Israel: Background and U.S. Relations
Jim Zanotti
Specialist in Middle Eastern Affairs
June 12, 2013
Congressional Research Service
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www.crs.gov
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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 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 executive branch dealings with Israel
and the broader Middle East. Some Members of Congress and some analysts criticize what they
perceive as U.S. support for Israel without sufficient scrutiny of its actions. Israel is a 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 has many regional security concerns. Israeli leaders calling for urgent international action
against Iran’s nuclear program hint at the possibility of a unilateral military strike against Iran’s
nuclear facilities. In addition to concerns over Iran, 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. Israel has shown particular concern about threats
from Hezbollah and other non-state groups in ungoverned or minimally governed areas in Syria,
Lebanon, and Egypt’s Sinai Peninsula, as well as from Hamas and other Palestinian militants in
the Gaza Strip.
Israel’s political impasse with the Palestinians on core issues in their longstanding conflict shows
little or no sign of abating. 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 that area, 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,” but Palestinians claim a capital in East Jerusalem and some
international actors’ advocate special political classification for the city or specific Muslim and
Christian holy sites. Although Israel withdrew its permanent military presence and its settlers
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 economy and
a vibrant democracy. Recent discoveries and exploitation of offshore natural gas raise the
prospect of a more energy-independent future, while economic debates focus largely on cost-of-
living and income and labor distribution issues. Israel’s demographic profile has evolved in a way
that appears to be affecting its political orientation. Along with secular and nationalist Jews from
various ethnic backgrounds, Jewish ultra-Orthodox, Russian-speaking, and Arab citizens
significantly influence societal debates. The government formed by Prime Minister Binyamin
Netanyahu in March 2013 features a set of coalition partners that is different from the previous
government, largely due to electoral gains on socioeconomic issues by new national leaders and
possible future prime ministerial candidates Yair Lapid and Naftali Bennett.
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Contents
Introduction ...................................................................................................................................... 1
Country Background ........................................................................................................................ 2
Historical Overview ................................................................................................................... 2
Demographic and Political Changes.......................................................................................... 3
Government and Politics ........................................................................................................... 5
Overview ............................................................................................................................. 5
2013 Elections and Current Government ............................................................................ 7
Economy .................................................................................................................................... 9
Israel’s Security Concerns ............................................................................................................. 11
General Threat Perceptions ..................................................................................................... 11
Challenges from Iran and Arab Neighbors .............................................................................. 12
Iran .................................................................................................................................... 13
Syria .................................................................................................................................. 14
Egypt ................................................................................................................................. 14
Rocket Threat from Lebanon and Gaza............................................................................. 14
The Palestinian Issue ............................................................................................................... 15
Concerns Regarding International Isolation ............................................................................ 16
Key U.S. Policy Issues ................................................................................................................... 17
Overview ................................................................................................................................. 17
Security Cooperation ............................................................................................................... 18
Background ....................................................................................................................... 18
Pending Legislation – U.S.-Israel Strategic Partnership Act of 2013 ............................... 19
Preserving Israel’s Qualitative Military Edge (QME) ....................................................... 19
U.S. Security Guarantees? ................................................................................................. 20
U.S. Aid and Arms Sales to Israel ..................................................................................... 21
Israeli-Palestinian Issues ......................................................................................................... 24
Status of Regional and International Diplomacy ............................................................... 24
Jerusalem ........................................................................................................................... 28
Settlements ........................................................................................................................ 29
Sensitive Defense Technology and Intelligence Issues ........................................................... 32
Israeli Arms Sales to Other Countries ............................................................................... 32
End-Use Monitoring .......................................................................................................... 33
Espionage-Related Cases .................................................................................................. 34
Israel’s Nuclear Status and Non-Proliferation ......................................................................... 34
Bilateral Trade Issues .............................................................................................................. 34
Pending Visa Waiver Legislation ............................................................................................. 35

Figures
Figure 1. Map of Israel .................................................................................................................... 4
Figure 2. Israeli Knesset .................................................................................................................. 8

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Tables
Table 1. Israeli Security Cabinet Members ...................................................................................... 7
Table 2. Basic Facts ....................................................................................................................... 10
Table 3. U.S. Bilateral Aid to Israel ............................................................................................... 23
Table 4. Defense Budget Appropriations for U.S.-Israeli Missile Defense: FY2006-
FY2014 Request ......................................................................................................................... 24

Appendixes
Appendix A. U.S.-Based Interest Groups Relating to Israel .......................................................... 37
Appendix B. Electoral Lists Represented in Knesset .................................................................... 38

Contacts
Author Contact Information........................................................................................................... 39

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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
security challenges. Congress provides active oversight of the executive branch’s dealings with
Israel. Some Members of Congress oppose what they perceive as U.S. support of Israel without
sufficient scrutiny of Israel’s actions. 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.
U.S. approaches to a number of challenges in the Middle East have implications for Israel. For
several years now, Israeli leaders have described Iran and its reported pursuit of a nuclear
weapons capability as an imminent threat to Israeli security. Israeli officials have claimed that
their window of opportunity to act on their own to delay, halt, or reverse Iranian progress toward
a nuclear weapons capability is closing. Consequently, they have sought increasingly punitive
international measures against Iran’s nuclear program. Within this context, Israeli leaders have
publicly hinted that absent a clear resolution of Iran’s nuclear activity to their satisfaction, they
may order the Israeli military to strike Iranian nuclear facilities.
Many Israeli officials also are concerned with the rise of Islamist political movements and threats
posed by violent jihadist terrorist groups emanating from ongoing regional political turmoil.
Israel has few means of influencing political outcomes in Egypt, Syria, Lebanon, or Jordan, but
developments in those states may significantly affect Israeli security. Syria’s civil war is posing
increasing risk to Israel, leading to limited Israeli military action and raising the possibility of
more overt conflict involving the Asad regime and/or Hezbollah—which is directly intervening in
support of the regime. Instability in Egypt’s Sinai Peninsula has already been used by militant
groups—probably including Al Qaeda-style Palestinian cells—for attacks on Israeli targets. At the
same time, many large and small Israeli population centers remain threatened by rocket fire from
Hamas and other terrorist groups in Gaza.
In this context of political change in the Arab world and stalemate in the Israeli-Palestinian peace
process, the Palestine Liberation Organization (PLO) has pursued greater international
recognition of Palestinian statehood. These efforts and Israel’s reaction to them have reinforced
and perhaps deepened the impasse on core issues of Israeli-Palestinian conflict—security
parameters, borders, Jewish settlements, water rights, Palestinian refugees, and the status of
Jerusalem.
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Country Background
Historical Overview1
The start of a quest for a modern Jewish homeland can be traced to the publication of Theodor
Herzl’s The Jewish State in 1896. Herzl was inspired by the concept of nationalism that had
become popular among various European peoples in the 19th century, and was also motivated by
his perception of European anti-Semitism. 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 Arab majority in Palestine for eventual self-determination, insisting that its promises to Jews
and Arabs did not conflict. Jews immigrated to Palestine in ever greater numbers during the
Mandate period, and tension between Arabs and Jews and between each group and the British
increased, leading to periodic clashes. 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 self-determination and independence from
European colonial powers.
In 1947, the United Nations General Assembly developed a partition plan (Resolution 181) to
divide Palestine into Jewish and Arab states, proposing U.N. trusteeship for Jerusalem and some
surrounding areas. The leadership of the Jewish Yishuv (or polity) welcomed the plan because of
the legitimacy they asserted that it conferred on the Jews’ claims in Palestine despite their small
numbers, 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 prefigured current
debate about 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. During and after the conflict, roughly 700,000 Palestinians
were driven or fled from their homes, an occurrence Palestinians call the nakba (“catastrophe”).2
Many became internationally designated refugees after ending up either in areas of Mandate-era
Palestine controlled by Jordan (the West Bank) or Egypt (the Gaza Strip), or in nearby Arab
states. Palestinians remaining in Israel became Israeli citizens.
The conflict ended with armistice agreements between Israel and its neighboring Arab states:
Egypt, Jordan, Lebanon, and Syria. The territory controlled by Israel within these 1949-1950
armistice lines is roughly the size of New Jersey. Israel engaged in further armed conflict with
some or all of its neighbors in 1956, 1967, 1973, and 1982. Since the late 1960s, Israel has also
dealt with the threat of Palestinian nationalist and (later) Islamist terrorism. In 1979, Israel

1 For more, see Howard M. Sachar, A History of Israel: From the Rise of Zionism to Our Time, New York: Knopf,
1996.
2 CRS Report RL34074, The Palestinians: Background and U.S. Relations, by Jim Zanotti.
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concluded a peace treaty with Egypt, followed in 1994 by a peace treaty with Jordan, thus making
another multi-front war less likely. However, as discussed throughout the report, major security
challenges persist from Iran and groups allied with it. Additionally, developments in Arab states
and in the ongoing Israeli-Palestinian conflict further complicate Israel’s regional position.
Demographic and Political Changes
Israel’s demographic profile has evolved in a way that appears to be affecting its political
orientation and societal debates. In the first decades following its founding, Israeli society was
dominated by secular Ashkenazi Jews from Eastern Europe who constituted the large majority of
19th and early 20th century Zionist immigrants. Many leaders from these immigrant communities
sought to build a country dedicated to Western liberal and communitarian values. The 1977
electoral victory of Menachem Begin’s Likud Party helped boost the influence of previously
marginalized groups, particularly Mizrahi (Eastern) Jews who had largely immigrated to Israel
from Arab countries and Iran. Subsequently other distinct groups, such as Haredim (ultra-
Orthodox) from communities that predated Zionist immigration, and Russian-speaking Israelis
who emigrated from the former Soviet Union in the 1990s,3 have increased their numbers—and
consequently their influence—in Israeli society. Israel also faces considerable estrangement
between its Jewish and Arab citizens. Arabs comprise more than 20% of the population, and
Islamist movements are increasingly popular in some Arab Israeli communities.
Political parties linked to recently expanded segments of Jewish Israeli society tend to favor the
right side of the Israeli political spectrum currently led by Binyamin Netanyahu and Likud. At the
same time, general trends show that support for traditionally left-leaning Zionist parties such as
Labor has decreased. Issues regarding religiosity in the public sphere and secular consternation at
subsidies and exemptions from military service for Haredim (many of whom engage in religious
study as an alternative to employment) have driven recent political debate, including during the
January 2013 electoral campaign. Military service remains compulsory for most Jewish Israeli
young men and women.
Many analysts believe that these changes 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.”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.

