Israel: Background and U.S. Relations
Jim Zanotti
Specialist in Middle Eastern Affairs
February 29, 2012
Congressional Research Service
7-5700
www.crs.gov
RL33476
CRS Report for Congress
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Israel: Background and U.S. Relations
Summary
Since Israel’s founding in 1948, successive U.S. Presidents and many Members of Congress have
demonstrated a commitment to Israel’s security and to maintaining close U.S.-Israel defense,
diplomatic, and economic cooperation. U.S. and Israeli leaders have pursued common security
goals and have developed close relations based on common perceptions of shared democratic
values and religious affinities. U.S. policymakers often seek to determine how regional events
and U.S. policy choices may affect Israel’s security, and Congress provides active oversight of the
executive branch’s dealings with Israel and the broader Middle East. Some Members of Congress
and some analysts criticize what they perceive as insufficiently critical support of Israel. Other
than Afghanistan, Israel is the leading recipient of U.S. foreign aid and is a frequent purchaser of
major U.S. weapons systems. The United States and Israel maintain close security cooperation—
predicated on a U.S. commitment to maintain Israel’s “qualitative military edge†over other
countries in its region. The two countries signed a free trade agreement in 1985, and the United
States is Israel’s largest trading partner. For more information, see CRS Report RL33222, U.S.
Foreign Aid to Israel, by Jeremy M. Sharp.
Israel’s perceptions of security around its borders have changed since early 2011 as several
surrounding Arab countries—including Egypt and Syria—have experienced political upheaval or
transition. Of particular concern to Israel is the durability of its 33-year-old peace treaty with
Egypt, where a new government—with an Islamist parliamentary majority—may become more
reflective of popular sentiment that includes anti-Israel strains. Israel perceives threats from Iran
and from Iranian-sponsored non-state actors such as the Lebanese Shiite group Hezbollah, as well
as Hamas and other Sunni Islamist Palestinian militants in Gaza. Israeli leaders have renewed
calls for urgent international action against Iran’s nuclear program, and some U.S. officials have
warned of the potential consequences of Israeli air strikes against Iran.
Recent regional developments and Israeli reactions to them have reinforced the political impasse
between Israel and the Palestinians on core issues in their longstanding conflict, calling into
question the land-for-peace formula that has guided years of efforts to resolve the Israeli-
Palestinian conflict. Since the end of the 1967 Arab-Israeli war, Israel has militarily occupied and
administered the West Bank, with the Palestinian Authority exercising limited self-rule in some
areas since 1995. Israeli settlement of occupied territories, facilitated by successive Israeli
governments, has resulted in a population of approximately 500,000 Israelis living in residential
neighborhoods or settlements in the West Bank (including East Jerusalem). These settlements are
of disputed legality under international law. Israel considers all of Jerusalem to be the “eternal,
undivided capital of Israel,†despite Palestinian claims to a capital in East Jerusalem and broader
Muslim and Christian religious claims in the city. Although Israel withdrew its permanent
military presence from the Gaza Strip in 2005, it still controls most access points and legal
commerce to and from the territory.
Despite its unstable regional environment, Israel has developed a robust diversified market
economy and a vibrant parliamentary democracy. Israeli Prime Minister Binyamin Netanyahu and
his Likud Party lead a coalition that is unusually stable relative to recent Israeli governments. The
next national elections will be held no later than early 2013. Israel’s political and social debates
are being shaped in new ways by population increases within ultra-Orthodox and Russian-
speaking communities and among Israel’s Arab citizens and Jews of non-European descent.
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Contents
Introduction...................................................................................................................................... 1
Historical and Demographic Overview of Israel ............................................................................. 2
Government and Politics.................................................................................................................. 5
Economy .......................................................................................................................................... 7
The Palestinian Issue ....................................................................................................................... 9
Overview ................................................................................................................................... 9
Current Challenges and U.S. Involvement .............................................................................. 10
Foreign Policy on Matters of U.S. Interest .................................................................................... 12
Regional Security Concerns .............................................................................................. 12
Iran and Its Nuclear Program ............................................................................................ 14
Egypt ................................................................................................................................. 18
Jordan ................................................................................................................................ 19
Syria .................................................................................................................................. 20
Lebanon............................................................................................................................. 21
Turkey ............................................................................................................................... 22
Issues Affecting U.S.-Israel Relations ........................................................................................... 24
Overview ................................................................................................................................. 24
U.S. Security Guarantees for Israel? ....................................................................................... 24
U.S. Aid and Arms Sales to Israel ........................................................................................... 26
Loan Guarantees...................................................................................................................... 28
Security Cooperation............................................................................................................... 29
Preserving Israel’s Qualitative Military Edge (QME)....................................................... 30
Cooperative Missile Defense and Iron Dome ................................................................... 32
Emergency U.S. Stockpile in Israel................................................................................... 34
Sensitive Defense Technology and Intelligence Issues ........................................................... 34
Israeli Arms Sales to Other Countries ............................................................................... 35
End-Use Monitoring.......................................................................................................... 36
Espionage-Related Cases .................................................................................................. 38
Nuclear Non-Proliferation ....................................................................................................... 38
Jerusalem ................................................................................................................................. 40
Settlements .............................................................................................................................. 41
Bilateral Trade ......................................................................................................................... 43
Scientific and Business Cooperation ....................................................................................... 44
Intellectual Property Protection............................................................................................... 45
U.S.-Based Interest Groups Relating to Israel ............................................................................... 45
Figures
Figure 1. Map of Israel .................................................................................................................... 4
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Tables
Table 1. Parties in the Knesset, 2011 ............................................................................................... 5
Table 2. Key Cabinet Ministers ....................................................................................................... 6
Table 3. Basic Facts ......................................................................................................................... 8
Table 4. Recent U.S. Assistance to Israel....................................................................................... 28
Contacts
Author Contact Information........................................................................................................... 46
Acknowledgments ......................................................................................................................... 46
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Introduction
U.S.-Israel defense, diplomatic, and economic cooperation has been close for decades. U.S.
policymakers often consider Israel’s security as they make policy choices in the region.. Israel has
relied on U.S. support for its defense posture, despite reported private and sometimes public
disagreements between U.S. and Israeli officials on how to respond to and prioritize various
challenges in a shifting regional environment. Congress provides active oversight of the executive
branch’s dealings with Israel. Some Members of Congress oppose what they perceive as
insufficiently critical U.S. support of Israel. Other Members of Congress have criticized actions
by the Obama Administration and previous U.S. administrations for being insufficiently
supportive of Israel, and occasionally have authorized and appropriated funding for programs
benefitting Israel at a level exceeding that requested by the executive branch.
During 2011, Israel did not face any conventional military attacks, but its security perceptions
changed as several surrounding Arab countries experienced political upheavals. Israel has few
means of influencing political outcomes in Egypt, Syria, Lebanon, or Jordan, but developments in
those states may significantly affect Israeli security. Israelis have expressed concern that Islamist
governments hostile to Israel and the West could gain power in countries undergoing transitions.
Political change in the Arab world and continuing stalemate in the Israeli-Palestinian peace
process have partly driven the Palestine Liberation Organization (PLO)’s pursuit of greater
international recognition of Palestinian statehood. Those factors may also be increasing the
prospect of Hamas’s integration into Palestinian organs of governance, despite ongoing tensions
between Hamas and rival faction Fatah. These developments and Israeli reactions to them have
reinforced and perhaps deepened the political impasse on core issues of Israeli-Palestinian
conflict—security parameters, borders, Jewish settlements, water rights, Palestinian refugees, and
the status of Jerusalem. Meanwhile, Israeli leaders have renewed their calls for urgent
international action against Iran’s nuclear program in a way that some analysts have interpreted as
warning that Israeli air strikes against Iranian nuclear facilities could occur in coming months.
Domestically, Israeli Prime Minister Binyamin Netanyahu and his Likud Party lead a multi-party
coalition that is viewed as right-wing.1 The coalition has been unusually stable in a system where
governments have rarely completed their terms. The next national elections will be held no later
than early 2013. The announcement in January 2012 by television journalist Yair Lapid that he is
forming a centrist party to compete in the next election has not changed most Israeli analysts’
view of the likely outcome—probably similar to the current distribution of seats and another
Netanyahu-led coalition, but with the possible loss of several seats by the centrist Kadima Party.
The Kadima leadership primary between the current party leader, former Foreign Minister Tzipi
Livni, and former Defense Minister Shaul Mofaz is scheduled for March 2012.
Despite a strong recent economic performance, Israel faced large, non-violent domestic protests
in the summer of 2011 over cost of living and income distribution issues. Current debate in the
Knesset (Israel’s parliament) and civil society focuses on addressing these issues as well as on
controversial legislative proposals seeking to compel Israel’s Arab citizens (comprising
approximately 20% of the population) to affirm the state’s “Jewishness†and to limit or tax
1 In Israel, the left-right spectrum is generally defined by positions on the Israeli-Palestinian conflict/peace process,
though the spectrum also has some validity in describing differences on economic and social issues.
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foreign funding for Israeli non-governmental organizations (NGOs). Efforts by growing ultra-
orthodox Jewish communities to impose gender segregation on the general population in public
places has also garnered attention in recent months. Netanyahu’s government also is confronting
increased attacks and vandalism by activists and Israeli West Bank settlers against mosques and
churches, NGOs, Palestinian homes and motorists, and even Israeli military bases in retaliation
for government action against settler outposts unsanctioned by Israeli law (see “Settlementsâ€
below). Rising public anger at these “price tag†attacks have created political difficulties for
Netanyahu, whose coalition includes supporters of illegal outposts. U.S. officials, including
Secretary of State Hillary Clinton, have expressed concern over these domestic developments.2
Historical and Demographic Overview of Israel3
The quest for a modern Jewish homeland coincided with the publication of Theodor Herzl’s The
Jewish State in 1896. The following year, Herzl described his vision at the first Zionist Congress,
which encouraged Jewish settlement in Palestine, the territory that had included the Biblical home
of the Jews but was then part of the Ottoman Empire. During World War I, the British
government issued the Balfour Declaration in 1917, supporting the “establishment in Palestine of
a national home for the Jewish people.†Palestine became a British Mandate after the war, and
British officials simultaneously encouraged the national aspirations of the overwhelming Arab
majority in Palestine for eventual self-determination, insisting that its promises to Jews and Arab
did not conflict. Jews immigrated to Palestine in ever greater numbers during the Mandate period,
and clashes between Arabs and Jews and between both groups and the British increased.
Following World War II, the plight of Jewish survivors of the Holocaust gave the demand for a
Jewish home added poignancy and urgency, while Arabs across the Middle East simultaneously
demanded independence and self-determination.
In 1947, the United Nations General Assembly developed a partition plan (Resolution 181) to
divide Palestine into Jewish and Arab states, with Jerusalem and some surrounding areas
proposed to be under U.N. trusteeship. The Jewish leadership (known as the Yishuv) welcomed
the plan because of the legitimacy it conferred on the Jews’ claims in Palestine, while the
Palestinian Arab leadership and the League of Arab States (Arab League) rejected the plan,
insisting both that the specific partition proposed and the entire concept of partition were unfair
given Palestine’s Arab majority. Debate on this question has prefigured current debate regarding
Israeli-Palestinian issues that focuses on whether it is possible to have a state that both provides a
secure Jewish homeland and is governed in accordance with democratic values and the principle
of self-determination.
After several months of civil conflict between Jews and Arabs, Britain officially ended its
Mandate on May 14, 1948, at which point the state of Israel proclaimed its independence and was
immediately invaded by Arab armies. The conflict ended with armistice agreements between
Israel and its neighbors: Egypt, Jordan, Lebanon, and Syria. The territory controlled by Israel
within these 1949-1950 armistice lines point is roughly equal to that of the state of New Jersey.
Israel engaged in further armed conflict with some or all of its neighboring Arab states in 1956,
1967, 1973, and 1982. Since the late 1960s, Israel has also dealt with the threat of Palestinian
2 Barak Ravid, “Clinton warns of Israel’s eroding democratic values,†Ha’aretz, December 5, 2011.
3 For more, see Howard M. Sachar, A History of Israel: From the Rise of Zionism to Our Time, New York: Knopf,
1996.
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nationalist and Islamist terrorism. In 1979, Israel concluded a peace treaty with Egypt, followed
in 1994 by a peace treaty with Jordan, thus making another multi-front war less likely. Israel’s
current relations with its neighbors are discussed in the “Foreign Policy on Matters of U.S.
Interest†section below.
Israel’s demographic profile is changing in a way that appears to be increasingly affecting its
political orientation and societal debates. In the first decades following its founding, Israeli
society was dominated by the secular Ashkenazi Jews from Eastern Europe who constituted the
large majority of 19th and early 20th Century Zionist immigrants and who sought to build a
country dedicated to Western liberal values. The 1977 electoral victory of Menachem Begin’s
Likud Party and its revisionist Zionist ideology helped boost the influence of historically
marginalized groups, such as Haredim (ultra-Orthodox) from communities that predated Zionist
immigration, and Sephardic and Mizrahi Jews who had largely immigrated to Israel from Arab
countries and Iran following the outbreak of the 1948 war. The higher birth rates of these groups,
combined with the influx of nearly a million Russian-speaking immigrants from the former
Soviet Union in the 1990s, have increased their prominence in Israeli society relative to the
traditional leadership class of Ashkenazi Jews. Political parties linked to these groups, including
Yisrael Beiteinu (Russian-speaking immigrants) and Shas (Sephardic and Mizrahi Jews and
Haredim), have increased in popularity as a result, while support for Ashkenazi Zionist parties
such as Labor and Meretz has decreased.
Many analysts believe that these demographic trends partly explain why Israel’s current Jewish
population is “more nationalistic, religiously conservative, and hawkish on foreign policy and
security affairs than that of even a generation ago.â€4 These trends’ likely long-term effects on
Israel’s internal cohesion and its ties with the United States and other international actors are
unclear. Israel also faces increasing estrangement between its Jewish and Arab citizens (Arabs
comprise more than 20% of the population). Military service remains compulsory for all Israeli
young men and women, with exceptions for Arabs and most Haredim, though broad exceptions
for men engaging in religious study might end as soon as the summer of 2012 following a
February 2012 Israeli Supreme Court ruling overturning the law granting these exceptions.5
4 Haim Malka, Crossroads: The Future of the U.S.-Israel Strategic Partnership, Center for Strategic and International
Studies, 2011.
5 Amy Teibel, “Israeli ultra-Orthodox say they won’t be drafted,†Associated Press, February 27, 2012.
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Figure 1. Map of Israel
Source: Map Resources. Adapted by CRS.
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Government and Politics
Israel is a parliamentary democracy in which the President is head of state and the Prime Minister
is head of government. The unicameral parliament (the Knesset) elects a president for a seven-
year term. The President designates the leader of the party with the most seats in parliament or the
one with the best chance to form a stable government as Prime Minister. The Prime Minister
relies on Cabinet votes to determine the government’s course of action on domestic issues, while
military and national security action are directed through a 14-minister “security cabinet.â€
The political spectrum is highly fragmented, with small parties exercising disproportionate power
due to the low vote threshold for entry into parliament and the need for major parties to seek the
support of smaller parties to form and maintain coalition governments. For the March 2006
election, the threshold was raised from 1% to 2%. This was intended to bar smaller parties from
parliament but it spurred some to join together simply to overcome the threshold. National
elections must be held at least every four years, but are often held earlier due to difficulties in
holding coalitions together. Since Israel’s founding, the average life span of an Israeli government
has been about 22 months. In recent years, the peace process and scandals have caused coalitions
to break apart or produced early elections. Just as rules have been changed to make it harder for
tiny parties to enter the Knesset, the conditions for bringing down a government have also
become more stringent.
Israel does not have a constitution. Instead, 11 Basic Laws lay down the rules of government and
enumerate fundamental rights. Israel has an independent judiciary, with a system of magistrates
courts and district courts headed by a Supreme Court.
Table 1. Parties in the Knesset, 2011
Coalition or
Seats Party
Orientation and Views
Opposition
28
Kadima
Centrist; a Palestinian state must be established to
Opposition
ensure that Israel remains a democratic, Jewish state
27
Likud
Rightist; negotiate economic peace before a
Coalition
permanent “arrangement†with the Palestinians
15
Yisrael Beiteinu (Israel Our
Russian-speakers; Rightist; Nationalist; Secular; a
Coalition
Home)
Palestinian state to be established only if Israeli Arabs
and their territory are exchanged for Jewish settlers
and settlements
10
Shas
Sephardi; Ultra-orthodox; seeks more social welfare
Coalition
and education funds; opposes “division†of Jerusalem
by ceding the east for a Palestinian capital
8
Ha’avoda (Labor)
Leftist; Social-democrat; a Palestinian state should be Opposition
established alongside a Jewish state
5
Ha’atzma’ut (Independence) Break-off from Labor party under Ehud Baraka
Coalition
5
United Torah Judaism
Ashkenazi; Ultra-Orthodox; opposes separation of
Coalition
(UTJ)b
religion and state and drafting of ultra-orthodox
young men into the military; advocates application of
more Jewish law in the state; seeks more social
welfare and education funds
4
National Union (NU)c
Nationalist; Ashkenazi Orthodox; opposes
Opposition
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Coalition or
Seats Party
Orientation and Views
Opposition
establishment of a Palestinian state west of the
Jordan River; for annexation of territories captured
in 1967, legalization of unauthorized outposts, and
building of new settlements
4
Hadash (Democratic Front
Israeli-Arab; Communist; for withdrawal to 1967
Opposition
for Peace and Equality)
borders; for separation of religion and the state
4
Ra’am-Ta’al (United Arab
Israeli-Arab; Islamist; for withdrawal to 1967 borders Opposition
List)
and the creation of a Palestinian state
3 Habayet
Hayehudi
(Jewish
Nationalist; Ashkenazi Orthodox; opposes a
Coalition
Home)-New National
Palestinian state; settlements should remain under
Religious Party (NRP)c
Israeli sovereignty
3
Balad (National Democratic Israeli-Arab; leftist; for an Israeli state that is not
Opposition
Assembly)
Jewish in character alongside a Palestinian state
3
New Movement/Meretz
Leftist; Civil libertarian; Secular; peace activists for
Opposition
withdrawal to 1967 borders
1
Am Shalem (Whole
Ultra-Orthodox former member of Shas
Coalition
Nation)d
a. Ehud Barak and 4 other members broke from the Labor party on January 17, 2011, and formed the new
Ha’atzma’ut (Independence) party. The break came after the Labor party threatened to leave Prime Minister
Netanyahu’s coalition due to the stal ed peace process. The Independence party stayed with the coalition,
while the remaining members of the Labor party broke with it. The split allowed Netanyahu to keep a
majority coalition (66 of 120 Knesset Members) and allowed Barak to avoid backlash from within his own
party. See Daniel Levy, “A Requiem for Israel’s Labor Party,†Foreign Policy online, January 17, 2011.
b. Includes Degel HaTorah and Agudat Yisrael.
c. Previously aligned as NU/NRP for a combined 9 seats; NU and Jewish Home split over a joint electoral list.
d. Chaim Amsalem was expelled from Shas in late 2010 and formed his own party in April 2011.
