Israel: Background and Relations with the United States
Order Code IB82008
CRS Issue Brief for Congress
Received through the CRS Web
Israel: Background and Relations
with the United States
Updated May 18, 2006
Carol Migdalovitz
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Historical Overview of Israel
Government and Politics
Overview
Current Political Situation
Economy
Overview
Current Issues
Foreign Policy
Middle East
Iran
Palestinian Authority
Egypt
Jordan
Syria
Lebanon
Other
European Union
Relations with the United States
Overview
Issues
Peace Process
Trade and Investment
Aid
Security Cooperation
Other Current Issues
Military Sales
Espionage-Related Cases
Intellectual Property Protection
U.S. Interest Groups
IB82008
05-18-06
Israel: Background and Relations with the United States
SUMMARY
On May 14, 1948, the State of Israel
“Roadmap,” the international framework for
declared its independence and was immedi-
achieving a two-state solution. Israel unilater-
ately engaged in a war with all of its neigh-
ally disengaged from Gaza in summer 2005
bors. Armed conflict has marked every de-
and is constructing a security barrier to sepa-
cade of Israel’s existence. Despite its unstable
rate from the Palestinians. The victory of the
regional environment, Israel has developed a
Hamas terrorist group in the January 2006
vibrant parliamentary democracy, albeit with
Palestinian parliamentary elections has com-
relatively fragile governments.
plicated Israeli-Palestinian relations and led
Israeli officials to consider unilateral steps in
Prime Minister Ariel Sharon formed a
the West Bank. Israel concluded a peace treaty
three-party coalition in January 2005 to secure
with Egypt in 1979 and with Jordan in 1994,
support for withdrawing from the Gaza Strip
but never reached accords with Syria and
and four small settlements in the West Bank.
Lebanon. It unilaterally withdrew from south-
In November, however, new Labor party
ern Lebanon in 2000. European countries
leader Amir Peretz withdrew his party from
collectively are Israel’s second largest trading
the government and called for early elections.
partner, and the EU participates in the peace
Sharon then resigned from the Likud party to
process.
form a new party, Kadima. On January 4,
2006, Sharon suffered an incapacitating
Since 1948, the United States and Israel
stroke; Deputy Prime Minister Ehud Olmert
have developed a close friendship based on
succeeded Sharon. Kadima placed first in the
common democratic values, religious affini-
March 28, 2006, Knesset (parliament) elec-
ties, and security interests. U.S.-Israeli bilat-
tion, and Olmert has formed a four-party
eral relations are multidimensional. The
coalition government.
United States is the principal proponent of the
Arab-Israeli peace process, but U.S. and
Israel has an advanced industrial, market
Israeli views differ on various peace process
economy in which the government plays a
issues, such as the fate of the Golan Heights,
substantial role. The economy is now doing
Jerusalem, and Israeli settlements. The United
very well, and increased social spending is
States and Israel concluded a free-trade agree-
expected.
ment in 1985, and the United States is Israel’s
largest trading partner. Since 1976, Israel has
Israel’s foreign policy is focused largely
been the largest recipient of U.S. foreign aid.
on its region, Europe, and the United States.
The two countries also have very close secu-
The government views Iran as an existential
rity relations.
threat due to its nuclear ambitions and support
for anti-Israel terrorists. Israel negotiated a
Current issues in U.S.-Israeli relations
series of agreements with the Palestinians in
include Israel’s military sales to China, inade-
the 1990s, but the Oslo peace process ended in
quate Israeli protection of U.S. intellectual
2000, after the beginning of the intifadah or
property, and espionage-related cases.
uprising against Israeli occupation. Israeli and
Palestinian officials resumed contacts after the
See also CRS Issue Brief IB91137, The
November 2004 death of Yasir Arafat. Both
Middle East Peace Talks and CRS Report
sides accepted but have not implemented the
RL33222, U.S. Foreign Aid to Israel.
Congressional Research Service ˜ The Library of Congress
IB82008
05-18-06
MOST RECENT DEVELOPMENTS
On May 4, 2006, the Knesset (parliament) approved a new four-party coalition
government of Prime Minister Ehud Olmert’s Kadima Party, the Labor Party, the Pensioners’
Party, and the ultra-orthodox Shas Party. It controls 67 out of 120 seats in the Knesset, has
25 cabinet ministers, and Dalia Itzik of Kadima is the first woman Speaker of the Knesset.
The government’s guidelines call for shaping permanent borders for a democratic state with
a Jewish majority. The government will strive to negotiate with the Palestinians, but it will
act in the absence of
negotiations. The guidelines
also promise to narrow the
Key New Cabinet Officers
social gap. Shas joined the
coalition without agreeing to
Ehud Olmert
Prime Minister; Minister of
Kadima
Social Welfare
evacuate West Bank settlements
as specified in the guidelines
Tzipi Livni
Vice Prime Minister;
Kadima
Minister of Foreign Affairs
and will decide on the issue
when it is on the government
Shimon Peres
Vice Premier; Negev and
Kadima
Galilee Development
agenda. Negotiations continue
with United Torah Judaism
Amir Peretz
Deputy Prime Minister;
Labor
Minister of Defense
(UTJ) and Meretz. If they
succeed, only the right-wing
Abraham Hirschson
Finance
Kadima
Likud, National Union, Yisrael
Haim Ramon
Justice
Kadima
Avi Dichter
Public Security
Kadima
Beiteinu (Israel Our Home), and
Arab parties will not be in the
Shaul Mofaz
Deputy Prime Minister;
Kadima
Minister of Transportation*
government. Israel’s 1.2 million
Russian language speakers are
Roni Bar-On
Interior
Kadima
not represented in the cabinet.
Yuli Tamir
Education
Labor
Labor wants Olmert to negotiate
Eli Yishai
Deputy Prime Minister;
Shas
with Palestinian President
Minister of Industry, Trade,
and Labor
Mahmud Abbas before deciding
on a unilateral move and may
create problems if he does not
*Also in charge of strategic dialogue with the United States.
oblige.
BACKGROUND AND ANALYSIS
Historical Overview of Israel1
The quest for a modern Jewish homeland was launched with the publication of
Theodore Herzl’s The Jewish State in 1896. The following year, Herzl described his vision
at the first Zionist Congress, which encouraged Jewish settlement in Palestine, a land that
had been the Biblical home of the Jews and was then part of the Ottoman Empire. In 1917,
the British government issued the Balfour Declaration, supporting the “establishment in
1 For more, see Howard M. Sachar, A History of Israel: From the Rise of Zionism to Our Time, New
York, Knopf, 1996.
CRS-1
IB82008
05-18-06
Palestine (which had become a British mandate after World War I) of a national home for
the Jewish people.” Britain also made conflicting promises to the Arabs concerning the fate
of Palestine, which had an overwhelmingly Arab populace. Nonetheless, Jews immigrated
to Palestine in ever greater numbers and, following World War II, the plight of Jewish
survivors of the Nazi holocaust gave the demand for a Jewish home greater poignancy and
urgency. In 1947, the U.N. developed a partition plan to divide Palestine into Jewish and
Arab states, with Jerusalem under U.N. administration. The Arab states rejected the plan.
On May 14, 1948, the State of Israel proclaimed its independence and was immediately
invaded by Arab armies. The conflict ended with armistice agreements between Israel and
its neighbors: Egypt, Jordan, Lebanon, and Syria. Israel engaged in armed conflict with
some or all of these countries in 1948, 1956, 1967, 1973, and 1982. Since the late 1960’s,
it also has dealt with the threat of Palestinian terrorism. In 1979, Israel concluded a peace
treaty with Egypt, thus making another multi-front war unlikely. Israel’s current relations
with its neighbors are discussed in “Foreign Policy” below.
Government and Politics
Overview
Israel is a parliamentary democracy in which the President is head of state and the Prime
Minister is head of government. The unicameral parliament (the Knesset) elects a president
for a seven-year term. The incumbent is Moshe Katzav. The Prime Minister is the leader of
the party with the most seats in parliament. The political spectrum is highly fragmented, with
small parties exercising disproportionate power due to the low vote threshold for entry into
parliament and the need for their numbers to form coalition governments. In the March
2006, election, the threshold to enter parliament was raised from 1% to 2%, which was
intended to bar some smaller parties from parliament but also spurred some to join together
simply to overcome the threshold. National elections must be held at least every four years,
but are often held earlier due to difficulties in holding coalitions together. The average life
span of an Israeli government is 22 months. The peace process, the role of religion in the
state, and political scandals have caused coalitions to break apart or produced early elections.
Israel does not have a constitution. Instead, 11 Basic Laws lay down the rules of
government and enumerate fundamental rights; two new Basic Laws are under consideration.