3 Most of these Russian-speaking emigrants are Ashkenazi and tend to be secular, but are generally more sympathetic
with right-leaning parties than with the old Ashkenazi elite.
4 Haim Malka, Crossroads: The Future of the U.S.-Israel Strategic Partnership, Washington, DC: Center for Strategic
and International Studies, 2011, p. 19.
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Figure 1. Map of Israel

Source: CIA, The World Factbook.
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Government and Politics
Overview
Israel is a parliamentary democracy in which the prime minister is head of government and the
president is a largely ceremonial head of state. The unicameral parliament (the Knesset) elects a
president for a seven-year term. Israel does not have a written 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.
The political spectrum is highly fragmented, with small parties exercising disproportionate power
due to the low vote threshold (2%) for entry into the Knesset, and larger parties seeking small
party support to form and maintain coalition governments. Since Israel’s founding, the average
lifespan of an Israeli government has been about 23 months. In recent years, however, the
Knesset has somewhat tightened the conditions for bringing down a government.

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Primer on Israeli Electoral Process and Government-Building5
Elections to Israel’s 120-seat Knesset are direct, secret, and proportional based on a party list system, with the
entire country constituting a single electoral district. Al Israeli citizens age 18 and older may vote. Turnout in
elections since 2001 has ranged between 62-67% of registered voters (before that it generally ranged between
77-80%)6. Elections must be held at least every four years, but are often held earlier due to difficulties in holding
coalitions together. A Central Elections Committee is responsible for conducting and supervising the elections.
The committee includes representatives from parties in the current Knesset and is headed by a Supreme Court
justice.
National laws provide parameters for candidate eligibility, general elections, and party primaries—including
specific conditions and limitations on campaign contributions and public financing for parties.7 Since 2007, a
“cooling-off law” requires that senior Israeli military officers wait at least three years before entering civilian
politics.8
Fol owing elections, the task of forming a government is given by Israel’s president to the Knesset member
he/she believes has the best chance to form a government as prime minister. The would-be prime minister has
28 days to assemble a majority coalition, and the president can extend this period for an additional 14 days. The
government and its ministers are installed fol owing a vote of confidence by at least 61 Knesset members.
Thereafter, the ministers determine the government’s course of action on domestic issues, while military and
national security action are directed through a “security cabinet” (formally known as the Ministerial Committee
on Defense) consisting of a group of key ministers—some whose membership is set by law, others who are
appointed by the prime minister—who number no more than half of al cabinet ministers.9
For the first 30 years of Israel’s existence (1948-1977), the social democratic Mapai/Labor movement—led by a
founding Ashkenazi Zionist elite of Eastern European descent—dominated Israeli governing coalitions. As
questions regarding the future of territories that Israel’s military occupied during the 1967 Arab-Israeli War
became increasingly central to political life, the nationalist Likud party and its prominent prime ministers
Menachem Begin and Yitzhak Shamir helped drive the political agenda over the fol owing 15 years. Although
Labor under Yitzhak Rabin later initiated the Oslo peace process with the Palestinians, its political momentum
was slowed and reversed after Rabin’s assassination in 1995. Despite Labor’s setbacks, its warnings regarding the
demographic chal enge that high Arab birth rates could eventual y present to continued Israeli political control

5 Much of the information for this textbox comes from Israel’s Ministry of Foreign Affairs website, “Elections in Israel
- February 2009,” February 10, 2009.
6 International Institute for Democracy and Electoral Assistance, “Voter turnout data for Israel,” October 5, 2011;
Alistair Lyon, “Netanyahu claims election win despite losses,” Reuters, January 22, 2013.
7 For additional details on Israel’s campaign finance laws, see Ruth Levush, “Campaign Finance: Israel,” Law Library
of Congress, July 25, 2012.
8 The law, sponsored by Likud’s Yuval Steinitz, was reportedly intended to counter Israeli military officers’ cultivation
of civilian political connections and influence in anticipation of their possible career transitions. Some reports criticized
the law’s failure to address the use of influence by civilian politicians to prepare for private sector career transitions.
Nehemia Shtrasler, “The Bottom Line / Lawmakers don't need to cool off too?” Ha’aretz, May 16, 2007. This law may
have prevented Lieutenant General (ret.) Gabi Ashkenazi, who retired as Israel Defense Forces Chief of Staff in
February 2011, from possibly challenging Netanyahu from the center-left. Attempts in 2010 and 2011 spearheaded by
then Kadima (now Ha’tnua) legislator Yoel Hasson to shorten the cooling-off period to 18 months were unsuccessful,
partly because of their reported focus on providing a political opening for Ashkenazi.
9 According to a one media report, “Under Israeli law, war must be approved by the full cabinet. But the security
cabinet, whose secrecy is better enforced, can green-light more limited military ‘missions’. Making that distinction
depends on whether Israel's intelligence chiefs anticipate an escalation into protracted conflict.” Dan Williams,
“Netanyahu’s new security cabinet may hesitate on any Iran war,” Reuters, March 19, 2013. Historically, Israeli prime
ministers (including Netanyahu) have appeared to prefer convening the smaller forum for consultative purposes when
convening the larger one is not legally required. See, e.g., Eli Lake, “Meet the Israeli ‘Octet’ That Would Decide an
Iran Attack,” Daily Beast, March 9, 2012. For a primer on and historical overview of Israel’s national security
decisionmaking process by a former Israeli security official, see Charles D. Freilich, Zion’s Dilemmas: How Israel
Makes National Security Policy, Ithaca, New York: Cornell University, 2012. For a more concise version of the same
subject matter, see Charles D. Freilich, “National Security Decision-Making in Israel: Improving the Process,” Middle
East Journal, vol. 67, no. 2, spring 2013.
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over Palestinians, under the rubric of maintaining both a Jewish and a democratic state, gained traction among
many Israelis. In this context, Prime Minister Ariel Sharon, a longtime champion of the Israeli right and
settlement movement, split from Likud and established Kadima as a more centrist alternative in 2005. Elections
in February 2009 were a divided affair, with Tzipi Livni’s Kadima winning the most Knesset seats but Netanyahu’s
Likud leading the coalition because of an overall advantage for right-of-center parties. For more recent
developments, see “2013 Elections and Current Government” below.
Table 1. Israeli Security Cabinet Members
Previous Knesset
Member Party
Ministerial
Position(s)
Terms
Binyamin Netanyahu
Likud
Prime Minister
7
Minister of Foreign Affairs
Minister of Public Diplomacy and
Diaspora Affairs
Moshe Ya’alon
Likud
Minister of Defense
1
Yair Lapid
Yesh Atid
Minister of Finance
0
Naftali Bennett
Ha’bayit Ha’Yehudi
Minister of Economy and Trade
0
Minister of Religious Affairs
Tzipi Livni
Ha’tnua
Minister of Justice
4
Yitzhak Aharonovich
Yisrael Beiteinu
Minister of Public Security
2
Gilad Erdan
Likud
Minister of Communications
3
Minister of Home Front Defense
Note: Avigdor Lieberman of Yisrael Beiteinu (four previous Knesset terms) is expected to join the security
cabinet if he returns as foreign minister following his criminal trial. Ben Caspit, “The Trial of Avigdor Liberman,”
Al-Monitor Israel Pulse, May 31, 2013.
2013 Elections and Current Government
A new Israeli coalition government was sworn in on March 18, 2013, following elections that
took place on January 22, 2013. The right-of-center10 “Likud Beiteinu” list,11 featuring Prime
Minister Binyamin Netanyahu’s Likud party and Yisrael Beiteinu (Israel Is Our Home), has the
most seats (31) in the 120-seat Knesset (parliament), but 11 fewer than its constituent parties had
in the previous Knesset. After a surprisingly strong showing in January’s elections, the newly
formed, centrist Yesh Atid (There Is a Future), led by former journalist Yair Lapid,12 has the
second-largest Knesset representation (19 seats). Lapid and Naftali Bennett13 of the pro-settler

10 In Israel, the left-right spectrum has been traditionally defined by parties’ positions on the Israeli-Palestinian
conflict/peace process, though the spectrum also has some validity in describing differences on economic and social
issues.
11 Under Israeli electoral law, lists for Knesset elections may consist of one party or multiple parties running jointly.
12 For a profile of Lapid, see Raffi Berg, “Profile: Yair Lapid, Israel's Yesh Atid party leader,” BBC News, March 14,
2013.
13 Bennett, who is routinely described as a young, charismatic leader helping remake his party, is also a
multimillionaire former businessman and was a former chief of staff to Netanyahu during his time as opposition leader
(continued...)
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party Ha’bayit Ha’Yehudi agreed to join the government with Likud Beiteinu and the centrist
Ha’tnua party after reportedly agreeing on basic parameters with Netanyahu over plans to remove
the general exemption from mandatory conscription for young ultra-Orthodox men. Netanyahu
also reportedly agreed in principle to raise the electoral threshold for political parties seeking to
enter the Knesset from 2% to 4%. Shelly Yachimovich formally leads the opposition as head of its
largest party, Labor. Other elements of the opposition include the ultra-Orthodox parties Shas and
United Torah Judaism. For a breakdown of the electoral lists with Knesset seats, see Appendix B.
Figure 2. Israeli Knesset

There has been much speculation over the implications of the January elections’ outcome for the
future of Israel’s political leadership. It is possible that the coalition could collapse over
disagreements on Palestinian or socioeconomic issues and trigger another round of elections well
before they would be required in late 2017.14 It is unclear whether Yair Lapid’s rise poses a long-
term challenge to Netanyahu or represents the latest in an historical string of Israeli centrist
parties whose appeal is initially strong on the basis of novelty and the leader’s personality, but
fades before the next election.15 A mid-May 2013 public opinion poll revealed negative approval
ratings for Netanyahu, but even more negative ratings for Lapid, who as finance minister became
a leading face of unpopular austerity measures (referenced below) for Israel’s 2013-2014
budget.16
Some observers cite discontent within Likud given its diminished Knesset and cabinet
representation. One commentator had the following view on intraparty tensions during the
coalition-building process: “Netanyahu was distinctly unhappy with the hardline roster Likud
party members chose for their Knesset slate in late November. Much of the party membership,
and no small number of leading Likud politicians, are distinctly unhappy with everything that has