Table 2. Key Cabinet Ministers
Post(s) Incumbent
Party
Prime Minister, Minister of
Binyamin Netanyahu
Likud
Economic Strategy, Minister of
Pensioner Affairs, Minister of
Health, and Minister of Science,
Culture, and Sport
Vice Prime Minister, Minister
Silvan Shalom
Likud
for Regional Development,
Minister for Development of
the Negev and Galilee
Vice Prime Minister, Minister
Moshe Ya’alon
Likud
for Strategic Affairs
Deputy Prime Minister, Minister Avigdor Lieberman
Yisrael Beiteinu
of Foreign Affairs
Deputy Prime Minister, Minister Ehud Barak
Independence
of Defense
Deputy Prime Minister, Minister Eli Yishai
Shas
of Interior
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Post(s) Incumbent
Party
Deputy Prime Minister, Minister Dan Meridor
Likud
of Intelligence and Atomic
Energy
Minister of Finance
Yuval Steinitz
Likud
Economy
Israel has an advanced industrial, market economy in which the government plays a substantial
role. Despite limited natural resources, the agricultural and industrial sectors are well developed.
The engine of the economy is an advanced high-tech sector, including aviation, communications,
computer-aided design and manufactures, medical electronics, and fiber optics. Israel still
benefits from loans, contributions, and capital investments from the Jewish diaspora, but its
economic strength has lessened its dependence on external financing.
Israel is aiming to shrink its budget deficit to 1% of gross domestic product by 2014, and the
government is allowed by law to raise the annual budget by only 1.7%. When Prime Minister
Netanyahu was finance minister in the early 2000s, the government attempted to liberalize the
economy by controlling government spending, reducing taxes, and privatizing state enterprises.
The chronic budget deficit decreased, while the country’s international credit rating was raised,
enabling a drop in interest rates. However, Netanyahu’s critics suggested that cuts in social
spending had widened the national income gap and shrunk the Israeli middle class.
During the summer of 2011, large groups of Israelis from across economic and cultural
backgrounds came together to protest economic inequality and what they perceived as an unfairly
high cost of living.6 The protests occurred despite Israel’s very impressive macroeconomic profile
and fiscal position. Various factors—including Israel’s communitarian heritage, its unique system
of land ownership, its tradition of vigorous public debate, and the consequences of deregulation
for a system characterized by some as “crony capitalismâ€7—may have contributed to this
situation.
In response to the protests, Netanyahu empowered a committee headed by economist Manuel
Trajtenberg to make economic policy recommendations. The committee’s report included calls
for domestic spending increases, a more progressive income tax system, early childhood
education, changes to pricing policies, and cuts to defense spending. The tax proposals have
already been enacted into law, but most of the other proposals—though accepted in principle by
Israel’s cabinet—remain subject to political debate given concerns over whether defense spending
reductions are advisable at a time of increased regional uncertainty. Since 2009, Israel has made
its budgets on a two-year cycle. The utility of this practice is a subject of debate, and the Knesset
will decide by the end of 2012 whether it will be extended for a third such cycle.8
6 See “Street Power,†Economist, August 6, 2011.
7 Daniel Doron, “Crony Capitalism in Israel,†Wall Street Journal, October 9, 2010.
8 Ruth Levush, “Israel’s Social Protest and the Two-Year Budget Cycle: Any Lessons?,†blogs.loc.gov, September 14,
2011.
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Table 3. Basic Facts
Population
7.76 million (2011 est.) (includes an estimated 296,700 settlers in
the West Bank (2009 est.), 192,800 in East Jerusalem (2008 est.),
and 19,100 in the Golan Heights (2008 est.))
Jews
75.4%
Arabs
20.5% (84.0% Muslim, 8.1% Druze, 7.8% Christian) (2010 est.)
Real Gross Domestic
4.6% (2011 est.)
Product growth rate
GDP per capita
$30,082 (2011 est.)
Unemployment rate
5.6% (2011 est.)
Population below
23.6% (2007 est.)
poverty line
Inflation rate
2.6% (2011 est.)
Military spending as % of
6.2% (2010 est.)
GDP
External Debt as % of
46% (2011 est.)
GDP
Current account (Trade)
0.2% (2011 est.)
surplus as % of GDP
Exports $55.67
billion (2010 est.)
Export commodities
machinery and equipment, software, cut diamonds, agricultural
products
Export partners
U.S. 32.1%, Hong Kong 6.3%, India 5.1%, Belgium 5.1% (2010
est.)
Imports
$58.04 billion (2010 est.)
Import commodities
raw materials, military equipment, investment goods, rough
diamonds
Import partners
U.S. 12.8%, China 8.1%, Germany 6.3%, Belgium 5.8%, (2010 est.)
Source: Central Intelligence Agency, The World Factbook; Economist Intelligence Unit; Israel Central Bureau of
Statistics.
Reported offshore natural gas finds could have substantial implications for Israel’s energy
security. In December 2010, Noble Energy, a U.S.-based energy company, reconfirmed its
estimates for its third, and largest, natural gas discovery off the northern coast of Israel. The
Leviathan field has an estimated gross resource base of 16 trillion cubic feet (tcf) of natural gas.
Noble Energy estimates that its three natural gas discoveries since 2009—Tamar, Dalit, and
Leviathan—have 25 tcf of gross resources. Once these sources begin production, which is
expected as early as 2012 for Tamar and by 2018 for the other two, they could transform Israel
from a net energy importer with a 16-year supply of natural gas to a net exporter with over a 100-
year supply.9 In early 2011, the Knesset approved a new taxation scheme that will boost the
government’s share of oil and gas revenue from approximately 30% to between 52% and 62%.
9 For more information on this subject, see CRS Report R41618, Israel’s Offshore Natural Gas Discoveries Enhance
Its Economic and Energy Outlook, by Michael Ratner.
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The Palestinian Issue10
Overview
From the late 19th century onward, many Zionists have attempted to reconcile their national
aspirations for a Jewish homeland in historic Palestine with those of Arabs living there. This
ongoing dilemma of competing claims has been exacerbated by conflict and by the actions and
agendas of neighboring Arab states and other regional and international actors. As the state of
Israel won its independence in 1947-1949 while fighting Palestinian Arab militias and Arab state
armies, roughly 700,000 Palestinians were driven or fled from their homes in what is now Israel,
an occurrence Palestinians call the nakba (“catastropheâ€). Palestinian exiles based in Arab states
increasingly supplanted Arab state governments as the primary champions of their people’s cause
after Israel’s military occupation of the West Bank (including East Jerusalem) and Gaza Strip
during the 1967 Arab-Israeli war.
Two decades of violence—including Palestinian acts of international terrorism—and international
political rivalry ensued between Israel and the Palestine Liberation Organization (PLO).
Meanwhile, Israelis began constructing communities for Jewish Israelis (generally referred to as
“settlementsâ€) in the territories captured in 1967. Although Israel officially withdrew from Gaza
in 2005, and the West Bank (save for East Jerusalem and its greater vicinity) has not been
annexed by Israel, Israeli citizens residing in the West Bank are subject to Israeli law and are
connected by transportation and other infrastructure systems to Israel proper. Furthermore, Israel
continues to control access and commerce to and from both the West Bank and Gaza, with the
exception of Egypt’s control over the passage of individuals at the Rafah crossing on its border
with Gaza. Israel also still maintains control over many aspects of governance and security for
Palestinians within the West Bank.
Beginning in 1987, an intifada (uprising) by Palestinians against Israeli rule in the West Bank and
Gaza helped mobilize support among Israelis for greater Palestinian self-rule in exchange for
assurances of peaceful coexistence. The resulting U.S.-brokered peace process, which established
a Palestinian Authority (PA) with powers of limited self-rule over Gaza and parts of the West
Bank, has not successfully resolved the core issues of Israeli-Palestinian dispute: borders, security
parameters, settlements, refugees, and the status of Jerusalem. A second Palestinian intifada in the
early 2000s brought deadly and traumatizing violence to both Israelis and Palestinians,
contributing to slowdowns and reversals of the peace process.
Outbreaks of violence have eroded trust and empowered political movements on both sides that
are deeply skeptical of the possibility of Israel coexisting peacefully with a Palestinian state.
Palestinian political division is exacerbated by a geographical split between parts of the West
Bank under the limited rule of PA President and Fatah leader Mahmoud Abbas, and Gaza under
the rule of the Islamist group Hamas (a U.S.-designated terrorist group). Israeli security measures,
which were established largely in response to Palestinian terrorist threats, are perceived by
Palestinians and many international observers as too obstructive of Palestinian political and
economic freedoms to foster conditions for peace. Israel is continually faced with the question of
whether to maintain the political and security status quo, to continue efforts for peace through
10 See also CRS Report RL34074, The Palestinians: Background and U.S. Relations, by Jim Zanotti.
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negotiations, or to take a different course of action. Decisions on this question have traditionally
defined Israel’s domestic political scene, and are interrelated with Israel’s other regional and
international concerns, including those involving threats from Iran’s regime and various state and
non-state groups that Iran supports.
Current Challenges and U.S. Involvement
The internationally mandated land-for-peace framework that has undergirded U.S. policy since
the June 1967 Arab-Israeli war presupposes broad Arab acceptance of any final-status Israeli-
Palestinian agreement, and, more fundamentally, Arab acceptance of Israel.11 Israelis insist that
their security needs must be met for them to be willing to relinquish West Bank land in a
negotiated two-state solution with the Palestinians. Increasing concern among Israeli leaders in
the wake of ongoing Arab political change that they cannot count on future positive ties even with
states such as Egypt and Jordan has likely led them to perceive greater risks in the possibility of
implementing and maintaining a land-for-peace deal.12 For their part, Palestinian leaders and Arab
state rulers may be less likely to take unpopular decisions to please international partners or in the
interests of long-term peace if opposition to Israel and its policies becomes more of an organizing
principle for political activism throughout the region.
In May 2011, President Obama gave two speeches calling for renewed Israeli-Palestinian
negotiations focusing on the issues of borders and security parameters. The speeches
contemplated that borders would be based on the Israel-West Bank armistice line existing prior to
the 1967 war (also known as the “Green Lineâ€). In referring to possible land swaps, the President
implied that Israel would compensate Palestinians for existing settlements and contiguous areas
beyond the Green Line that it might keep in a final agreement. Although Prime Minister
Netanyahu did not categorically reject President Obama’s proposal, he complained in response—
including at a speech before a joint session of Congress—that the 1967 war established that the
preexisting armistice line was not defensible and thus not a proper reference point for permanent
borders. During the first two years of Obama’s and Netanyahu’s time in office, attempts by
Palestinians to link a meaningful resumption of negotiations to a freeze in Israeli residential
construction beyond the Green Line—claiming inspiration from Obama’s public call for this
freeze—were unsuccessful. Netanyahu accepted the idea of a two-state solution in principle, but
insisted that any Palestinian state would need to be demilitarized and remain subject to indefinite
Israeli control of its airspace, the electromagnetic spectrum used for telecommunications, and the
Jordan Valley.
Substantive Israeli-Palestinian negotiations have not resumed to date, even within the limited
scope of borders and security. A temporary and partial Israeli moratorium on new building
11 Formally, the League of Arab States (Arab League) remains committed to “land for peace,†reflected in the 2002
Arab Peace Initiative. 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 then-Crown Prince (now King) Abdullah
of 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.
12 Egypt and Jordan were routinely held out as examples showing that even if making peace with Israel was unpopular
with the countries’ populations, their autocratic or monarchical leaders could normalize and maintain relations with
Israel without significantly losing their capacity or legitimacy to rule.
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projects in the West Bank expired without extension in late 2010. Continued construction beyond
the Green Line, including public announcements of new projects in the West Bank and East
Jerusalem, have been criticized widely by Palestinians, the Obama Administration, and other
international actors as undermining prospects for peace talks. This contributed to the effort by
PLO and Abbas (its chairman) in 2011 to seek greater international recognition of Palestinian
statehood outside of a negotiating context. The effort climaxed in the PLO’s September 2011
application for membership to the United Nations and late 2011 admission to the U.N.
Educational, Scientific and Cultural Organization (UNESCO). However, the Palestinian U.N.
membership effort has stalled in the Security Council and, despite opportunities to pursue the
effort further there and with other specialized U.N. agencies, the PLO has not yet opted to do so.
Congressional holds on portions of FY2011 aid to the Palestinians—some of which have been
lifted—and Israeli withholding of transfer payments that constitute over half of the PA’s budget
came in response to Palestinian actions at the United Nations and may influence Abbas’s thinking
regarding the viability of future efforts.13 For many Israeli and American observers who assert
that the U.N. has had a longtime anti-Israel, pro-Palestinian institutional bias, the PLO U.N.
initiatives are emblematic of a larger effort by Palestinians and their supporters to “delegitimizeâ€
Israel, and to an increasing reservoir of international anti-Israel and anti-Semitic feeling.14
The United States and the other members of the international Quartet (the European Union, the
United Nations Secretary-General’s office, and Russia) continue to press for Israeli-Palestinian
talks aimed at a peace agreement by the end of 2012. However, as preconditions to talks, the PLO
insists that Israel halt all construction beyond the Green Line and accept the 1967 lines as terms
of reference.15 Meanwhile, Palestinian and regional Arab political developments have led Fatah
and Hamas to agree in principle to establish a consensus PA government, coordinate future PLO
actions, exchange political prisoners, and hold PA and PLO elections in 2012. The likelihood of
these developments actually occurring, however, remains unclear. Hamas’s profile may have been
strengthened by the Netanyahu government’s late 2011 release of over 1,000 Palestinian prisoners
in exchange for the release of captured Israeli soldier Gilad Shalit, as well as by the apparent
empowerment of the Muslim Brotherhood and other Islamist movements in Egypt and other Arab
countries.16 The unrest in Syria and its violent suppression by the Asad regime has reportedly led
to a weakening of ties between Hamas and Iran, as Hamas’s external leadership has left its
Damascus headquarters and is emphasizing its Muslim Brotherhood roots.17 If Hamas eschews
13 According to the Financial Times, “Under the 1994 Paris protocol, the Israeli authorities are responsible for
collecting Palestinian tax and customs at ports and border crossings. They are supposed to be transferred directly to the
PA, but Israel has in the past repeatedly refused to do so in response to political events.†Tobias Buck, “Israel freezes
Palestinian funds,†Financial Times, May 1, 2011.
14 Secretary of Defense Leon Panetta said in December 2011, “Indeed, there is an international campaign underway to
isolate Israel. President Obama has stood steadfastly in the way of that effort, especially in the United Nations.â€
Transcript of remarks by Secretary Panetta at Saban Forum, Brookings Institution, Washington, DC, December 2,
2011, available at http://www.defense.gov/transcripts/transcript.aspx?transcriptid=4937.
15 The Netanyahu government insisted prior to September 2011 that PLO acceptance of Israel as a Jewish state was a
precondition to resuming negotiations, but appears to no longer explicitly take this position. PLO officials claim that
accepting Israel as Jewish state before talks would undermine the PLO negotiating position on Palestinian refugees and
might further undermine the status of Arab citizens of Israel.
16 However, some analysts assert that Hamas may face challenges from the ongoing Arab Awakening owing both to its
external political leadership’s former close ties to the Syrian regime, and to perceptions among some that it has not
governed according to the popular will since taking power in Gaza in 2007.
17 “Hamas ‘to renounce’ armed resistance to Israel,†Jane’s Intelligence Weekly, December 15, 2011. Hamas’s external
leaders have since reportedly relocated to Qatar and Egypt, though it is unclear to what extent either country might
serve as a permanent external office. A December 2011 meeting of Hamas’s governing Shura Council took place in
(continued...)
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violence temporarily or permanently as part of this shift, the group could pose less of an
immediate threat to Israel, but threats from splinter factions or more extreme groups in the Gaza
Strip would likely remain. Israel would also face more complicated choices about whether and
how to deal with Hamas, the PLO, and the PA politically if Hamas involvement in the PLO and
PA were to increase. Thus far, Netanyahu and the Quartet have rejected the possibility of dealing
with a Palestinian entity that involves Hamas unless the entity’s leaders clearly recognize Israel’s
right to exist, reject violence, and agree to honor past Israeli-Palestinian agreements.18
As Fatah and Hamas consider their options vis-Ã -vis each other and Israel in the absence of
progress toward a two-state solution, some analysts assert that Israeli leaders face a dilemma
between democracy and demography. Past prime ministers, including Yitzhak Rabin and Ehud
Olmert, claimed that coming to an arrangement with the Palestinians on the West Bank and Gaza
would be necessary in order to avoid the situation—otherwise probable within the next decade or
two based on demographic trends—of Jews ruling as a numerical minority over a numerical
majority of Arabs in historic Palestine. Their concerns focused on possible domestic and
international pressure associated with these demographics, and a choice between giving up
Jewish primacy or facing intensified regional and international accusations that Jewish rule in the
areas of historic Palestine is undemocratic and contrary to the principle of self-determination.
Some demographers have disputed the demographic analysis underlying these concerns, and it is
unclear to what extent Netanyahu and other members of his government see demography as a
problem.
Foreign Policy on Matters of U.S. Interest
Regional Security Concerns
Ongoing political change in the Arab Middle East could have a lasting impact on Israeli
perceptions of security. Following Israel’s peace treaty with Egypt in 1979, the priority that Israel
had placed since its founding in 1948 on defending against a concentration of Arab conventional
armies at its borders gave way to concerns about generally asymmetric threats posed by terrorism
and rocket arsenals. Near-complete success in stopping Palestinian terrorist attacks inside Israel
after 2006 led to greater Israeli focus on perceived threats from Iran—including a possibly
existential nuclear threat—and non-state actors allied to it in Lebanon and the Gaza Strip. Given
the ongoing regional change, however, Israel is once again uncertain about what to expect from
Egypt and Syria, and is also concerned about the future stability of Jordan’s monarchy. Israelis
have expressed concern that Islamist governments hostile to Israel and the West could gain power.
