Jordan that will be similar to projects undertaken at its other frontiers.³⁹ Israeli security officials additionally monitor groups and individuals in the neighboring Gaza Strip and (Egypt's) Sinai Peninsula who claim allegiance to or inspiration from Salafi-jihadists,⁴⁰ and Israeli leaders have taken note of incidents in Europe since 2014 in which extremists have specifically targeted Jews (including Israeli citizens).⁴¹ In late December 2015, IS leader Abu Bakr al Baghdadi issued his first explicit threat against Israel,⁴² though how that translates to operational capacity and concerted effort to direct or inspire attacks against Israeli targets is less clear.⁴³

In contemplating potential threats to Israel from Syria in January 2016, Israeli Defense Minister Moshe Ya'alon said, "In Syria, if the choice is between Iran and the Islamic State, I choose the Islamic State…. Iran determines [the] future of Syria, and if it leads to perpetuation, Iranian hegemony in Syria will be [a] huge challenge for Israel."⁴⁴

Israeli-Palestinian Issues

Key U.S. Policy Considerations

Official U.S. policy continues to favor a "two-state solution" to address core Israeli security demands as well as Palestinian aspirations for national self-determination. Although a National Security Council official publicly stated President Obama's view in November 2015 that the parties would not likely be "in the position to negotiate a final status agreement" by the end of his term,⁴⁵ reports in March 2016 indicate that the Administration is considering whether to pursue one or more options offering a blueprint for future talks. Such options could include a presidential or international statement, or even a U.S.-backed U.N. Security Council resolution "calling on both sides to compromise on key issues, something Israel had opposed and Washington has repeatedly vetoed in the past."⁴⁶ One commentator has stated that the region may be trending toward "a steady low-grade civil war between Palestinians and Israelis and a growing Israeli isolation in Europe and on college campuses that the next U.S. president will have to navigate."⁴⁷

Several Israelis in the Netanyahu-led government and others toward the right of the political spectrum have bristled at Obama's periodic efforts and deliberations aimed at moving the peace process forward. Netanyahu has publicly welcomed resuming negotiations without preconditions, but he and other Israeli officials have indicated or hinted that regional difficulties involving Iran and Arab states steeped in turmoil since 2011 forestall or seriously impede prospects for mutual Israeli-Palestinian concessions through negotiation.

Some Israeli politicians toward the left of the political spectrum welcome the prospect of greater U.S. involvement in principle, claiming that regional challenges, Israel's international ties,⁴⁸ and demographic changes make resolving the Palestinian issue a priority. Yitzhak Herzog and his main opposition Labor party, while acknowledging that a two-state solution is unlikely in the near-term, have proposed preserving a two-state vision by "retain[ing] control of the West Bank settlement blocs [areas around the 1949-1967 armistice or "Green" line where most Israeli West Bank settlers live], complet[ing] the separation barrier to keep terrorists out of Israel and freez[ing] all building in settlements outside the blocs."⁴⁹

A number of complicating factors, ranging from internal Israeli and Palestinian politics, to attempts by both sides to gain political advantage over the other outside of negotiations, have contributed to serious challenges for resolving the decades-long conflict. After the most recent U.S.-backed round of peace talks collapsed in April 2014, Israeli-Palestinian disputes intensified in media exchanges and international fora. Doubts regarding prospects for peace appear to have increased after Netanyahu made remarks—which he later downplayed—during his successful election campaign in March 2015 that raised questions about his willingness to accept a two-state solution.⁵⁰

While unrest was intensifying in and around Jerusalem (as discussed below), Palestinian Authority (PA) President Mahmoud Abbas stated in late September 2015 in remarks before the U.N. General Assembly that the Palestinians were no longer bound by the 1990s "Oslo" agreements creating the PA.⁵¹ This fueled speculation over whether the PA might at some point discontinue security cooperation with Israel or even disband itself, and whether Abbas's apparent expressions of frustration pointed seriously toward imminent change.

~~Map: "E1" in Greater Context~~

~~(as of January 2016)~~

As violence has continued, some Israeli officials have reportedly questioned the future viability of the PA,⁵² and questions have intensified regarding the aging Abbas's remaining tenure and what will happen when he leaves office.⁵³ In December 2015, Secretary of State John Kerry gave a speech stating that "current trends including violence, settlement activity, demolitions, are imperiling the viability of a two-state solution." In his speech, Kerry also warned of the potential security and economic consequences for Israel without the PA and its some 30,000 security personnel.⁵⁴ For additional information on the PA security forces—some of whom receive training and equipment from the United States and other countries—and their coordination with Israel amid ongoing violence and tension, see CRS Report RS22967, U.S. Foreign Aid to the Palestinians, by [author name scrubbed].

In a January 2016 speech, U.S. Ambassador to Israel Dan Shapiro echoed some of Kerry's concerns, asking rhetorically, "And if [Israel] judges a political solution to be out of reach for the time being, then what is its plan for managing and stabilizing the conflict in the short and medium term? What tools can Israel provide to assist us in our global diplomatic defense of Israel, to which we will always be committed?"⁵⁵ Turning his emphasis to the Palestinians and Israel's Arab neighbors, Shapiro said that Americans have tough questions for them

…about murderous incitement, about withholding recognition, questions about threats to end security cooperation, about support for terror groups, and about misuse of the UN system. How do these tendencies serve their own people, or build confidence among Israelis that there is a partner, or help achieve their aspirations for independence in a two-state solution?⁵⁶

Israeli residential construction (generally known internationally as "settlements") in the West Bank and East Jerusalem remains a contentious issue. Netanyahu—facing pressure from within his governing coalition amid ongoing Israeli-Palestinian violence—has reiterated strong support for settlement activity in the West Bank.⁵⁷ Such statements seem to be exacerbating expressions of concern from anti-settlement activists, Palestinian officials, and some international actors about possible plans for construction in sensitive areas such as "E1"⁵⁸ (see map above), and about land appropriations.⁵⁹ A number of local and international observers have suggested measures to address the issue. Among various policy prescriptions, two former U.S. officials proposed that Israel curb settlement building in some key places in possible exchange for more active U.S. diplomatic support to "stem the drift toward a binational state, blunt the delegitimization movement internationally and give us leverage to block future European sanctions against Israel."⁶⁰

Ongoing Violence: Another Palestinian Intifada?