On February 2, 2006, the Knesset’s Constitution, Law, and Justice Committee approved a
draft constitution encompassing existing Basic Laws and a chapter of human rights and basic
principles. To placate the ultra-orthodox, however, the government that took power in April
agreed not to take up the issue in the new Knesset. Israel has an independent judiciary, with
a system of magistrates courts and district courts topped by a Supreme Court.
There is an active civil society. Some political pressure groups are especially concerned
with the peace process, including the Council of Judea, Samaria, and Gaza (Yesha Council),
which represents local settler councils and opposes any withdrawal from occupied Arab
territories, and Peace Now, which opposes settlements, the security barrier in the West Bank,
and seeks territorial compromise. Both groups have U.S. supporters.
CRS-2
IB82008
05-18-06
Current Political Situation
These have been tumultuous times in Israeli domestic politics. Prime Minister Ariel
Sharon’s plan to disengage from the Gaza Strip and four small West Bank settlements split
his Likud Party. In August 2005, Finance Minister Benjamin “Bibi” Netanyahu resigned
from the government to protest disengagement and became a candidate for Likud chairman,
challenging Sharon. In September, Sharon supporters narrowly defeated an effort in the
Likud Central Committee by opponents of disengagement to call an early party leadership
primary to depose Sharon. On November 7, eight Sharon opponents in Likud joined the
opposition to deny Knesset approval of three new Sharon cabinet appointees; the dissidents
considered two of the appointments compensation for supporting disengagement.
In a November Labor Party primary, Histadrut labor federation head Amir Peretz
defeated acting party leader Shimon Peres and former Infrastructure Minister Benjamin Ben
Eliezer. Peretz emphasized the party’s need to champion socioeconomic goals, which it had
subordinated for the sake of joining Sharon’s coalition. On November 20, Labor voted to
withdraw from the coalition government, depriving Sharon of his parliamentary majority.
On November 21, Sharon said that he was no longer willing to “waste time” dealing
with Likud rebels, resigned from the party, and founded a new “centrist” party, Kadima
(Forward). He asked President Katzav to dissolve parliament and schedule an early election.
Some 18 Likud Members of the Knesset (parliament), including several ministers, the
chairman of the Likud Central Committee, several Labor Members of the Knesset (MKs),
players in other political parties, and prominent personalities joined Kadima. Former Labor
leader Peres supported Sharon. Kadima’s platform maintained that to secure a Jewish
majority in a democratic Jewish State of Israel, part of the Land of Israel (the area between
the Jordan River and the Mediterranean Sea) will have to be ceded. It affirmed a
commitment to the Road Map, the international framework for achieving a two-state solution
to the Israeli-Palestinian conflict. Israel would keep settlement blocs, the security barrier,
and a united Jerusalem while demarcating permanent borders.
Netanyahu won a Likud primary to replace Sharon as party leader on December 19.
Netanyahu called for “defensible walls” against Hamas and borders that would include the
Jordan Valley, the Golan Heights, an undivided Jerusalem, settlement blocs, and hilltops, and
moving the security barrier eastward.
On January 4, 2006, Sharon suffered an incapacitating stroke. In a peaceful transition
under the terms of Basic Law Article 16 (b), Deputy Prime Minister Olmert became Acting
Prime Minister. On January 16, Olmert became acting chairman of Kadima.
The Hamas victory in the January 25 Palestinian parliamentary elections rapidly became
an election issue, even though all parties agreed that Israel should not negotiate with Hamas.
Olmert set conditions for dealing with Hamas and worked to get foreign governments to
agree with them. On March 8, he revealed plans for further unilateral withdrawals from the
West Bank and said that he would reallocate funds from settlements to the Negev, the
Galilee, and Jerusalem. Although he prefers negotiations, if they do not develop in a
“reasonable time,” then he will proceed with what he calls “convergence,” or merging of
settlements east of the security barrier with large settlement blocs that will be west of the
barrier. Netanyahu charged that the unreciprocated, unilateral withdrawal from Gaza had
CRS-3
IB82008
05-18-06
rewarded terrorists and contributed to the Hamas win. He criticized Olmert’s plan as
another unilateral concession that would endanger Israel. Peretz suggested that Israel must
continue a dialogue with moderate Palestinians, not Hamas.
The March 28, 2006, Knesset election results were surprising in many respects. The
voter turnout of 63.2% was the lowest ever.
The contest was widely viewed as a referendum
on Kadima’s plans to disengage from the West Bank, but it also proved to be a vote on
economic policies that many believed had harmed the disadvantaged. Kadima came in first,
but by a smaller margin than polls had predicted. Labor, emphasizing socioeconomic issues,
came in a respectable second. Likud lost 75% of its votes from 2003 because Kadima
drained off supporters. Its decline also was due to Netanyahu, whose policies as Finance
Minister were blamed for social distress and whose opposition to unilateral disengagement
was unpopular with an increasingly pragmatic, non-ideological electorate.
The Shas campaign specifically aimed at restoring child allowances for the large
families of its constituents. Although it opposes disengagements, the party’s spiritual leader
has made rulings that may allow Shas to accommodate Kadima’s plans for the territories.
Yisrael Beiteinu (Israel Our Home), a party appealing to Russian-speakers, wants borders
that exclude Israeli Arabs and their land and include settlements; it opposes unilateral
disengagement and the Road Map. The rightist NU/NRP drew support from settlers; it
opposes all withdrawals from the West Bank, where it believes Jews have a biblical right to
settle. The new Pensioners’ Party (GIL) drew single-issue voters harmed by Netanyahu’s
policies as well as young protest voters. Its positions on other issues are not known. The
ultra-orthodox United Torah Judaism was part of the last Sharon government; it seeks
increased child allowances and deferments for religious school students from the military.
United Arab List, Hadash, and Balad — Israeli Arab parties — are not part of a new
government but are expected to passively support any future disengagements.
Parties in the Knesset
Seats
Party
Orientation
29
Kadima
Centrist, Pro-disengagement
19
Labor
Leftist, Social-democrat
12
Likud
Rightist, Anti-disengagement
12
Shas
Sephardic Ultra-orthodox
11
Yisrael Beiteinu
Russian-speakers, Nationalist, Against unilateral
(Our Home Israel)
withdrawals, but for exchange populations and
territories to create 2 homogenous states
9
National Union (NU)/
Nationalist, Ashkenazi Orthodox, Seeks to annex
National Religious Party (NRP)
the West Bank (Land of Israel) and transfer Pales-
tinians to Jordan
7
Pensioners’ (GIL)
Single-issue: guaranteed pensions for all
6
United Torah Judaism (UTJ)
Ashkenazi Orthodox, Anti-withdrawals
5
Meretz/Yahad
Leftist, Anti-occupation, Civil libertarian
4
United Arab List/Ta’al
Israeli-Arab, Islamist
3
Hadash
Israeli-Arab, Communist
3
Balad
Israeli-Arab
CRS-4
IB82008
05-18-06
Economy
Overview
Israel has an advanced industrial,
market economy in which the govern-
Basic Facts
ment plays a substantial role. Most
people enjoy a middle class standard of
Population
6,276,883 (2005.)
living. Per capita income is on par with
Population
1.2% (2005 est.)
Growth Rate
some European Union members. De-
spite limited natural resources, the agri-
— Jewish 80.1% (1996)
Ethnic
cultural and industrial sectors are well-
Groups
— non-Jewish (mostly Arab)
19.9% (1996)*
developed. An advanced high tech
GDP Growth
sector includes aviation, communica-
5.2 (2005 est.)
Rate
tions, computer-aided design and manu-
GDP Per Capita $22,200 (2005 est.)
factures, medical electronics, and fiber
Inflation Rate
1.3% (2005 est.)
optics. Israel greatly depends on for-
Unemploy-
eign aid and loans and contributions
8.9% (2005 est.)
ment Rate
from the Jewish diaspora. After eco-
Ratio of debt to
nomic declines in 2001 and 2002 due to
101% (2005 est.)
GDP
the effects of the Palestinian intifadah
Foreign Debt
$74.46 billion (2004 est.)
(uprising) on tourism and the bursting
crude oil, grains, raw materials,
Imports
of the global high-tech bubble, Israel’s
military equipment
economy has substantially recovered
cut diamonds, high-technology
Exports
since 2003 and is growing at a pace not
equipment, fruits and vegetables
seen since the 1990s. Most economic
Main Trading
United States, Belgium, Germany,
indicators are positive: inflation is low,
Partners
United Kingdom
employment and wages are rising, and
Sources: CIA, The World Factbook, January 2006; and
the standard of living is rising. Under
the Israeli government.