Drastic limits on Israel’s ability to affect political and economic outcomes within Arab states—
given its near-universal vilification among those populations—add a sense of powerlessness to
that of growing and intensified danger. Additionally, it is unclear whether Israel views political
change in the Arab world and the effect of that change on the Iranian regime as a factor affecting
a possible decision on whether and when to attack Iranian nuclear facilities.
(...continued)
Sudan.
18 See also CRS Report R41514, Hamas: Background and Issues for Congress, by Jim Zanotti.
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In this complex threat environment, Israel’s dependence on U.S. security guarantees, strategic
cooperation, and regional influence—already substantial for decades—may increase (see “U.S.
Security Guarantees for Israel?†and “Security Cooperation†below). If that is the case, one
probable result is that most international actors will hold the United States responsible to a greater
degree for Israel’s actions. This could lead to disagreement among U.S. and Israeli officials over
the way in which Israel can continue to carry out its traditional prerogative of “defending itself,
by itself,†possibly leading U.S. policymakers to increase calls for formal or informal Israeli
communication or coordination of future military plans. Israeli officials and commentators, along
with some former U.S. officials, have seemingly stepped up efforts to assert that Israel is the most
reliable and valuable U.S. ally in a region critical to U.S. and global interests.19 These efforts may
seek to bolster the already strong popular and official U.S. commitment to Israel’s security, but
they may also seek to minimize a view among U.S. policymakers that Israel should defer more to
U.S. views on regional military action and on diplomacy with Palestinians in reciprocation for
increased or continued security assistance.20 According to a November 2011 Jewish Daily
Forward article, U.S. actors and analysts, including “senior Pentagon officials, generals and
independent defense strategists,†weigh the “direct military benefits the United States receives
from its partnership with Israel … against the geopolitical costs the relationship imposes on
Washington in its dealings with the broader Arab and Muslim world; some suggest a net negative
outcome for Washington in the equation.â€21
Observations such as those from Secretary of Defense Leon Panetta that Israel is increasingly
isolated in the region and internationally22 prompt questions about how Israel is likely to try to
counter this trend. Will it seek to improve relations—or at least ensure against their further
deterioration—with Turkey, Egypt, and Jordan, and if so, how? Is Israel likely to show flexibility
on its current security practices or its negotiating demands with the Palestinians when the
leadership status and internal stability of most of its neighboring countries—Egypt, Syria,
Lebanon—remain unclear? Or will it accept a greater measure of regional and international
isolation, further increasing its reliance on U.S. security guarantees and strategic cooperation?
Israel’s actions may depend on whether its leaders perceive their policies—as opposed to
entrenched anti-Israel sentiments—are a key factor in Israel’s isolation.
19 See, e.g., Zalman Shoval, “Time to upgrade the US-Israel strategic relationship,†Jerusalem Post, October 5, 2011;
Robert D. Blackwill and Walter B. Slocombe, Israel: A Strategic Asset for the United States, Washington Institute for
Near East Policy, November 2011.
20 According to one report, in a National Security Council meeting during the summer of 2011, then Secretary of
Defense Robert Gates “coldly laid out the many steps the administration has taken to guarantee Israel’s security—
access to top-quality weapons, assistance developing missile-defense systems, high-level intelligence sharing—and
then stated bluntly that the U.S. has received nothing in return, particularly with regard to the peace process. Gates
reportedly argued to the President directly that Israeli Prime Minister Binyamin Netanyahu “is not only ungrateful, but
also endangering his country by refusing to grapple with Israel’s growing isolation and with the demographic
challenges it faces if it keeps control of the West Bank.†Jeffrey Goldberg, “Robert Gates Says Israel Is an Ungrateful
Ally,†Bloomberg, September 5, 2011.
21 Nathan Guttman, “Israel Is Strategic Asset After All,†Jewish Daily Forward, November 18, 2011.
22 Transcript of remarks by Secretary Panetta at Saban Forum, Brookings Institution, Washington, DC, December 2,
2011, available at http://www.defense.gov/transcripts/transcript.aspx?transcriptid=4937.
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Iran and Its Nuclear Program23
Many Israeli officials have stated that Iran will pose an existential threat to Israel if it achieves
nuclear weapons capability. Some claim that because of Iranian leaders’ longstanding ideological
pronouncements against the existence of Israel,24 Iran might seek to use a nuclear weapon against
Israel even if faced with the prospect of near-certain retaliation from Israel’s presumed nuclear
arsenal.25
However, according to prominent Israeli investigative reporter Ronen Bergman, “most of Israel's
leaders do not believe that Iran is going to use nuclear weapon[s] against Israel…. The Iranians
are not stupid. They want to live…. [T]hey are not suicidal...â€26 Some leading Israeli officials and
analysts—including Defense Minister Ehud Barak and Tamir Pardo, director of Israel’s Mossad
intelligence agency—generally avoid characterizing the threat from Iran as existential because
they claim that Israel “is a strong state and it could protect itself under any circumstances.â€27 Yet,
for many of these officials, the threat of a nuclear-weapons-capable Iran is still thought to present
enormously high costs. They are concerned that a nuclear Iran would compromise traditional
Israeli security doctrine and practices—based on principles of self-reliance and maintaining
overwhelming military superiority—and lead to an unacceptable level of uncertainty. This in turn
would fundamentally damage the quality of life and psychological sense of safety that Israelis
deem critically important to their continued viability as a Jewish national home.28
Israeli leaders have hinted repeatedly since the George W. Bush Administration that absent
international action to ensure that Iran cannot obtain a nuclear weapons capability, Israel might
take military action. Iran reportedly possesses missiles capable of delivering a conventional
warhead to Israel,29 and Israel reportedly possesses missiles and aircraft capable of delivering
preemptive and/or retaliatory strikes against Iran. U.S., Israeli, and international estimates
indicate that Iran could possess enough fissile material for a nuclear weapon as early as one year
after a decision to pursue a nuclear weapons capability, and could prepare a weapon for missile
delivery one year after that.
23 See also CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.
24 Ayatollah Ruhollah Khomeini, leader of Iran’s Islamic revolution, decreed that the elimination of Israel is a religious
duty. His successor as supreme leader, Ayatollah Ali Khamene’i, has repeatedly referred to Israel as a “cancerous
tumor†since his accession in 1989, including in a rare Friday sermon at a Tehran mosque in February 2012. Elected
President Mahmoud Ahmadinejad quoted Khomeini when he expressed the hope that Israel would eventually be
“wiped off the map,†and he has described the Holocaust as a “myth†used as a pretext to create an “artificial Zionist
regime.â€
25 Israel is not a party to the Nuclear Nonproliferation Treaty (NPT) and is widely assumed internationally to have
clandestinely developed its own undeclared nuclear weapons capability. A consensus among media and expert reports
is that Israel possesses an arsenal of 100 to 200 nuclear weapons, although some suggest a higher figure. See, e.g.,
Douglas Frantz, “Israel Gains Full Nuclear Arsenal,†Los Angeles Times, October 12, 2003. In a report on National
Public Radio’s All Things Considered on March 22, 2001, Eric Weiner used a range of 200 to 400 nuclear weapons,
citing the CIA as his source.
26 Transcript from National Public Radio’s Talk of the Nation, January 30, 2012.
27 Avner Cohen, “Israel ponders a nuclear Iran,†Bulletin of the Atomic Scientists (web edition), August 17, 2010. See
also Barak Ravid, “Mossad chief: Nuclear Iran not necessarily existential threat to Israel,†Ha’aretz, December 29,
2011.
28 Haim Malka, Crossroads: The Future of the U.S.-Israel Strategic Partnership, Center for Strategic and International
Studies, 2011, pp. 58-59; Kaye, et al., op. cit., pp. 37, 52-53.
29 Iran’s arsenal includes the Shahab-3, a single-stage, liquid-fueled missile, with a range of up to 1,200 miles, and the
two-stage, solid-fuel Sajjil-2 missile, with a range of 1,200 miles to 1,500 miles, which was test-fired on May 20, 2009.
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Israeli officials have called on the international community to thwart Iran’s nuclear ambitions in
order to avert the need for Israel to act as it did when it destroyed Iraq’s reactor at Osirak in a
military strike in 1981 or when it struck a presumed nuclear site at Al Kibar near Deir al Zur in
Syria in 2007. In addition to the direct threat that Israel would face from a nuclear-weapons-
capable Iran, Israeli officials are concerned that such a capability would erode means of deterring
Iran from pursuing greater regional influence and amplifying threats to Israeli security from the
Shiite group Hezbollah in Lebanon, Hamas and Palestinian militants in Gaza, and possibly even
the beleaguered Asad regime in Syria. Analysts discuss a range of possible regional reactions,
including a change by Gulf Arab states to try to reach an accommodation with Iran, or the
possibility of nuclear proliferation in countries such as Egypt, Turkey, and Saudi Arabia,
potentially compelling Israel to either declare its nuclear weapons status or consider giving it up
if Iran will do the same.30
In late 2011, Israeli officials increased their calls for international action against Iran’s nuclear
program. Some observers interpreted these calls as possible warnings that absent more vigorous
international action or even a U.S. air strike against Iranian nuclear facilities, Israeli air strikes
might ensue in coming months. In a November 2011 CNN interview, Israeli Defense Minister
Ehud Barak said that the window of opportunity for a preventive strike to effectively stop or slow
Iran’s progress toward nuclear weapons capability could close within nine months.31 He explained
that Iran could enter a “zone of immunity†from military action “by widening [the] redundancy of
their plan, making it spread over many more [sites], with many more elements.â€32 At the February
2012 annual Herzliya security conference in Israel, Barak explained his zone of immunity
concept largely through reference to concerns that a substantial portion of Iran’s enriched uranium
and/or uranium enrichment centrifuges are being moved into its new Fordow facility near the city
of Qom.33 Fordow is reportedly built into mountainous terrain at least 230 feet underground, and
is thought by most analysts to be impenetrable by U.S.-supplied Israeli bunker-buster bombs.34
U.S. and Israeli intelligence assessments generally agree that Iran seeks a nuclear weapons
“breakout†capacity—gathering the components “necessary for nuclear weapons while deferring
a decision on whether to build and test a bomb.â€35 However, they have periodically differed on
timetables and on details pertaining to Iran’s pursuit of weaponization, and on the level of Iranian
progress they publicly deem unacceptable. Some observers assert that Israeli reports and official
statements hinting at possible military action are mainly calculated to intimidate Iran and prod
Western governments to greater action.
Analyses of the question of possible U.S, Israeli, or joint military action against Iran’s nuclear
facilities and infrastructure generally show that officials within the U.S. and Israeli governments
have a variety of views on its advisability and on the following points related to this issue:
• The imminence and nature of the Iranian threat;
30 Avner Cohen, “Israel ponders a nuclear Iran,†Bulletin of the Atomic Scientists (web edition), August 17, 2010.
31 Transcript available at http://transcripts.cnn.com/TRANSCRIPTS/1111/20/fzgps.01.html.
32 Transcript of remarks by Ehud Barak on CNN’s Fareed Zakaria GPS, November 20, 2011.
33 “Israel and Iran: Closer to take-off,†Economist, February 11, 2012.
34 For a scenario proposing that Israel might be able to target Fordow, see Austin Long, “Can They?,†Tablet,
November 18, 2011.
35 Joel Greenberg and Joby Warrick, “Israel: Iran must be stopped soon,†Washington Post, February 3, 2012.
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• The question of whether non-military options have a chance of succeeding within
an acceptable time frame;
• The likelihood that Israel would act against or without ascertaining U.S. wishes;
• The potential for military action to eliminate or delay Iran’s nuclear program;
• The likely response of Iran and other regional countries to potential military
action; and
• The possibility of long-term coexistence with and/or containment of an Iran that
has nuclear weapons or a breakout capacity.36
In January 2012, on the eve of a visit to Israel by General Martin Dempsey, Chairman of the Joint
Chiefs of Staff, Defense Minister Barak said that a decision on a possible Israeli preventive strike
remained “very far off,â€37 though at the Herzliya conference in early February he also said that
time was “urgently running out†to act. A February 2012 column by David Ignatius of the
Washington Post stated that Secretary of Defense Leon Panetta “believes there is a strong
likelihood that Israel will strike Iran in April, May or June.â€38
Since the second term of the George W. Bush Administration, U.S. officials have sought to
coordinate positions on Iran’s nuclear program with Israel while possibly also dissuading it from
acting on its own. In doing so, they have attempted to maintain that a credible strike option exists
while simultaneously communicating the possible risks for U.S. interests, regional security, and
global energy markets.39 It is unclear whether Israel views ongoing political change in the Arab
world and the effect of that change on the Iranian regime as a factor affecting a possible attack
decision and/or timeline. It is also unclear to what extent reports of a possible ongoing “secret
war†against Iran’s nuclear program, perhaps involving Israel and one or more Western countries
in surveillance, sabotage, and assassination,40 might mitigate the need for an air strike. The two
previous heads of Israel’s Mossad spy agency, Meir Dagan and Ephraim Halevy, have both
publicly stated that an Israeli military strike against Iran’s nuclear facilities would be
counterproductive, partly because—according to one report—they both “believe sabotage and
diplomacy have done much to set back Iran’s nuclear ambitions and can do more yet.â€41 A U.S.-
Israel joint missile defense exercise known as Austere Challenge 12 has been postponed from its
planned April date and will reportedly be rescheduled for October or November 2012. Some
reports claim that the exercise is being rescheduled for later in the year at least partly to
36 See, e.g., Ronen Bergman, “Will Israel Attack Iran?â€, New York Times Magazine, January 25, 2012; Dalia Dassa
Kaye, et al., Israel and Iran: A Dangerous Rivalry, RAND Corporation, 2011; Dana H. Allin and Steven Simon, The
Sixth Crisis: Iran, Israel, America and the Rumors of War, New York: Oxford University Press, 2010.
37 Isabel Kershner and Rick Gladstone, “Decision to Attack Iran Is ‘Far Off,’ Israel Says,†New York Times, January 19,
2012.
38 David Ignatius, “Of a mind to attack Iran,†Washington Post, February 3, 2012.
39 Eli Lake, “U.S., Israel Discuss Triggers for Bombing Iran’s Nuclear Infrastructure,†Daily Beast, December 28,
2011.
40 Yossi Melman, “The war against Iran’s nuclear program has already begun,†Ha’aretz, December 2, 2011.
41 Bruce Riedel, “The Israeli Anti-Attack-Iran Brigade,†The Daily Beast, November 7, 2011. However, according to
one report, some senior Israeli military intelligence officials believe that—as was the case with Iraq in the late
1970s/early 1980s—possible Mossad actions have not stopped Iran’s progress toward nuclear weapons capability.
Bergman, op. cit.
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discourage perceptions of joint U.S.-Israel planning with respect to a possible spring 2012 Israeli
attack.42
Additionally, some U.S. and Israeli officials and former officials have stated their belief that
Israel is incapable of the sustained military campaign they believe to be necessary to significantly
set back Iran’s nuclear program.43 However, a 2010 book co-authored by Steven Simon—before
he was appointed to his current position as senior director for the Middle East and North Africa
on the National Security Council staff—suggested that because of the burden Prime Minister
Netanyahu may take upon himself to prevent possible future disaster for his people, “U.S.
calculations of risk and benefit that tilt toward Israeli restraint might prove to be mirror-imaging
of a particularly deceptive sort.â€44 The book also raises the possibility that Israel might consider a
potential military strike to possibly mark the beginning of a series of intelligence and military
efforts to “mow the lawn†on a periodic basis over an extended period of time in the event Iran
seeks to continue or reconstitute its nuclear program.45
In counseling patience, the United States is arguing that sanctions have finally begun to yield
visible results and are likely to become more effective as time passes. In 2011, the United States
and some of its major allies have begun to impose sanctions directly against Iran’s sale of crude
oil, for which Iran depends for about 70% of its hard currency revenues. Earlier, in the 111th
Congress, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010
(CISADA, P.L. 111-195) expanded existing sanctions significantly to try to restrict Iran’s ability
to make or import gasoline. CISADA also added a broad range of other measures further
restricting the already limited amount of U.S. trade with Iran and restricting some high
technology trade with countries that allow WMD-useful technology to reach Iran. In the 2012
National Defense Authorization Act (P.L. 112-81), Congress passed additional sanctions on Iran
set to take full effect in June 2012. These sanctions target Iran’s ability to receive oil payments
through its Central Bank, an effect that could greatly reduce Iran’s oil export earnings and reports
indicate that major Asian oil importers such as India, Japan, and South Korea—in order to avoid
sanctions under this provision—are considering shifting at least partially to alternative sources.46
The European Union in January 2012 announced its own oil embargo against Iran, to be
implemented by July 2012. Both U.S. and Israeli officials have publicly cited effects they believe
sanctions are having on Iran’s economy, including rapidly accelerating depreciation of Iran’s
currency (the rial). How this will affect the regime’s plans regarding its nuclear program is not
clear,47 but some Israeli officials have expressed concerns that sanctions are unlikely to have a
timely, decisive effect.
42 Yaakov Katz, “Joint drill with U.S. to be held after delay,†Jerusalem Post, February 6, 2012.
43 This includes former Central Intelligence Agency and National Security Agency director Michael Hayden, who was
quoted in January 2011 as saying at a Washington, DC event, “The Israelis aren’t going to [attack Iran] ... they can’t do
it, it’s beyond their capacity. They only have the ability to make this [problem of Iran's nuclear program] worse. We
can do a lot better.†Josh Rogin, “Bush’s CIA director: We determined attacking Iran was a bad idea,â€
thecable.foreignpolicy.com, January 19, 2011.
44 Dana H. Allin and Steven Simon, The Sixth Crisis: Iran, Israel, America and the Rumors of War, New York: Oxford
University Press, 2010, p. 52.