Tensions and violence have generally increased since the end of negotiations in April 2014. The dynamic appears to be partly linked to specific incidents and the responses they trigger, and partly to cyclical patterns of protest and confrontation (see chronology below).

Observers debate whether another Palestinian intifada (or uprising) might be underway or imminent. Most deaths and injuries since September 2015 have come from so-called "lone wolf" attacks by Palestinian men and women—often teenagers⁶¹—and Israeli security responses to either violent incidents or protests. According to one commentator, the unrest "has in fact decreased in scale and relative lethality since its peak last fall. Yet Palestinian attacks [spanning Israel, Jerusalem, and the West Bank] continue on what seems like a daily basis."⁶² At least one apparently unprovoked attack by a Jewish Israeli against Arabs has also taken place.⁶³ At least 28 Israelis and 176 Palestinians have been killed.⁶⁴

The present dynamic appears to differ from the general organizational guidance and coordination of Palestinian protests and attacks during the first (1987-1991) and second (2000-2005) intifadas. The current young generation of Palestinians has little or no memory of past intifadas, and many appear to be influenced by Internet-based social media that encourage spontaneous demonstrations and individual initiative in planning and executing attacks,⁶⁵ making the attacks very difficult for Israeli security and intelligence officials to anticipate.⁶⁶

~~Chronology of Selected Key Events Possibly Related to Recent~~
~~Israeli-Palestinian Violence~~

April 2014	A church and two mosques in Israel are vandalized, and a Jewish Israeli is arrested for allegedly delivering a threatening note to the Roman Catholic bishop of Nazareth, leading to expressions of concern among Arab Israelis.
~~June 2014~~	Hamas-linked militants kidnap and murder three Jewish Israeli teenagers in the West Bank, triggering robust Israeli investigative and security measures aimed at broadly subduing terrorist acts and plots. The suspected militants are killed by Israeli authorities in September.
July 2014	Jewish extremists murder a Palestinian teenager in East Jerusalem by beating and burning him, sparking further Israeli-Palestinian tension despite the arrest of the alleged killers.
July-August 2014	Israel-Gaza conflict (Israeli code name "Operation Protective Edge") takes place, significantly affecting Israeli and Palestinian societies.
Fall 2014	Israeli-Palestinian tensions rise in Jerusalem in connection with Jewish Israeli visits (including by high-profile politicians) to the Temple Mount/Haram al Sharif (also known as the "Holy Esplanade"), leading to protests, individual instances of violence, and Israeli restrictions on access to the Esplanade. A day after a Palestinian bus driver dies under disputed circumstances; two Palestinians kill five Israelis (including three with U.S. citizenship) at a Jerusalem synagogue before being killed by police.
Summer 2015	As periodic incidents of Israeli-Palestinian violence continue in Jerusalem and the West Bank, an arson attack destroys a Palestinian home in the West Bank, killing a toddler, his parents, and seriously injuring another family member. A number of Jewish extremists are arrested in connection with the attack.
September 2015-March 2016	Palestinians barricade the Al Aqsa Mosque in connection with claims of increased Jewish religious visits to the Holy Esplanade during the high holiday period in late 2015, triggering a robust Israeli security response. Israeli-Palestinian violence intensifies in and around Jerusalem and spreads to other areas in Israel and the West Bank as Israeli, Palestinian Authority, U.S., and other international officials seek ways to address the violence, its underlying causes, and the problems it generates.

The violence has also led to questions about heightened Israeli security measures, in terms of both their efficacy and their legal implications—locally and internationally.⁶⁷ Specific instances involving Israeli authorities and suspected terrorists, including the October death of an Eritrean migrant in Beersheba in a case of mistaken identity after a deadly attack by an Arab,⁶⁸ have triggered heated debate about when lethal force is appropriate to prevent a potential or actual attack or to prevent a suspect's escape. Israeli military personnel (supplemented by reserve call-ups) have been deployed widely to maintain order. Additionally, Israeli authorities have arrested a number of Jewish extremists wanted for various acts of violence and vandalism,⁶⁹ though U.S. Ambassador Shapiro indicated in his January speech that authorities should do more to respond to such acts.⁷⁰ Given Israeli observations that permitting Palestinians to work in Israel may deter attacks, the Israeli security cabinet has reportedly approved the broad outlines of a plan that would allow 30,000 additional Palestinians to work in Israel, while some permits have been taken from Palestinians whose relatives were killed while carrying out attacks.⁷¹

One concern among Israeli, PA, and international officials appears to be that further escalation could strengthen political support for extremists. That could include U.S.-designated terrorist organizations Hamas, Palestine Islamic Jihad – Shaqaqi Faction, and Al-Aqsa Martyrs Brigade (a Fatah offshoot) on the Palestinian side; and Kahane Chai on the Israeli side. Hamas leaders repeatedly encourage further attacks in public statements, while some figures from Fatah and other Palestinian factions have also reportedly made statements supporting violence. Reports indicate that Hamas has been preparing its Gaza-based arsenals and tunneling system for a possible outbreak of new violence.⁷²

Ongoing tensions have involved Palestinian Arab citizens of Israel in addition to Palestinians from the West Bank and East Jerusalem. In mid-November 2015, Israel's security cabinet outlawed the northern branch of Israel's Islamic Movement for incitement related to controversy over the Holy Esplanade and Al Aqsa Mosque, prompting protests among some Israeli Arabs that the move harms their freedoms of expression and association.⁷³ Another development that could provoke negative reactions among Israeli Arabs would be further progress by the ruling Israeli coalition toward drafting a Basic Law defining Israel as the nation-state of the Jewish people.⁷⁴ In February 2016, the Knesset (parliament) ethics committee temporarily suspended three Israeli Arab Knesset members from official parliamentary debate (though they retain their voting rights) after they met with some Palestinians whose relatives had attacked Jews and been killed by Israeli security personnel.⁷⁵ One measure apparently seeking to ease ethnic tensions is an Israeli government plan—announced in late 2015—for a total of around $4 billion of public investment over five years that is aimed at narrowing gaps between Jewish and Arab citizens.⁷⁶

Domestic Israeli Politics

Domestic discussions in Israel focus largely on the following issues:
How to address an interrelated set of concerns relating to national security, freedom of expression, competing ideologies, and international influence.

How to promote macroeconomic strength while addressing popular concerns regarding economic inequality and cost of living.⁷⁷
A discussion of some prominent current or recent developments is set forth below.