(...continued)
in 2006-2008 before the two reportedly had a falling out of sorts. Bennett favors Israeli annexation of a large part of the
West Bank. Jodi Rudoren, “Dynamic Former Netanyahu Aide Shifts Israeli Campaign Rightward,” New York Times,
December 26, 2012.
14 See, e.g., Jeffrey Heller, “Israel coalition wobbles over proposed military service law,” Reuters, May 27, 2013.
15 Robert M. Danin, “Israel’s Election and the Perils of Third Parties,” cfr.org, January 23, 2013.
16 Yossi Verter, “Haaretz poll: Lapid pays price for austerity measures as his popularity plunges,” haaretz.com, May
16, 2013.
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unfolded since.”17 It is unclear whether such discontent, to the extent it exists, could eventually
endanger Netanyahu’s leadership from his right.
According to many observers, the January 2013 elections largely hinged on domestic
socioeconomic issues. Although the new government agreed in May 2013 on a 2013-2014 budget
that will incorporate spending cuts and tax increases in order to control Israel’s fiscal deficit, cost-
of-living and income distribution issues have generated contention. Despite consistent economic
growth and Israel’s stable fiscal position, these issues drove large, non-violent domestic protests
in the summer of 2011.18 Other matters that garner significant domestic attention include the
influence of ultra-Orthodox Jewish communities on gender roles in the public sphere, as well as
tensions between avowed Jewish nationalist elements of society and Palestinians (including Arab
Israelis), non-Jewish religious groups, and some other Jewish Israelis.19 U.S. officials have
expressed concern over these dynamics.20
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’s economy appears to be experiencing a moderate slowdown after years of sustained, robust
growth (nearly 5% from 2010 to 2011, for example). The slowdown seems to be largely due to
second-order effects from down economies in Israel’s largest export markets in Europe and North
America. According to the Economist Intelligence Unit, Israel’s growth in real GDP, estimated at
3.2% for 2012, is forecast to remain between 2-3% in 2013 and 2014.21 In subsequent years,
however, the central bank’s relatively expansionary monetary policy, an expected rebound in the
global economy, and anticipated new income from recently discovered offshore natural gas
deposits (as discussed below) are expected to return economic growth to 4-5%.22
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 suggest that cuts in social spending widened income inequality and shrank the Israeli

17 David Horovitz, “Netanyahu and his partner-rivals,” Times of Israel, March 14, 2013.
18 Various factors—including Israel’s communitarian heritage, its tradition of vigorous public debate, and the
consequences of deregulation for a system characterized by some as “crony capitalism”—may have contributed to the
protests.
19 Such tensions include “price tag” attacks and vandalism in retaliation for government action or anticipated action
limiting settlements or countering outposts unsanctioned by Israeli law. Yossi Melman, “A price tag for Jewish terror,”
Jerusalem Report, May 6, 2013.
20 Barak Ravid, “Clinton warns of Israel’s eroding democratic values,” Ha’aretz, December 5, 2011.
21 Economist Intelligence Unit, Country Report: Israel, generated May 29, 2013.
22 Ibid.
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middle class.23 A May 2013 Organisation for Economic Co-operation and Development (OECD)
report stated that Israel has the highest poverty rate of any OECD country (slightly more than
20%) and the fifth-highest level of income inequality.24
Table 2. Basic Facts
Population
7.70 million (2013 est.) (includes an estimated 325,500 settlers in
the West Bank (2011 est.), 186,929 in East Jerusalem (2010 est.),
and 18,700 in the Golan Heights (2011 est.))
Jews
75.4%


Arabs
20.5% (84.1% Muslim, 8.1% Druze, 7.8% Christian) (2011 est.)
Real Gross Domestic
2.3% (2013 proj.)
Product growth rate
GDP per capita (at
$32,200 (2012 est.)
purchasing power parity)
Unemployment rate
6.3% (2012 est.)
Population below
23.6% (2007 est.)
poverty line
Inflation rate
2.0% (2013 proj.)
Defense spending as % of 5.3% (2013 proj.)
GDP
Budget deficit as % of
4.1% (2013 proj.)
GDP

Public Debt as % of GDP
74.4% (2012 est.)
Foreign exchange and
$75.2 billion (2012 est.)
gold reserves

Current account (Trade)
surplus as % of GDP
1.7% (2013 proj.)
Exports $64.74
billion (2012 est.)
Export commodities
machinery and equipment, software, cut diamonds, agricultural
products, chemicals, textile and apparel
Export partners
U.S. 28.8%, Hong Kong 7.9%, Belgium 5.6%, United Kingdom 5%,
India 4.5%, China 4% (2011 est.)
Imports
$77.59 billion (2012 est.)
Import commodities
raw materials, military equipment, investment goods, rough
diamonds, fuels, grain, consumer goods
Import partners
U.S. 11.8%, China 7.4%, Germany 6.2%, Belgium 6.1%,
Switzerland 5.4%, Italy 4.2% (2011 est.)
Sources: Central Intelligence Agency, The World Factbook; Economist Intelligence Unit; Israel Central Bureau of
Statistics, Jane’s Defence Procurement Budgets.

23 “How Netanyahu Went from Idealism to Pragmatism on Economic Policy” Knowledge@Wharton Blog, October 10,
2012.
24 OECD, “Crisis squeezes income and puts pressure on inequality and poverty,” May 15, 2013.
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Reported offshore natural gas finds in recent years 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, which 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. Combined production from these offshore
fields 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.25 Gas from Tamar began being piped to Israel in March
2013, and production from Dalit and Leviathan is expected by 2018. 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%. Questions remain regarding how Israel might
feasibly export gas via pipelines or liquefied natural gas (LNG) production and shipping given
both potential economic costs and political and security risks.
Israel’s Security Concerns
General Threat Perceptions
A leading Israeli commentator has written, “The region is in the throes of major historic change.
For Israel, there are real dangers and significant opportunities.”26 Many Israeli leaders assert that
they are currently facing an unprecedented confluence of largely asymmetric regional security
challenges from Iran, non-state militant groups, and surrounding Arab countries.27 Israel’s
regional conventional military superiority persists and may even continue to grow, but an Israeli
commentator wrote last summer that recent events “have potentially made Israel’s increasing
conventional superiority less relevant to Israeli security, leaving Israel vulnerable to an array of
security challenges.” 28
However, Israelis and other observers debate the extent of Israel’s vulnerability.29 Some former
Israeli officials have asserted that internal challenges faced by Israel’s neighbors appear to have
strengthened Israel’s regional position.30 For example, it is possible to argue that ongoing conflict
in Syria is requiring Iran and Hezbollah to commit significant resources and manpower to
maintaining a strategic foothold there, and thus reduces the active threat they pose to Israel.
Moreover, some unconventional security threats have been reduced because of factors such as

25 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.
26 Leslie Susser, “Strategic dilemmas,” Jerusalem Report, May 20, 2013.
27 Yaakov Lapin, “Ya’alon: Israel may have to face Iran threat alone,” jpost.com, April 16, 2013.
28 See, e.g., Efraim Inbar, “Israel’s National Security Amidst Unrest in the Arab World,” Washington Quarterly, vol.
35, no. 3, summer 2012.
29 One former U.S. official has written, “The Israelis have major demographic, security and political problems. It’s
even possible, without worst casing matters, to worry about the future survival of Israel as a Jewish democratic state.
But states just don’t disappear and collapse. The risk in worst-casing the Israel story is that we infantilize the country—
assume that it’s a transient entity headed for a disaster and that there are no options to divert the terrible end.” Aaron
David Miller, “Debunking Myths on Israel and U.S. Foreign Policy,” Israel Policy Forum (publicized September 2012).
30 See, e.g., former Israeli prime minister Ehud Olmert and former Mossad director Meir Dagan, cited in Ethan
Bronner, “Israel Says It's Not Seeking U.S. Intervention in Syria, Despite Chemical Arms,” New York Times, April 29,
2013.
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heightened security measures vis-à-vis Palestinians; missile defense systems; and reported
cyberwarfare capabilities. Debate continues over the urgency of a political resolution to Israel’s
disputes with the Palestinians, as well as the potential regional and international consequences—
including possibly increased “isolation”—if no resolution occurs. Analysts also have varying
views regarding the extent to which Israel maintains deterrence over non-state militant groups
such as Hamas and Hezbollah.
Challenges from Iran and Arab Neighbors
Over the nearly 40 years since the last major Arab-Israeli War in 1973, Israel has relied on the
following three advantages—all either explicitly or implicitly backed by the United States—to
remove or minimize potential threats to its security and existence:
• Overwhelming conventional military superiority;
• Formally ambiguous but universally presumed regional nuclear weapons
exclusivity;31 and
• De jure or de facto arrangements or relations with the authoritarian leaders of its
Arab state neighbors aimed at preventing interstate conflict.
Although Israel’s conventional military advantages are clear, the following three strategic
challenges have gained in urgency, could threaten the other two advantages listed above, and are
therefore subjects of serious concern among Israelis:
• Iranian Nuclear Challenge.32 Iran’s possible achievement of a nuclear weapons
capability, either for direct use or to exercise indirect but decisive influence on
the region, could worsen security dilemmas. Israeli leaders have asserted that
even if Iran does not use, intend to use, or even manufacture a nuclear weapon,
its mere capacity to do so will increase its deterrence by raising the potential
costs Israel and others would incur by acting against it or its allies (i.e.,
Hezbollah and various Palestinian militant groups). The resulting intimidation
could lead Arab Gulf states in proximity to Iran to adopt more quiescent or pro-
Iranian policies or to pursue nuclear capabilities of their own. In turn, this could
open the way for increased Iranian influence and/or nuclear proliferation
throughout the region. Prime Minister Netanyahu reportedly fears that such
intimidation could lead to a “mass exodus of Jews from an Israel under nuclear
threat, weakening the state and compromising the Zionist dream.”33
• Islamist-Led or -Influenced Arab States. Sunni Islamist-led or -influenced Arab
states may actively or tacitly support increased political pressure against Israel,
particularly on the Palestinian issue, and/or increased military mobilization at or
near its borders. Anti-Israel sentiments are widespread in other Middle Eastern