Former Finance Minister Netanyahu,
*Within 1967 borders.
the government attempted to liberalize
the economy by controlling government
spending, reducing taxes, and resuming
privatization of state enterprises. The chronic budget deficit decreased, while the country’s
international credit rating was raised, enabling a drop in interest rates. Netanyahu’s critics,
however, suggested that his cuts in social spending widened the national income gap and
increased the underclass. According to Israel’s National Insurance Institute, 20% of all
Israelis and 30% of Israeli children live below the poverty line.
Israel has a budget deficit target of 3% of gross domestic product, and the government
is allowed by law to raise the annual budget by only 1%. The new government’s policies
may test these limits, although Olmert has vowed not to increase the deficit while lessening
the social gap. The coalition agreement calls for raising the minimum wage to $1,000 a
month by the end of the Knesset session, canceling a 1.5% pension cut of the Netanyahu era,
guaranteeing a pension for all workers, and increasing spending on heath care, child
allowances, daycare, and other socioeconomic programs.
CRS-5
IB82008
05-18-06
Current Issues
The 2006 budget was not approved before the dissolution of the last parliament;
therefore spending has remained at 2005 levels since January and a budget surplus has
accrued. The surplus will enable the new government to spend more on social programs. The
Knesset must approve a budget within 45 days of the formation of a new government, or by
mid-June. On May 10, 2006, the Knesset approved the first reading of the budget by a 62-47
vote, with 4 Labor Members of the Knesset abstaining to protest bread price increases.
Foreign Policy
Middle East
Iran. Israeli officials state that Iran will pose an existential threat to Israel if it achieves
nuclear capability. Ayatollah Khomeini, founder of Iran’s Islamic revolution, decreed that
the elimination of Israel is a religious duty. His disciple, President Mahmud Ahmadinejad,
quoted Khomeini when he called for Israel to be “wiped off the map,” has described the
Holocaust as a “myth” used as a pretext to create an “artificial Zionist regime,” and
suggested that Europe, the United States, or Canada donate land for a Jewish state. He
repeatedly makes virulently anti-Israel statements. Iran has a missile, the Shahab-3, capable
of delivering a warhead to Israel. Israeli officials have called on the international community
to thwart Iran’s nuclear ambitions in order to avert the need for Israel to act as it did against
Iraq’s reactor at Osirak in 1981.
When U.S. Vice President Dick Cheney warned in early 2005 that Israel might act pre-
emptively against Iran, Israel’s then Defense Minister Shaul Mofaz countered, urging a U.S.
pre-emptive strike. Israel has nuclear weapons, and the prospect of a counterattack is seen
by many as a deterrent against an Iranian attack. On January 17, 2006, then Acting Prime
Minister Olmert said, “Under no circumstances ... will Israel permit anyone who harbors evil
intentions against us to possess destructive weapons that can threaten our existence.” He
added, “Israel acted, and will continue to act, in cooperation and consultation with ...
international elements.” On April 23, he told the cabinet, “our position has always been that
it would not be correct to focus on us as the spearhead of the global struggle as if it were our
local, individual problem and not a problem for the entire international community. The
international struggle must be led and managed by — first and foremost — the US, Europe,
and the UN institutions. We are not ignoring our need to take ... steps in order to be prepared
for any eventuality.”
On April 12, the head of Israeli Military Intelligence, Maj. Gen. Amos Yadlin, stated
that Iran could develop a nuclear bomb “within three years, by the end of the decade.” Meir
Dagan, head of Mossad (the Institute for Intelligence and Special Operations) had previously
offered a two-year estimate. Olmert reportedly has given Mossad responsibility for the Iran
nuclear issue.
Iran also provides financial, political, and/or military support to Hizballah, Hamas,
Palestinian Islamic Jihad (PIJ), the Al Aqsa Martyrs’ Brigades, and the Popular Front for the
Liberation of Palestine-General Command — Palestinian terrorist groups seeking to obstruct
CRS-6
IB82008
05-18-06
the peace process and destroy Israel. It has compensated families of suicide bombers. In
January 2006, Mofaz charged that Iran had financed a PIJ suicide bombing in Tel Aviv.
Palestinian Authority. During the Oslo peace process of the 1990’s, Israelis and
Palestinians negotiated a series of agreements that resulted in the creation of a Palestinian
administration with territorial control over parts of the West Bank and Gaza Strip. After
Sharon came to power and during the intifadah, Israel refused to deal with the late
Palestinian leader Yasir Arafat. After Arafat’s death in November 2004 and the election of
Mahmud Abbas as President of the Palestinian Authority (PA) in January 2005, Israel’s
relations with the PA and its leaders improved somewhat. Sharon and Abbas met at a summit
in Sharm al-Shaykh, Egypt, in February, and promised to end violence and to take other
measures. Israel made some goodwill gestures toward the PA, and President Abbas and 13
Palestinian factions agreed to an informal truce. After June 2005, however, Sharon and
Abbas did not meet. Although Israeli officials described the disengagement from the Gaza
Strip as unilateral, they met with Palestinian counterparts to coordinate aspects of
implementation of the disengagement plan, notably security and disposition of assets.
Israel still has 242 settlements, other civilian land use sites, and 124 unauthorized
settlement outposts in the West Bank and 29 settlements in East Jerusalem — all areas that
the Palestinians view as part of their future state. Israel retains military control over the West
Bank and is building a security barrier on West Bank territory to separate Israelis and
Palestinians and prevent terrorists from entering Israel. Palestinians object to the barrier
being built on their territory. The barrier is taking the form of a future border between Israel
and Palestine, and critics suggest that it will cut Palestinians off from East Jerusalem.
The Israeli government accepted the Roadmap, the framework for a peace process
leading to a two-state solution, developed by the United States, European Union, U.N., and
Russia, reluctantly and with many conditions. Sharon contended that the Roadmap requires
that the PA first fight terror, by which he meant disarm militants and dismantle their
infrastructure. Abbas preferred to include terrorist groups such as Hamas in the political
system and refused to disarm them prior to January 2006 parliamentary elections. Hamas’s
victory in those elections creates policy dilemmas for Israel and the international community.
Israel has demanded that Hamas abrogate its Covenant that calls for the destruction of Israel,
disarm and disavow terrorism, and accept all prior agreements with Israel as preconditions
for relations with a Hamas-led PA. As noted above, Prime Minister Ehud Olmert has said
that he prefers negotiations according to the Roadmap formula but also has declared that if
they do not occur, then he will proceed with a plan to unilaterally withdraw from part of the
West Bank and “converge” isolated settlements into large settlement blocs.
Egypt. After fighting four wars in as many decades, Israel and Egypt signed a peace
treaty in 1979. In 1982, Israel withdrew from the Sinai Peninsula, which it had taken in the
1967 war. Egypt and Israel established diplomatic relations, although Egypt withdrew its
ambassador during the four years of the second intifadah, 2001-2005, because it objected to
Israel’s “excessive” use of force against the Palestinians. Some Israelis refer to their ties
with Egypt as a “cold peace” because full normalization of relations, such as enhanced trade,
bilateral tourism, and educational exchanges, has not materialized. Egyptian President Hosni
Mubarak has visited Israel only once — for the funeral of former Israeli Prime Minister
Yitzhak Rabin. Outreach is often one way, from Israel to Egypt. Egyptians say that they are
reluctant to engage because of Israel’s continuing occupation of Arab lands. Israelis are
CRS-7
IB82008
05-18-06
upset by some Egyptian media and religious figures’ anti-Israeli and occasionally anti-
Semitic rhetoric. Nonetheless, the Egyptian government often plays a constructive role in
the Arab-Israeli peace process, hosting meetings and acting as a liaison. In March 2005, it
helped secure an informal Palestinian truce and later helped prevent it from breaking due to
violence between Palestinian factions and Israel and between Palestinian security forces and
factions. Since the January 2006 Hamas election victory, Egyptian officials have
unsuccessfully urged the group to accept a 2002 Arab League declaration that offers Israel
recognition within its 1967 borders.
Egypt deployed 750 border guards to secure the Gaza-Egyptian border after Israel’s
disengagement from Gaza. After one year, the two sides will jointly evaluate the mission.
Thus far, Israeli officials have expressed satisfaction with Egypt’s monitoring of the border.
Israel refused an Egyptian request to deploy military border guards, instead of police, for
greater control of smuggling along the entire border in Sinai, which some Israelis argue
would require a change in the military appendix of the 1979 peace treaty.