In early 2016, the Israeli public and international observers have vigorously debated a Netanyahu-supported bill in the Knesset that would require non-governmental organizations (NGOs) receiving more than half their funding from foreign governments to officially declare the funding sources and have their representatives wear special tags when doing business at the Knesset. According to one media account, "The law would mostly impact [largely European-funded] left-wing organizations…since right-wing NGOs typically receive funding through private donations, particularly from the US."⁷⁸ In December 2015, an Israeli media source with a traditionally left-of-center viewpoint published two articles citing evidence that U.S.-based nonprofit groups had sent millions of dollars of tax-deductible private donations in recent years to support Jewish settlements or infrastructure in the West Bank and East Jerusalem.⁷⁹ The "NGO bill" debate is connected with larger controversies involving Europe-Israel relations and intensified Jewish nationalist criticisms of domestic human rights groups amid the ongoing Israeli-Palestinian violence.⁸⁰

In December 2015, Netanyahu finalized the government's approval of a deal to allow a consortium led by U.S.-based Noble Energy and Israel's Delek Group to develop an offshore natural gas field known as Leviathan in exchange for some domestic price regulation and an agreement by Noble and Delek to sell or reduce their stakes in other offshore projects. Netanyahu claims that the deal is essential for Israel's energy self-sufficiency, and he and other proponents also point to possible benefits from a number of proposed initiatives to export Israeli gas to neighboring countries.⁸¹ However, widespread domestic concern about pricing and competition has fueled political controversy and demonstrations on the issue. Netanyahu had to invoke a "never-before-used national security clause" to overcome objections from Israel's antitrust office,⁸² and the deal still faces a challenge in Israel's High Court of Justice (Supreme Court).⁸³

~~Author Contact Information~~

~~[author name scrubbed], Specialist in Middle Eastern Affairs ([email address scrubbed], [phone number scrubbed])~~

~~Footnotes~~
28. Steven J. Erlanger and Rami Nazzal, "Talk Grows About Who Will Succeed Palestinians' Aged Abbas, Seen as Ineffective," New York Times, February 28, 2016.