31 Israel is not a party to the Nuclear Non-Proliferation Treaty (NPT) and maintains a policy of “nuclear opacity” or
amimut. A consensus among media and analysts’ reports is that Israel possesses an arsenal of 80 to 200 nuclear
weapons. See, e.g., Timothy McDonnell, “Nuclear pursuits: Non-P-5 nuclear-armed states, 2013,” Bulletin of the
Atomic Scientists, vol. 69(1), 2013.
32 For more information, see CRS Report R42443, Israel: Possible Military Strike Against Iran’s Nuclear Facilities,
coordinated by Jim Zanotti.
33 Leslie Susser, “Spy vs. Spy,” Jerusalem Report, March 26, 2012.
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states. These sentiments are not exclusive to Islamists, but country-specific and
region-wide Islamist narratives, political constructs, and media platforms offer
possible channels for coordinating their impact. This trend is reflected in a
number of ongoing political and constitutional debates in Arab countries where
political change has empowered Islamist parties and movements.
• Instability and Terrorism from Ungoverned Spaces. Ungoverned or minimally
governed spaces are proliferating near Israel’s borders in Syria, Lebanon, Egypt’s
Sinai Peninsula, and Libya. These areas attract or could attract terrorists,
weapons traffickers, criminal networks, refugees, and migrants, and contribute to
trends that appear to threaten Israeli security.34 Israel is reportedly giving
increased priority to constructing specially outfitted security fences along its
borders with Syria, Egypt, Lebanon, and even Jordan.35
Israeli planners and decision makers have scrambled to determine how to properly address these
potential threats by recalibrating resource allocations, military postures, and regional and
international political activities.
Iran
The security discourse in Israel has been dominated in recent years by the question of how to deal
politically and operationally with the Iranian nuclear program. Reports abound of an ongoing
“shadow war” involving the United States and Israel against Iran. In this apparent conflict,
alleged U.S.-Israel cyberattacks and Israel-sponsored assassinations of Iranian nuclear program
principals are countered by alleged terrorist plots by Iran or its Lebanese non-state ally Hezbollah
against Israeli targets worldwide—including Bulgaria,36 Cyprus, Georgia, Thailand, and India.
The following variables could influence Israeli leaders’ decision on whether to seriously consider
unilateral action against the Iranian nuclear program: the degree of success international
negotiations and sanctions have in coming months in changing Iran’s behavior; the effectiveness
of possible covert measures at delaying or reversing Iranian nuclear progress; political dynamics
within the Israeli government; and the level of assurance that President Obama may or may not
provide about U.S. willingness to prevent Iran’s acquisition of nuclear weapons or perhaps a
“breakout capacity” below the threshold of actual construction of one or more nuclear weapons.37
On May 22, 2013, the Senate voted 99-0 to pass S.Res. 65. As passed, the resolution included the
following language, along with a clause explicitly stating that it would not be construed as
authorization for the use of force or as a declaration of war:
if the Government of Israel is compelled to take military action in legitimate self-defense
against Iran's nuclear weapons program, the United States Government should stand with

34 Susser, “Strategic dilemmas,” op. cit.
35 “Israel and the walls that surround it,” aljazeera.com, May 2, 2012.
36 Several reports identify Hezbollah as the perpetrator of the July 2012 suicide bus bombing in Burgas, Bulgaria that
targeted an Israeli tourist group—killing six (including the Bulgarian driver) and injuring 32. Nicholas Kulish and Eric
Schmitt, “Hezbollah Is Blamed for Attack on Israeli Tourists in Bulgaria,” New York Times, July 19, 2012.
37 Such breakout capacity, though not necessarily entailing an actor’s possession of one or more nuclear weapons,
entails an actor’s ability to combine fissile material with a nuclear warhead and an appropriate delivery vehicle. CRS
Report R42443, Israel: Possible Military Strike Against Iran’s Nuclear Facilities, coordinated by Jim Zanotti.
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Israel and provide, in accordance with United States law and the constitutional responsibility
of Congress to authorize the use of military force, diplomatic, military, and economic
support to the Government of Israel in its defense of its territory, people, and existence.38
Syria
The Syrian civil war—in which the initial conflict between the Asad regime and its aggrieved
citizens has been intertwined with a growing sectarian and proxy battle involving regional and
global powers—has increasingly become a security challenge for Israel. Israel became militarily
involved in early 2013 to a limited extent. This involvement began with some retaliatory strikes
against instances of artillery fire on its positions in the Golan Heights. Subsequently, Israel has
reportedly begun flying reconnaissance missions over Syrian territory. Additionally, in February
and May 2013, Israel allegedly conducted three separate airstrikes to prevent the control and use
of sophisticated missiles or anti-aircraft weapons by Hezbollah. Most commentators conclude that
Israel would prefer to avoid greater involvement in Syria, partly because, in the words of one,
Israel is “hard-pressed to figure out what possible outcome is in [its] best interests.”39 It is unclear
whether Israel can indefinitely avoid a larger role, in view of various factors, including
Hezbollah’s involvement in the conflict; possible Russian delivery of sophisticated S-300 anti-
aircraft systems to Syria, and continuing threats to the Golan Heights border area and the U.N.
Disengagement Observer Force (UNDOF) that monitors it.40
Egypt
Regarding Egypt, a core Israeli dilemma is how to support a more robust Egyptian security
presence in Sinai to improve order and counter terrorism, while ensuring that Egypt adheres to the
limitations on military deployment that underpin its 1979 peace treaty with Israel. An August
2012 Sinai-based attack on an Egyptian garrison and Israeli border checkpoints—a year after
another deadly Sinai-based attack in Israel—highlighted the threat posed by terrorists with
apparent links to Al Qaeda-style Palestinian groups. Additional border incursions have
subsequently occurred. In response to the August attack, Israeli leaders publicly oscillated
between insistence that Egypt’s military act more forcefully, and alarm that Egyptian responses—
especially the deployment of tanks—either directly contradicted the treaty41 or established a
dangerous precedent for its future weakening or abolition.
Rocket Threat from Lebanon and Gaza
Israel continues to face a rocket threat from the Gaza Strip/Sinai Peninsula (via Hamas and other
militant groups) and Lebanon (via Hezbollah) that has expanded in geographical range in the past
few years. Israel engaged in a weeklong conflict with Hamas and other Palestinian militants in

38 On March 5, 2013, Representative Paul Gosar introduced H.Res. 98, which, if passed, would state the House’s full
support for “Israel’s lawful exercise of self-defense, including actions to halt Iranian aggression such as a strike against
Iran’s illegal nuclear program.” To date, H.Res. 98 has at least 31 co-sponsors (all of whom are Republican).
39 Ben Caspit, “Will Israel Take Out the Russian Missiles in Syria?,” Al-Monitor Israel Pulse, May 17, 2013.
40 For basic information on UNDOF, which has monitored the Israel-Syria cease-fire since 1974, see
http://www.un.org/en/peacekeeping/missions/undof/facts.shtml.
41 There are divergent Israeli and Egyptian accounts over the level of consultation and coordination—required by the
treaty—that took place in connection with Egypt’s August 2012 post-attack deployments.
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November 2012, and the resulting Egyptian-mediated, U.S.-supported cease-fire has largely held.
However, there has been little or no lasting progress in arresting the rocket threat or in negotiating
an easing of Israel’s perimeter of control in and around Gaza. Meanwhile, Israel continues to
deploy and develop programs to defend against a wide variety of ranges of rockets and missiles.
The Palestinian Issue
At the same time, there has been no substantive progress toward a conflict-ending negotiated
settlement between Israel and the Palestinians. Neither Israeli leaders, nor Fatah or Hamas leaders
preoccupied with maintaining their domestic credibility and respective territorial fiefdoms in the
West Bank and Gaza, appear disposed to make substantive compromises with one another. It is
unclear to what extent continued stalemate on the Palestinian issue could worsen regional
tensions and anti-Israel sentiment, or motivate greater international action seeking to establish
Israeli legal and moral culpability for its treatment of Palestinians. Periodically recurring
incidents of violence and vandalism involving Israelis (including West Bank settlers) who live
and travel in close proximity to Palestinians highlight the difficulty Israeli authorities face both in
restraining and protecting their citizens, and could contribute to future tensions.
Political figures from the Israeli left and center, as well as some U.S. and international
commentators, continue to stress what they characterize as an urgent need for Israel to return to
negotiations. Some analysts assert that Israeli leaders face a dilemma between democracy and
demography.42 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. The concerns they enunciated focus on possible domestic and international
pressure associated with these demographics, and a choice between giving up Jewish primacy or
facing intensified 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 data
underlying these concerns. Additionally, the apparent primacy of socioeconomic issues in the
2013 elections could signal that Israelis feel less urgency about the issue than in past years. Prime
Minister Netanyahu has reportedly endorsed a two-state solution with his foreign ministry
personnel on demographic grounds,43 but such concerns do not appear to be a critical issue for
key members of the government such as Defense Minister Ya’alon44 and Economy Minister
Bennett.
See “Status of Regional and International Diplomacy” below for further analysis of the peace
process, including regional factors.

42 Akiva Eldar, “Israel’s New Politics and the Fate of Palestine,” The National Interest, July/August 2012; Peter
Beinart, The Crisis of Zionism, New York: Times Books, 2012.
43 Susser, “Strategic dilemmas,” op. cit.
44 In a June 2012 interview, Ya’alon said, “We can live like this for another 100 years, too.... The demographic
argument is a lie.” Ari Shavit, “IDF chief of staff-turned-vice premier: ‘We are not bluffing,’” Ha’aretz Magazine, June
14, 2012.
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Concerns Regarding International Isolation
Israel and many of its supporters have expressed concern about a sense of international
isolation.45 Israel’s willingness to show flexibility regarding its security practices, negotiating
demands, or diplomatic tactics may depend on whether its leaders believe that changes in their
policies can change attitudes toward them. Some Israelis argue or imply that efforts to isolate
them are led by implacable enemies determined to spread anti-Israel and anti-Semitic attitudes,
and thus bear little or no relationship to Israel’s policies.46 Other Israelis assert a more direct
relationship between Israeli policies, such as the construction of Jewish communities or
“settlements” (the term used most commonly internationally) in the West Bank and East
Jerusalem, and international attitudes toward Israel. This latter set routinely laments what they
characterize as extreme approaches by their leaders toward charged issues like the Israeli-
Palestinian conflict.47
Israel is likely to need U.S. help in improving or mitigating the damage done to various regional
and international relationships. U.S.-aided efforts by Israel to repair previously deteriorated
relations with Turkey are one example. During President Barack Obama’s March 2013 visit to
Israel, Prime Minister Netanyahu apologized via telephone to Turkish Prime Minister Recep
Tayyip Erdogan for any operational mistakes by Israel during the Gaza flotilla incident of May
2010 “that might have led to the loss of life or injury,” and also agreed to conclude an agreement
on “compensation/nonliability.”48 Debate persists on how much and how fast Netanyahu’s
apology and subsequent, related steps might restore former Israel-Turkey closeness on military,
intelligence, and political matters.49