45 Ibid, p. 53.
46 Tom Gjelten, “Can Sanctions Alone Get Iran to Negotiate?,†NPR, January 25, 2012.
47 For more information on Iran sanctions, see CRS Report RS20871, Iran Sanctions, by Kenneth Katzman.
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Egypt48
For more than 30 years, the United States and Israel have based their core assumptions about the
basic stability of the Middle East and the absence of major Israeli-Arab conventional warfare on
the cornerstone of the March 1979 Israel-Egypt peace treaty. The Israeli government is concerned
that its quiet, though cold, peace with Egypt may suffer as ongoing Egyptian political change
empowers anti-Israel public opinion. Israeli leaders are concerned that an Islamist government in
Egypt dominated by the Muslim Brotherhood might revisit aspects of Egypt’s cooperation with
Israel. Although Islamist groups have thus far publicly stated that they do not intend to abrogate
the peace treaty, some political figures have suggested holding a popular referendum on the
treaty. Additionally, popular sympathy for Palestinian rights and challenges to government control
of the Sinai Peninsula could make it difficult for Egypt to counter smuggling into Gaza and
continue to limit passenger traffic at the Rafah crossing. Even after 2011-2012 elections, the
power structure and constitutional order of a new Egyptian government may remain unclear for
some time. In the future, Egypt may clash more frequently with Israel politically, like Turkey has
in recent years, which could complicate U.S. efforts to maintain regional stability and
partnerships with both countries. If U.S.-Egypt tensions over Egypt’s early 2012 crackdown on
non-governmental organizations promoting democracy in the country lead to a change in U.S.
assistance to Egypt, it is possible that could affect Israel’s relations with Egypt.
Israel and Egypt signed the 1979 peace treaty after having fought four wars in as many decades.
In 1982, Israel withdrew from the Sinai Peninsula, which it had occupied in the 1967 war, and
Egypt and Israel established diplomatic relations. Some Israelis refer to their ties with Egypt as a
“cold peace†because full normalization of relations with regard to trade, tourism, and educational
and cultural exchange has not materialized. Egyptians say that they are reluctant to engage
because of Israel’s continuing occupation of Arab lands. Israelis are upset by some Egyptian
media and religious figures’ anti-Israel and occasionally anti-Semitic rhetoric.
Under Mubarak, the Egyptian government often played a constructive role in the Arab-Israeli
peace process, hosting meetings and acting as a liaison. It generally supported President
Mahmoud Abbas. For example, after Hamas took over the Gaza Strip in June 2007, Egypt worked
with Israel to largely close the Rafah crossing at the Gaza-Egypt border. The post-Mubarak
government has generally been seen as more sympathetic (some Arab observers say more even-
handed) to Hamas. Observers have seen this as important to Egypt’s mediation of a May 2011
agreement in principle between Fatah and Hamas and the Israel-Hamas prisoner exchange in late
2011 involving Gilad Shalit. Reports indicate that some of Hamas’s external leadership
previously based in Syria has either relocated or plans to relocate to Cairo as a result of the
political upheaval faced by the Asad regime.
Israel is also concerned over heightened instability in an already difficult-to-govern Sinai
Peninsula, and the transitional Egyptian government’s ability to control Sinai’s tribal groups and
networks of militants and criminals. These groups use the Sinai to smuggle weapons into Gaza
and to carry out terrorist incursions into Israel. A terrorist incursion in August 2011 led to the
accidental killing of five Egyptian soldiers in the border area by Israeli forces pursuing the
terrorists. This fed popular Egyptian outcries that resulted in a storming of the Israeli embassy in
September 2011 that was only defused after President Obama and other top U.S. officials
coordinated the rescue of Israeli personnel with Egypt’s Supreme Council of the Armed Forces
48 CRS Report RL33003, Egypt in Transition, by Jeremy M. Sharp.
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(SCAF). Israel eventually apologized to Egypt for the accidental killings. Reports indicate that
Israel has increased its deployments near its 140-mile border with Egypt and is building a 15-
foot-tall fence (planned to be completed in late 2012) on its side of the border at a cost of $360
million.49 Past U.S. efforts to provide aid to Egypt to counter smuggling into Gaza or to condition
military aid on improved anti-smuggling efforts have not decisively solved the problem. Although
the Israel-Egypt peace treaty provides for the Sinai’s demilitarization, Egypt deployed armored
vehicles and 1,500 troops in August 2011 to join civilian border guards and police after receiving
the required permission by Israel pursuant to the treaty.
Israel-Egypt relations have an economic dimension. In December 2004, Egypt and Israel signed a
Qualified Industrial Zone (QIZ) agreement under which jointly produced goods enter the U.S.
market duty free as part of the U.S.-Israel Free Trade Agreement. The QIZ agreement was
amended and expanded in October 2007. Since the initial agreement was signed, Israeli exports to
Egypt have grown, as have Egyptian exports to the United States. In June 2005, Israel signed a
memorandum of understanding (MOU) to buy 1.7 billion cubic feet of Egyptian natural gas for an
estimated $2.5 billion over 15 years, fulfilling a commitment made in an addendum to the 1979
peace treaty. Gas began to flow in February 2008. Repeated attacks by militants or tribal groups
in the Sinai have disabled the pipeline carrying the gas to Israel and Jordan multiple times since
Mubarak’s departure. Although the pipeline supplies over 40% of Israel’s natural gas, Israel’s
natural gas dependence is minimal, so supply disruption actually has a greater effect on Jordan’s
energy security. Many Egyptian politicians have voiced support for renegotiating the 2005 MOU
on more favorable terms for Egypt.50
Jordan51
Israel and Jordan signed a peace treaty in October 1994 and exchanged ambassadors. Relations
have developed with trade, cultural exchanges, and water-sharing agreements. Since 1997, Jordan
and Israel have collaborated in creating 13 qualified industrial zones (QIZs) to export jointly
produced goods to the United States duty-free under the U.S.-Israel Free Trade Agreement (FTA).
Normalization of ties is not popular with the Jordanian people, over half of whom are of
Palestinian origin,52 although King Abdullah II has attempted to control media and organizations
opposed to normalization. Jordanian policy toward Israel may become subject to greater or more
frequent public debate in Jordan if current Jordanian government efforts to respond to popular
discontent result in a greater opening of the political system.
Believing that a two-state solution to the Israeli-Palestinian conflict would contribute to domestic
and regional stability, the King supports the peace process and periodically hosts meetings
between Israeli and Palestinian leaders. The King has opposed possible unilateral Israeli steps in
the West Bank, fearing that they would strengthen Palestinian radicals who could destabilize the
region and undermine his regime. After Hamas took over Gaza in June 2007, speculation revived
49 Joel Greenberg, “On Israel’s uneasy border with Egypt, a fence rises,†Washington Post, December 2, 2011.
50 Dan Murphy, “Egypt pipeline attack raises questions about Sinai security,†Christian Science Monitor, September
27, 2011.
51 See also CRS Report RL33546, Jordan: Background and U.S. Relations, by Jeremy M. Sharp.
52 Speculation over the ratio of East Bankers to Palestinians (those who arrived as refugees and immigrants since 1948)
in Jordanian society tends to be a sensitive domestic issue. Jordan last conducted a national census in 2004, and it is
unclear whether or not the government maintains such statistics. Over time, intermarriage has made it more difficult to
discern distinct differences between the two communities, though divisions do persist.
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concerning a possible union between Jordan and the West Bank, which some Israelis have long
suggested as the ideal solution. In July 2007, King Abdullah firmly rejected the idea: “I say
clearly that the idea of confederation or federation, or what is called administrative responsibility,
is a conspiracy against the Palestinian cause, and Jordan will not involve itself in it.... The
Jordanians refuse any settlement of the Palestinian issue at their expense.â€53 In 1988, the King’s
father had relinquished Jordan’s previous claims to the West Bank (which it annexed, including
East Jerusalem, following the 1948 Arab-Israeli war) and accepted the PLO as the sole body with
a claim to the West Bank and Gaza.
Syria54
Israel and Syria have fought several wars and, except for rare breaches, have maintained a
military truce along their border for many years. Yet, they failed to reach a peace agreement in
negotiations that ended in 2000. Since 1967, Israel has occupied Syria’s Golan Heights and, in
December 1981, effectively annexed the region by applying Israeli law there. There are 42 Israeli
settlements and over 19,000 settlers on the Golan. The United States has never recognized Israel’s
annexation of the Golan Heights, which it views as a violation of international law. Some U.S.
and Israeli officials have expressed belief that peace between Israel and Syria would be easier to
achieve than peace between Israel and the Palestinians. Over the past decade, Israel has
demanded that, before returning to peace talks with Syria, the Asad regime cease supporting
Hezbollah in Lebanon, expel leaders of Hamas and other Palestinian rejectionist groups (i.e.,
those who reject an Israeli-Palestinian peace process and the existence of Israel) who have been
headquartered in Damascus, and sever ties with Iran. Turkey brokered indirect Israel-Syria talks
in 2008, but these collapsed after Israel’s attack on Hamas-controlled Gaza in December 2008.
Prospects of reduced Iranian influence in Syria as a result of the ongoing uprising may partly
motivate Israeli government leaders who are predicting the imminent downfall of the Asad
regime. Although Israel harbors concerns about the long-term political and security consequences
of a potentially Sunni Islamist Syria at its border, it also sees benefits from Iran losing its biggest
regional ally and a key support and supply channel to Hezbollah in Lebanon. Nevertheless, Israel
may be concerned about regional spillover effects of violence in Syria or the possibility of a “last
gasp†missile and/or chemical/biological weapons attack from the Asad regime directly or
through Hezbollah or Palestinian militants in southern Lebanon.55 Regardless of the political
outcome in Syria, Israelis may perceive heightened importance for the Golan Heights as a buffer
zone given greater political instability and potential hostility in bordering countries. They might,
therefore, be as skeptical of the durability of a future land-for-peace deal with Syria involving the
Golan as of one with the Palestinians involving the West Bank.
53 July 1 interview with Al Ghad newspaper, cited in Hassan M. Fattah, “Growing Talk of Jordanian Role in Palestinian
Affairs,†New York Times, July 10, 2007.
54 See also CRS Report RL33487, Unrest in Syria and U.S. Sanctions Against the Asad Regime, by Jeremy M. Sharp
and Christopher M. Blanchard.
55 See, e.g., Amos Harel and Avi Issacharoff, “In the eye of the observer,†Ha’aretz, January 6, 2012.
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Lebanon56
Israeli forces invaded Lebanon in 1982 to prevent Palestinian attacks on northern Israel. The
forces gradually withdrew to a self-declared nine-mile “security zone,†north of the Israeli border.
Peace talks in the 1990s failed to produce an Israel-Lebanon peace treaty, mainly because of
Syria’s insistence that it reach an accord with Israel first. Israel unilaterally withdrew from
southern Lebanon on May 25, 2000. Lebanon insists that the Israeli withdrawal is incomplete
because of the continuing presence of Israeli forces in the Shib’a Farms area where the borders of
Lebanon, Syria, and Israel meet. The U.N. has determined, however, that Israel’s withdrawal from
Lebanon was complete and treats the Shib’a Farms as part of Syria’s Golan Heights occupied by
Israel. Syria verbally recognizes that Shib’a is part of Lebanon, but will not demarcate the border
officially as long the Israeli occupation continues. Syria withdrew its occupation force from
Lebanon in 2005. Hezbollah, widely viewed as a proxy of Syria and Iran, remains in Lebanon.
Both the United States and Israel consider Hezbollah a terrorist organization, but it enjoys popular
support in Lebanon, particularly among Shiites. Hezbollah also participates in Lebanese politics
and holds cabinet positions in the Lebanese government.57
Hezbollah’s kidnapping of two Israeli soldiers on July 12, 2006, provoked Israel to launch a
month-long war against Hezbollah in Lebanon. The war’s end provided a mixed outcome for
Israel. Its leaders’ claims that the war has deterred Hezbollah from continuing provocative cross-
border action are borne out by the durability of the cease-fire. The positions of Israeli forces at the
end of the war were assumed by the Lebanese army and an enlarged U.N. Interim Force in
Lebanon (UNIFIL) peacekeeping mission. Nevertheless, Hezbollah’s ability to survive militarily
bolstered its political status as the only actor in Lebanon capable of defying Israel, and increased
its regional popularity across sectarian lines. It used its postwar prestige first to solidify its ability
to block Lebanese government actions it opposed, then to work in concert with its political allies
to change the government and install Prime Minister Najib Miqati in early 2011.
Furthermore, Hezbollah has rearmed via smuggling networks from Syria. According to Israeli
military officials quoted in the media, Hezbollah’s arsenal of tens of thousands of missiles include
M-600 ballistic missiles with a 185-mile range and half-ton payload.58 Reports dating from 2010
that Syria may have transferred Scud missiles to Hezbollah59 have not been verified and have
been questioned by U.S. officials.60
In August 2008, the Israeli security cabinet announced that it would hold the Lebanese
government, which includes Hezbollah, “responsible for any event that takes place in its
sovereign territory or events for which Lebanese nationals are responsible.â€61 Advocates of this
policy argue that the new conditions improve Israel’s deterrent power as Hezbollah understands
56 For more information on Lebanon, see CRS Report R40054, Lebanon: Background and U.S. Relations, by Casey L.
Addis.
57 For more information on Hezbollah, see CRS Report R41446, Hezbollah: Background and Issues for Congress, by
Casey L. Addis and Christopher M. Blanchard.
58 Jonathan Lis and Amos Harel, “Syria gave advanced M-600 missiles to Hezbollah, defense officials claim,†Haaretz
(Israel), May 5, 2010.
59 U.S. Open Source Center (OSC) Report GMP20100411184001, “Syria Sends Scud Missiles to Hizballah, Israel
Threatens War,†Al Ra’y Online (Kuwait), April 11, 2010.
60 “U.S. Says Unclear if Hezbollah Took Scuds to Lebanon,†Reuters, April 16, 2010.
61 “Israel: Lebanon is Responsible for Hezbollah’s Actions,†Haaretz, August 8. 2008.
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the severe ramifications of the new situation should there be any action against Israel in Lebanon
or overseas. Critics have expressed concerns that future conflict between Hezbollah and Israel is
inevitable, and that the new policy might result in widespread destruction in Lebanon and could
trigger a wider, regional conflict.62
Turkey
Turkey-Israel relations blossomed in the mid-1990s. The two regional democracies then shared
antipathy to Syria, developed closer trade ties, and Israel sold weapons and military equipment to
Turkey. After the Islamist-rooted Justice and Development Party (AKP) came to power in Turkey
in 2002, commentators predicted that bilateral relations would cool, but initially they generally
continued as before, even after Turkey hosted Hamas politburo chief Khaled Meshaal in 2006.
The relationship worsened considerably after Israel’s December 2008 invasion of the Gaza Strip
disrupted indirect Israel-Syria talks that Turkey had been mediating. Turkish Prime Minister
Recep Tayyip Erdogan felt personally insulted and politically blindsided by the Israeli invasion,
having hosted then Israeli Prime Minister Ehud Olmert in Ankara just days before it began.
Additionally, Erdogan used heated rhetoric—such as charges of “crimes against humanityâ€â€”to
criticize Israel’s conduct toward Palestinians during and after the 2008-2009 Gaza conflict,
including a particularly public incident when he left the podium during a January 2009 public
event with Israeli President Shimon Peres in Davos, Switzerland. Erdogan’s words and actions
led Israel to doubt Turkey’s suitability for mediating future talks between Israel and Syria or other
regional actors, and began affecting other aspects of bilateral relations such as joint military
exercises.
Turkish-Israeli relations reached their lowest point as a result of Israel’s May 2010 seizure in
international waters of a Turkish ship—the Mavi Marmara—that was part of a flotilla intending
to break Israel’s blockade of the Gaza Strip and to deliver humanitarian aid. The incident resulted
in the death of eight Turks and an American of Turkish origin. Turkey accused Israel of “state
terror,†recalled its ambassador from Israel, cancelled joint military exercises as well as trilateral
exercises in which U.S. forces participate, and banned Israeli military planes from its airspace. It
demanded an apology, compensation for victims, and an international investigation. Israel
withdrew its military advisers from Turkey, warned Israeli tourists against traveling there, and
refused to apologize after maintaining that it had acted lawfully in self-defense and alleging that
the flotilla’s planners had terrorist links.
In September 2011, diplomatic efforts aimed at getting Israel to apologize to Turkey for the
flotilla incident reportedly stalled due to Prime Minister Netanyahu’s concerns about the potential
Israeli public reaction.63 When the report of the U.N. Secretary-General’s panel of inquiry on the
incident—also known as the “Palmer Reportâ€64—was leaked by the New York Times and other
outlets, Turkey announced that it was downgrading its diplomatic relations with Israel to the
62 See, e.g., “Drums of War: Israel and the ‘Axis of Resistance,’†International Crisis Group, August 2, 2010.
63 The deaths took place under disputed circumstances.
64 The report is available at http://go.ynet.co.il/pic/news/Palmer-Committee-Final-report.pdf. The panel was chaired by
former New Zealand Prime Minister Sir Geoffrey Palmer, and included former Colombian President Alvaro Uribe and
one participant each from Turkey and Israel. The report expressly provided that its findings were not intended to decide
legal questions. Upon the report’s leak, Turkish officials disputed the report’s finding that Israel’s naval blockade of the
Gaza Strip was legal, notwithstanding the report’s criticism of Israel’s handling of the incident itself.
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second secretary level—effectively expelling Israel’s ambassador to Turkey.65 It also suspended
all Turkey-Israel military agreements. The countries’ bilateral free trade agreement remains in
effect.
Turkey continues to insist on both an apology and compensation from Israel for families of the
Turkish fatalities in return for the possibility of normalization. It also seeks a lifting of the Israeli
naval blockade on the Gaza Strip. Erdogan spoke of the possibility of having Turkish naval
vessels accompany future aid flotillas to Gaza, but subsequently said that no plans for such
voyages were imminent. Erdogan also speculated that international sanctions against Israel could
be a source of leverage in solving the Israeli-Palestinian conflict.66 Though Erdogan supports a
negotiated two-state solution to the conflict, he backs Palestinian pursuit of United Nations
membership and Fatah-Hamas rapprochement as well.
The breach with Israel has affected Turkey’s profile in Congress. Following the flotilla incident,
the Senate passed S.Res. 548 by voice vote on June 24, 2010. The resolution condemned the
attack by the “extremists aboard the Mavi Marmara,†invoked Israel’s right to self-defense, and
encouraged “the Government of Turkey to recognize the importance of continued strong relations
with Israel and the necessity of closely scrutinizing organizations with potential ties to terrorist
groups.â€67 A January 2011 New York Times Magazine article quotes Selim Yenel, a Turkish
Foreign Ministry deputy undersecretary responsible for U.S. relations, as saying, “We’re getting a
lot of flak from the Hill. We used to get hit by the Greek lobby and the Armenian lobby, but we
were protected by the Jewish lobby. Now the Jewish lobby is coming after us as well.â€68 The
closer convergence of U.S. and Turkish interests on regional developments since late 2010,
especially with respect to the uprising in Syria and to Turkey’s hosting of a U.S. radar for a
NATO-approved missile defense system, may be softening congressional concerns about
Turkey’s regional policies and alignment.