1.	See, e.g., Jeffrey Goldberg, "The Obama Doctrine," The Atlantic~~, from the April 2016 issue~~; Jason M. Breslow, "Dennis Ross: Obama, Netanyahu Have a 'Backdrop of Distrust,'" PBS Frontline, January 6, 2016; Sarah Moughty, "Michael Oren: Inside Obama-Netanyahu's Relationship," PBS Frontline, January 6, 2016.
2.	See, e.g., Dennis Ross, Doomed to Succeed: The U.S.-Israel Relationship from Truman to Obama, New York: Farrar, Straus and Giroux, 2015; Haim Malka, Crossroads: The Future of the U.S.-Israel Strategic Partnership~~, Washington, DC: Center for Strategic and International Studies, 2011~~Dana H. Allin and Steven N. Simon, Our Separate Ways: The Struggle for the Future of the U.S.-Israel Alliance, New York: PublicAffairs, 2016; Pew Research Center, Israel's Religiously Divided Society, March 8, 2016.
3.	See transcript of testimony from Natan Sachs of the Brookings Institution from the hearing before the House Foreign Affairs Committee on July 16, 2014, at http://docs.house.gov/meetings/FA/FA00/20140716/102496/HHRG-113-FA00-Transcript-20140716.pdf.
4.	Tamar Pileggi and Jonathan Beck, "Netanyahu calls Iran deal 'historic mistake for world,'" Times of Israel, July 14, 2015.
5.	Israeli Ministry of Foreign Affairs, "Security Cabinet rejects nuclear deal with Iran," July 14, 2015. U.N. Security Council Resolution 2231, adopted on July 20, 2015, calls upon "all Members States, regional organizations and international organizations to take such actions as may be appropriate to support the implementation of the JCPOA [Joint Comprehensive Plan of Action], including by taking actions commensurate with the implementation plan set out in the JCPOA and this resolution and by refraining from actions that undermine implementation of commitments under the JCPOA."
6.	"Security Cabinet rejects nuclear deal with Iran," op. cit. In an April 2015 interview, President Obama said, "I've been very forceful in saying that our differences with Iran don't change if we make sure that they don't have a nuclear weapon—they're still going to be financing Hezbollah, they're still supporting Assad dropping barrel bombs on children, they are still sending arms to the Houthis in Yemen that have helped destabilize the country. There are obvious differences in how we are approaching fighting ISIL in Iraq, despite the fact that there's a common enemy there." "Transcript: President Obama's Full NPR Interview on Iran Nuclear Deal," April 7, 2015.
7.	See, e.g., Amos Harel, "Washington, Jerusalem discussing massive compensation for Iranian nuclear deal," haaretz.com, May 20, 2015; and Leslie Susser, "The Challenge: Getting the US Back in Israel's Corner," Jerusalem Report, May 18, 2015. On May 19, 2015, the Defense Security Cooperation Agency published a notification of a proposed U.S. sale to Israel of $1.879 billion worth of munitions and associated parts.
8.	Michael Herzog, "Israel Confronts the Iran Nuclear Deal," Washington Institute for Near East Policy, PolicyWatch 2455, July 24, 2015.
9.	Additionally, an Israeli media report indicates that Israel's Atomic Energy Commission has advised members of Israel's defense establishment that the deal would prevent Iran from developing a nuclear bomb over its duration. Chaim Levinson, "Israel's Nuclear Advisory Panel Endorses Iran Deal," haaretz.com, October 22, 2015.
10.	David Ignatius, "Netanyahu's Next Step," Washington Post, September 4, 2015.
11.	Merrit Kennedy, "Implementation Day Arrives: Sanctions On Iran Are Lifted," npr.org, January 16, 2016.
12.	Israeli Ministry of Foreign Affairs, "Amb Danon calls for punitive measures against Iran," March 14, 2016.
13.	Barbara Opall-Rome, "Experts: Israel Lacks Leverage Against Iranian Missile Tests," DefenseNews, March 14, 2016.
14.	As one example, see the text of the August 19, 2015, letter from President Obama to Representative Jerrold Nadler, available at http://www.nytimes.com/interactive/2015/08/20/world/middleeast/document-obamas-letter-to-congressman-nadler.html?_r=3.
15.	"US officials: Israel requesting $5 billion in annual defense aid," Times of Israel, November 4, 2015.
16.	Ibid.; Carol E. Lee and Gordon Lubold, "Obama Seeks to Reassure Allies—Israelis, Saudis worried over Iran nuclear deal," Wall Street Journal, July 20, 2015; Harel, op. cit.; Susser, op. cit.; Julian Pecquet, "US offer of anti-Iran bomb lands as a dud in Israel," Al-Monitor Congress Pulse, September 21, 2015.
17.	Ben Caspit (translated from Hebrew), "Why Bibi snubbed Obama and is skipping next week's AIPAC conference," Al-Monitor Israel Pulse, March 14, 2016; Joshua Davidovich and Judah Ari Gross, "Defense minister: American aid package to be finalized in 'weeks,'" Times of Israel, February 22, 2016; Dan Williams and Matt Spetalnick, "Israel may bank on Obama's successor for future U.S. aid pact: minister," Reuters, February 8, 2016; "US officials: Israel won't get better aid deal after Obama leaves office," Jewish Telegraphic Agency, February 8, 2016.
18.	Barbara Opall-Rome, "Obama Offers Israel New 10-Year Aid Package, But There's a Catch," DefenseNews, February 13, 2016.
19.	Ibid.
20.	The text of the 2007 MOU for FY2009-FY2018 is available at http://www.endtheoccupation.org/downloads/2007israelusmou.pdf.
21.	Caspit, op. cit.
22.	Opall-Rome, "Obama Offers Israel New 10-Year Aid Package, But There's a Catch," op. cit.
23.	For information on congressional appropriations for missile defense at levels above those from Administration requests, see CRS Report RL33222, U.S. Foreign Aid to Israel, by [author name scrubbed].
24.	Opall-Rome, "Obama Offers Israel New 10-Year Aid Package, But There's a Catch," op. cit.
25.	OCO funding is not subject to P.L. 112-25 budget caps.
26Leslie Susser, "Living in a post-American Middle East," Jerusalem Report, July 11, 2016.
4.	See, e.g., Neri Zilber, "A Nice, Relaxing Weekend in the Sights of Hezbollah," Tablet, July 12, 2016; Avi Isaacharoff, "10 years after the Second Lebanon War, Israel isn't in Hezbollah's sights," Times of Israel, July 14, 2016; William Booth, "Ten years after last Lebanon war, Israel warns next one will be far worse," Washington Post, July 23, 2016.
5.	In April 2016, Secretary of Defense Ash Carter notified Israel and Egypt that the United States was reviewing its participation in the Multinational Force and Observers mission in the Sinai Peninsula. Currently, there are about 700 U.S. personnel serving in the MFO out of an approximate total of 1,600. Richard Sisk, "US Reviewing Troop Presence in Sinai amid Increasing ISIS Threats," military.com, April 12, 2016.
6.	For information on various potential threats to Israel's security, see the transcript of a House Foreign Affairs Middle East and North Africa Subcommittee hearing dated April 19, 2016, available at http://docs.house.gov/meetings/FA/FA18/20160419/104817/HHRG-114-FA18-Transcript-20160419.pdf; and Robert M. Danin, "Israel Among the Nations," Foreign Affairs, July/August 2016.