45 One recent article asserted that Israel’s president, Shimon Peres, and former prime ministers Ehud Olmert and Ehud
Barak have warned that “unless the occupation of the bulk of the West Bank ends, or Palestinians in the West Bank are
given full voting rights in Israel, the country will lose its claim to be a democracy. It will, says Mr. Peres, become a
‘pariah’, just as South Africa did. The BDS [boycott, divestment, and sanctions] campaign may thus, he implies,
become unstoppable. Even the Americans might find it hard to go on backing Israel come hell or high water.” “Could
two become one?,” Economist, March 16-22, 2013.
46 Inbar, op. cit.; Barry Rubin, “The Region: Is Israel losing support?,” jpost.com, January 6, 2013.
47 In response to Israel’s announcement of plans to expand settlement construction in the West Bank and East
Jerusalem following the United Nations General Assembly vote in November 2012 to change the observer status of
“Palestine” (the Palestine Liberation Organization (PLO)) within the U.N. system from that of an entity to a “non-
member state,” former Israeli prime minister Ehud Olmert was quoted as saying, “Netanyahu is isolating the State of
Israel from [the] entire world in an unprecedented way, and we are going to pay a difficult price for this in every aspect
of our lives.” “Former PM Olmert: Netanyahu is isolating Israel from the rest of the world,” haaretz.com, December 8,
2012.
48 Summary of conversation between Netanyahu and Erdogan from Israeli Prime Minister’s Office website, March 22,
2013. The May 2010 Gaza flotilla incident involved the boarding in international waters by Israeli commandos of a
ship that was commissioned by a Turkish Islamist non-governmental organization to carry goods to the Israeli-
blockaded Gaza Strip. Under disputed circumstances, the commandos reportedly killed eight Turks and an American of
Turkish ancestry and injured several others.
49 See, e.g., Oded Eran, “Israel-Turkey Reconciliation Still Remote,” nationalinterest.org, April 18, 2013; Uzi
Mahnaimi, “Israel to corral Iran with Turkish airbase,” Sunday Times (UK), April 21, 2013. Continuing Israeli
restrictions and limitations on the passage of people and goods to and from Gaza’s sea coast and its land borders with
Israel remain a potential sticking point. State Department transcript of remarks by Secretary of State John Kerry and
Turkish Foreign Minister Ahmet Davutoglu, Ciragan Palace, Istanbul, Turkey, April 7, 2013.
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Key U.S. Policy Issues
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 maintained close bilateral ties based on common democratic values, religious affinities, and
security interests. Relations have evolved through legislation; memoranda of understanding;
economic, scientific, and military agreements; and trade. Congress provides military assistance to
Israel and has enacted other legislation in explicit support of its security. 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.50
In consequence of possible Israeli concerns about regional challenges and potential changes in
levels of U.S. interest and influence in the region, Israeli leaders and their supporters may actively
try to persuade U.S. decision makers both that
• Israel’s security and the broader stability of the region continue to be critically
important for U.S. interests; and
• Israel has substantial and multifaceted worth as a U.S. ally beyond temporary
geopolitical considerations and shared ideals and values.51
These efforts would seek to perpetuate and bolster the already strong popular and official U.S.
commitment to Israel’s security. According to one U.S. commentator, American Israel Public
Affairs Committee (AIPAC) president Michael Kassen has deplored what he describes as “the
‘growing allure of isolationism’ in America, which is another way of saying that Israel, among
other nations, may command less deference and interest among a new and younger generation of
legislators.”52
Israel-sponsored efforts to emphasize its importance to the United States also may aim to
minimize possible demands by U.S. policymakers for Israel to compensate the United States for a
potentially greater commitment to Israel in response to regional challenges.53 Expectations among
some U.S. officials could include greater Israeli deference to and coordination with the United
States on regional military action and on diplomacy with Palestinians. This could fuel or intensify
U.S.-Israel disagreement over how Israel might continue its traditional prerogative of “defending
itself, by itself,” while also receiving external assistance.

50 Malka, op. cit., pp. 93-94.
51 See, e.g., Michael Eisenstadt and David Pollock, Asset Test: How the United States Benefits from Its Alliance with
Israel, Washington Institute for Near East Policy, September 2012.
52 Jacob Heilbrunn, “Israel’s Fraying Image,” National Interest, May/June 2013.
53 According to one report, some U.S. military officers 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.” Nathan Guttman, “Israel Is
Strategic Asset After All,” Jewish Daily Forward, November 18, 2011.
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The U.S.-Israel discourse on key issues affecting Israel’s security apparently features points of
agreement on overall goals but differences in drawing priorities. A prominent Israeli journalist
wrote the following summary of President Obama’s March 2013 visit to Israel:
On the Iranian issue, Netanyahu said that there is no time, and that we have to act now, while
the Americans told him to calm down. They said that there is time, and that they will only act
when the conditions are ripe, and they have no other options on that. As for the Palestinians,
it was the exact opposite. The Americans say that there is no time, that we have to act now to
rescue Palestinian President Abu Mazen [Mahmoud Abbas], support the moderates and
establish a strategic alliance between Israel, the Palestinians, the Turks and the Jordanians.
Such an alliance might also include a post-Assad Syria and have an impact on Egypt. In
contrast, Netanyahu says, “Calm down. There’s still time. We’re not ready yet. I will act. I
want peace, but only when the conditions are ripe.”54
Security Cooperation55
Background
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. This aid for Israel has been designed to maintain Israel’s
“qualitative military edge” (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 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 1987, Israel was designated a
“major non-NATO ally” by the Reagan Administration, and in 1988, under the terms of Section
517 of the Foreign Assistance Act of 1961, as amended, Congress codified this status, affording
Israel preferential treatment in bidding for U.S. defense contracts and expanding its 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 over bilateral tensions related to Israeli arms
sales to China (see “Israeli Arms Sales to Other Countries” below), but resumed in 2005.

54 Ben Caspit, “What Really Happened Between Netanyahu and Obama,” Al-Monitor Israel Pulse, April 11, 2013.
55 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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On May 6, 1986, Israel and the United States signed an MOU—the contents of which are
classified—for Israeli participation in the Strategic Defense Initiative (SDI/“Star Wars”), under
which U.S.-Israel 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.”
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.
Congress and the President enacted the U.S.-Israel Enhanced Security Cooperation Act (P.L. 112-
150) in July 2012. The act contains non-binding “sense of Congress” language focusing largely
on several possible avenues of cooperation discussed below, including providing Excess Defense
Articles; boosting operational, intelligence, and political-military coordination; expediting
specific types of arms sales (such as F-35 fighter aircraft, refueling tankers, and “bunker buster”
munitions); and additional aid for Israel’s Iron Dome anti-rocket system and U.S.-Israel
cooperative missile defense programs. The act also extended deadlines for Israel to access U.S.
military stockpiles.
Pending Legislation – U.S.-Israel Strategic Partnership Act of 2013
In early March 2013, slightly differing versions of a U.S.-Israel Strategic Partnership Act of 2013
were introduced in the House (H.R. 938) and the Senate (S. 462) with bipartisan co-sponsors.56
Both versions refer to Israel as a “major strategic partner” of the United States—a designation
whose meaning has not been further defined in U.S. law or by the executive branch—and contain
various other provisions that encourage continued and expanded U.S.-Israel cooperation in a
number of areas. Both versions also would extend the war reserves stockpile authority57 for Israel
through FY2015, and would seek to have the executive branch give Israel the same Strategic
Trade Authorization (STA) licensing exception for certain munitions and dual-use items that 36
other countries currently have.58
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

56 To date, H.R. 938 has at least 292 sponsors, and S. 462 has at least 39.
57 For information on the war reserves stockpile authority, under which the United States maintains munitions
stockpiles for its own use and for Israel’s use in emergency situations with U.S. permission, see CRS Report RL33222,
U.S. Foreign Aid to Israel, by Jeremy M. Sharp
58 For information on the STA licensing exception, see Export Control Reform Initiative Factsheet #4: License
Exception “Strategic Trade Authorization” (STA). Available at:
http://new.export.gov/cms_files/ECR%20Factsheet%204%20-%20STA_Latest_eg_main_047475.pdf. Israel, along
with seven other countries, currently has a more limited form of the STA licensing exception.
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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, 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 requiring that any proposed U.S. arms sale to “any country
in the Middle East other than Israel” must include a notification to Congress with a
“determination that the sale or export of such would not adversely affect Israel’s qualitative
military edge over military threats to Israel.”59 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. However, the codified definition focuses on preventing arms sales to
potential regional Israeli adversaries based on a calculation of conventional military threats. It is
unclear whether calls for revisiting this definition or rethinking its implementation may arise in
light of the evolving nature of potential regional threats to Israel’s security.
Additionally, what might constitute a legally defined adverse effect to QME is not clarified in
U.S. legislation. After 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.60
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, and Iraq—
could become increasingly subject to challenge both by Israeli officials feeling heightened
sensitivity to regional threats and by sympathetic U.S. policymakers.
U.S. Security Guarantees?
Although the United States and Israel do not have a mutual defense treaty or agreement that
provides formal U.S. security guarantees,61 successive Administrations have either stated or
implied that the United States would help provide for Israel’s defense in the context of discussing
specific threats, such as from Iran.62 Both houses of Congress routinely introduce and pass

59 §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.”
60 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.
61 The United States and Israel do, however, have a Mutual Defense Assistance Agreement (TIAS 2675, dated July 23,
1952) in effect regarding the provision of U.S. military equipment to Israel (see “End-Use Monitoring”), and have
entered into a range of stand-alone agreements, memoranda of understanding, and other arrangements varying in their
formality.
62 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
(continued...)
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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.”63 Additionally, as mentioned above, S.Res. 65,
which the Senate passed in May 2013, stated that the United States should provide “diplomatic,
military, and economic support to the Government of Israel in its defense of its territory, people,
and existence” in connection with certain specified contingencies relating to Iran’s nuclear
program.
A former Israeli deputy national security advisor has written about potential benefits and
drawbacks for Israel of more formal U.S. security guarantees for Israel, including a possible
“nuclear umbrella.” A 2006 article that this former official 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.64
Perhaps at least partly due to some of the reasons this former Israeli official 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, as discussed above.
U.S. Aid and Arms Sales to Israel
Specific figures and comprehensive detail regarding various aspects of U.S. aid and arms sales to
Israel are discussed in CRS Report RL33222, U.S. Foreign Aid to Israel, by Jeremy M. Sharp.
This includes information on conditions that generally allow Israel to use its military aid earlier
and more flexibly than other countries, and on the effects of budget sequestration regarding
various forms of assistance to Israel in FY2013.