Whether ongoing political change in the Arab world will significantly impact the Turkey-Israel
relationship is not yet clear. Turkey is less likely to be flexible in its demands of Israel if it
perceives that its leverage has increased due to (1) diminished reliability of Israel’s peace treaties
with Egypt and Jordan and (2) potential for anti-Israel sentiment to gain political traction in the
region. It is debatable whether an active U.S. brokering role will improve or worsen prospects for
Turkey-Israel rapprochement and for future U.S. relations with both countries. In a December
2011 speech, Secretary of Defense Leon Panetta said:
65 Turkey similarly downgraded diplomatic relations with Israel in 1980 following Israel’s enactment of a law on the
status of Jerusalem that was deemed a violation of international law by U.N. Security Council Resolution 478.
Resolution 478 passed on August 20, 1980 by a vote of 14-0, with the United States as the lone abstention. Turkey
reinstated Israel’s ambassador in 1992 following the 1991 Madrid Conference that signaled the beginning of the Middle
East peace process. Linda Gradstein, “No end in sight for downward spiral in Turkish-Israeli ties,†JTA, September 6,
2011.
66 Time magazine staff interview with Turkish Prime Minister Recep Tayyip Erdogan, globalspin.blogs.time.com,
September 26, 2011.
67 In the House, Representative Dina Titus sponsored H.Res. 1599, which was referred to the House Foreign Affairs
Committee in July 2010 and garnered 23 co-sponsors. H.Res. 1599 called upon the Secretary of State to investigate the
“role of any foreign governments, including the Republic of Turkey, which may have aided and abetted the organizers
of the recent Gaza Flotilla mission to breach Israeli coastal security and assault the naval defense forces of the state of
Israel.â€
68 James Traub, “Turkey’s Rules,†New York Times Magazine, January 20, 2011.
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Like all of you, I’ve been deeply troubled by the direction of the Turkish-Israeli relationship.
Turkey is a key NATO ally and has proven to be a real partner in our effort to support
democratic change and stand against authoritarian regimes that use violence against their
own people. It is in Israel’s interest, Turkey’s interest, and U.S. interest, for Israel to
reconcile with Turkey. And both Turkey and Israel need to do more to put their relationship
back on the right track.69
Issues Affecting U.S.-Israel Relations
Overview
On May 14, 1948, the United States became the first country to extend de facto recognition to the
state of Israel. Over the years, despite occasional policy differences, the United States and Israel
have developed close bilateral ties based on common democratic values, religious affinities, and
security interests. Relations have evolved through legislation; memoranda of understanding;
economic, scientific, military agreements; and trade. Congress strongly supports U.S.
commitments to Israel’s security through military assistance and other legislation. Many analysts
view these forms of support as pillars of a regional security order—largely based on varying
types and levels of U.S. arms sales to Israel and Arab countries—that have discouraged the
outbreak of major Arab-Israeli interstate conflict for nearly 40 years.70
U.S. Security Guarantees for Israel?
Although the United States and Israel do not have a mutual defense agreement,71 successive
Administrations have either stated or implied that Israel’s security is guaranteed by the United
States. President Obama, in a February 5, 2012, NBC interview, said while responding to
questions regarding a possible Israeli military strike against Iranian nuclear facilities:
I will say that we have closer military and intelligence consultation between our two
countries than we ever have. And my number one priority continues to be the security of the
United States, but also the security of Israel.
In a March 2006 speech against the backdrop of Iran’s hostile rhetoric toward Israel and pursuit
of a nuclear program, President George W. Bush said, “I made it clear, I’ll make it clear again,
that we will use military might to protect our ally Israel.â€72 In a February 2012 column in which
he claimed that Secretary of Defense Leon Panetta believes there is a “strong likelihood†that
Israel will strike Iran’s nuclear facilities in the spring of 2012, David Ignatius of the Washington
Post wrote:
69 Transcript of remarks by Secretary Panetta at Saban Forum, Brookings Institution, Washington, DC, December 2,
2011, available at http://www.defense.gov/transcripts/transcript.aspx?transcriptid=4937.
70 Malka, op. cit., pp. 93-94.
71 The United States and Israel do, however, have a Mutual Defense Assistance Agreement (TIAS 2675) in effect,
dated July 23, 1952 (see “End-Use Monitoringâ€), and have entered into a range of stand-alone agreements, memoranda
of understanding, and other arrangements varying in their formality.
72 Seymour M. Hersh, “The Iran Plans,†The New Yorker, April 17, 2006.
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Administration officials caution that Tehran shouldn’t misunderstand: The United States has
a 60-year commitment to Israeli security, and if Israel’s population centers were hit
[presumably as part of an Iranian retaliation], the United States could feel obligated to come
to Israel’s defense.73
Both houses of Congress routinely introduce and pass resolutions supporting Israel’s right to
defend itself and U.S. efforts to bolster Israel’s capacity for self-defense. Some resolutions have
included language that could imply support for more active U.S. measures to defend Israel. For
example, H.Res. 523 and H.Con.Res. 21, both of which overwhelmingly passed the House (in
2005 and 2007, respectively) and addressed a possible Iranian threat, also both reasserted the
“commitment of the United States to defend the right of Israel to exist as a free and democratic
state.†In response to Iraqi Scud missile attacks on Israel during the 1991 Gulf War, both the
House (H.Con.Res. 41) and Senate (S.Con.Res. 4) unanimously passed January 1991 resolutions
“reaffirming America’s continued commitment†to provide Israel with the means to maintain its
freedom and security.
Chuck Freilich, a former Israeli deputy national security advisor, has written about potential
benefits and drawbacks of more formal U.S. security guarantees for Israel, including a possible
“nuclear umbrella.†A 2006 article that Freilich co-authored on a potential Iranian threat said:
Such an arrangement would seem to be a “no-brainer†for Israel. Yet Jerusalem might in fact
be quite reluctant to conclude one. This, for three primary reasons, each deeply entrenched in
Israel’s national security thinking. First, it would fear a loss of freedom of action, due to the
contractual requirement to consult on the means of addressing the threat. Second, it would be
concerned lest the US demand that Israel divulge and even forego its independent
capabilities. And third, it might worry that the US would not live up to its nuclear
commitments, much as NATO allies feared during the Cold War.74
Perhaps at least partly due to some of the reasons Freilich outlines, U.S. Administrations and
Congress have supported Israel’s ability to defend itself by embracing and even codifying the
concept of helping maintain Israel’s “qualitative military edge†(QME) over regional threats (see
“Security Cooperation†below).
A 2011 book by Haim Malka, deputy director for the Middle East program at the Center for
Strategic and International Studies (CSIS), provides historical background on discussions within
the United States about extending formal security guarantees to Israel:
The idea of a formal alliance goes back to the early 1950s, when Israel’s founders sought a
defense alliance with a great power. The former editor of Foreign Policy, Richard H.
Ullman, floated the idea seriously in the 1970s, suggesting that security guarantees would
“give the Israelis the assurances they will need to withdraw from the occupied territory, and
to persuade the Palestinians that the cause of Palestinian irredentism is forever beyond
reach.†Ullman emphasized the important psychological and deterrent components, writing
that those assurances would not make the United States responsible for Israel’s security, but
rather “would be to signal to Israel’s neighbors that the forces behind Israel’s defense would
be, in effect, inexhaustible.†The idea has been raised every few years since—in the waning
73 David Ignatius, “Of a mind to attack Iran,†Washington Post, February 3, 2012.
74 Richard N. Rosecrance and Chuck Freilich, “Confronting Iran: A US Security Guarantee for Israel?,†bitterlemons-
international.org, July 6, 2006. See also Chuck Freilich, Speaking About the Unspeakable: U.S.-Israeli Dialogue on
Iran’s Nuclear Program, Washington Institute for Near East Policy, PolicyFocus #77, December 2007.
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days of the Clinton administration, during President Clinton’s last-ditch effort to broker
Israeli agreements with Syria and the Palestine Liberation Organization, and through internal
Israeli government discussions in 2007 and 2010. Right now, in Washington, there is little
visible interest in pursuing it.75
Malka’s book does say that a vocal minority in Israel supports a more formal U.S. security
commitment, and then describes some of the potential benefits and drawbacks for both
countries.76
U.S. Aid and Arms Sales to Israel77
Israel is the largest cumulative recipient of U.S. foreign assistance since World War II. From 1976
to 2004, Israel was the largest annual recipient of U.S. foreign assistance, but has since been
supplanted—first by Iraq, then by Afghanistan. Since 1985, the United States has provided
approximately $3 billion in grants annually to Israel. In the past, Israel received significant
economic assistance, but now almost all U.S. bilateral aid to Israel is in the form of Foreign
Military Financing (FMF). U.S. FMF to Israel represents approximately 60% of total FMF and
20% of Israel’s defense budget. A 10-year bilateral memorandum of understanding commits the
United States to $3.075 billion in FMF to Israel in FY2012, increasing to $3.1 billion annually
from FY2013 to FY2018 subject to continuing congressional appropriations. Congress routinely
provides hundreds of millions of dollars in additional annual assistance for Israeli or joint U.S.-
Israeli missile defense programs ($235.7 million for FY2012—see “Cooperative Missile Defense
and Iron Dome†below). The United States also generally provides some annual American
Schools and Hospitals Abroad (ASHA) funding and funding to Israel for migration assistance.
Israel uses approximately 75% of its FMF to purchase arms from the United States. Reported past
arms purchases include several variants of smart, “bunker-buster†bombs (such as the GBU-27,
GBU-28, and GBU-39) that could be used to strike underground terrorist command centers
(presumably aimed at Hezbollah bunkers in Lebanon) or possibly underground nuclear facilities
(presumably aimed at Iranian uranium enrichment facilities).78 Israel has been the first country to
receive these bombs from the United States, with the first congressional notifications occurring in
the mid-2000s.
After years of negotiation, the United States and Israel announced in 2010 that Israel will
purchase 19 F-35 Joint Strike Fighters, the fifth-generation stealth aircraft considered to be the
most technologically-advanced fighter jet ever made, at a cost of $2.75 billion.79 Israel may
purchase additional squadrons of F-35s in the future and has received U.S. approval to purchase
75 Malka, op. cit., p. 84.
76 Ibid, pp. 84-89.
77 For more details, see CRS Report RL33222, U.S. Foreign Aid to Israel, by Jeremy M. Sharp.
78 However, according to one report, the GBU-28 and GBU-39 may not have sufficient strike capacity to damage
Iranian underground nuclear targets such as the Fordow uranium enrichment plant (near the city of Qom), which is
reportedly buried nearly 250 feet inside a mountain. The United States Air Force possesses the 30,000-pound class
Massive Ordnance Penetrator, a bomb which is made by Boeing, delivered on a B-2 Stealth bomber, and designed to
penetrate depths of up to 200 feet of reinforced concrete. “ANALYSIS-Iran nuclear sites may be beyond reach of
‘bunker busters’,†Reuters, January 12, 2012.
79 In 2010, during intense Obama Administration negotiations with the Israeli government over a possible Israeli
settlement freeze in the West Bank, the Administration had reportedly unsuccessfully offered Israel, among other
things, 20 additional F-35s in exchange for a 90-day moratorium on settlement construction.
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up to 75 aircraft.80 Prior to the agreement, both sides had negotiated over the level of Israeli
customization of the F-35. Reportedly, a June 2010 Letter of Acceptance indicated that Israel will
be able to install its own radio and datalink systems, and discussions over the integration of
electronic warfare capabilities will continue and may be approved should Israel purchase
additional planes.81 As part of the deal, the United States reportedly agreed to make reciprocal
purchases of equipment from Israel’s defense industries estimated at $4 billion.82 Due to delays in
the overall F-35 program, the expected delivery of the aircraft to Israel has been delayed. While
waiting for delivery of the F-35s, Israel may choose to upgrade its existing F-15 and F-16
fighters.
Additionally, Israel continues to receive Excess Defense Articles (EDA).83 The Defense Security
Cooperation Agency (DSCA) manages the EDA program, which enables the U.S. to reduce its
inventory of outdated equipment by providing friendly countries with necessary supplies at either
reduced rates or at no charge.84 From 2001 to the present, Israel has been authorized over $330
million in EDA.
Strong congressional support for Israel has resulted in Israel’s receiving benefits not available to
other countries. For example, Israel can use some U.S. military assistance both for research and
development in the United States and for military purchases from Israeli manufacturers. In
addition, all U.S. foreign assistance earmarked for Israel is delivered in the first 30 days of the
fiscal year. Most other recipients normally receive aid in installments.
U.S. lawmakers continue to grapple with the question of how to reduce the U.S. budget deficit
and national debt. Some Members of Congress see foreign affairs funds, particularly for foreign
aid programs, as expenditures that can be cut in order to reduce annual budget deficits. Some
Members have called for phasing out foreign assistance entirely. Though many leaders have
exempted aid to Israel from such plans, widespread opposition to U.S. foreign aid in general has
caused some Israel advocates concern.85 In March 2011, the American Israel Public Affairs
Committee (AIPAC) published a memorandum asserting that foreign aid is “an essential
component of America’s national security strategy.â€86 Although it may be too early to predict
which countries or functional accounts may be affected by possible aid reductions in the coming
years, the anticipation of changes to aid levels may spur diplomatic negotiations over future
80 DSCA’s notification to Congress of the F-35 sale is available online at http://www.dsca.mil/PressReleases/36-
b/2008/Israel_08-83.pdf.
81 “Defense Minister Barak approves purchase of 20 F-35 fighters for around $2.75 billion,†Ha'aretz, August 16, 2010.
82 “Israel set to build wings for some 800 F-35s,†Reuters, August 30, 2010.
83 In April 1998, the United States designated Israel as a “major non-NATO ally,†which qualifies Israel to receive
EDA under §516 of the Foreign Assistance Act and §23(a) of the Arms Export Control Act.
84 To access DSCA’s Excess Defense Articles database, see http://www.dsca.mil/programs/eda/search.asp.
85 In December 1985, Congress passed P.L. 99-177, the Balanced Budget and Emergency Deficit Control Act of 1985,
otherwise known as Gramm-Rudman-Hollings. The law enacted across-the-board budget cuts through a process of
sequestration for FY1986 and beyond. That year all foreign aid accounts, including Israel’s, were cut by 4.3%. Because
Israel’s aid is usually disbursed within 30 days of the enactment of the foreign operations appropriations bill and
because Gramm-Rudman-Hollings was passed in December 1985, the government of Israel ended up “voluntarilyâ€
returning a total of $128.6 million in FY1986 economic ($51.6 million) and military aid ($77 million) to the United
States Treasury. See, “Israel may not Suffer as Much as Other Nations from Painful Budget Cuts,†Washington Post,
January 15, 1986.
86 Available at
http://www.aipac.org/~/media/Publications/Policy%20and%20Politics/AIPAC%20Analyses/Issue%20Memos/2011/03/
AIPAC_Memo_Foreign_Aid_Keeps_America_Safe_Strong_and_Prosperous.pdf.
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assistance. It is possible that both parties may attempt to restructure U.S. assistance without
jeopardizing U.S. efforts to maintain Israel’s “qualitative military edge†(QME). It is also possible
that the U.S. aid program to Israel may continue without restructuring due to broad public support
and the need to counter continuing, emerging, and worsening threats in the region.
Table 4. Recent U.S. Assistance to Israel
(historical $ in millions)
Military
Economic
Immig.
Year Total Grant
Grant
Grant
ASHA All
other
1949-
68,030.9 29,014.9
23,122.4
868.9
121.4 14,903.3
1996
1997 3,132.1 1,800.0 1,200.0
80.0
2.1
50.0
1998 3,080.0 1,800.0 1,200.0
80.0
—
—
1999 3,010.0 1,860.0 1,080.0
70.0
—
—
2000 4,131.85
3,120.0
949.1
60.0
2.75 —
2001 2,876.05
1,975.6
838.2
60.0
2.25 —
2002 2,850.65
2,040.0
720.0
60.0
2.65 28.0
2003 3,745.15
3,086.4
596.1
59.6
3.05 —
2004 2,687.25
2,147.3
477.2
49.7
3.15
9.9
2005 2,612.15
2,202.2
357.0
50.0
2.95 —
2006 2,534.5 2,257.0
237.0
40.0
—
0.5
2007 2,503.15
2,340.0
120.0
40.0
2.95
0.2
2008 2,423.9 2,380.0
—
40.0
3.90 —
2009 2,583.9 2,550.0
—
30.0
3.90 —
2010 2,803.8 2,775.0
—
25.0
3.80 —
2011 3,029.22
3,000.0
—
25.0
4.225 —
2012 3,095.0 3,075.0
—
20.0
—
—
Total 115,129.57 67,423.4
30,897.0
1,658.2
159.075 14,991.9
Notes: ESF was earmarked for $960 million for FY2000 but was reduced to meet a 0.38% rescission. FY2000
military grants include $1.2 billion for the Wye agreement and $1.92 billion in annual military aid. Final amounts
for FY2003 are reduced by 0.65% mandated rescission and for FY2004 by 0.59%.
Loan guarantees are not included in the tables because they do not represent a transfer of funds, but rather a
promise of ultimate U.S. responsibility for loans to Israel from commercial institutions.