In December 2004, Egypt and Israel signed a Qualified Industrial Zone (QIZ)
Agreement under which jointly produced goods enter the U.S. market duty free as part of the
U.S.-Israeli Free Trade Agreement (FTA). As a result of the QIZ, Israeli exports to Egypt
grew 110% in 2005. On June 30, 2005, Israel signed a memorandum of understanding to
buy 1.7 billion cubic feet of Egyptian natural gas for an estimated U.S.$2.5 billion over 15
years, fulfilling a commitment made in an addendum to the 1979 peace treaty. The deal
includes cooperation in construction of the infrastructure and may expand to other energy
areas. Gas is not expected to flow before 2007. (See also CRS Report RL33003, Egypt:
Background and U.S. Relations, by Jeremy Sharp.)
Jordan. Israel and Jordan signed a peace treaty in October 1994 and exchanged
ambassadors, although Jordan did not have an ambassador in Israel during most of the
intifadah. Relations have developed with trade, cultural exchanges, and water-sharing
agreements. Since 1997, Jordan and Israel have collaborated in creating 13 qualified
industrial zones (QIZs) to export jointly produced goods to the United States duty-free under
the U.S.-Israel Free Trade Agreement (FTA), although Jordanian companies are now said to
prefer arrangements under the U.S.-Jordan FTA over the QIZ. Normalization of ties is not
popular with the Jordanian people, over half of whom are of Palestinian origin, although
King Abdullah II has attempted to control media and organizations opposed to normalization.
The King is very supportive of the peace process, wants the Roadmap to be implemented,
and has hosted meetings between Israeli and Palestinian leaders. (See also CRS Issue Brief
IB93085, Jordan: U.S. Relations and Bilateral Issues, by Alfred Prados; and CRS Report
RS22002, Qualifying Industrial Zones in Jordan: A Model for Promoting Peace and
Development in the Middle East? by Mary Jane Bolle, et al.)
Syria. Israel and Syria have fought several wars and, except for rare breaches, have
maintained a military truce along their border for many years. Yet, they failed to reach a
peace agreement in negotiations that ended in 2000. Since 1967, Israel has occupied Syria’s
Golan Heights and, in December 1981, effectively annexed it by applying Israeli law there.
There are 42 Israeli settlements on the Golan. Syrian President Bashar al-Asad has said that
he wants to hold peace talks with Israel, but Israeli officials demand that he first cease
supporting the Lebanese Hizballah militia, which attacks Israeli forces in the disputed
Sheba’a Farms area of Lebanon and communities in northern Israel and aids Palestinian
CRS-8
IB82008
05-18-06
militant groups. They also want Asad to expel Palestinian rejectionist groups (i.e., those who
do not agree with the Israeli-Palestinian peace process). Sharon said that the Golan is
essential for Israel’s security and discussion of withdrawal would be a mistake. (See also
CRS Issue Brief IB92075, Syria: U.S. Relations and Bilateral Issues, by Alfred Prados.)
Since Syria was implicated in the February 2005 assassination of former Lebanese
Prime Minister Rafiq Hariri, international pressure on the Asad regime has mounted. Israeli
officials have said that Israel is not interested in the fall of the regime, only in changing its
policies. Some reportedly fear that anarchy or extreme Islamist elements might follow Asad
and prefer him to stay in power in a weakened state. On December 1, Sharon said that
nothing should be done to ease U.S. and French pressure on Syria, implying that Syrian-
Israeli peace talks would do that. His successor, Olmert has indicated that talks with Syria
are not on his agenda and has blamed Damascus for Palestinian terror attacks in Israel.
Lebanon. Israeli forces invaded Lebanon in 1982 to prevent Palestinian attacks on
northern Israel. The forces were gradually withdrawn to a self-declared nine-mile “security
zone,” north of the Israeli border. Peace talks in the 1990’s failed to produce a peace treaty,
mainly because of Syria’s insistence that it first reach an accord with Israel. Israel
unilaterally withdrew from southern Lebanon on May 25, 2000. Lebanon insists that the
Israeli withdrawal is incomplete because of the continuing presence of Israeli forces in the
Sheba’a Farms area, in the region where Lebanon, Syria, and Israel meet. The United
Nations has said that Israel’s withdrawal from Lebanon was complete and treats the Sheba’a
Farms as part of Syria’s Golan Heights occupied by Israel. Lebanon claims that Syria
verbally recognized that Sheba’a is Lebanon, but will not demarcate the border as long the
Israeli occupation continues. Hizballah took control of the former “security zone” after
Israeli forces left and attacks Israeli forces in Sheba’a and northern Israeli communities. Al
Qaeda in Iraq’s claim of responsibility for firing rockets from Lebanon into northern Israel
in December 2005 was not confirmed. Israeli officials questioned whether Al Qaeda could
act without Hizballah knowledge and approval. The Lebanese government considers
Hizballah to be a legitimate resistance group and a political party represented in parliament.
Israel views it as a terrorist group and wants the Lebanese army to move into the south and
to disarm Hizballah. (See also CRS Issue Brief IB89118, Lebanon; and CRS Report
RL31078, The Shib’a Farms Dispute and Its Implications, both by Alfred Prados.)
Other. Aside from Egypt and Jordan, Israel has diplomatic relations with the majority-
Muslim governments of Mauritania and Turkey and has had interest or trade offices in
Morocco, Tunisia, Oman, and Qatar. The latter four suspended relations with Israel during
the intifadah. Former Foreign Minister Silvan Shalom had predicted that relations with Arab
and Muslim countries would improve due to Israel’s disengagement from Gaza. The first
diplomatic breakthrough was his September 1, 2005, meeting in Istanbul with the Pakistani
foreign minister, although Pakistani officials asserted that they will not recognize Israel until
an independent Palestinian state is established. On September 14, Pakistan’s President
Musharraf shook Prime Minister Sharon’s hand in a “chance” meeting at the U.N. summit
in New York. Pakistan agreed to accept Israeli humanitarian aid after a devastating
earthquake in October. Shalom met the Indonesian, Qatari, Algerian, Moroccan, and
Tunisian foreign ministers in New York. Also in September, Bahrain ended its economic
boycott of Israel, a move required by the World Trade Organization and the Bahrain-U.S.
Free Trade Agreement. Bahrain has vowed, however, not to normalize relations. In
September, Tunisian President Ben Ali sent a personal letter to Sharon, praising his
CRS-9
IB82008
05-18-06
“courageous” withdrawal from Gaza. Shalom attended the World Summit on the
Information Society in Tunisia in November.
European Union
Israel has complex relations with the European Union. Many Europeans believe that
the Israeli-Palestinian conflict is a root cause of terrorism and Islamist extremism among
their own Muslim populations and want it addressed urgently. The EU has ambitions to
exert greater influence in the Middle East peace process. The EU is a member of the
“Quartet,” with the United States, U.N., and Russia, which developed the Roadmap. EU
officials appeared to share Palestinian suspicions that Sharon’s disengagement plan meant
“Gaza first, Gaza only” and would not lead to the Roadmap process. They observed, with
concern, Israel’s ongoing settlement activity and construction of the security barrier in the
West Bank, which, according to the Europeans, contravene the Roadmap and prejudge
negotiations on borders. Israel has been cool to EU overtures because it views many
Europeans as biased in favor of the Palestinians and hears Europeans increasingly question
the legitimacy of the State of Israel. Some Israelis contend that the basis of such views is an
underlying European anti-Semitism. Nonetheless, in November 2005, Israel agreed to allow
the EU to maintain a Border Assistance Mission (EU-BAM) to monitor the reopened Rafah
crossing between the Gaza Strip and Egypt.
To Israel’s dismay, some EU representatives met local Hamas leaders elected in
December 2004 in order to oversee EU-funded local projects. The EU also authorized its
monitoring mission for the January 2006 Palestinian parliamentary elections to contact the
full range of candidates, including Hamas, in order to carry out its task. EU officials have
said, however, that Hamas will remain on the EU terror list until it commits to using
nonviolent means to solve the Israeli-Palestinian conflict. The EU agrees with the Quartet’s
preconditions for relations with the Hamas-led government: disavowal of violence,
recognition of Israel, and acceptance of prior Israeli-Palestinian accords. The EU is
developing, at the Quartet’s request, a temporary international mechanism to aid the
Palestinian people directly while bypassing the government. Israel also demands that the
EU include Hizballah on its list of terrorist organizations and has protested meetings between
European ambassadors and the Hizballah minister in the Lebanese cabinet.
Israel participates in the EU’s Euro-Mediterranean Partnership Initiative, otherwise
known as the Barcelona Process, and in the European Neighborhood Policy (ENP). And
European Union countries combined are Israel’s largest trading partner, but the EU bans
imports from Israeli settlements in the occupied territories. (See CRS Report RL31956,
European Views and Policies Toward the Middle East, by Kristin Archick.)