(...continued)
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.” Seymour M. Hersh, “The Iran Plans,” New Yorker,
April 17, 2006.
63 Additionally, 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.
64 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; Malka, op. cit.,
pp. 84-89.
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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 one half of total FMF
and 20% of Israel’s defense budget. The remaining six years of a 10-year bilateral memorandum
of understanding commits the United States to $3.1 billion annually from FY2013 to FY2018,
subject to congressional appropriations. Israel uses approximately 75% of its FMF to purchase
arms from the United States, in addition to receiving U.S. Excess Defense Articles (EDA).
Congress routinely provides hundreds of millions of dollars in additional annual assistance for the
Israel’s Iron Dome anti-rocket system65 and joint U.S.-Israel missile defense programs such as
Arrow and David’s Sling.
During an April 2013 visit to Israel, Secretary of Defense Chuck Hagel confirmed arms sales
worth a total of $10 billion to Israel, Saudi Arabia, and the United Arab Emirates.66 The deal,
which most observers assert is intended to counter Iranian regional influence, would reportedly
include new-generation KC-135 refueling tankers that could increase Israeli long-range strike
capabilities, such as for military action against Iranian nuclear facilities.67 In a report before the
deal’s official announcement, a New York Times article stated that “Congressional officials said
members were seeking assurances that the package was in keeping with American policy to
guarantee Israel’s ‘qualitative military edge’ while not recklessly emboldening Israeli hawks.”68
The United States also generally provides some annual American Schools and Hospitals Abroad
(ASHA) funding and funding to Israel for migration assistance. Loan guarantees, arguably a form
of indirect aid, also remain available to Israel through FY2015 under the U.S.-Israel Enhanced
Security Cooperation Act (P.L. 112-150).



65 Reports based on Israeli military sources indicate that initial uses of Iron Dome in 2011 and 2012, including during
the November 2012 Israel-Gaza conflict, showed a high rate of success—possibly around 80%—in intercepting short-
range rockets fired from Gaza. It is unknown if the United States or another third party has independently verified
Israeli claims, and analysts have debated the claims’ validity. Although Iron Dome is costly in comparison with the
Gaza-based rockets it has intercepted, analysts debate whether the system’s cost-effectiveness is better measured by
armament attrition or by comparing the system’s costs with estimates of damage that would likely occur in its absence.
See, e.g., Philip Giraldi, “Is Iron Dome the Maginot Line?,” theamericanconservative.com, December 3, 2012;
Matthew Fargo, “Iron Dome – A Watershed for Missile Defense?,” csis.org/blog, December 3, 2012. For more
information, see CRS Report RL33222, U.S. Foreign Aid to Israel, by Jeremy M. Sharp.
66 David Alexander, “Arms deal with Middle East allies signal to Iran: Hagel,” Reuters, April 21, 2013.
67 Thom Shanker, “Arms Deal with Israel and 2 Arab Nations Is Near,” New York Times, April 19, 2013.
68 Ibid.
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Table 3. U.S. Bilateral Aid 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 3,098.0
3,075.0 —
20.0 3.00 —
2013
3,115.0 (Before
3,100.0
—
15.0 —
—
Sequestration)
2014
3,115.0 3,100.0
—
15.0 —
—
Request
Total 118,247.57
70,523.4 30,897.0
1,673.2
162.075 14,991.9
Notes: FY2000 military grants include $1.2 billion for the Wye agreement and $1.92 billion in annual military
aid. For information on U.S. loan guarantees to Israel, see CRS Report RL33222, U.S. Foreign Aid to Israel, by
Jeremy M. Sharp.



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Table 4. Defense Budget Appropriations for U.S.-Israeli Missile Defense:
FY2006-FY2014 Request
(historical $ in millions)
Arrow III
(High
David’s Sling
Iron
Fiscal Year
Arrow II
Altitude)
(Short-Range)
Dome
Total
FY2006 122.866 —
10.0
— 132.866
FY2007 117.494 —
20.4
— 137.894
FY2008 98.572 20.0
37.0
— 155.572
FY2009 74.342 30.0
72.895
— 177.237
FY2010 72.306 50.036 80.092
— 202.434
FY2011 66.427 58.966 84.722
205.0
415.115
FY2012 58.955 66.220 110.525
70.0a
305.700
FY2013
44.365 74.692 149.679
211.0
479.736
Before
Sequestration
FY2014
10.663 52.607 32.512
220.0
315.782
Request
a. These funds were not appropriated by Congress, but reprogrammed by the Obama Administration from
other Department of Defense accounts.
Israeli-Palestinian Issues
For historical background on these issues, see CRS Report RL34074, The Palestinians:
Background and U.S. Relations, by Jim Zanotti.
Status of Regional and International Diplomacy
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. 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. However, Israeli leaders appear to have
become increasingly concerned—given ongoing Arab political change—that they cannot count on
future positive ties even with states such as Egypt and Jordan.69 This assessment has likely led
Israel to perceive greater risks in a potential land-for-peace deal, perhaps due to a calculation that
continued possession of territory may be a more reliable guarantor of security than an agreement
with one or more Arab entities.
For their part, Palestinian leaders and Arab state rulers may find it harder to move toward formal
peace with Israel if they become more accountable to public opinion focused on Israel and its
indicia of control in the West Bank, Gaza, and Jerusalem. Formally, the League of Arab States

69 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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(Arab League) remains committed to “land for peace,” as reflected in the 2002 Arab Peace
Initiative.70
The United States, together with the other
Israel’s New Government and the
members of the international Quartet (the
Peace Process
European Union, the United Nations
How the Israeli government that was formed in March
Secretary-General’s office, and Russia),
will act on Israeli-Palestinian issues remains unclear.
continues to advocate for Israeli-Palestinian
Although Yesh Atid leader and Finance Minister Yair
talks aimed at a peace deal under the
Lapid may have political interests in drawing distinctions
with Prime Minister Netanyahu, so far he has not sought
framework initially established by the Oslo
to do so by reference to Israeli-Palestinian issues—
agreements of the 1990s. During the first two
despite apparent hopes that he might among some
years of President Obama’s and Prime
officials and analysts internationally, including in the
Minister Netanyahu’s time in office, attempts
United States. Lapid may partly be seeking to avoid
by Palestinians to link a meaningful
perceptions of external influence, and partly be mirroring
the skepticism voiced among some elements of the
resumption of negotiations to a freeze in
government about the idea of a peace deal based on
Israeli settlement construction beyond the
Israeli relinquishing territory.71 Economy Minister Naftali
Green Line (the armistice line that divided
Bennett’s pro-settler party could obstruct negotiating
Israel from the West Bank prior to the 1967
opportunities that depend on limiting settlement planning
Arab-Israeli War)—claiming inspiration from
and construction, due to its control over the housing
ministry. Moreover, government ministers favoring a
Obama’s public call for this freeze in 2009—
return to negotiations remain constrained by widespread
were unsuccessful.73
popular concerns regarding the security risks of military
withdrawal or territorial concessions in the West Bank.72
During the next two years, PLO Chairman
Mahmoud Abbas opted to pursue initiatives outside of the negotiating process at the United
Nations and U.N.-related agencies. These initiatives were aimed at increasing the international
legitimacy of Palestinian claims of statehood in the West Bank and Gaza. On November 29, 2012,
the U.N. General Assembly (UNGA) adopted Resolution 67/19, changing the permanent observer
status of the PLO (recognized as “Palestine” within the U.N. system) from an “entity” to a “non-

70 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.
71 Although Lapid publicly supports a return to negotiations, he has voiced opposition to a settlement freeze as well as
skepticism that PLO Chairman Mahmoud Abbas is a “partner for peace.” Jodi Rudoren, “Fresh Israeli Face Plays
Down Dimming of Political Star,” New York Times, May 19, 2013, with additional quotes from this interview with
Lapid included at https://www.facebook.com/rudoren/posts/10201162356036803?mds=%2Fsharer-
dialog.php%3Fsid%3D10201162356036803&mdf=1. Justice Minister Tzipi Livni, who has responsibility for the
Palestinian portfolio, and—like Lapid—is a centrist political figure, though less electorally popular, has criticized
Lapid’s statements as a hindrance to the peace process.
72 Israel has faced heightened security threats, largely from rockets deployed by Hezbollah and Palestinian militants,
following its military’s withdrawal from southern Lebanon in 2000 and from the Gaza Strip in 2005.
73 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. President Obama’s May 2011 speeches calling for renewed Israeli-
Palestinian negotiations focused on the issues of borders and security parameters. Netanyahu complained that Obama’s
proposal to use the Green Line as the reference point for border negotiations did not properly take into account
historical Israeli security concerns regarding defensibility of territory.
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member state.”74 This took place a year after the PLO gained admission in November 2011 to the
U.N. Educational, Scientific and Cultural Organization (UNESCO).75 The change that Resolution
67/19 made to the PLO’s U.N. permanent observer status is largely symbolic. However, it may
increase the probability that the Palestinians and other international actors could take future
steps—particularly in the International Criminal Court (ICC)—toward legal action against Israelis
for alleged violations of international laws and norms regarding the treatment of people and
property in the West Bank and Gaza.76 The PLO has reportedly frozen possible action in
international fora temporarily in order to give U.S. efforts at restarting diplomacy some time to
bear fruit.
Shortly after beginning his second term, President Obama traveled to Israel in March 2013 and
told the Israeli people that “this is precisely the time to respond to the wave of revolution [in the
region] with a resolve and commitment for peace.”77 Secretary of State John Kerry has been
active in regional diplomacy in an apparent bid to draw Israel and the Palestine Liberation
Organization (PLO) into resuming negotiations on issues like borders and security.78 The extent to
which Kerry’s apparent investment in the peace process might translate into commitment and
action on the issue from the White House is unclear.79 One potentially significant development
was the late April 2013 statement by Qatari Prime Minister Sheikh Hamad bin Jassim al Thani
during a visit to Washington, DC, with other Arab League officials publicly contemplating that
“comparable and mutual[ly] agreed minor” land swaps could be one aspect of a conflict-ending
agreement.80
Chairman Abbas and his colleagues have indicated reluctance to resume talks or agree to land
swaps as an “advance payment”81 if Israel is unwilling to take certain steps. These include
freezing West Bank and East Jerusalem settlement construction at least partially, releasing some
Palestinian prisoners, allowing greater Palestinian use or ownership of Israeli-controlled West
Bank land, and/or specifically outlining a border agreement plan. Prime Minister Netanyahu has
publicly resisted such measures, though there are media reports that he is temporarily and