7.	See, e.g., Susser, "Living in a post-American Middle East," op. cit.; Martin Kramer, "Israel and the Post-American Middle East," Foreign Affairs, July/August 2016; Dennis Ross, "Why Middle Eastern Leaders Are Talking to Putin, Not Obama," Politico, May 8, 2016.
8.	See, e.g., William Booth and Carol Morello, "Biden arrives in Israel to talk billions in military aid — and try to patch things up," washingtonpost.com, March 8, 2016; Greg Jaffe and Juliet Eilperin, "Obama's gulf gambit: More military aid to allies could ease regional rifts with Iran," washingtonpost.com, April 21, 2016.
9.	Danin, op. cit.; Kramer, op. cit.
10.	See, e.g., Carmit Valensi and Udi Dekel, "The Current Challenges in the Middle East Demand a Joint United States-Israel Strategy," Strategic Assessment, April 2016.
11.	William Booth, "With Golan fence, Israel closer to surrounding itself with barriers," Washington Post, June 6, 2013; Sharona Schwartz, "Does a Border Fence Work? Check Out the Dramatic Change After Israel Put One Up," The Blaze, November 11, 2013. A proposed fence at Israel's border with Jordan is in the planning and budgeting stages, but given other military and domestic priorities, may take years to complete. Attila Somfalvi, "Can Israel afford Netanyahu's plan for massive border fence with Jordan?," Ynetnews, June 30, 2014; Yossi Melman, "A shared threat," Jerusalem Report, April 6, 2015.
12.	Michael Herzog, "Israel Confronts the Iran Nuclear Deal," Washington Institute for Near East Policy, PolicyWatch 2455, July 24, 2015.
13.	Danin, op. cit.
14.	Valensi and Dekel, op. cit.; David E. Sanger, "A Year Later, a Mixed Record for the Iran Accord," New York Times, July 14, 2016.
15.	Sanger, op. cit.
16.	Valensi and Dekel, op. cit.
17.	Joe Gould, "US Lawmakers Urge Action on Jet Sales to Qatar, Kuwait and Bahrain," Defense News, July 12, 2016.
18.	Andrew Roth, "Iran announces delivery of Russian S-300 missile defense system," washingtonpost.com, May 10, 2016.
19.	Valensi and Dekel, op. cit.
20.	See, e.g., Barbara Opall-Rome, "Netanyahu Hints at V-22 Orders," Defense News, July 1, 2016; Yitzhak Benhorin, "Israel to request $5 billion in aid," Ynetnews, November 5, 2015.
21.	"'Obama wants Israel to spend aid money entirely on US-made weapons,'" Reuters, May 3, 2016.
22.	The letter's text is available at http://www.lgraham.senate.gov/public/index.cfm/press-releases?ID=A86F71E2-A8CE-4A5A-9877-3A5B69198D7B.
23.	Julie Hirschfeld Davis, "U.S. Offers to Increase Military Aid to Israel," New York Times, July 1, 2016.
24.	Davis, op. cit.; "'Obama wants Israel to spend aid money entirely on US-made weapons,'" op. cit. According to one source, Israel currently spends about 13% of its annual FMF on fuel purchases. Davis, op. cit.
25.	Davis, op. cit.
26.	Michael Wilner, "The White House missile aid objection: An MOU negotiating tactic?," jpost.com, June 19, 2016.
27.	OCO funding is not subject to P.L. 112-25 budget caps.
For more information on budget caps and OCO exceptions, see CRS Report R42994, The Budget Control Act, Sequestration, and the Foreign Affairs Budget: Background and Possible Impacts, by [author name scrubbed]; and CRS Report R40213, Foreign Aid: An Introduction to U.S. Programs and Policy, by [author name scrubbed] and [author name scrubbed].
2729.	~~Israeli Prime Minister's Office, PM Netanyahu's Address to the Jewish Federations of North America General Assembly, November 10, 2015~~Davis, op. cit.
2830.	In 2008, Congress enacted legislation requiring that any proposed U.S. arms sale to "any country in the Middle East other than Israel" must include a notification to Congress with a "determination that the sale or export of such would not adversely affect Israel's QME over military threats to Israel." §36(h) of the Arms Export Control Act, which contains the QME requirement, was added by §201(d) of the Naval Vessel Transfer Act of 2008 (P.L. 110-429).
31.	See, e.g., Yossi Melman, "High Stakes Poker," Jerusalem Report, May 2, 2016.
32.	The version of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2017 (S. 3117), reported by the Senate Appropriations Committee in June 2016 would increase FMF to Israel for 2017 to $3.4 billion along with an increase in funding to Jordan. Senator Lindsey Graham, who chairs the State, Foreign Operations, and Related Programs Subcommittee, has openly advocated increasing aid to key partners amid regional turmoil. Rachel Oswald, "Graham Eyes Emergency Funding Bill for Middle East Aid," CQ News, April 20, 2016. On July 25, 2016, the Israeli Prime Minister's office released a statement that read in part, "Israel places great value on the predictability and certainty of the military assistance it receives from the United States and on honoring bilateral agreements. Therefore, it is not in Israel's interest for there to be any changes to the fixed annual MOU levels without the agreement of both the U.S. Administration and the Israeli government. For FY2017, Israel remains committed to the FMF level specified in the current MOU, which is $3.1 billion."
33.	"Israel announces purchase of 14 more F-35 fighter jets," Associated Press, February 22, 2015.
34.	"Israel Set to Build Wings for Some 800 F-35s," Reuters, August 30, 2010.
35.	Aharon Lapidot, "After F-35 makes aliyah, it will get new Israeli identity," Israel Hayom, May 2, 2016. "Adir" is a Hebrew expression for "mighty" or "powerful."
36.	Amir Oren, "First Israeli F-35 Fighter Aircraft Rolls Off the Production Line in Texas," haaretz.com, June 22, 2016.
37.	Reports based on Israeli military sources indicate that Iron Dome has had a high rate of success in intercepting short-range rockets fired from Gaza. It is unknown if the United States or another third party has independently verified Israeli claims, and some analysts have debated the claims' validity.
38.	Yuval Azulai, "Israel, US conduct joint missile defense trial," Globes, July 6, 2016.
39.	Dan Williams, "Israel to Deploy New 'David's Sling' Missile Shield in Mid-2016," Reuters, December 21, 2015.
40.	Azulai, op. cit. The trial reportedly included such Israeli missile defense assets as David's Sling, Arrow 2, and Arrow 3; and such U.S. assets as Patriot (of which, some batteries have been acquired by Israel), Terminal High Altitude Air Defense (THAAD), Aegis, and the radar station located in Israel's Negev Desert. The trial was a follow-up to the biennial bilateral "Juniper Cobra" joint military exercise.
41.	Conference report language accompanying P.L. 112-239, the 2013 National Defense Authorization Act; Section 234 of P.L. 113-66, the 2014 National Defense Authorization Act.
42.	Barbara Opall-Rome, "Israel Claims Intercept Success with Sea-Based Iron Dome," Defense News, May 18, 2016.
43.	See the Joint Explanatory Statement for Defense accompanying P.L. 114-113 at page 119-A, available at http://docs.house.gov/meetings/RU/RU00/20151216/104298/HMTG-114-RU00-20151216-SD004.pdf.