Relations with the United States
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, the United States and Israel have developed
a close friendship based on common democratic values, religious affinities, and security
CRS-10
IB82008
05-18-06
interests. Relations have been evolved through legislation, memorandums of understanding,
economic, scientific, military agreements, and trade.
Issues
Peace Process. The United States has been the principal international proponent of
the Arab-Israeli peace process. President Jimmy Carter mediated the Israeli-Egyptian talks
at Camp David which resulted in the 1979 peace treaty. President George H.W. Bush
convened the peace conference in Madrid in 1990 that inaugurated a decade of unprece-
dented, simultaneous negotiations between Israel, Jordan, Syria, Lebanon, and the
Palestinians. President Clinton continued U.S. activism throughout his tenure in office,
facilitated the Israeli-Jordanian peace treaty in 1994, and hosted the Israeli-Palestinian
summit at Camp David in 2000 that failed to reach a peace settlement.
Secretary of State Condoleezza Rice has not named a Special Middle East Envoy and
said that she would not get involved in direct Israeli-Palestinian negotiations of issues and
preferred to have the Israelis and Palestinians work together. However, she has traveled to
the region several times and personally mediated an accord to secure the reopening the Rafah
crossing between Gaza and Egypt in November 2005. The Administration supported Israel’s
disengagement from Gaza mainly as a way to return to the Road Map process to achieve a
solution based on two states, Israel and Palestine, living side by side in peace and security.
Some Israelis criticized U.S. insistence that the Palestinian elections proceed in January
2006, with Hamas participating, which produced a Hamas-led government. The Administra-
tion now agrees with Israel’s preconditions for dealing with that government.
Olmert has said that he would seek U.S. support for moves to determine Israel’s
permanent borders. On March 30, Secretary Rice observed, “I wouldn’t on the face of it just
say absolutely we don’t think there’s any value in what the Israelis are talking about.”
All recent U.S. Administrations have disapproved of Israel’s settlement activity as
prejudging final status and possibly preventing the emergence of a contiguous Palestinian
state. On April 14, 2004, however President Bush noted the need to take into account
changed “realities on the ground, including already existing major Israeli population center,”
(i.e., settlements), asserting “it is unrealistic to expect that the outcome of final status
negotiations will be full and complete return to the armistice lines of 1949.” He later
emphasized that it was a subject for negotiations between the parties.
At times of violence, U.S. officials have urged Israel not to retaliate with disproportion-
ate force. The current Bush Administration has insisted that U.N. Security Council
resolutions be “balanced,” by criticizing Palestinian as well as Israeli violence and has vetoed
resolutions which do not meet that standard.
Since taking East Jerusalem in the 1967 war, Israel has insisted that Jerusalem is its
indivisible, eternal capital. Few countries agree with this position. The U.N.’s 1947 partition
plan called for the internationalization of Jerusalem, while the Declaration of Principles
signed by Israel and the Palestine Liberation Organization in September 1993 says that it is
a subject for permanent status negotiations. U.S. Administrations have recognized that
Jerusalem’s status is unresolved by keeping the U.S. Embassy in Tel Aviv. However, in
1995, both houses of Congress mandated that the embassy be moved to Jerusalem, and only
CRS-11
IB82008
05-18-06
a series of presidential waivers of penalties for non-compliance have delayed the move. U.S.
legislation has granted Jerusalem status as a capital in particular instances and sought to
prevent U.S. official recognition of Palestinian claims to the city. The failure of the State
Department to follow congressional guidance on Jerusalem prompted a response in H.R.
2601, the Foreign Relations Authorization bill, passed in the House on July 20, 2005. (See
also CRS Issue Brief IB91137, The Middle East Peace Talks, by Carol Migdalovitz; and
CRS Report RL33000, Foreign Relations Authorization, FY2006 and FY2007: An
Overview, by Susan Epstein, coordinator.)
The United States has never recognized Israel’s annexation of the Golan Heights which
it views as a violation of international law. The current administration has not attempted to
revive Israeli-Syrian peace talks.
Trade and Investment. Israel and the United States concluded a Free Trade
Agreement 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 200% since the FTA became effective. As
noted above, qualified industrial zones in Jordan and Egypt are considered to be part of the
U.S.-Israeli free trade area. The United States is Israel’s main trading partner, while Israel
ranks about 20th among U.S. trading partners. In 2005, the United States imported $23.8
million in goods from Israel and exported $27.1 million in goods to Israel.
Israel encourages U.S. investment. In July 2005, the U.S. microchip manufacturer Intel
announced that it would invest $4.6 billion in its Israeli branch; Israel provided a grant of
15% of an investment of up to $3.5 billion or $525 million to secure the deal. In May 2006,
U.S. investor Warren Buffet announced that he was buying 80% of Iscar, a major Israeli
metalworks, for $4 billion.
Aid. Israel has been the largest recipient of U.S. foreign aid since 1976. In 1998,
Israeli, congressional, and Administration officials agreed to reduce U.S. $1.2 billion in
Economic Support Funds (ESF) to zero over ten years, while increasing Foreign Military
Financing (FMF) from $1.8 billion to $2.4 billion. The process began in FY1999, with P.L.
105-277, October 21, 1998. Separately from the scheduled ESF cuts, Israeli has received an
extra $1.2 billion to fund implementation of the Wye agreement (part of the Israeli-
Palestinian peace process) in FY2000, $200 million in anti-terror assistance in FY2002, and
$1 billion in FMF in the supplemental appropriations bill for FY2003. P.L. 109-102,
November 14, 2005, the Foreign Operations Appropriations Act, 2006, provided $240
million in ESF, $2.28 billion in FMF, and $40 million for the settlement of migrants to
Israel. For FY2007, the Administration has requested $120 million in ESF, $2.34 billion in
FMF, and $40 million for migrants.
On July 11, 2005, Israeli press reported that Israel was requesting about $2.25 billion
in special aid in a mix of grants and loan guarantees over four years, with one-third to be
used to relocate military bases to Israel in the disengagement from Gaza and the rest to
develop the Negev and Galilee regions and for other purposes, but none to help compensate
settlers or for other civilian aspects of the disengagement. Preliminary discussions were held
but no formal request made, and in light of the costs of Hurricane Katrina, Olmert postponed
it. On November 15, an Israeli news source reported that talks had resumed on a $1.2 billion
CRS-12
IB82008
05-18-06
aid package for the Negev and Galilee; $800 million for military aspects of disengagement
had been deleted after a negative U.S. response. In January 2006, Shimon Peres reportedly
discussed it with Secretary Rice. However, neither the FY2005 supplemental nor the
FY2006 foreign operations bills appropriate aid for this purpose.
Congress has legislated other special provisions regarding aid to Israel. Since the
1980s, ESF and FMF have been provided as all grant cash transfers, not designated for
particular projects, transferred as a lump sum in the first month of the fiscal year, instead of
in periodic increments. Israel is allowed to spend about one-quarter of the military aid for
the procurement in Israel of defense articles and services, including research and develop-
ment, rather than in the United States. Finally, to help Israel out of its economic slump, P.L.
108-11, April 16, 2003, provided $9 billion in loan guarantees over three years, use of which
has since been extended to 2008. As of July 2005, Israel had not used $4.9 billion of the
guarantees. (See also CRS Report RL33222, U.S. Foreign Aid to Israel, by Jeremy Sharp.)
Security Cooperation. Although Israel is frequently referred to as an ally of the
United States, the two countries do not have a mutual defense agreement. Even thought there
is no treaty obligation, on February 1, 2006, however, President Bush stated that the United
States would defend Israel militarily. On November 30, 1981, U.S. Secretary of Defense
Caspar Weinberger and Israeli Minister of Defense Ariel Sharon signed a memorandum of
understanding (MOU), establishing a framework for continued consultation and cooperation
to enhance the national security of both countries. In November 1983, the two sides formed
a Joint Political Military Group, (JPMG) which meets twice a year, to implement most
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 2001,
an annual interagency strategic dialogue, including representatives of diplomatic, defense,
and intelligence establishments, was created to discuss long-term issues. In 2003, reportedly
at the U.S. initiative due to bilateral tensions related to Israeli arms sales to China, the talks
were suspended. (See Military Sales, below.) After the issue was resolved, they resumed at
the State Department on November 28, 2005, and reportedly focused on Syria and
democratization in the Arab world. On January 11, 2006, the JPMG convened in Tel Aviv
also for the first time since 2003.