Loan Guarantees
Since 1972, the United States has extended loan guarantees to Israel to assist with housing
shortages, Israel’s absorption of new immigrants from the former Soviet Union and Ethiopia, and
its economic recovery following a 2000-2003 recession that was sparked by the second
Palestinian intifada (uprising). Loan guarantees are a form of indirect U.S. assistance to Israel,
since they enable Israel to borrow from commercial sources at lower rates. Israel has never
defaulted on a U.S.-backed loan. According to the U.S. Treasury Department, Israel is legally
obligated to use the proceeds of guaranteed loans for refinancing its government debt and also has
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agreed that proceeds shall not be used for military purposes or to support activities in the West
Bank (including East Jerusalem) and Gaza. However, U.S. officials note that since Israel’s
national budget is fungible, proceeds from the issuance of U.S.-guaranteed debt that are used to
refinance Israeli government debt free up domestic Israeli funds for other uses.87
The current authorization of Israel’s loan guarantee program will expire at the end of FY2012. A
2011 internal report by the State Department’s Office of Inspector General reportedly
recommended that the loan guarantee program be terminated, given Israel’s economic strength.88
However, according to a more recent report in Israel’s Ha’aretz newspaper, the Obama
Administration may seek a three-year extension of the program from Congress.89 Israel currently
is authorized to borrow $3.8 billion in loan guarantees. According to one Israeli official, “We
consider the loan guarantees as preparation for a rainy day.... This is a safety net for war, natural
disaster and economic crisis, which allows Israel to maintain economic stability in unstable
surroundings.â€90
Loan guarantees figured prominently in the U.S.-Israel diplomatic standoff over Israeli
settlements between President George H.W. Bush and Prime Minister Yitzhak Shamir in 1991.91
Although some U.S. officials have hinted at their possible use as leverage on Israel regarding its
participation in negotiations with the Palestinians, Israel has become significantly more
economically self-sufficient in the intervening 20 years, and the possibility has been openly
rejected by at least one Member of Congress.92
Security Cooperation93
Strong bilateral relations have fueled and reinforced significant U.S.-Israel cooperation on
defense, including 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. U.S. military aid for Israel has been designed to maintain
Israel’s QME over neighboring militaries, since Israel must rely on better equipment and training
to compensate for a manpower deficit in any potential regional conflict. U.S. military aid, a
87 CRS correspondence with the U.S. Treasury Department’s Office of International Affairs, October 2009.
88 “U.S. report recommends ending loan guarantees to Israel at end of 2011,†Ha'aretz, July 28, 2011.
89 Barak Ravid, “U.S. to grant three-year extension of loan guarantees to Israel,†Ha'aretz, January 25, 2012.
90 Ibid.
91 Bush refused to provide Shamir with $10 billion in requested loan guarantees to absorb immigrants from the Soviet
Union without assurances that Israel would stop settlement building beyond the pre-1967 armistice lines. Many
analysts believe that the disagreement led to Shamir’s ouster from power in 1992. Bush eventually agreed to provide
the guarantees to Shamir’s successor, Yitzhak Rabin, while reserving the option to deduct from the loan guarantees any
amounts Israel spent on settlements.
92 After then U.S. Special Envoy for Middle East Peace George Mitchell raised loan guarantees as a possible point of
leverage in January 2010, Senator Joseph Lieberman responded, during a trip to Jerusalem, “Any attempt to pressure
Israel, to force Israel to the negotiating table by denying Israel support, will not pass in Congress…. Congress will act
against any attempt to do that. I don't think it will come to this point.â€
93 The Jewish Virtual Library maintains a page that contains hyperlinked documents, speeches, and reports under the
heading “U.S.-Israel Relations: Strategic & Military Cooperation,†available at
http://www.jewishvirtuallibrary.org/jsource/US-Israel/strattoc.html.
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portion of which may be spent on procurement from Israeli defense companies, also has helped
Israel build a domestic defense industry, and Israel in turn ranks as one of the top 10 exporters of
arms worldwide.
On November 30, 1981, then U.S. Secretary of Defense Caspar Weinberger and Israeli Defense
Minister Ariel Sharon signed a memorandum of understanding (MOU) establishing a framework
for consultation and cooperation to enhance the national security of both countries. In November
1983, the two sides formed a Joint Political Military Group (JPMG) to implement provisions of
the MOU. Joint air and sea military exercises began in June 1984, and the United States has
constructed facilities to stockpile military equipment in Israel. In 1988, under the terms of Section
517 of the Foreign Assistance Act of 1961, as amended, Israel was designated a “major non-
NATO ally,†affording it preferential treatment in bidding for U.S. defense contracts and
expanding access to weapons systems at lower prices. In 2001, an annual interagency strategic
dialogue, including representatives of diplomatic, defense, and intelligence establishments, was
created to discuss long-term issues. This dialogue was halted in 2003 due to bilateral tensions
related to Israeli arms sales to China (see “Israeli Arms Sales to Other Countries†below), but
resumed in 2005.
On May 6, 1986, Israel and the United States signed an MOU—the contents of which are
secret—for Israeli participation in the Strategic Defense Initiative (SDI/“Star Warsâ€), under which
U.S.-Israeli co-development of the Arrow ballistic missile defense system has proceeded, as
discussed below. In 1998, another U.S.-Israel MOU referred to growing regional threats from
ballistic missiles. This MOU said that “In the event of such a threat, the United States
Government would consult promptly with the Government of Israel with respect to what support,
diplomatic or otherwise, or assistance, it can lend to Israel.â€
Security cooperation extends to cooperation in countering terrorism. The Implementing
Recommendations of the 9/11 Commission Act of 2007 (P.L. 110-53, enacted on August 3, 2007)
recognizes Israel as a potential research partner for the Department of Homeland Security.
Preserving Israel’s Qualitative Military Edge (QME)
Since the late 1970s, successive Administrations have argued that U.S. arms sales are an
important mechanism for addressing the security concerns of Israel and other regional countries.
During this period, some Members of Congress have argued that sales of sophisticated weaponry
to Arab countries may erode Israel’s QME over its neighbors. However, successive
Administrations have maintained that Arab countries are too dependent on U.S. training, spare
parts, and support to be in a position to use sophisticated U.S.-made arms against the United
States, Israel, or any other U.S. ally in a sustained campaign. Arab critics routinely charge that
Israeli officials exaggerate the threat they pose. Ironically, the threat of a nuclear-armed Iran,
though it has partially aligned Israeli and Sunni Arab interests in deterring a shared rival, also
may be exacerbating Israeli fears of a deteriorated QME, as Saudi Arabia and other Gulf states
dramatically increase defense procurements from U.S. and other foreign suppliers.
In 2008, Congress enacted legislation that requires 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 qualitative
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military edge over military threats to Israel.â€94 In parallel with this legal requirement, U.S. and
Israeli officials continually signal their shared understanding of the U.S. commitment to
maintaining Israel’s QME.
• In July 2007, Israel’s then-Prime Minister Ehud Olmert stated that his
government had received, “a detailed and explicit commitment†from the United
States “to ensure [Israel’s] qualitative military edge over the Arab states.â€95
• During an October 2007 visit to Washington, DC, Israeli Defense Minister Ehud
Barak stated that Israel has “understandings and arrangements with the
Administration that make us confident that Israel’s military qualitative edge will
be kept.â€96
• In July 2010, U.S. Assistant Secretary of State for Political-Military Affairs
Andrew Shapiro noted the 2008 change in U.S. law and stated “one of my
primary responsibilities is to preserve Israel’s Qualitative Military Edge, or
QME.â€97
• In September 2010, the Defense Security Cooperation Agency (DSCA) notified
Congress of plans to sell up to 25 F-35 Joint Strike Fighters to Israel, with an
option for 50 more, at a potential total cost of $15.2 billion with delivery
beginning in 2014. On October 7, 2010, Israeli Maj. Gen. (res.) Udi Shani signed
an agreement with the United States for the Israel Defense Forces to purchase
their first squadron of F-35 joint strike fighter aircraft, which are to be delivered
beginning in 2015. Shani stated, “this is a historic event and a new era in Israel’s
security and strategic strength which will allow Israel to maintain its military
qualitative edge in order to cope with the challenges both near and far for many
years.†He added, “We have an option to purchase more aircrafts (sic)… (T)he
deal is an additional expression of the strategic alliance and of our friendly
relations with the United States, and of their support of the Israeli qualitative
edge.â€98
• In response to a November 2010 letter from 198 Members of Congress
expressing concern about the proposed sale of new and upgraded F-15 fighter jets
to Saudi Arabia, Secretary of State Hillary Clinton and Secretary of Defense
Robert Gates reaffirmed that the United States commitment to Israel’s QME is
94 §36(h) of the Arms Export Control Act, which contains the “qualitative military edge†requirement, was added by
§201(d) of the Naval Vessel Transfer Act of 2008 (P.L. 110-429). The Act defines QME as “the ability to counter and
defeat any credible conventional military threat from any individual state or possible coalition of states or from non-
state actors, while sustaining minimal damages and casualties, through the use of superior military means, possessed in
sufficient quantity, including weapons, command, control, communication, intelligence, surveillance, and
reconnaissance capabilities that in their technical characteristics are superior in capability to those of such other
individual or possible coalition of states or non-state actors.â€
95 Yaakov Katz, “Jerusalem Wary of U.S. Arms Sale to Saudis,†Jerusalem Post, July 30, 2007.
96 Nathan Guttman, “Contradictory Signals From Israel and its Supporters on Saudi Arms Deal,†Forward, October 24,
2007.
97 U.S. Department of State, Assistant Secretary for Political-Military Affairs Andrew J. Shapiro, “The Obama
Administration’s Approach to U.S.-Israel Security Cooperation: Preserving Israel’s Qualitative Military Edge,â€
Remarks at the Brookings Saban Center for Middle East Policy, Washington, DC, July 16, 2010.
98 Israel Defense Forces, “Final Agreement Signed for the Purchase of F-35 Fighters,†States News Service, October 8,
2010.
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“rock solid.â€99 Their comments reinforced an October 20 statement by Assistant
Secretary of Defense for International Security Affairs Alexander Vershbow
asserting that Israel did not object to the Saudi sale.100
• In November 2011, Assistant Secretary Shapiro made another speech in support
of preserving Israel’s QME, saying that it is “critical to regional stability and as a
result is fundamentally a core interest of the United States.â€101
What might constitute a legally-defined adverse effect to QME is not clarified in U.S. legislation.
Since the passage of the 2008 legislation, a bilateral QME working group was created allowing
Israel to argue its case against proposed U.S. arms sales in the region.102 However, absent
legislative clarification, the legality of future U.S. arms sales to other regional aid recipients,
partners, or allies—including Egypt, Saudi Arabia, Jordan, Lebanon, Iraq, and Turkey—could
become increasingly subject to challenge both by Israeli officials feeling heightened sensitivity to
regional threats and by sympathetic U.S. policymakers.
Cooperative Missile Defense and Iron Dome103
Congress and successive Administrations have shown strong support for joint U.S.-Israeli missile
defense projects. U.S.-Israeli missile defense cooperation has perennially been authorized and
appropriated in defense authorization and appropriations bills. Missile defense cooperation is
generally not considered a form of direct aid, but many U.S. and Israeli observers consider it a
vital component of Israel’s strategic relationship with the United States. Israel and the United
States each financially contribute to several projects and share technology from co-developed
weapons systems.
Shortly after the start of SDI in 1985, the Reagan Administration sought allied political support
through various cooperative technology agreements on ballistic missile defense (BMD). An MOU
was signed with Israel on May 6, 1986 to jointly develop an indigenous Israeli capability to
defend against ballistic missiles.104 Israeli interest in BMD was strengthened by what it witnessed
in the missile war between Iran and Iraq in the later 1980s, and what Israel experienced when it
was attacked by Scud missiles from Iraq during Operation Desert Storm in 1991.
Under the 1986 agreement allowing Israel to participate in SDI, the United States and Israel have
co-developed different versions of the Arrow anti-ballistic missile. The total U.S. financial
99 Letter from Secretary of State Clinton and Secretary of Defense Gates to Hon. Howard Berman, November 16, 2010.
100 Andrew J. Shapiro, Assistant Secretary of State for Political-Military Affairs and Alexander Vershbow, Assistant
Secretary of Defense for International Security Affairs, Briefing on Pending Major Arms Sale, Washington, DC,
October 20, 2010.
101 Remarks by U.S. Assistant Secretary of State for Political-Military Affairs Andrew Shapiro, Washington Institute of
Near East Policy, Washington, DC, November 4, 2011, available at http://www.state.gov/t/pm/rls/rm/176684.htm.
102 Barbara Opall-Rome, “Israeli Brass Decry U.S. Arms Sales to Arab States,†Defense News, January 23, 2012.
According to this article, the U.S. side of the working group is led by the Undersecretary of Defense for Policy and
Assistant Secretary of State for Political-Military Affairs, while the Israeli side is led by the Defense Ministry’s policy
chief and the Israel Defense Forces director of planning.
103 For more information on this subject, see CRS Report RL33222, U.S. Foreign Aid to Israel, by Jeremy M. Sharp.
104 Subsequently, a number of additional agreements were signed, including, for example: an April 1989 Memorandum
of Agreement (MOA) to develop an Israeli computer facility as part of the Arrow BMD program, a June 1991
agreement to develop a second generation Arrow BMD capability, and a September 2008 agreement to develop a short-
range BMD system to defend against very short-range missiles and rockets.
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contribution so far exceeds $1 billion. The system became operational in 2000 in Israel and has
been tested successfully. The Defense Department’s Missile Defense Agency has agreed to extend
the U.S.-Israel Arrow System Improvement Program (ASIP) and post-ASIP through 2013. Since
2001, Israel and the United States have conducted a joint biennial exercise, called Juniper Cobra,
to work on integrating their weapons, radars, and other systems. Recent exercises have been seen
as a signal to discourage “enemies,†which most observers interpret to include Iran.105 Another
ongoing co-developed project is David’s Sling (also known as Magic Wand), which is designed to
counter medium-range (40 km to 300 km) threats. Until David’s Sling can be deployed, Israel
relies on Patriot Advanced Capability-3 (PAC-3) missile defense batteries that it purchases from
the United States.106
One of the most significant gestures of U.S. support for Israel’s missile defense architecture has
been the deployment of the AN/TPY-2 X-Band radar system (built by Raytheon Co.) to Israel in
late 2008. Not only is the X-Band system far more capable of detecting incoming missiles than
Israel’s existing radar,107 but the United States has also linked the X-Band to its global network of
satellites in the U.S. Defense Support Program (DSP). The DSP is the principal component of the
U.S. Satellite Early Warning System to detect missile launches.108 The X-Band system remains
U.S.-owned and is operated by U.S. troops and defense contractors—the first indefinite U.S.
military presence to be established on Israeli soil. Reportedly, the system has been deployed to a
secret location in the southern Negev desert close to the Egyptian border. Another U.S. X-Band
system was deployed in eastern Turkey in late 2011 and some reports indicate that the
information it collects could potentially be made available for Israel’s defense from potential
ballistic missile threats.109
Israel faces a continuing rocket threat from Gaza and from its northern border with Lebanon.
Both areas were subject to extended Israeli military occupation followed by unilateral
disengagement. Periodic rocket and mortar attacks from Palestinian militants in Gaza, including
from Islamist groups reported to be more radical than Hamas, were countered in 2011 with
considerable success by Israel’s new short-range Iron Dome missile defense system. Pursuant to
the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (P.L. 112-10),
Congress made an appropriation of $205 million toward Israel’s procurement of additional Iron
Dome batteries—each estimated to cost $50 million.110 During April, August, and October 2011,
Israel deployed Iron Dome batteries to protect the cities of Beersheba, Ashdod, and Ashkelon.
According to one report, Iron Dome interceptors succeeded 70% of the time they were fired in
destroying incoming projectiles from Gaza.111 The Israeli military discovered that a radar failure
had caused some of the misses and have since resolved the malfunction.
105 Irene R. Prusher, “To Defend Against Iran Missiles, US and Israel Conduct Joint Exercises,†Christian Science
Monitor, October 29, 2009.
106 Yaakov Katz, “IDF upgrades Patriot missile battery,†Jerusalem Post, November 27, 2011.
107 The X-Band system can detect incoming missiles from 500-600 miles. Currently, Israel’s early warning system is
only able to detect missiles from 100 miles out.
108 Israel was first given access to DSP in 2001 but only on a per-request, rather than constant, basis.
109 Josh Rogin, “Amid tensions, U.S. and Turkey move forward on missile defense,†thecable.foreignpolicy.com,
September 19, 2011.
110 CRS conversations with Israeli officials, April 2011. According to these same conversations, each Iron Dome
interceptor projectile costs between $80,000 and $90,000.
111 “Iron Dome hits 70% of militant rockets,†Jane’s Defence Weekly, January 6, 2012.
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However, Israeli leaders have cautioned that missile defense systems are not capable of fully
protecting Israeli population centers in the event of intensified, sustained attacks from its
enemies. The Iron Dome system is not designed to protect against shorter range mortars and
rockets due to their abbreviated flight times, leaving communities in the immediate vicinity of the
Gaza border—such as Sderot (estimated population: 21,000) more vulnerable. The Israeli military
plans to deploy a total of nine Iron Dome batteries112 across the country by 2013. It believes it
requires a total of between 10-15 batteries total to adequately protect most urban areas. Israel is
reportedly considering exporting the system to customers in Asia (such as South Korea,
Singapore, and India) in order to recoup Iron Dome’s cost.
Emergency U.S. Stockpile in Israel
In the early 1980s, Israeli leaders sought to expand what they called their “strategic
collaboration†with the United States military by allowing U.S. arms and equipment to be
stockpiled at Israeli bases for use in wartime.113 Nearly a decade later, the United States agreed to
establish munitions stockpiles in Israel for use by the United States and, with U.S. permission, for
use by Israel in emergency situations. The United States European Command (EUCOM) manages
the War Reserves Stock Allies-Israel (WRSA-I) program. The United States stores missiles,
armored vehicles and artillery ammunition in Israel. According to one Israeli officer, “Officially,
all of this equipment belongs to the US military…. If however, there is a conflict, the IDF can ask
for permission to use some of the equipment.â€114 During the 2006 war against Hezbollah in
Lebanon, the United States granted Israel access to the stockpile. In the 111th Congress,
lawmakers passed P.L. 111-266, the Security Cooperation Act of 2010. Section 302 of the Act
amends the Department of Defense Appropriations Act, 2005 to extend the President's authority
to transfer to Israel surplus defense items that are stockpiled in Israel and intended for use as
Israeli reserve stocks. According to various reports, this amendment will increase the value of
U.S. materiel stored in Israel from $800 million to $1.2 billion.115
Sensitive Defense Technology and Intelligence Issues
Any arms sales, information sharing, or co-development of technology between the United States
and Israel raise questions about what Israel might do with capabilities or information it acquires.
The transfer by sale of U.S. defense articles or services to Israel and all other foreign countries is
authorized subject to the provisions of the Arms Export Control Act (AECA) (see §40A of P.L.
90-629 as amended)116 and the regulations promulgated to implement it. Section 3 of the AECA
stipulates that in order to remain eligible to purchase U.S. defense articles, training, and services,
foreign governments must agree not to use purchased items and/or training for purposes other
than those permitted by the act, or to transfer them to third-party countries (except under certain
specifically enunciated conditions), without the prior consent of the President.