44.	Barbara Opall-Rome, "Israel Eyes US Funding To Detect, Destroy Hamas Tunnels," Defense News, April 18, 2016.
45.	Both the House and the Senate versions would increase funding from Administration requested levels for Iron Dome from $42 million to $62 million, for David's Sling from $37.2 million to $266.5 million, for Arrow 2 from $10.8 million to $67.3 million, and for Arrow 3 from $55.8 million to $204.9 million. For some information on the Congress-Administration dynamics of this year's process, see Julian Pecquet, "Obama, Congress hurtle toward showdown over Israel missile defense," Al-Monitor Congress Pulse, April 27, 2016.
46.	https://www.whitehouse.gov/sites/default/files/omb/legislative/sap/114/saphr5293r_20160614.pdf?elqTrackId=6EC9CEC95DE185EB4389F47C7BDB2988&elq=b8956db884d14431acb7ea48bb94f526&elqaid=19132&elqat=1&elqCampaignId=11805.
47.	See, e.g., Wilner, op. cit.
48.	For more on Lieberman, see Barak Ravid, "Which Avigdor Lieberman Will Enter Israel's Defense Ministry?," haaretz.com, May 20, 2016; and Leslie Susser, "The Netanyahu enigma," Jerusalem Report, June 27, 2016.
49.	Marissa Newman, "The winners and the losers in the emerging coalition shake-up," Times of Israel, May 20, 2016.
50.	Kramer, op. cit.
51.	Ben Caspit, "Is Bibi's massive fundraising network about to collapse?," Al-Monitor Israel Pulse, July 20, 2016. According to one source, "Ehud Olmert, Mr Netanyahu's predecessor as prime minister, was forced to resign in 2009 over bribery allegations and is now serving a 19-month sentence in prison, while possibly facing further convictions." "Israel's prime minister: The law looms larger," Economist, July 16, 2016:
52.	Mazal Mualem (translated from Hebrew), "How the once-moderate Likud was radicalized," Al-Monitor Israel Pulse, April 8, 2016.
53.	Diaa Hadid, "Israel Imposes Tough Restrictions on Palestinians in West Bank After Attacks," New York Times, July 2, 2016.
54.	Israeli Prime Minister's Office, "PM Netanyahu Orders that Palestinian Authority Payments to Terrorists and their Families be Deducted from Tax Revenue Transfers to the PA," July 1, 2016. Israel periodically delays or withhold tax revenue transfers to the PA over security or political concerns or disputes. Palestinians and some international observers assert that the 1994 Paris Protocol governing such transfers does not permit Israeli delays or withholding. The PA transfers alluded to by the prime minister's office presumably refer to Palestinian payments to persons imprisoned by Israel for terrorism and those persons' families. In 2014, the Palestinians reportedly shifted the responsibility for making these payments from the PA to the Palestine Liberation Organization (PLO) budget, largely in order to defuse concerns among the PA's international donors about perceptions that the donors might be indirectly associated with the prisoner-related payments. CRS Report RS22967, U.S. Foreign Aid to the Palestinians, by [author name scrubbed].
55.	Hadid, op. cit. Some U.S. citizens have been killed or injured. The State Department issued a December 16, 2015, travel warning for Israel, the West Bank, and Gaza that remains in effect.
56.	The subcommittee staff report is available at http://www.hsgac.senate.gov/subcommittees/investigations/hearings/joint-staff-report_-review-of-us-state-department-grants-to-onevoice. Both NGOs are controlled by the PeaceWorks Network Foundation, a U.S.-based 501(c)(3) organization.
57.	Subcommittee staff report, p. 5.
58.	"Right-wing lawmakers pan US 'intervention' in Israeli elections," Times of Israel, July 13, 2016.
59.	"Israeli military finds its independent voice under attack," Christian Science Monitor, May 9, 2016.
60.	The shooter, Sgt. Elor Azaria, is being tried for manslaughter in an Israeli military court amid controversy over whether the shooter might have reasonably believed that the wounded Palestinian presented a threat.
61.	"Israel Defense Minister Moshe Yaalon Quits, Says Can't Trust PM Netanyahu," Associated Press, May 20, 2016.
62.	Judah Ari Gross, "Barak flogs Netanyahu, laments 'budding fascism' in Israel," Times of Israel, June 16, 2016.
63.	"After contentious debate, Knesset passes NGO law," Times of Israel, July 12, 2016.
64.	Ruth Levush, "Israel: Laws Authorize Expulsion of Lawmakers Engaged in Incitement to Racism or Support of Armed Struggle Against the State," Law Library of Congress Global Legal Monitor, July 21, 2016.
65.	"Knesset passes law allowing expulsion of lawmakers," Jewish Telegraphic Agency, July 20, 2016.
66.	"Only Four of 20 Israeli Ministers Openly Declare Support of Two-state Solution," haaretz.com, June 27, 2016.
67.	Jonathan Lis, "Labor Adopts Herzog's Plan for Separation From Palestinians as Party Platform," haaretz.com, February 8, 2016.
68.	Text of letter available at http://kaygranger.house.gov/sites/granger.house.gov/files/Letter%20to%20President%20Obama%20supporting%20direct%20negotiations%20%E2%80%93%20signed%20by%20394%20Members%20of%20Congress_1.pdf.
69.	The report, dated July 1, 2016, is available at http://www.state.gov/p/nea/rls/rpt/259262.htm. It also lamented terrorist attacks against civilians and incitement to violence, and said that although the Palestinian Authority leadership has consistently expressed opposition to violence against civilians, "Palestinian leaders have not consistently and clearly condemned specific terrorist attacks. And streets, squares and schools have been named after Palestinians who have committed acts of terrorism."
70.	Susser, "The Netanyahu enigma," op. cit.
71.	Ibid.
72.	See, e.g., Uri Savir (translated from Hebrew), "Have Arab leaders forgotten about Palestine?," Al-Monitor Israel Pulse, July 10, 2016.
73.	See, e.g., Bruce Maddy-Weitzman, "How far can they go?," Jerusalem Report, June 27, 2016. The Arab Peace Initiative offers a comprehensive Arab peace with Israel if Israel were to withdraw fully from the territories it occupied in 1967, agree to the establishment of a Palestinian state with a capital in East Jerusalem, and provide for the "[a]chievement of a just solution to the Palestinian Refugee problem in accordance with UN General Assembly Resolution 194." The initiative was proposed by Saudi Arabia, adopted by the 22-member Arab League (which includes the PLO), and later accepted by the 56-member Organization of the Islamic Conference (now the Organization of Islamic Cooperation) at its 2005 Mecca summit. The text of the initiative is available at http://www.bitterlemons.org/docs/summit.html.
74.	Dennis Ross and David Makovsky, "The neglected Israeli-Palestinian peace process must be revived," Washington Post, February 25, 2016. For more information on measures various parties have taken against Israel and/or Israeli settlements, see CRS Report R44281, Israel and the Boycott, Divestment, and Sanctions (BDS) Movement, coordinated by [author name scrubbed].