On May 6, 1986, Israel and the United States signed an agreement (the contents of
which are secret) for Israeli participation in the Strategic Defense Initiative (SDI/”Star
Wars”). Under SDI, Israel is developing the “Arrow” anti-ballistic missile with a U.S.
financial contribution so far of more than $1 billion and increasing annually. The system
became operational in 2000 in Israel and has tested successfully, most recently on December
2, 2005, when it shot down a missile simulating an Iranian Shahab-3 that can be armed with
nuclear warheads and reach Israel. P.L. 109-148, December 30, 2005, the Defense
Appropriations Act, Section 8088, provides $132,866,000 for the Arrow program:
$60,250,000 is earmarked for missile component co-production, and $100,000,000 is
earmarked for a joint feasibility study on a Short Range Ballistic Missile Defense initiative.
In 1988, under the terms of Sec. 517 of the Foreign Assistance Act of 1961, as amended,
Israel was designated a “major non-NATO ally,” affording it preferential treatment in
bidding for U.S. defense contracts and access to expanded weapons systems at lower prices.
Israel participates in NATO’s Mediterranean Dialogue, its Istanbul Cooperative Initiative,
and in Operation Active Endeavor monitoring the Mediterranean Sea to thwart terrorism.
CRS-13
IB82008
05-18-06
Other Current Issues
Military Sales. Israel accounts for about 10% of the world’s defense exports, totaling
$3.5 billion in 2004. The United States and Israel have regularly discussed Israel’s sale of
sensitive security equipment and technology to various countries, especially China. Israel
reportedly is China’s second major arms supplier, after Russia.2 U.S. administrations believe
that such sales are potentially harmful to the security of U.S. forces in Asia. In 2000, the
United States persuaded Israel to cancel the sale of the Phalcon, an advanced, airborne early-
warning system, to China. More recently, Israel’s agreement to upgrade Harpy Killer
unmanned aerial vehicles (UAVs) that it sold to China in 1999 angered the Department of
Defense. China tested the weapon over the Taiwan Strait in 2004. The Department
suspended technological cooperation with the Israel Air Force on the future F-35 Joint Strike
Fighter (JSF) aircraft as well as several other cooperative programs, held up shipments of
some military equipment, and refused to communicate with the Israeli Defense Ministry
Director General, whom Pentagon officials believed had misled them about the Harpy deal.
On August 17, 2005, the U.S. DOD and the Israeli Ministry of Defense issued a joint
press statement reporting that they had signed an understanding “designed to remedy
problems of the past that seriously affected the technology security relationship and to restore
confidence in the technology security area. In the coming months additional steps will be
taken to restore confidence fully.” According to the Israeli newspaper Ha’aretz, Israel will
continue to voluntarily adhere to the Wassenaar Arrangement on Export Controls for
Conventional Arms and Dual-Use Goods and Technologies, without actually being a party
to it. On November 4, in Washington, Defense Minister Mofaz announced that Israel would
again participate in the F-35 JSF project and that the crisis in relations was over. In March
2006, the new Defense Ministry Director General Jacob Toren said that an interagency
process had begun approving marketing licenses for Israeli firms to sell selected dual-use
items and services to China, primarily for the 2008 Olympic Games, on a case-by-case basis.
On October 21, 2005, it was reported that Israel would freeze or cancel a deal to upgrade 22
Venezuelan Air Force F-16 fighter jets, with some U.S. parts and technology. The Israeli
government had requested U.S. permission to proceed, but it was not granted.
Espionage-Related Cases. In November 1985, Jonathan Pollard, a civilian U.S.
naval intelligence employee, and his wife were charged with selling classified documents to
Israel. Four Israeli officials also were indicted. The Israeli government claimed that it was
a rogue operation. Pollard was sentenced to life in prison and his wife to two consecutive
five-year terms. She was released in 1990, moved to Israel, and divorced Pollard. Israelis
complain that Pollard received an excessively harsh sentence. Israel granted him citizenship
in 1996, and he remains a cause celebre in Israel. Israeli officials repeatedly raise the Pollard
case with U.S. counterparts, but no formal request for clemency is pending. Pollard’s
Mossad handler Rafi Eitan, now 79 years old, is head of the new Pensioners’ Party. (See
CRS Report RS20001, Jonathan Pollard: Background and Considerations for Presidential
Clemency, by Richard Best and Clyde Mark.)
2 Ron Kampeas, “Israel-U.S. Dispute on Arms Sales to China Threatens to Snowball,” Jewish
Telegraphic Agency, June 8, 2005, citing a U.S.-China Economic and Security Review 2004 report.
CRS-14
IB82008
05-18-06
On June 13, 2005, U.S. Department of Defense analyst Lawrence Franklin was indicted
for the unauthorized disclosure of classified information (about Iran) to a foreign diplomat.
Press reports named Na’or Gil’on, a political counselor at the Israeli Embassy in Washing-
ton, as the diplomat. Gil’on has not been accused of wrongdoing and returned to Israel.
Foreign Minister Shalom strongly denied that Israel was involved in any activity that could
harm the United States, and Israel’s Ambassador to the United States Daniel Ayalon declared
that “Israel does not spy on the United States.” Franklin had been charged earlier on related
counts of conspiracy to communicate and disclose national defense information to persons
not entitled to receive it. On August 4, two former officials of the American Israel Political
Action Committee (AIPAC), Steven J. Rosen and Keith Weissman, whom AIPAC fired in
April, were identified as “persons” and indicted for their parts in the conspiracy. Both denied
wrongdoing. On October 24, their attorneys asked the court to summon Israeli diplomats to
Washington for testimony. On January 20, 2006, Franklin was sentenced to 12 years, 7
months in prison. Rosen and Weissman are the first nongovernment employees indicted
under the 1917 Espionage Act for receiving classified information orally and argue that they
were exercising protected free speech. Their trial begins on August 7.
Intellectual Property Protection. The “Special 301” provisions of the Trade Act
of 1974, as amended, require the U.S. Trade Representative (USTR) to identify countries
which deny adequate and effective protection of intellectual property rights. In April 2005,
the USTR elevated Israel from its “Watch List” to the “Priority Watch List” because it had
an “inadequate data protection regime” and intended to pass legislation to reduce patent term
extensions. The USTR singled out for concern U.S. biotechnology firms’ problems in Israel
and a persistent piracy affecting the U.S. copyright industry. In November 2005, U.S.
Ambassador to Israel Richard H. Jones urged the Knesset to put Israel in line with
Organizations for Economic Cooperation and Development (OECD) countries with
copyright law. (Joining the OECD is an important Israeli foreign policy goal.) On December
15, then-Minister of Industry Olmert and then-USTR Rob Portman agreed to negotiations
on the issue. On April 28, 2006, however, the USTR decided to keep Israel on the Priority
Watch List due to continuing concern about copyright matters and about legislation Israel
passed in December 2005 that weakened protections for U.S. pharmaceutical companies. As
they had in 2005, Israeli officials criticized the USTR decision as discriminatory.
U.S. Interest Groups
An array of interest groups has varying views regarding Israel and the peace process.
Some 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/site/c.ijITI2PHKoG/b.685761/k.CB97/Home.htm]
American Jewish Congress: [http://www.ajcongress.org/]
Americans for Peace Now: [http://www.peacenow.org/]
Anti-Defamation League: [http://www.adl.org/]
CRS-15
IB82008
05-18-06
Conference of Presidents of Major Jewish Organizations:
[http://www.conferenceofpresidents.org/]
The Israel Project:
[http://www.theisraelproject.org/site/c.hsJPK0PIJpH/b.672581/k.CB99/Home.htm]
Israel Policy Forum: [http://www.israelpolicyforum.org/]
New Israel Fund: [http://www.nif.org/]
Zionist Organization of America: [http://www.zoa.org/]
Figure 1. Map of Israel
CRS-16
CRS Issue Brief for Congress
Received through the CRS Web
Israel: Background and Relations
with the United States
Updated May 18, 2006
Carol Migdalovitz
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Historical Overview of Israel
Government and Politics
Overview
Current Political Situation
Economy
Overview
Current Issues
Foreign Policy
Middle East
Iran
Palestinian Authority
Egypt
Jordan
Syria
Lebanon
Other
European Union
Relations with the United States
Overview
Issues
Peace Process
Trade and Investment
Aid
Security Cooperation
Other Current Issues
Military Sales
Espionage-Related Cases
Intellectual Property Protection
U.S. Interest Groups
IB82008
05-18-06
Israel: Background and Relations with the United States
SUMMARY
On May 14, 1948, the State of Israel
“Roadmap,” the international framework for
declared its independence and was immedi-
achieving a two-state solution. Israel unilater-
ately engaged in a war with all of its neigh-
ally disengaged from Gaza in summer 2005
bors. Armed conflict has marked every de-
and is constructing a security barrier to sepa-
cade of Israel’s existence. Despite its unstable
rate from the Palestinians. The victory of the
regional environment, Israel has developed a
Hamas terrorist group in the January 2006
vibrant parliamentary democracy, albeit with
Palestinian parliamentary elections has com-
relatively fragile governments.
plicated Israeli-Palestinian relations and led
Israeli officials to consider unilateral steps in
Prime Minister Ariel Sharon formed a
the West Bank. Israel concluded a peace treaty
three-party coalition in January 2005 to secure
with Egypt in 1979 and with Jordan in 1994,
support for withdrawing from the Gaza Strip
but never reached accords with Syria and
and four small settlements in the West Bank.