112 Each Iron Dome battery contains three launchers each equipped with 20 Tamir interceptor missiles. See “Rafael and
Raytheon collaborate on Iron Dome project,†Jane’s Defence Weekly, August 17, 2011; “Iron Dome anti-rocket system
was never meant to protect Israeli towns,†Ha’aretz, December 21, 2010.
113 “U.S.-Israel Strategic Link: Both Sides Take Stock,†New York Times, October 2, 1981.
114 “US may give Israel Iraq Ammo,†Jerusalem Post, February 11, 2010.
115 “US to boost weapons stockpile in Israel,†Agence France Presse, November 11, 2010.
116 22 U.S.C. §2785.
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Israeli Arms Sales to Other Countries
Israel is a major arms exporter—with India, China, and Russia among its customers or past
customers.117 The United States and Israel have regularly discussed Israel’s sale of sensitive
security equipment and technology to various countries, especially China. As of 2005, Israel was
reportedly China’s second major arms supplier, after Russia.118 In the late 1990s, the Office of
Naval Intelligence (ONI) reported that China had acquired U.S. technology “through Israel in the
form of the Lavi fighter and possibly SAM [surface-to-air missile] technology,â€119 although
Chinese and Israeli officials have repeatedly denied that such technology was shared.
In 2000, the United States persuaded Israel to cancel the sale of the Israeli-built Phalcon—an
advanced, airborne early-warning system—to China.120 In 2003, however, Israel’s agreement to
upgrade radar-seeking Harpy Killer drones that it sold to China in 1999 dismayed the Department
of Defense (DoD). China tested the weapon over the Taiwan Strait in 2004. DoD retaliated by
suspending its joint strategic dialogue with Israel and its technological cooperation with the Israel
Air Force on the F-35 Joint Strike Fighter (JSF) aircraft and several other programs, among other
measures.
On August 17, 2005, DoD and the Israeli Ministry of Defense issued a joint press statement
reporting that they had signed an understanding “designed to remedy problems of the past that
seriously affected the technology security relationship and to restore confidence in the technology
security area. In the coming months additional steps will be taken to restore confidence fully.â€121
Sources have reported that this understanding has given the United States de facto veto power
over Israeli third-party arms sales that the United States deems harmful to its national security
interests.122 In June 2005, the Israeli newspaper Ha’aretz reported that Israel would voluntarily
adhere to the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use
Goods and Technologies, without actually being a party to it.123
117 Other customers for Israeli arms include Germany, Spain, France, Canada, Australia, Turkey, Singapore, Brazil,
Italy, the Netherlands, Poland, and Romania.
118 Ron Kampeas, “Israel-U.S. Dispute on Arms Sales to China Threatens to Snowball,†Jewish Telegraphic Agency,
June 8, 2005, citing a U.S.-China Economic and Security Review 2004 report.
119 ONI, Worldwide Challenges to Naval Strike Warfare, 1996. The 1997 edition of this report said that the design for
China’s J-10 fighter (also known as the F-10—the designation used in the report) “had been undertaken with
substantial direct assistance, primarily from Israel and Russia, and with indirect assistance through access to U.S.
technologies.†ONI, Worldwide Challenges to Naval Strike Warfare, 1997. See also Robert Hewson, “Chinese J-10
‘benefited from the Lavi project,’†Jane’s Defence Weekly, May 16, 2008; Duncan L. Clarke and Robert J. Johnston,
“U.S. Dual-Use Exports to China, Chinese Behavior, and the Israel Factor: Effective Controls?†Asian Survey, Vol. 39,
No. 2, March-April 1999. The Lavi fighter (roughly comparable to the U.S. F-16) was developed in Israel during the
1980s with approximately $1.5 billion in U.S. assistance, but did not get past the prototype stage.
120 In April 2000, Representative Sonny Callahan, Chairman of the House Appropriations Subcommittee on Foreign
Operations, Export Financing, and Related Programs, sought to withhold $250 million, equivalent to the value of the
Phalcon sale, from almost $3 billion in U.S. economic and military aid to Israel, if Israel transferred the Phalcon to
China. See Eric Pianin, “Israel-China Radar Deal Opposed,†Washington Post, April 7, 2000.
121 “U.S. Israel Agree to Consult on Future Israeli Weapons Sales -Nations Affirm Joint Commitment to Address
Global Security Challenges,†U.S. State Department Press Release, August 17, 2005.
122 “U.S. OKs Israel-China Spy Sat Deal,†DefenseNews.com, October 12, 2007. This article quotes a U.S. official as
saying, “We don't officially acknowledge our supervisory role or our de facto veto right over their exports.... It's a
matter of courtesy to our Israeli friends, who are very serious about their sovereignty and in guarding their reputation
on the world market.â€
123 Ze’ev Schiff, et al., “Bowing to U.S. pressure, Israel to curb arms deals,†Ha’aretz, June 26, 2005. The participants
(continued...)
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On July 17, 2007, the Israeli Knesset passed a Law on Control of Defense Exports that
established a new authority in the Defense Ministry to oversee defense exports—involving the
Foreign Ministry for the first time in the process. As a result, the United States agreed to establish
a High Technology Forum to institutionalize senior-level U.S.-Israel dialogue to address bilateral
high technology trade, investment, and related issues.
In late 2008, the United States reportedly refused to approve an Israeli sale to Russia of up to 100
Heron drones that contain U.S. parts, and the Israeli Defense Exports Control Directorate
(DECD) was said to have heightened scrutiny of all defense exports to Russia.124 In 2010, the
United States resumed discussions with Israel over a possible Heron sale to Russia. Reports
indicate that Israel Aerospace Industries and Russian arms maker Oboronprom signed a $400
million joint venture agreement in October 2010 for the manufacture of Heron-1 reconnaissance
drones at a facility in Russia, possibly beginning in mid-2011. These reports indicate that Russia’s
suspension of a sale of S-300 surface-to-air missile systems to Iran may have revived the Heron
deal, but that the Herons are to be used only for homeland security purposes. Russia reportedly
covets the opportunity to acquire and possibly manufacture the Heron TP drone, which has more
advanced capabilities and can fire air-to-surface missiles. In November 2010, Israel delivered 12
shorter-range drones to Russia in connection with a 2009 agreement reached to address Russia’s
procurement priorities in the wake of its 2008 war with Georgia.125
India is presently the best customer for Israeli arms and Israel is the second largest arms supplier
for India. India’s first purchase was of early warning radars in 2004. Highlights include the
Phalcon and reportedly the Barak-8 tactical defense system.126 Israel has supplied India with two
Green Pine radar systems as well as avionics systems to upgrade Indian jet fighters.
In January 2012, various news outlets reported that the Israeli defense company Israel Aerospace
Industries (IAI) will sell weapons worth between $1.1 billion to $1.6 billion to an undisclosed
Asian country over the next four years. The sale includes IAI aircraft, missiles and intelligence
technologies.
End-Use Monitoring
Sales of U.S. defense articles and services to Israel are made subject to the terms of both the
AECA and the July 23, 1952 Mutual Defense Assistance Agreement between the United States
and Israel (TIAS 2675). The 1952 agreement states:
(...continued)
to the Wassenaar Arrangement have agreed to (1) maintain national export controls on certain conventional arms and
dual-use goods and technologies, (2) report on transfers and denials of specified controlled items to destinations outside
the Arrangement, and (3) exchange information on sensitive dual-use goods and technologies. Participants include the
United States and 39 other countries (including Russia, Japan, South Korea, Australia, New Zealand, South Africa,
Canada, and most European countries). More information is available at http://www.wassenaar.org/.
124 Nadav Ze’evi, “Israel Holds Up Sale of UAV’s to Russia under US Pressure,†Ma’ariv, March 5, 2009, BBC
Monitoring Middle East, March 6, 2009.
125 The sources for the material in most of this paragraph are “Procurement, Russian Federation,†Jane’s Sentinel
Security Assessment – Russia and the CIS, January 29, 2012; Spencer Ackerman, “Will Israel Sell Russia Its Prized
Monster Drone?†Wired.com, January 18, 2011.
126 Yiftah S. Shapir, “Israel’s Arms Sales to India,†Strategic Assessment, Vol. 12, No. 3, November 2009, available at
http://www.inss.org.il/upload/%28FILE%291259664485.pdf.
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The Government of Israel assures the United States Government that such equipment,
materials, or services as may be acquired from the United States ... are required for and will
be used solely to maintain its internal security, its legitimate self-defense ... and that it will
not undertake any act of aggression against any other state.
Past Administrations have acknowledged that some Israeli uses of U.S. defense articles may have
gone beyond the requirements under the AECA and the 1952 agreement that Israel use such
articles for self-defense and internal security purposes. These past Administrations have
transmitted reports to Congress stating that “substantial violations†of agreements between the
United States and Israel regarding arms sales “may have occurred.†The most recent report of this
type was transmitted in January 2007 in relation to concerns about Israel’s use of U.S.-supplied
cluster munitions during military operations against Hezbollah in Lebanon during 2006.127 Other
examples include findings issued in 1978, 1979, and 1982 with regard to Israel’s military
operations in Lebanon and Israel’s air strike on Iraq’s nuclear reactor complex at Osirak in 1981.
The Reagan Administration suspended the delivery of cluster munitions to Israel from 1982 to
1988 based on concerns about Israel’s use of U.S. supplied cluster munitions in Lebanon. The
Reagan Administration also briefly delayed a scheduled shipment of F-15 and F-16 aircraft to
Israel following Israel’s 1981 strike on Iraq. If Israel takes future action with U.S. defense articles
to preempt perceived security threats, allegations of AECA violations could follow.128
In 2008, after several Israeli internal investigations into its 2006 use of cluster munitions in
Lebanon and congressional action129 to attempt to restrict the overall export of the munitions,
Israel announced that it would begin purchasing Israeli-made M85 cluster bombs rather than
U.S.-manufactured bomblets. The M85 was developed by Israel Military Industries (IMI) and it is
generally considered to be more reliable than U.S.-made cluster munitions. However, one
Norwegian study asserted that the failure rate of M85 submunitions was closer to 10% than the
1% rate claimed by its proponents.130
127 Sean McCormack, U.S. Department of State Spokesman, Daily Press Briefing, Washington, DC, January 29, 2007.
128 Some Palestinian groups and other Arab and international governments, along with at least one Member of
Congress, have characterized Israeli military operations against Palestinians (such as Israel’s 2008-2009 Operation Cast
Lead, which was directed against Hamas in the Gaza Strip) as acts of aggression. The Senate and the House
overwhelmingly passed resolutions during the week of January 5, 2009 in connection with Operation Cast Lead that
supported Israel’s right to defend itself (S.Res. 10 and H.Res. 34). Representative Dennis Kucinich, however, submitted
a letter to then Secretary of State Condoleezza Rice arguing that “Israel’s most recent attacks neither further internal
security nor do they constitute ‘legitimate’ acts of self-defense.†Office of Representative Dennis J. Kucinich, "Press
Release: Israel May Be in Violation of Arms Export Control Act," January 6, 2009.
129 The Consolidated Appropriations Act, 2008 (P.L. 110-161), enacted on December 26, 2007, significantly restricted
the export of U.S.-manufactured cluster munitions. On September 6, 2007, President George W. Bush objected to
efforts by lawmakers to ban the export of cluster munitions. In a statement of Administration policy, the President
wrote, “The Administration also objects to restrictions on providing military assistance for cluster munitions....
Currently, the sales of cluster munitions are subject to safeguards. See, “Statement of Administration Policy, H.R. 2764
– State, Foreign Operations, and Related Programs Appropriations Act, 2008,†Office of Management and Budget,
September 6, 2007. Restrictions on cluster munitions exports have been carried forward to apply to appropriations in
subsequent years as well. §7054(b) of the Consolidated Appropriations Act, 2012 (P.L. 112-74) provides: “No military
assistance shall be furnished for cluster munitions, no defense export license for cluster munitions may be issued, and
no cluster munitions or cluster munitions technology shall be sold or transferred, unless—(1) the submunitions of the
cluster munitions, after arming, do not result in more than 1 percent unexploded ordnance across the range of intended
operational environments; and (2) the agreement applicable to the assistance, transfer, or sale of such cluster munitions
or cluster munitions technology specifies that the cluster munitions will only be used against clearly defined military
targets and will not be used where civilians are known to be present or in areas normally inhabited by civilians.â€
130 M85, Analysis of Reliability, available online at http://www.npaid.org/filestore/M85.pdf. A higher failure rate for
submunitions leads to a greater amount of unexploded ordnance that might ultimately harm individuals not targeted.
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Espionage-Related Cases
In the past 25 years, there have been at least three cases in which U.S. government employees
were convicted of disclosing classified information to Israel or of conspiracy to act as an Israeli
agent.
• In 1986, Jonathan Pollard, a civilian U.S. naval intelligence employee, and his
wife Anne pled guilty to selling classified documents to Israel. Four Israeli
officials also were indicted in connection with the case. Israel granted Pollard—
who is serving a life sentence in U.S. federal prison—citizenship in 1996 and, in
1998, acknowledged that Pollard had been its agent. Prime Minister Netanyahu
and several of his predecessors have unsuccessfully petitioned various Presidents
to pardon Pollard.
• In 2006, U.S. Department of Defense analyst Lawrence Franklin pled guilty to
disclosing classified information to an Israeli diplomat and to two pro-Israel
lobbyists from the American Israel Political Action Committee (AIPAC). The
information was about Al Qaeda, U.S. policy toward Iran, and the 1996 bombing
of the Khobar Towers, a U.S. military housing site in Saudi Arabia. The
lobbyists, who had been fired by AIPAC, were the first non-government
employees ever indicted under the 1917 Espionage Act for receiving classified
information orally, but the government dropped the charges against them in 2009
because of the likelihood classified information would be revealed at trial and
because of a higher burden of proof requirement given the defendants’ non-
government status.
• In 2009, Ben-Ami Kadish, who had worked at the U.S. Army’s Armament
Research, Development, and Engineering Center in Dover, NJ, pled guilty to one
count of conspiracy to act as an unregistered agent of Israel. He was indicted on
suspicion of giving Israel classified documents concerning nuclear weapons, F-
15 fighter jets, and the Patriot missile air-defense system to Israel between 1979
and 1985.
Nuclear Non-Proliferation
A consensus among media and expert reports is that Israel possesses an arsenal of 100 to 200
nuclear weapons, although some suggest a higher figure.131 Most reports appear to rely on
suspicions voiced in a large volume of declassified U.S. government material in combination with
the 1986 revelations of Mordechai Vanunu, a former technician at Israel’s nuclear reactor
complex, who provided data on and photographs of the nuclear reactor center at Dimona to the
Sunday Times (London).132 In 1988, Israel convicted Vanunu of espionage and treason for selling
secrets to the Times, but did not admit that his disclosures were truthful. This follows the Israeli
doctrine of nuclear or strategic ambiguity, according to which it neither admits nor denies that it
131 See footnote 25.
132 Books relying on Vanunu’s information include Yair Evron, Israel’s Nuclear Dilemma, Ithaca: Cornell University
Press, 1994, and Seymour Hersh, Samson Option, New York, Vintage Books, 1993. Other sources on the Israeli
nuclear weapons include Avner Cohen, Israel and the Bomb (New York: Columbia University Press, 1998), and
“Completing the Deterrence Triangle,†Carnegie Endowment for International Peace, Non-Proliferation Project, v. 3,
no. 18, June 29, 2000.
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possesses nuclear weapons. Israel believes that this doctrine as well as its nuclear weapons add to
its deterrence. The United States has agreed with this Israeli approach since September 1969,
when Israeli Prime Minister Golda Meir and U.S. President Richard Nixon reportedly reached an
accord whereby both sides agreed never to acknowledge Israel’s nuclear arsenal in public.133
Israel’s ambiguous nuclear status is viewed by some members of the international community as
an obstacle to advancing non-proliferation objectives. The 1995 Non-Proliferation Treaty
(NPT)134 Review Conference adopted a resolution that called for “all States in the Middle East to
take practical steps†toward establishing “an effectively verifiable Middle East zone free of
weapons of mass destruction, nuclear, chemical and biological, and their delivery systems, and to
refrain from taking any measures that preclude the achievement of this objective.†It also called
for all NPT states, including the nuclear-weapon states, “to extend their cooperation and to exert
their utmost efforts with a view to ensuring the early establishment by regional parties of a
Middle East zone free of nuclear and all other weapons of mass destruction and their delivery
systems.â€
The Obama Administration has stated its support for the nuclear-weapon-free zone. Ambassador
Susan Burk, Special Representative of the President for Nuclear Non-Proliferation, told a
Washington audience in March 2010, that the United States supports the 1995 resolution and is
“working very hard with partners in the region and elsewhere to try to see if we can come up with
some concrete measures that would begin to implement this resolution or at least move it forward
in some direction.â€135
Israel has expressed support for a WMD-free zone, but has asserted that Middle Eastern countries
should resolve other regional security issues and reconcile themselves to Israel’s existence before
negotiating such a zone. Sha’ul Horev, Director General of Israel’s Atomic Energy Commission,
explained the government’s position September 2009:
It is our vision and policy, to establish the Middle East as a mutually verifiable zone free of
weapons of mass destruction and their delivery systems. We have always emphasized, that
such a process, through direct negotiations, should begin with confidence building measures.
They should be followed by mutual recognition, reconciliation, and peaceful relations.
Consequently conventional and non-conventional arms control measures will emerge ... In
our view, progress towards realizing this vision cannot be made without a fundamental
change in regional circumstances, including a significant transformation in the attitude of
states in the region towards Israel.136
Other countries argue the reverse—that establishing a Middle East WMD-free zone is necessary
to improve the prospects for settling existing regional disputes.137
133 Eli Lake, “Secret U.S.-Israel Nuclear Accord in Jeopardy,†Washington Times, May 6, 2009.
134 Israel, India, and Pakistan are all generally believed to possess nuclear weapons, but none of them have signed the
NPT.
135 Available at http://www.carnegieendowment.org/files/0331_transcript_npt1.pdf.
136 “Statement by Dr. Sha'ul Horev, Director General, Israel Atomic Energy Commission, to the 53rd General
Conference of the International Atomic Energy Agency, September 2009,†Israel Atomic Energy Commission,
September 15, 2009.
137 See, for example, Mr. Wael Al-Assad, Statement of the League of Arab States before the Third Preparatory
Committee for the 2010 NPT Review Conference, May 6, 2009; and Statement by H.E. Ambassador Maged Abdel
Fatah Abdel Aziz before the Third Session of the Preparatory Committee for the 2010 NPT Review Conference, May
(continued...)