75.	Thomas L. Friedman, "The Many Mideast Solutions," New York Times, February 10, 2016.
76.	The main document establishing PA limited self-rule over the Gaza Strip and parts of the West Bank is the Israeli-Palestinian Interim Agreement on the West Bank and the Gaza Strip (known generally as the "1995 Interim Agreement" or "Oslo II"), which was signed by Israel and the PLO on September 28, 1995. The text is available at http://www.mfa.gov.il/MFA/ForeignPolicy/Peace/Guide/Pages/THE%20ISRAELI-PALESTINIAN%20INTERIM%20AGREEMENT.aspx.
77.	See, e.g., Barak Ravid, "Israeli Minister: Palestinian Authority Will Collapse, the Only Question Is When," Ha'aretz, February 29, 2016
78.	Adnan Abu Amer (translated from Arabic), "Is the PA coordinating arrests with Israel?," Al-Monitor Palestine Pulse, April 28, 2016; Joshua Davidovich, "Days of death and destruction," Times of Israel, July 3, 2016.
79.	See, e.g., Amos Harel, "Why Netanyahu Deserves Credit for Iran Nuclear Deal," haaretz.com, July 18, 2015. Russia's announcement in mid-April 2015 that it intends to fulfill its agreement to provide Iran an upgraded anti-aircraft capability (the S-300 system), after having suspended performance for a number of years, may decrease the viability of an Israeli military option even more.
29.	Adam Entous, "Spy Vs. Spy: The Fraying U.S.-Israel Ties," Wall Street Journal, October 23, 2015. One December 2015 media report alleged—among various things relating to U.S. and Israeli intelligence practices—that, in monitoring various Israeli leaders in connection with the Iranian nuclear issue, the National Security Agency "swept up the contents of some of their private conversations with U.S. lawmakers and American-Jewish groups." Adam Entous and Danny Yadron, "U.S. Spying Nabs Allies," Wall Street Journal, December 30, 2015.
30.	See, e.g., Anne Barnard, "Lebanon: New Skirmish Between Israel and Hezbollah in Disputed Territory," New York Times, January 5, 2016; "Three killed as Israel and Hezbollah clash on Lebanese border," BBC News, January 28, 2015; "Hezbollah drones, anti-aircraft missiles destroyed in alleged IAF attack, says Syrian opposition," jpost.com, December 8, 2014.
31.	Amos Harel, "Analysis: Israeli Army Avoids Poking Russian Bear With a Stick," haaretz.com, November 30, 2015; Roi Kais, "Report: Russia blocks Israeli jets over Lebanon," Ynetnews, October 17, 2015.
32.	See, e.g., Barbara Opall-Rome, "Israel, Russia Conclude First Round of Deconfliction Talks," DefenseNews, October 7, 2015.
33.	Harel, "Analysis: Israeli Army Avoids Poking Russian Bear With a Stick," op. cit.
34.	Isabel Kershner, "Netanyahu Welcomes Cease-Fire in Syria, but Adds a Warning," New York Times, February 29, 2016.
35.	Identical letters dated May 27, 2015, from the Permanent Representative of Israel to the United Nations addressed to the Secretary-General and the President of the Security Council, U.N. Document S/2015/382, May 27, 2015; Isabel Kershner, "Israel Says Hezbollah Military Sites Put Lebanese Civilians at Risk," New York Times, May 13, 2015. Press reports citing unnamed U.S. officials with knowledge of Israeli intelligence estimates state that Hezbollah has upgraded the range and precision of its artillery, anti-ship, anti-tank, and anti-aircraft capabilities in recent years. Adam Entous, Charles Levinson and Julian E. Barnes, "Hezbollah Upgrades Missile Threat to Israel," Wall Street Journal, January 2, 2014.
36.	See, e.g., Neri Zilber, "Hezbollah Claims a 'Nuclear Option' in Tense Standoff with Israel," Daily Beast, March 3, 2016; Amos Harel, "Israel's Unlikely Place in a Rapidly Changing Middle East," haaretz.com, March 7, 2016.
37.	Nour Samaha, "Hezbollah's Death Valley," foreignpolicy.com, March 3, 2016.
38.	Isabel Kershner, "Beyond Borders, Israel Sees a New World of Chaos, Tunnels and Terror," New York Times, February 12, 2016; "Israel and Islamic State: The caliphate eyes the holy land," Economist, January 23, 2016; David Ignatius, "In Middle East, a Serious Game of War," Washington Post, January 27, 2016.
39.	Barbara Opall-Rome, "Israel Invests Billions in Border Barricades," DefenseNews, September 7, 2015.
40.	See, e.g., Alex Fishman, "Hamas is funding Islamic State in Sinai," Ynetnews, December 14, 2015; Ronen Bergman, "The battle over Sinai: ISIS's next strong force," Ynet Magazine, December 25, 2015.
41.	See, e.g., "Kosher Copenhagen deli targeted in anti-Semitic attack," Times of Israel, April 9, 2015; "Brussels Jewish Museum killings: Suspect 'admitted attack,'" BBC News, June 1, 2014.
42.	"Islamic State head: 'Palestine will be graveyard' for Jews," Times of Israel, December 26, 2015.
43.	See, e.g., Will McCants, "ISIS and Israel," jihadica.com, November 6, 2015; Isabel Kershner and Diaa Hadid, "5 Palestinian Israelis, Said to Be ISIS Supporters, Are Held," New York Times, December 10, 2015.
44.	Judah Ari Gross, "Ya'alon: I would prefer Islamic State to Iran in Syria," Times of Israel, January 19, 2016.
45.	Robert Malley, quoted in "Palestinian presidency: US comments on peace process 'discouraging,'" Ma'an, November 8, 2015.
46.	Carol E. Lee and Rory Jones, "U.S. to Renew Mideast Peace Push ," Wall Street Journal, March 8, 2016. France has been proposing some kind of new initiative since January 2016. Daoud Kuttab, "How serious is the French proposal on Middle East peace?," Al-Monitor Palestine Pulse, March 3, 2016.
47.	Thomas L. Friedman, "The Many Mideast Solutions," New York Times, February 10, 2016.
48.	For example, see CRS Report R44281, Israel and the Boycott, Divestment, and Sanctions (BDS) Movement, coordinated by [author name scrubbed].
49.	Jonathan Lis, "Labor Adopts Herzog's Plan for Separation From Palestinians as Party Platform," haaretz.com, February 8, 2016. Herzog's plan also envisions that certain Arab East Jerusalem communities currently within Jerusalem's municipal boundaries would be separated from the rest of the city. Some criticize this part of the plan as impractical on grounds that it undermines the Palestinian demand for a future capital in East Jerusalem.
50.	Jodi Rudoren and Michael D. Shear, "Israeli Leader Backs Off Stand on 2-State Option," New York Times, March 20, 2015.
51.	The main document establishing PA limited self-rule over the Gaza Strip and parts of the West Bank is the Israeli-Palestinian Interim Agreement on the West Bank and the Gaza Strip (known generally as the "1995 Interim Agreement" or "Oslo II"), which was signed by Israel and the PLO on September 28, 1995. The text is available at http://www.mfa.gov.il/MFA/ForeignPolicy/Peace/Guide/Pages/THE%20ISRAELI-PALESTINIAN%20INTERIM%20AGREEMENT.aspx.
52.	Barak Ravid, "Israeli Minister: Palestinian Authority Will Collapse, the Only Question Is When," Ha'aretz, February 29, 2016; Adnan Abu Amer (translated from Arabic), "Is PA on verge of collapse?," Al-Monitor Palestine Pulse, December 11, 2015.