Lebanon. It unilaterally withdrew from south-
In November, however, new Labor party
ern Lebanon in 2000. European countries
leader Amir Peretz withdrew his party from
collectively are Israel’s second largest trading
the government and called for early elections.
partner, and the EU participates in the peace
Sharon then resigned from the Likud party to
process.
form a new party, Kadima. On January 4,
2006, Sharon suffered an incapacitating
Since 1948, the United States and Israel
stroke; Deputy Prime Minister Ehud Olmert
have developed a close friendship based on
succeeded Sharon. Kadima placed first in the
common democratic values, religious affini-
March 28, 2006, Knesset (parliament) elec-
ties, and security interests. U.S.-Israeli bilat-
tion, and Olmert has formed a four-party
eral relations are multidimensional. The
coalition government.
United States is the principal proponent of the
Arab-Israeli peace process, but U.S. and
Israel has an advanced industrial, market
Israeli views differ on various peace process
economy in which the government plays a
issues, such as the fate of the Golan Heights,
substantial role. The economy is now doing
Jerusalem, and Israeli settlements. The United
very well, and increased social spending is
States and Israel concluded a free-trade agree-
expected.
ment in 1985, and the United States is Israel’s
largest trading partner. Since 1976, Israel has
Israel’s foreign policy is focused largely
been the largest recipient of U.S. foreign aid.
on its region, Europe, and the United States.
The two countries also have very close secu-
The government views Iran as an existential
rity relations.
threat due to its nuclear ambitions and support
for anti-Israel terrorists. Israel negotiated a
Current issues in U.S.-Israeli relations
series of agreements with the Palestinians in
include Israel’s military sales to China, inade-
the 1990s, but the Oslo peace process ended in
quate Israeli protection of U.S. intellectual
2000, after the beginning of the intifadah or
property, and espionage-related cases.
uprising against Israeli occupation. Israeli and
Palestinian officials resumed contacts after the
See also CRS Issue Brief IB91137, The
November 2004 death of Yasir Arafat. Both
Middle East Peace Talks and CRS Report
sides accepted but have not implemented the
RL33222, U.S. Foreign Aid to Israel.
Congressional Research Service ˜ The Library of Congress
IB82008
05-18-06
MOST RECENT DEVELOPMENTS
On May 4, 2006, the Knesset (parliament) approved a new four-party coalition
government of Prime Minister Ehud Olmert’s Kadima Party, the Labor Party, the Pensioners’
Party, and the ultra-orthodox Shas Party. It controls 67 out of 120 seats in the Knesset, has
25 cabinet ministers, and Dalia Itzik of Kadima is the first woman Speaker of the Knesset.
The government’s guidelines call for shaping permanent borders for a democratic state with
a Jewish majority. The government will strive to negotiate with the Palestinians, but it will
act in the absence of
negotiations. The guidelines
also promise to narrow the
Key New Cabinet Officers
social gap. Shas joined the
coalition without agreeing to
Ehud Olmert
Prime Minister; Minister of
Kadima
Social Welfare
evacuate West Bank settlements
as specified in the guidelines
Tzipi Livni
Vice Prime Minister;
Kadima
Minister of Foreign Affairs
and will decide on the issue
when it is on the government
Shimon Peres
Vice Premier; Negev and
Kadima
Galilee Development
agenda. Negotiations continue
with United Torah Judaism
Amir Peretz
Deputy Prime Minister;
Labor
Minister of Defense
(UTJ) and Meretz. If they
succeed, only the right-wing
Abraham Hirschson
Finance
Kadima
Likud, National Union, Yisrael
Haim Ramon
Justice
Kadima
Avi Dichter
Public Security
Kadima
Beiteinu (Israel Our Home), and
Arab parties will not be in the
Shaul Mofaz
Deputy Prime Minister;
Kadima
Minister of Transportation*
government. Israel’s 1.2 million
Russian language speakers are
Roni Bar-On
Interior
Kadima
not represented in the cabinet.
Yuli Tamir
Education
Labor
Labor wants Olmert to negotiate
Eli Yishai
Deputy Prime Minister;
Shas
with Palestinian President
Minister of Industry, Trade,
and Labor
Mahmud Abbas before deciding
on a unilateral move and may
create problems if he does not
*Also in charge of strategic dialogue with the United States.
oblige.
BACKGROUND AND ANALYSIS
Historical Overview of Israel1
The quest for a modern Jewish homeland was launched with the publication of
Theodore Herzl’s The Jewish State in 1896. The following year, Herzl described his vision
at the first Zionist Congress, which encouraged Jewish settlement in Palestine, a land that
had been the Biblical home of the Jews and was then part of the Ottoman Empire. In 1917,
the British government issued the Balfour Declaration, supporting the “establishment in
1 For more, see Howard M. Sachar, A History of Israel: From the Rise of Zionism to Our Time, New
York, Knopf, 1996.
CRS-1
IB82008
05-18-06
Palestine (which had become a British mandate after World War I) of a national home for
the Jewish people.” Britain also made conflicting promises to the Arabs concerning the fate
of Palestine, which had an overwhelmingly Arab populace. Nonetheless, Jews immigrated
to Palestine in ever greater numbers and, following World War II, the plight of Jewish
survivors of the Nazi holocaust gave the demand for a Jewish home greater poignancy and
urgency. In 1947, the U.N. developed a partition plan to divide Palestine into Jewish and
Arab states, with Jerusalem under U.N. administration. The Arab states rejected the plan.
On May 14, 1948, the State of Israel proclaimed its independence and was immediately
invaded by Arab armies. The conflict ended with armistice agreements between Israel and
its neighbors: Egypt, Jordan, Lebanon, and Syria. Israel engaged in armed conflict with
some or all of these countries in 1948, 1956, 1967, 1973, and 1982. Since the late 1960’s,
it also has dealt with the threat of Palestinian terrorism. In 1979, Israel concluded a peace
treaty with Egypt, thus making another multi-front war unlikely. Israel’s current relations
with its neighbors are discussed in “Foreign Policy” below.
Government and Politics
Overview
Israel is a parliamentary democracy in which the President is head of state and the Prime
Minister is head of government. The unicameral parliament (the Knesset) elects a president
for a seven-year term. The incumbent is Moshe Katzav. The Prime Minister is the leader of
the party with the most seats in parliament. The political spectrum is highly fragmented, with
small parties exercising disproportionate power due to the low vote threshold for entry into
parliament and the need for their numbers to form coalition governments. In the March
2006, election, the threshold to enter parliament was raised from 1% to 2%, which was
intended to bar some smaller parties from parliament but also spurred some to join together
simply to overcome the threshold. National elections must be held at least every four years,
but are often held earlier due to difficulties in holding coalitions together. The average life
span of an Israeli government is 22 months. The peace process, the role of religion in the
state, and political scandals have caused coalitions to break apart or produced early elections.
Israel does not have a constitution. Instead, 11 Basic Laws lay down the rules of
government and enumerate fundamental rights; two new Basic Laws are under consideration.
On February 2, 2006, the Knesset’s Constitution, Law, and Justice Committee approved a
draft constitution encompassing existing Basic Laws and a chapter of human rights and basic
principles. To placate the ultra-orthodox, however, the government that took power in April
agreed not to take up the issue in the new Knesset. Israel has an independent judiciary, with
a system of magistrates courts and district courts topped by a Supreme Court.
There is an active civil society. Some political pressure groups are especially concerned
with the peace process, including the Council of Judea, Samaria, and Gaza (Yesha Council),
which represents local settler councils and opposes any withdrawal from occupied Arab
territories, and Peace Now, which opposes settlements, the security barrier in the West Bank,
and seeks territorial compromise. Both groups have U.S. supporters.
CRS-2
IB82008
05-18-06
Current Political Situation
These have been tumultuous times in Israeli domestic politics. Prime Minister Ariel
Sharon’s plan to disengage from the Gaza Strip and four small West Bank settlements split
his Likud Party. In August 2005, Finance Minister Benjamin “Bibi” Netanyahu resigned
from the government to protest disengagement and became a candidate for Likud chairman,
challenging Sharon. In September, Sharon supporters narrowly defeated an effort in the
Likud Central Committee by opponents of disengagement to call an early party leadership
primary to depose Sharon. On November 7, eight Sharon opponents in Likud joined the
opposition to deny Knesset approval of three new Sharon cabinet appointees; the dissidents
considered two of the appointments compensation for supporting disengagement.