74 138 member states voted in favor of Resolution 67/19, nine voted against (including the United States and Israel),
and 41 abstained. The PLO has had permanent observer status at the United Nations since 1974. “Palestine” maintains
many of the capacities it had as an observer entity—including participation in General Assembly debates and the ability
to co-sponsor draft resolutions and decisions related to proceedings on Palestinian and Middle East issues. However, it
is not a member of the United Nations, and does not have the right to vote or to call for a vote in the General Assembly.
75 However, the PLO’s fall 2011 application to obtain membership in the United Nations was unsuccessful. U.N.
Security Council, “Report of the Committee on the Admission of New Members concerning the application of
Palestine for admission to membership in the United Nations,” S/2011/705, November 11, 2011.
76 An April 2012 opinion by the ICC’s Office of the Prosecutor, which determined that there was no basis for it to
consider a declaration of consent by “Palestine” to ICC jurisdiction in the West Bank and Gaza, appeared to rule that
guidance from the U.N. General Assembly would be decisive in determining whether the PLO or Palestinian Authority
had competence as a state to consent to ICC jurisdiction. International Criminal Court, Office of the Prosecutor,
“Situation in Palestine,” April 3, 2012. Some analyses assert, however, that legal ambiguities remain. See, e.g., John
Cerone, “Legal Implications of the UN General Assembly Vote to Accord Palestine the Status of Observer State,”
insights, American Society of International Law, December 7, 2012.
77 White House transcript of remarks by President Barack Obama, Jerusalem International Convention Center, March
21, 2013.
78 Jay Solomon and Joshua Mitnick, “U.S. to Open Wallet in Mideast Peace Bid,” wsj.com, April 9, 2013; Robert
Danin, “A second chance for the Arab Peace Initiative?,” foreignpolicy.com, April 30, 2013.
79 See, e.g., Elise Labott, “Analysis: Kerry ready to dirty hands in diplomatic deal-making,” cnn.com, May 7, 2013.
80 State Department transcript of remarks by al Thani, Washington, DC, April 29, 2013.
81 “Fatah official: Too early to talk about land swaps,” Ma’an, May 4, 2013.
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discreetly curtailing new settlement construction plans in line with U.S. efforts to restart direct
Israel-Palestinian negotiations.82 Netanyahu has called upon Abbas to negotiate without
preconditions. However, Netanyahu has expressed skepticism that possible Arab state support for
land swaps, absent additional overtures, would be acceptable to Israel, having been quoted as
saying, “The root of the conflict isn’t territorial,” but rather is the “Palestinians’ failure to accept
the State of Israel as the nation-state of the Jewish people.”83
Meanwhile, reports routinely speculate about the possibility of “unity,” or, more precisely, a
consensus Palestinian Authority (PA) governance arrangement between Fatah and Hamas (the
main two Palestinian factions) for the West Bank and Gaza with a pathway to presidential and
legislative elections and a greater role for Hamas in the PLO.84 If Hamas involvement in the PLO
and PA were to increase, Israel would face more complicated choices about whether and how to
deal with the Palestinians. Thus far, Israel and the Quartet have rejected the possibility of dealing
with a Palestinian entity that involves Hamas—a U.S.-designated foreign terrorist organization—
unless the entity’s leaders clearly accept the “Quartet principles,” under which they would
recognize Israel’s right to exist, reject violence, and agree to honor past Israeli-Palestinian
agreements. However, because Hamas controls Gaza, its exclusion from the peace process raises
questions about whether the PLO’s claim to represent all Palestinians would be credible in
potential future talks with Israel.
Hamas’s future direction is unclear. Unrest and conflict in Syria have reportedly led to a
weakening of—but not a complete break in—its ties with Iran. Hamas’s external leadership left
its Damascus headquarters in late 2011/early 2012 and is emphasizing its Muslim Brotherhood
roots.85 The implications of reported power struggles among various nodes of Hamas’s leadership
remain unclear for Hamas’s political and military stances and the threats it and other Gaza-based
armed groups may pose to Israel.86
Partly as a result of the uncertainty surrounding Hamas’s future, implications are unclear for West
Bank-Gaza political unity, and by extension, Israeli-Palestinian negotiations. Lack of Fatah-
Hamas accommodation could fuel further cultural and political separation between Palestinians,87
and growing gaps between Palestinians in the West Bank and Gaza could worsen the credibility
problems Mahmoud Abbas already faces in presenting himself as the sole spokesman for the
national movement. Commercial links between Gaza and non-Palestinian actors in the Sinai and
the Gulf88 could exacerbate the territory’s separation from the West Bank. These outside links
may expand at least partly due to the limits Israel places on the flow of people and goods at its
borders with Gaza and from Gaza’s Mediterranean coast.89 If outside links to Gaza grow in

82 See “Settlements” below.
83 “One Step Forward,” New York Times, May 2, 2013.
84 The PLO is the internationally recognized representative of the Palestinian people. The PA was created pursuant to
various Israel-PLO agreements during the Oslo process in the 1990s as the organ of governance for limited Palestinian
self-rule in the West Bank and Gaza Strip.
85 “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.
86 CRS Report RL34074, The Palestinians: Background and U.S. Relations, by Jim Zanotti.
87 This separation may be partially explained by the lack of a territorial link between the two Palestinian territories, and
partially explained by geography and recent history linking the Gaza Strip with Egypt and the West Bank with Jordan.
88 Qatar’s emir visited Gaza in October to pledge $400 million in assistance for building and road infrastructure
projects. Qatar is reportedly using Egypt’s Rafah crossing to transport construction materials into the territory.
89 Nicolas Pelham, “Gaza’s Tunnel Phenomenon: The Unintended Dynamics of Israel’s Siege,” Journal of Palestine
(continued...)
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relative importance, they may reinforce the assertions of Israelis who insist that Israel has not
borne legal responsibility for Gaza or its residents since its withdrawal of military personnel and
soldiers in 2005. One Israeli analyst has written that “in divesting itself of just 1.5 percent of the
land [of British Mandate-era Palestine], Israel significantly recalibrated the so-called
‘demographic equation’ (the ratio of Jews to Arabs in the area under its control).”90
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 basin”) and some
of its immediate West Bank vicinity in 1967—shortly after occupying these areas militarily in the
June 1967 Arab-Israeli War. In doing so, Israel joined these newly occupied areas,91 which
featured a predominantly Arab population, to the predominantly Jewish western part of the city it
had controlled since 1948. Israel proclaimed this entire area to be Israel’s eternal, undivided
capital.92 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.93 Israel’s annexation of areas beyond
the Green Line is generally not internationally recognized.
Successive U.S. Administrations of both political parties since 1948 have maintained 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.
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
identified by the host country, 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 such a move would undermine prospects for Israeli-Palestinian
peace and U.S. credibility with Palestinians and in the Muslim 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.

(...continued)
Studies, vol. XLI, no. 4, Summer 2012.
90 Daniel Levy, “Seven Lean Years of Peacemaking,” New York Times, September 11, 2012.
91 Jordan had occupied these areas militarily since 1948, and unilaterally annexed them and the entire West Bank in
1950. It only ceded its claims to the Palestine Liberation Organization (PLO) in 1988.
92 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. Israel had first declared Jerusalem to be its capital in 1950.
93 “Poll: Most Israelis Support East Jerusalem Construction,” Ynetnews.com, March 22, 2010.
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The State Department Authorization Act for FY2002-FY2003 (P.L. 107-228) urged the President
to begin relocating the U.S. embassy “immediately.” The act also sought to (1) prohibit the use of
appropriated funds for the operation of U.S. diplomatic facilities in Jerusalem unless such
facilities were overseen by the U.S. ambassador to Israel; and (2) allow Israel to be recorded as
the place of birth of U.S. citizens born in Jerusalem. When signing the act into law, President
George W. Bush wrote in an accompanying “signing statement” that the various provisions on
Jerusalem would, “if construed as mandatory … 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.” The case of Zivotofsky v. Clinton,94 remanded by the Supreme Court in
March 2012 for further action in lower federal courts, could decide or have implications for
Congress’s constitutional authority on questions relating to the status of Jerusalem and could
influence its future ability to direct the executive branch in its conduct of foreign affairs more
broadly.
Over successive Congresses, including the 113th, various Members have periodically introduced
substantially similar versions of a Jerusalem Embassy and Recognition Act (see, e.g., H.R. 104,
H.R. 252, and S. 604). 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 approximately 139 residential communities (known internationally and by significant
segments of Israeli society as “settlements”), approximately 105 settlement outposts unauthorized
under Israeli law, and other military and civilian land-use sites in the West Bank. In addition,
depending on how one defines what constitutes a separate neighborhood or settlement in East
Jerusalem, Israeli authorities and Jewish Israeli citizens have established roughly between 14 and
17 main residential areas there. Approximately 300,000 Israelis live in West Bank settlements,
with roughly 200,000 more in East Jerusalem.95 All of these residential communities are located
in 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 Faithful”) 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. Israelis who defend the settlements’ legitimacy
generally use some combination of legal, historical, strategic, nationalistic, or religious
justifications.96

94 Zivotofsky v. Clinton, U.S. Supreme Court Docket No. 10-699, March 26, 2012. The case involves a U.S. citizen who
was born in Jerusalem, and whose parents are suing on his behalf to have the State Department reflect Israel as his
birthplace on his passport.
95 These figures and additional data on settlements and outposts are available at http://www.fmep.org/settlement_info.
96 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.
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The international community generally considers Israeli construction on territory beyond the
Green Line to be illegal.97 Israel retains military control over the West Bank and has largely
completed a separation barrier98 on West Bank territory that in some places corresponds with the
Green Line but in others goes significantly beyond it. 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
Secretary of State Cyrus Vance stating explicitly that settlements were “illegal” in 1980.99
President Reagan later stated that settlements were “not illegal,” but “ill-advised” and
“unnecessarily provocative.” Since then, the executive branch has generally refrained from
pronouncements on the settlements’ legality.100 A common U.S. stance has been that settlements
are an “obstacle to peace.” Loan guarantees to Israel currently authorized by U.S. law are subject
to possible reduction by an amount equal to the amount Israel spends on settlements in the
occupied territories. The executive branch made its most recent reduction in FY2005.101
An April 2004 letter from President George W. Bush to then Israeli Prime Minister Ariel Sharon
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.
Upon taking office, in the context 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.”102 PLO leaders followed suit and made a settlement freeze a precondition for