53.	Steven J. Erlanger and Rami Nazzal, "Talk Grows About Who Will Succeed Palestinians' Aged Abbas, Seen as Ineffective," New York Times, February 28, 2016.
54.	Transcript of Secretary Kerry's remarks at the Brookings Institution's Saban Forum, available at http://www.state.gov/secretary/remarks/2015/12/250388.htm.
55.	U.S. Embassy to Israel website: January 18, 2016 - Ambassador Daniel B. Shapiro's Remarks at the Institute for National Security Studies 9th International Conference.
56.	Ibid. During a March 2016 visit to Israel, Vice President Joe Biden said, "'Let me say in no uncertain terms: The United States of America condemns these acts and condemns the failure to condemn these acts," Isabel Kershner, "Biden Assails 'Failure to Condemn' Mideast Killings," New York Times, March 10, 2016.
57.	"Israel 'Supports Settlement at Any Time' After Hebron Incident," Voice of America, January 24, 2016.
58.	"Distancing the Two State Solution: The Ministry of Housing's Plans and Construction – Exposed," Settlement Watch, Peace Now, December 2015; Daoud Kuttab, "Is the two-state solution dead?," Al-Monitor Palestine Pulse, February 25, 2016.
59.	"UN chief asks Israel to reverse West Bank land seizure," Agence France Presse, March 15, 2016.
60.	Dennis Ross and David Makovsky, "The neglected Israeli-Palestinian peace process must be revived," Washington Post, February 25, 2016. For more information on economic measures targeting Israel and/or Israeli settlements, see CRS Report R44281, Israel and the Boycott, Divestment, and Sanctions (BDS) Movement, coordinated by [author name scrubbed].
61.	See, e.g., Jodi Rudoren, "Young Palestinians Fanning the Flames of a New Uprising," New York Times, October 14, 2015.
62.	Neri Zilber, "The business end of Palestinian despair," blogs.timesofisrael.com, March 3, 2016. In November 2015, the House (H.Res. 293) and Senate (S.Res. 302) both passed resolutions condemning Palestinian attacks, calling upon PA officials to stop incitement via Palestinian media and to take steps to halt the attacks, encouraging continued PA-Israel security cooperation, and calling for the resumption of Israeli-Palestinian peace negotiations.
63.	Ben Hartman, "Dimona: Jewish man stabs 4 Arabs in suspected nationalist attack," jpost.com, October 9, 2015.
64.	"American veteran killed as Palestinians unleash attacks in Israel," CBS News, March 8, 2016. A few U.S. citizens have been killed or injured, prompting the U.S. Embassy in Tel Aviv and Consulate General in Jerusalem to issue a March 9 security message (http://israel.usembassy.gov/sm_030916.html) to U.S. citizens for Israel, Jerusalem, and the West Bank.
65.	Mazal Mualem (translated from Hebrew), "Will social media spark a third intifada?," Al-Monitor Israel Pulse, October 12, 2015.
66.	Zilber, "The business end of Palestinian despair," op. cit.
67.	See, e.g., B'Tselem, "B'Tselem to PM: Your silence permits street executions," November 25, 2015; Amnesty International, "Spiralling Violence in Israel/Occupied Palestinian Territories," October 13, 2015.
68.	Josef Federman, "Fatal beating of Eritrean prompts soul-searching in Israel," Associated Press, October 19, 2015.
69.	Luke Baker, "Amid Palestinian violence, Israel tracks far-right Jewish threat," Reuters, December 8, 2015.
70.	U.S. Embassy to Israel website: January 18, 2016 - Ambassador Daniel B. Shapiro's Remarks at the Institute for National Security Studies 9th International Conference.
71.	Amos Harel, "Military Wants 30,000 More Palestinians Working in Israel," haaretz.com, February 8, 2016.
72.	Avi Issacharoff, "Hamas has replenished its rocket arsenals, Israeli officials say," Times of Israel, March 4, 2016.
73.	Calev Ben-David, "Israel Outlaws Domestic Islamic Group as Police Raid Offices," Bloomberg, November 17, 2015.
74.	Attila Somfalvi, "Netanyahu advances Jewish nation-state bill," Ynetnews, November 29, 2015.
75.	Isabel Kershner, "Lawmakers Rekindle Debate on Israel's Arabs," New York Times, February 10, 2016.
76.	"Israel government approves £2.5 billion plan to strengthen Arab communities," Britain Israel Communications & Research Centre, December 31, 2015.
77.	After contentious negotiation and month-to-month government funding that extended well beyond March 2015 elections and the subsequent government formation process, in November 2015 the Knesset passed Israel's 2015-2016 budget. The projected deficit is 2.9%. Raoul Wootliff and Marissa Newman, "Knesset passes 2015-2016 budget by 61-59 majority," Times of Israel, November 19, 2015. Key compromises included an agreement for the military to begin implementing some structural changes in exchange for increased defense spending, and a tax cut on public transportation in lieu of one on food. Spending increased for education, welfare, and health.
78.	"Israel moves forward on controversial NGO law," Deutsche Welle, February 9, 2016.
79.	Uri Blau, "Haaretz investigation: U.S. donors gave settlements more than $220 million in tax-exempt funds over five years" and "From N.Y.C. to the West Bank: Following the money trail that supports Israeli settlements," haaretz.com, December 7, 2015.
80.	See, e.g., "Israeli bill targets dovish nonprofits," Washington Post, December 28, 2015
81.	For background, see CRS Report RL33476, Israel: Background and U.S. Relations, by [author name scrubbed]. At about the same time as Netanyahu approved the Leviathan deal, some media reports indicated that Israel and Turkey might be nearing normalization of the two countries' long-frayed ties and preparing to discuss possible natural gas deals. See, e.g., Barak Ravid, "After Five Years, Israel and Turkey Agree on Reconciliation Pact," haaretz.com, December 17, 2015. In the absence of an announcement to this effect, speculation has continued on the subject. See, e.g., Semih Idiz, "Will Israel throw Erdogan a lifesaver?," Al-Monitor Turkey Pulse, March 15, 2016; Ahmad Melham (translated from Arabic), "Will Israel, Turkey decide the fate of Gaza?," Al-Monitor Palestine Pulse, March 15, 2016.
82.	Isabel Kershner and Stanley Reed, "Israel Grants Approval for Development of Giant Offshore Gas Field," New York Times, December 18, 2015
83.	"Meretz petitions High Court to block gas deal," Times of Israel~~, December 17, 2015~~.

Israel: Major Issues and U.S. Relations

Changes from March 16, 2016 to July 26, 2016

Israel: Background and U.S. Relations Inin Brief

Contents

Figures

Introduction

Overview of U.S.-Israel Relations

Footnotes

Key National Security Issues

Iranian Nuclear Deal and U.S.-Israel Implications

Overview

U.S.-Israel Negotiations on Aid Memorandum of Understanding (MOU)

Other U.S.-Israel Next Steps

Regional Threats from Hezbollah, Syria, and Elsewhere

Israeli-Palestinian Issues

Key U.S. Policy Considerations

Ongoing Violence: Another Palestinian Intifada?

Domestic Israeli Politics

Footnotes