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Jerusalem
Israel annexed East Jerusalem (which includes the walled Old City, with its Temple
Mount/Haram al Sharif and Western Wall, and most of the surrounding “historic basinâ€) and some
of its immediate West Bank vicinity in 1967—shortly after occupying these areas militarily in the
June 1967 Arab-Israeli “Six-Day†War—and joined them to the west part of the city it had
controlled since 1948. Israel proclaimed this entire area to be Israel’s eternal, undivided capital.138
Polls indicate that a large majority of Israelis believe that a united Jerusalem is their capital and
support Jewish residential construction of neighborhoods (the Israeli term) or settlements (the
general internationally-used term) within that part of Jerusalem that is east of the Green Line and
within the Israeli-drawn municipal borders.139
Successive U.S. Administrations, of both political parties, have insisted that the fate of Jerusalem
is to be decided by negotiations and have discouraged the parties from taking actions that could
prejudice the final outcome of those negotiations. Moreover, the Palestinians envisage East
Jerusalem as the capital of their future state. However, the House of Representatives passed
H.Con.Res. 60 in June 1997, and the Senate passed S.Con.Res. 21 in May 1997. Both resolutions
called on the Clinton Administration to affirm that Jerusalem must remain the undivided capital
of Israel. Congress has repeatedly sought to prohibit official U.S. government business with the
Palestinian Authority (PA) in Jerusalem, has prohibited the use of appropriated funds to create
U.S. government offices in Israel to conduct business with the PA, and has sought to allow Israel
to be recorded as the place of birth of U.S. citizens born in Jerusalem. The State Department does
not recognize Jerusalem, Israel as a place of birth for passports. The case of Zivotofsky v.
Clinton, argued in the Supreme Court in November 2011 and awaiting decision, could decide
Congress’s authority on this question.140
A related issue is the possible future relocation of the U.S. embassy from Tel Aviv to Jerusalem.
Proponents argue that Israel is the only country where a U.S. embassy is not in the capital, that
Israel’s claim to West Jerusalem—proposed site of an embassy—is unquestioned, and/or that
Palestinians must be disabused of their hope for a capital in Jerusalem. Opponents say a move
would undermine the peace process and U.S. credibility with Palestinians and in the Islamic
world, and could prejudge the final status of the city. The Jerusalem Embassy Act of 1995 (P.L.
104-45) provided for the embassy’s relocation by May 31, 1999, but granted the President
authority, in the national security interest, to suspend limitations on State Department
expenditures that would be imposed if the embassy did not open. Presidents Clinton, Bush and
Obama have consistently suspended these spending limitations, and the embassy’s status has
remained unchanged. The State Department Authorization Act for FY2002-FY2003 (P.L. 107-
228) urged the President to begin relocating the U.S. embassy “immediately.†President Bush
replied in his signing statement that the provision would, “if construed as mandatory …
(...continued)
4, 2009.
138 In 1980, under the first Likud Party government, the Israeli Knesset passed the Basic Law: Jerusalem—Capital of
Israel, which declares “Jerusalem, complete and united, is the capital of Israel.†See http://www.mfa.gov.il for the
complete text of the Basic Law.
139 “Poll: Most Israelis Support East Jerusalem Construction,†Ynetnews.com, March 22, 2010.
140 U.S. Supreme Court Docket No. 10-699, available at
http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/10-699.htm. For a description of the case, see, e.g.,
Adam Liptak, “Question of Birth Becomes One of President’s Power,†New York Times, July 25, 2011.
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impermissibly interfere with the president’s constitutional authority to conduct the nation’s
foreign affairs.†The State Department declared, “our view of Jerusalem is unchanged. Jerusalem
is a permanent status issue to be negotiated between the parties.†Bills such as H.R. 1006, The
Jerusalem Embassy and Recognition Act, from the 112th Congress, have been periodically
introduced. If such a bill were to be enacted, it would seek to compel the embassy’s relocation by
removing the President’s authority to suspend the State Department expenditure limitations cited
above.
Settlements
Israel has at least 242 residential communities (known by most international actors as
“settlementsâ€), 124 settlement outposts unauthorized under Israeli law, and other civilian land-use
sites in the West Bank, as well as 29 neighborhoods or settlements in East Jerusalem—all areas
that the Palestinians view as part of their future state. The first settlements were constructed
following the 1967 war, and were initially justified as directly associated with Israel’s military
occupation of the West Bank. Major residential settlement building began in the late 1970s with
the advent of the pro-settler Gush Emunim (“Bloc of the Faithfulâ€) movement and the 1977
electoral victory of Menachem Begin and the Likud Party. Existing settlements were expanded
and new ones established throughout the 1990s and 2000s despite the advent of the Madrid-Oslo
peace process with the Palestinians. Approximately 300,000 Israelis live in West Bank
settlements, with roughly 200,000 more in East Jerusalem. Israelis who defend the settlements’
legitimacy generally use a combination of legal, historical, strategic, nationalistic, or religious
justifications.141
The international community generally considers Israeli construction on territory beyond the pre-
1967 armistice lines to be illegal.142 Israel retains military control over the West Bank and has
largely completed a separation barrier143 on West Bank territory that in some places corresponds
with the pre-1967 armistice lines but in others goes significantly beyond them. The barrier is
intended to separate Israelis and Palestinians and prevent terrorists from entering Israel.
Palestinians object to the barrier being built on their territory because it cuts Palestinians off from
East Jerusalem and, in some places, bisects their landholdings and communities. It also is seen by
many as an Israeli device to unilaterally determine borders between Israel and a future Palestinian
state.
U.S. policy on settlements has varied since 1967. Until the 1980s, multiple Administrations either
stated or implied that settlements were “contrary to international law,†with President Carter’s
141 For more information on the history of the settlements and their impact on Israeli society, see Idith Zertal and Akiva
Eldar, Lords of the Land: The War for Israel’s Settlements in the Occupied Territories, 1967-2007, New York: Nation
Books, 2007; Gershom Gorenberg, The Accidental Empire: Israel and the Birth of the Settlements, 1967-1977, New
York: Times Books, 2006.
142 The most cited international law pertaining to Israeli settlements is the Fourth Geneva Convention, Part III, Section
III, Article 49 Relative to the Protection of Civilian Persons in Time of War, August 12, 1949, which states in its last
sentence, “The Occupying Power shall not deport or transfer parts of its own civilian population into the territory it
occupies.†Israel insists that the West Bank does not fall under the international law definition of “occupied territory,â€
but is rather “disputed territory†because the previous occupying power (Jordan) did not have an internationally-
recognized claim to it, and given the demise of the Ottoman Empire at the end of World War I and the end of the
British Mandate in 1948, no international actor has superior legal claim to it.
143 Israelis and Palestinians generally use very different terminology to describe the barrier. Many Israelis call it the
“security barrier†or “security fence,†while most Palestinians refer to it as the “wall†or “apartheid wall.â€
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Secretary of State Cyrus Vance stating explicitly that settlements were “illegal†in 1980.144
President Reagan later stated that settlements were “not illegal,†but “ill-advised†and
“unnecessarily provocative.†From that point on the executive branch has generally refrained
from pronouncements on the settlements’ legality.145 A common U.S. stance during the peace
process has been that settlements are an “obstacle to peace.â€
Upon taking office, as part of its attempts to restart the peace process between Israelis and
Palestinians, the Obama Administration called for Israel to totally freeze all settlement activity,
including in East Jerusalem. In his speech in Cairo in May 2009, President Obama said, “The
United States does not accept the legitimacy of continued Israeli settlements. This construction
violates previous agreements and undermines efforts to achieve peace. It is time for these
settlements to stop.†PLO leaders followed suit and made a settlement freeze a precondition for
their return to the peace talks.
Subsequently, U.S. and Israeli leaders publicly differed on whether Obama’s expectations of
Israel contradicted statements that the George W. Bush Administration had made. Some Israeli
officials and former Bush Administration officials said that the United States and Israel had
reached an unwritten understanding that “Israel could add homes in settlements it expected to
keep [once a final resolution with the Palestinians was reached], as long as the construction was
dictated by market demand, not subsidies.â€146 An April 2004 letter from President Bush to then
Israeli Prime Minister Ariel Sharon had explicitly acknowledged that “in light of new realities on
the ground, including already existing major Israeli populations (sic) centers, it is unrealistic to
expect that the outcome of final status negotiations will be a full and complete return to the
armistice lines of 1949.†Partly because of such statements from U.S. policymakers, Arab critics
routinely charge that U.S. support of Israel indirectly supports settlement activity.
Prime Minister Netanyahu announced a 10-month partial moratorium on settlement construction
in November 2009, but he specifically excluded Jerusalem from his edict and demanded leeway
for “natural growthâ€147 to accommodate increases in population. While the Obama Administration
described Netanyahu’s action as an important “first step,†the move did not satisfy Palestinians’
demand for a total freeze and the impasse in efforts to resume substantive peace talks continued.
The moratorium was not extended when it expired in September 2010, and new construction
projects began to be announced shortly thereafter.
In February 2011, the United States vetoed a draft U.N. Security Council resolution that would
have characterized Israeli settlements in the West Bank and East Jerusalem as illegal. All other 14
members of the Council, including the United Kingdom, France, and Germany, voted for the draft
resolution. Susan Rice, the U.S. Permanent Representative to the United Nations, clarified that
144 Daniel Kurtzer, “Do Settlements Matter? An American Perspective,†Middle East Policy, vol. 16, issue 3, Fall 2009.
145 Nicholas Rostow, “Are the Settlements Illegal?,†The American Interest, March/April 2010.
146 Glenn Kessler and Howard Schneider, “U.S. Presses Israel to End Expansion,†Washington Post, May 24, 2009.
This article quotes former Bush Administration deputy national security advisor Elliott Abrams as saying that the
United States and Israel reached “something of an understanding.†The accounts of former Bush Administration
officials diverge in their characterization of U.S.-Israel talks on the subject, but the Obama Administration has insisted
that if understandings ever existed, it is not bound by them. Ethan Bronner, “Israelis Say Bush Agreed to West Bank
Growth,†New York Times, June 3, 2009.
147 “Natural growth†is a vague term that, construed narrowly, could refer to building in settlements to accommodate
the rate of expansion of settler families, and, construed broadly, could refer to building to accommodate anyone
interested in moving to the settlements.
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the Administration still opposed settlement construction as illegitimate and at cross-purposes with
peace efforts.148
Given the structure of Israeli society and politics, it may be difficult to impose an external
restraint on settlement activity. Settlers affect the political and diplomatic calculus through
(1) influence over key voting blocs in Israel’s coalition-based parliamentary system
(although they do not all share the same ideology or interests, settlers constitute about 6%
of the Israeli population);
(2) renegade actions to foment public protest and even violence;149 and
(3) what they represent for some symbolically, emotionally, and even spiritually as guardians
of the last frontier for a country whose founding and initial survival depended on
pioneering spirit in the face of adversity.
The Netanyahu government’s periodic announcement of new plans for settlement construction,
possible consideration of legalizing some settlement outposts, approval of subsidies and loans for
some settlers, and repeated insistence that outside actors will not dictate Israeli policy on this
subject appears to demonstrate the government’s sensitivity to these domestic concerns.150 Yet,
some Israelis voice concerns that the demand to provide security to settlers and their
infrastructure and transportation links to Israel—a task made more difficult and manpower-
intensive by some settlers’ provocations of Palestinian West Bank residents and Israeli military
authorities—could perpetuate Israeli military control in the West Bank even if other rationales for
maintaining such control eventually recede or disappear. The government faces a choice
involving tension between pro-settler political interests and the rule of law in early 2012 because
it has been required by Israel’s Supreme Court to dismantle the illegal Migron outpost by the end
of March.
Bilateral Trade
Israel and the United States concluded a Free Trade Agreement (FTA) in 1985, and all customs
duties between the two trading partners have since been eliminated. The FTA includes provisions
that protect both countries’ more sensitive agricultural sub-sectors with non-tariff barriers,
including import bans, quotas, and fees. Israeli exports to the United States have grown since the
FTA became effective. Qualified Industrial Zones (QIZs) in Jordan and Egypt are considered part
of the U.S.-Israeli free trade area. In 2011, Israel imported $14.0 billion from the United States
and exported $23.0 billion in goods to the United States.151
148 “United States vetoes Security Council resolution on Israeli settlements,†UN News Centre, February 18, 2011.
149 See Mark Weiss, “Settlers Destroy Trees on West Bank,†Irish Times, July 22, 2009: “Militant settlers, who often
act independently, in defiance of the official settler leadership, confirmed that a ‘price tag’ policy exists under which
revenge attacks will be carried out against Palestinians every time the government acts to remove outposts.â€
150 Joel Greenberg, “Netanyahu strengthens his base within Likud,†Washington Post, February 2, 2011.
151 Statistics compiled by Foreign Trade Division, U.S. Census Bureau, available at http://www.census.gov/foreign-
trade/balance/c5081.html.
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Scientific and Business Cooperation
In the early 1970s, Israeli academics and businessmen began looking for ways to expand
investment in Israel’s high technology sector. At the time, Israel’s nascent technology sector,
which would later become the driving force in Israel’s economy, was in need of private capital for
research and development. The United States and Israel launched several programs to stimulate
Israeli industrial and scientific research, and Congress has on several occasions authorized and
appropriated funds for the following organizations:
• The BIRD Foundation (Israel-U.S. Binational Research & Development
Foundation).152 BIRD, which was established in 1977, provides matchmaking
services between Israeli and American companies in research and development
with the goal of expanding cooperation between U.S. and Israeli private high tech
industries.
• The BSF Foundation (U.S.-Israel Binational Science Foundation).153 BSF, which
was started in 1972, promotes cooperation in scientific and technological
research.
• The BARD Foundation (Binational Agriculture and Research and Development
Fund). BARD was created in 1978 and supports U.S.-Israeli cooperation in
agricultural research.154
Section 917 of P.L. 110-140, the Renewable Fuels, Consumer Protection, and Energy Efficiency
Act of 2007, contains the original language of the U.S.-Israel Energy Cooperation Act (H.R.
1838). Although it does not appropriate any funds for joint research and development, it does
establish a grant program to support research, development, and commercialization of renewable
energy or energy efficiency. The law also authorizes the Secretary of Energy to provide funds for
the grant program as needed. Since FY2009, Congress has since appropriated approximately $8
million for the program.
In November 2009, the U.S. Department of Energy and the Israeli Ministry of National
Infrastructures announced that they would each contribute $3.3 million to the BIRD Foundation
to launch four clean energy projects. The projects include two solar power related technologies, a
“smart grid†technology and a biodiesel project.
In January 2010, the Israeli government injected an additional $55 million into the BIRD, BSF,
and BARD foundations. According to Israeli Finance Minister Yuval Steinitz, “this is a significant
and important step for strengthening economic and technological ties with the United States and
152 See http://www.birdf.com/default.asp. Congress helped establish BIRD’s endowment with appropriations of $30
million and $15 million in 1977 and 1985, respectively. These grants were matched by the Israeli government for a
total endowment of $90 million.
153 See http://www.bsf.org.il/Gateway4/. Congress helped establish BSF’s endowment with appropriations of $30
million and $20 million in 1972 and 1984, respectively. These grants were matched by Israel for a total endowment of
$100 million. According to the treaty establishing the Foundation, the Foundation shall use the interest, as well as any
funds derived from its activities, for the operations of the Foundation.
154 See http://www.bard-isus.com/. Congress helped establish BARD’s endowment with appropriations of $40 million
and $15 million in 1979 and 1985 respectively. These grants were matched by the state of Israel for a total endowment
of $110 million. In recent years, Congress has provided funds for BARD in annual Agriculture Appropriations
legislation at approximately $500,000 a year.
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for capital inflows to Israeli innovation…. We hope that in the wake of this step, we will find
more opportunities for achieving these targets.â€
Intellectual Property Protection
The “Special 301†provisions of the Trade Act of 1974, as amended, require the U.S. Trade
Representative (USTR) to identify countries which deny adequate and effective protection of
intellectual property rights (IPR). In April 2005, the USTR elevated Israel from its “Watch Listâ€
to its “Priority Watch List†because it had an “inadequate data protection regime†and intended to
pass legislation to reduce patent term extensions. In subsequent years, the USTR retained Israel
on the Priority Watch List. In April 2009, the USTR did it again, noting some progress, but also
concerns about Israel’s inadequate protection against unfair commercial use of undisclosed test
and other data generated to obtain marketing approval for pharmaceutical products, and measures
that affect the length of patent term extensions granted to compensate for delays in obtaining
regulatory approval of a pharmaceutical product. The USTR says that these policies result in an
“unfair disadvantage to innovative pharmaceutical companies who receive comparatively weak
protection†under current Israeli laws.155
U.S.-Based Interest Groups Relating to Israel
Groups actively interested in Israel and the peace process are noted below with links to their
websites for information on their policy positions.
American Israel Public Affairs Committee: http://www.aipac.org
American Jewish Committee: http://www.ajc.org
American Jewish Congress: http://www.ajcongress.org
Americans for Peace Now: http://www.peacenow.org
Anti-Defamation League: http://www.adl.org
Conference of Presidents of Major Jewish Organizations: http://www.conferenceofpresidents.org
Foundation for Middle East Peace: http://www.fmep.org
Hadassah (The Women’s Zionist Organization of America, Inc.): http://www.hadassah.org
Israel Bonds: http://www.israelbonds.com
The Israel Project: http://www.theisraelproject.org
Israel Policy Forum: http://www.israelpolicyforum.org
J Street: http://jstreet.org
155 Office of the U.S. Trade Representative, 2009 Special 301 Report, available at http://www.ustr.gov.
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Israel: Background and U.S. Relations
Jewish National Fund: http://www.jnf.org
Jewish Policy Center: http://www.jewishpolicycenter.org
New Israel Fund: http://www.nif.org
S. Daniel Abraham Center for Middle East Peace: http://www.centerpeace.org
United Israel Appeal: http://www.jewishfederations.org/united-israel-appeal.aspx
Zionist Organization of America: http://www.zoa.org
Author Contact Information
Jim Zanotti
Specialist in Middle Eastern Affairs
jzanotti@crs.loc.gov, 7-1441
Acknowledgments
Some of the material in this report is derived from previous versions by Carol Migdalovitz, now-
retired CRS Specialist in Middle Eastern Affairs; and Casey Addis, former CRS Analyst in
Middle Eastern Affairs.
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