97 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,”
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.
98 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.”
99 Daniel Kurtzer, “Do Settlements Matter? An American Perspective,” Middle East Policy, vol. 16, issue 3, Fall 2009.
100 Nicholas Rostow, “Are the Settlements Illegal?,” The American Interest, March/April 2010.
101 For more information on this issue, see CRS Report RL33222, U.S. Foreign Aid to Israel, by Jeremy M. Sharp.
102 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.” 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
(continued...)
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their return to the peace talks. Israel responded with a partial 10-month moratorium, but tentative
efforts to restart negotiations did not take hold during that time. 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 the Administration still
opposed settlement construction as illegitimate and at cross-purposes with peace efforts.103
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 the
following means:
(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;104 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.105 Some
Israelis caution that the demand to provide security to settlers and their infrastructure and
transportation links to Israel could perpetuate Israeli military control in the West Bank even if
other rationales for maintaining such control eventually recede. Protecting settlers is made more
difficult and manpower-intensive by some settlers’ provocations of Palestinian West Bank
residents and Israeli military authorities. The government complied in 2012 with rulings by
Israel’s Supreme Court requiring it to dismantle two outposts. It has sought to placate settler
opposition to dismantlement by relocating the displaced outpost residents within the boundaries
of settlements permitted under Israeli law.106

(...continued)
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.
103 “United States vetoes Security Council resolution on Israeli settlements,” UN News Centre, February 18, 2011.
104 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.”
105 Joel Greenberg, “Netanyahu strengthens his base within Likud,” Washington Post, February 2, 2011.
106 Joel Greenberg, “Israeli settlers evacuated from West Bank outpost following court order,” Washington Post,
September 2, 2012.
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Some reports indicate that Israel is temporarily freezing some settlement construction plans,
perhaps in connection with U.S. efforts to revive the peace process.107 However, Israel is
apparently moving forward with settlement plans in at least one case and reportedly planning to
retroactively legalize some outposts previously unsanctioned under Israeli law.108
Sensitive Defense Technology and Intelligence Issues
Arms sales, information sharing, and co-development of technology between the United States
and Israel raises questions about what Israel might do with capabilities or information it acquires.
The 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)109 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.
Israeli Arms Sales to Other Countries
Israel is a major arms exporter—with India, China, and Russia among its customers or past
customers.110 The United States and Israel have regularly discussed Israel’s sale of sensitive
security equipment and technology to various countries, especially China.111 In 2003, Israel’s
agreement to upgrade radar-seeking Harpy Killer drones that it sold to China in 1999 dismayed
the Department of Defense (DOD). 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.

107 Maayan Lubell, “Israel to authorize four West Bank settler outposts,” Reuters, May 16, 2013.
108 Ibid. In the event settlement plans move forward, they may include proposals for approval of construction in an area
of the West Bank known as E-1, which is located immediately to the east of Israel’s municipal boundaries for
Jerusalem. “Briefing: Inside the E-1 Israeli settlement,” Integrated Regional Information Networks (IRIN), March 14,
2013. Domestic and international critics surmise that significant development in E-1 could harm prospects for a future
two-state solution by sundering a key geographic corridor between the West Bank’s main northern and southern
population centers, though it is unclear whether E-1 construction would necessarily close off future diplomatic options.
Robert Blecher, “Jerusalem in the Here and Now,” foreignpolicy.com, February 12, 2013; Andrew Friedman, “Is E1 for
Real?,” Jerusalem Report, April 8, 2013.
109 22 U.S.C. §2785.
110 Other customers for Israeli arms include Germany, Spain, France, Canada, Australia, Turkey, Singapore, Brazil,
Italy, the Netherlands, Poland, Finland, Azerbaijan, and Romania. Israel is also reportedly seeking to expand arms
exports to Latin America.
111 Office of Naval Intelligence, 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.
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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.”112 Thereafter, the U.S.-Israel joint strategic dialogue resumed. 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.113
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:
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 2006.114 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 their use 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.115

112 “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.
113 “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.”
114 Sean McCormack, U.S. Department of State Spokesman, Daily Press Briefing, Washington, DC, January 29, 2007.
The Consolidated Appropriations Act, 2008 (P.L. 110-161) significantly restricted the export of U.S.-manufactured
cluster munitions. Restrictions on cluster munitions exports have been carried forward to apply to appropriations in
subsequent years as well. Since 2008, Israel has been acquiring domestically manufactured cluster munitions.
115 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. During the 111th Congress, 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.
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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. The most prominent is that of Jonathan Pollard, who pled guilty in 1986 with his then wife
Anne to selling classified documents to Israel. 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.116
Israel’s Nuclear Status and Non-Proliferation117
Consensus among media and expert reports is that Israel possesses an arsenal of 80 to 200 nuclear
weapons.118 The United States has countenanced Israel’s nuclear ambiguity 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.119
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)
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”. Israel is not an
NPT state. The Obama Administration has stated its support for the nuclear-weapon-free zone.
Bilateral Trade Issues
The United States is Israel’s largest single-country trading partner,120 and—according to data from
the U.S. International Trade Commission—Israel is the United States’s 26th-largest trading
partner.121 The two countries 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

116 The second case is that of Department of Defense analyst Lawrence Franklin, who pled guilty in 2006 to disclosing
classified information to an Israeli diplomat and to two lobbyists from the American Israel Public Affairs Committee
(AIPAC). The third case is that of Ben-Ami Kadish, who had worked at the U.S. Army’s Armament Research,
Development, and Engineering Center in Dover, New Jersey. Kadish pled guilty in 2009 to one count of conspiracy to
act as an unregistered agent of Israel.
117 For information on Israel’s nuclear activities, see CRS Report R40439, Nuclear Weapons R&D Organizations in
Nine Nations, coordinated by Jonathan Medalia.
118 See footnote 31.
119 Eli Lake, “Secret U.S.-Israel Nuclear Accord in Jeopardy,” Washington Times, May 6, 2009.
120 According to a document entitled “Israel: EU Bilateral Trade and Trade with the World” generated by the European
Commission’s Directorate General for Trade on May 23, 2013, the countries of the European Union account for 31.6%
of Israel’s total trade volume, while the United States accounts for 20.1%.
121 Statistics on Israel’s status relative to other U.S. trading partners compiled by the U.S. International Trade
Commission, available at http://dataweb.usitc.gov/SCRIPTS/cy_m3_run.asp.
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of the U.S.-Israel free trade area. In 2011, Israel imported $14.3 billion in goods from and
exported $22.1 billion in goods to the United States.122 The United States and Israel have
launched several programs to stimulate Israeli industrial and scientific research, for which
Congress has authorized and appropriated funds on several occasions.123
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 List”
to its “Priority Watch List” because it had an “inadequate data protection regime” and intended to
pass legislation to reduce patent term extensions. The USTR has retained Israel on the Priority
Watch List in subsequent years, including in 2012, when it was one of 13 countries on the list.124
Pending Visa Waiver Legislation
Both the House and the Senate versions of the U.S.-Israel Strategic Partnership Act (H.R. 938 and
S. 462, respectively) encourage Israel’s inclusion in the U.S. visa waiver program.125 The Senate
version would amend the Immigration and Nationality Act (8 U.S.C. §1187(c)(2)) to exempt
Israel from a requirement that links program country eligibility to a specific maximum rate of
past nonimmigrant visa refusals. S. 462 also might provide an exemption for Israel from the
general legal requirement that a country provide reciprocal visa-free travel privileges to U.S.
citizens if the Secretary of State certifies that Israel has made “every reasonable effort, without
jeopardizing the security of the State of Israel, to ensure that reciprocal travel privileges are
extended to all United States citizens.” The possibility of an exemption for Israel on the
reciprocity requirement has reportedly “drawn criticism from lawmakers, Arab-American groups
and some Jewish critics, who say it would validate Israel’s practice of profiling U.S. citizens of
Arab, Muslim and Palestinian extraction and often denying them entry to the country on
unspecified security grounds.”126 Senator Barbara Boxer, the bill’s sponsor, has been cited as
arguing that the provision in question would “give the United States leverage to pressure Israel”
to stop the reported differential treatment of U.S. citizens based on ethnic background.127 H.R.
938 would not provide visa waiver exemptions for Israel, but would instead simply state that
Israel should be designated a visa waiver program country when it satisfies the requirements for
inclusion. The visa waiver provision in S. 462 is substantially similar to stand-alone legislation on

122 Statistics compiled by Foreign Trade Division, U.S. Census Bureau, available at http://www.census.gov/foreign-
trade/balance/c5081.html.
123 CRS Report RL33222, U.S. Foreign Aid to Israel, by Jeremy M. Sharp.
124 The other 12 are Algeria, Argentina, Canada, Chile, China, India, Indonesia, Pakistan, Russia, Thailand, Ukraine,
and Venezuela. 2012 Special 301 Report, available at http://www.ustr.gov. According to this report, the United States
and Israel reached an Understanding on Intellectual Property Rights, “which concerns several longstanding issues
regarding Israel’s regime for pharmaceutical products, on February 18, 2010. As part of the Understanding, Israel
committed to strengthen its laws on protection of pharmaceutical test data and patent term extension, and to publish
patent applications promptly after the expiration of a period of eighteen months from the time an application is filed.
The Understanding provided, among other things, that Israel would submit legislation regarding these matters within
180 days of the conclusion of the Understanding. The United States agreed to move Israel to the Watch List once Israel
submitted appropriate legislation to the Knesset, and to remove Israel from the Special 301 Watch List once the
Government enacted legislation implemented Israel’s obligations fully.”
125 For more information, see CRS Report RL32221, Visa Waiver Program, by Alison Siskin.
126 Jonathan Broder, “AIPAC-Backed Israel Bill Stalls Over Visa Waiver Provision,” cq.com, April 29, 2013.
127 Ibid.
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possible Israeli participation in the visa waiver program that was introduced earlier in 2013 in
both the House (H.R. 300) and the Senate (S. 266).
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Appendix A. U.S.-Based Interest Groups Relating
to Israel
Selected 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
Israel Institute: http://www.israelinstitute.org
The Israel Project: http://www.theisraelproject.org
Israel Policy Forum: http://www.israelpolicyforum.org
J Street: http://jstreet.org
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
The Telos Group: http://www.telosgroup.org
United Israel Appeal: http://www.jewishfederations.org/united-israel-appeal.aspx
Zionist Organization of America: http://www.zoa.org
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Appendix B. Electoral Lists Represented in Knesset


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Author Contact Information

Jim Zanotti

Specialist in Middle Eastern Affairs
jzanotti@crs.loc.gov, 7-1441


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