In a November Labor Party primary, Histadrut labor federation head Amir Peretz
defeated acting party leader Shimon Peres and former Infrastructure Minister Benjamin Ben
Eliezer. Peretz emphasized the party’s need to champion socioeconomic goals, which it had
subordinated for the sake of joining Sharon’s coalition. On November 20, Labor voted to
withdraw from the coalition government, depriving Sharon of his parliamentary majority.
On November 21, Sharon said that he was no longer willing to “waste time” dealing
with Likud rebels, resigned from the party, and founded a new “centrist” party, Kadima
(Forward). He asked President Katzav to dissolve parliament and schedule an early election.
Some 18 Likud Members of the Knesset (parliament), including several ministers, the
chairman of the Likud Central Committee, several Labor Members of the Knesset (MKs),
players in other political parties, and prominent personalities joined Kadima. Former Labor
leader Peres supported Sharon. Kadima’s platform maintained that to secure a Jewish
majority in a democratic Jewish State of Israel, part of the Land of Israel (the area between
the Jordan River and the Mediterranean Sea) will have to be ceded. It affirmed a
commitment to the Road Map, the international framework for achieving a two-state solution
to the Israeli-Palestinian conflict. Israel would keep settlement blocs, the security barrier,
and a united Jerusalem while demarcating permanent borders.
Netanyahu won a Likud primary to replace Sharon as party leader on December 19.
Netanyahu called for “defensible walls” against Hamas and borders that would include the
Jordan Valley, the Golan Heights, an undivided Jerusalem, settlement blocs, and hilltops, and
moving the security barrier eastward.
On January 4, 2006, Sharon suffered an incapacitating stroke. In a peaceful transition
under the terms of Basic Law Article 16 (b), Deputy Prime Minister Olmert became Acting
Prime Minister. On January 16, Olmert became acting chairman of Kadima.
The Hamas victory in the January 25 Palestinian parliamentary elections rapidly became
an election issue, even though all parties agreed that Israel should not negotiate with Hamas.
Olmert set conditions for dealing with Hamas and worked to get foreign governments to
agree with them. On March 8, he revealed plans for further unilateral withdrawals from the
West Bank and said that he would reallocate funds from settlements to the Negev, the
Galilee, and Jerusalem. Although he prefers negotiations, if they do not develop in a
“reasonable time,” then he will proceed with what he calls “convergence,” or merging of
settlements east of the security barrier with large settlement blocs that will be west of the
barrier. Netanyahu charged that the unreciprocated, unilateral withdrawal from Gaza had
CRS-3
IB82008
05-18-06
rewarded terrorists and contributed to the Hamas win. He criticized Olmert’s plan as
another unilateral concession that would endanger Israel. Peretz suggested that Israel must
continue a dialogue with moderate Palestinians, not Hamas.
The March 28, 2006, Knesset election results were surprising in many respects. The
voter turnout of 63.2% was the lowest ever.
The contest was widely viewed as a referendum
on Kadima’s plans to disengage from the West Bank, but it also proved to be a vote on
economic policies that many believed had harmed the disadvantaged. Kadima came in first,
but by a smaller margin than polls had predicted. Labor, emphasizing socioeconomic issues,
came in a respectable second. Likud lost 75% of its votes from 2003 because Kadima
drained off supporters. Its decline also was due to Netanyahu, whose policies as Finance
Minister were blamed for social distress and whose opposition to unilateral disengagement
was unpopular with an increasingly pragmatic, non-ideological electorate.
The Shas campaign specifically aimed at restoring child allowances for the large
families of its constituents. Although it opposes disengagements, the party’s spiritual leader
has made rulings that may allow Shas to accommodate Kadima’s plans for the territories.
Yisrael Beiteinu (Israel Our Home), a party appealing to Russian-speakers, wants borders
that exclude Israeli Arabs and their land and include settlements; it opposes unilateral
disengagement and the Road Map. The rightist NU/NRP drew support from settlers; it
opposes all withdrawals from the West Bank, where it believes Jews have a biblical right to
settle. The new Pensioners’ Party (GIL) drew single-issue voters harmed by Netanyahu’s
policies as well as young protest voters. Its positions on other issues are not known. The
ultra-orthodox United Torah Judaism was part of the last Sharon government; it seeks
increased child allowances and deferments for religious school students from the military.
United Arab List, Hadash, and Balad — Israeli Arab parties — are not part of a new
government but are expected to passively support any future disengagements.
Parties in the Knesset
Seats
Party
Orientation
29
Kadima
Centrist, Pro-disengagement
19
Labor
Leftist, Social-democrat
12
Likud
Rightist, Anti-disengagement
12
Shas
Sephardic Ultra-orthodox
11
Yisrael Beiteinu
Russian-speakers, Nationalist, Against unilateral
(Our Home Israel)
withdrawals, but for exchange populations and
territories to create 2 homogenous states
9
National Union (NU)/
Nationalist, Ashkenazi Orthodox, Seeks to annex
National Religious Party (NRP)
the West Bank (Land of Israel) and transfer Pales-
tinians to Jordan
7
Pensioners’ (GIL)
Single-issue: guaranteed pensions for all
6
United Torah Judaism (UTJ)
Ashkenazi Orthodox, Anti-withdrawals
5
Meretz/Yahad
Leftist, Anti-occupation, Civil libertarian
4
United Arab List/Ta’al
Israeli-Arab, Islamist
3
Hadash
Israeli-Arab, Communist
3
Balad
Israeli-Arab
CRS-4
IB82008
05-18-06
Economy
Overview
Israel has an advanced industrial,
market economy in which the govern-
Basic Facts
ment plays a substantial role. Most
people enjoy a middle class standard of
Population
6,276,883 (2005.)
living. Per capita income is on par with
Population
1.2% (2005 est.)
Growth Rate
some European Union members. De-
spite limited natural resources, the agri-
— Jewish 80.1% (1996)
Ethnic
cultural and industrial sectors are well-
Groups
— non-Jewish (mostly Arab)
19.9% (1996)*
developed. An advanced high tech
GDP Growth
sector includes aviation, communica-
5.2 (2005 est.)
Rate
tions, computer-aided design and manu-
GDP Per Capita $22,200 (2005 est.)
factures, medical electronics, and fiber
Inflation Rate
1.3% (2005 est.)
optics. Israel greatly depends on for-
Unemploy-
eign aid and loans and contributions
8.9% (2005 est.)
ment Rate
from the Jewish diaspora. After eco-
Ratio of debt to
nomic declines in 2001 and 2002 due to
101% (2005 est.)
GDP
the effects of the Palestinian intifadah
Foreign Debt
$74.46 billion (2004 est.)
(uprising) on tourism and the bursting
crude oil, grains, raw materials,
Imports
of the global high-tech bubble, Israel’s
military equipment
economy has substantially recovered
cut diamonds, high-technology
Exports
since 2003 and is growing at a pace not
equipment, fruits and vegetables
seen since the 1990s. Most economic
Main Trading
United States, Belgium, Germany,
indicators are positive: inflation is low,
Partners
United Kingdom
employment and wages are rising, and
Sources: CIA, The World Factbook, January 2006; and
the standard of living is rising. Under
the Israeli government.
Former Finance Minister Netanyahu,
*Within 1967 borders.
the government attempted to liberalize
the economy by controlling government
spending, reducing taxes, and resuming
privatization of state enterprises. The chronic budget deficit decreased, while the country’s
international credit rating was raised, enabling a drop in interest rates. Netanyahu’s critics,
however, suggested that his cuts in social spending widened the national income gap and
increased the underclass. According to Israel’s National Insurance Institute, 20% of all
Israelis and 30% of Israeli children live below the poverty line.
Israel has a budget deficit target of 3% of gross domestic product, and the government
is allowed by law to raise the annual budget by only 1%. The new government’s policies
may test these limits, although Olmert has vowed not to increase the deficit while lessening
the social gap. The coalition agreement calls for raising the minimum wage to $1,000 a
month by the end of the Knesset session, canceling a 1.5% pension cut of the Netanyahu era,
guaranteeing a pension for all workers, and increasing spending on heath care, child
allowances, daycare, and other socioeconomic programs.
CRS-5
IB82008
05-18-06
Current Issues
The 2006 budget was not approved before the dissolution of the last parliament;
therefore spending has remained at 2005 levels since January and a budget surplus has
accrued. The surplus will enable the new government to spend more on social programs. The
Knesset must approve a budget within 45 days of the formation of a new government, or by
mid-June. On May 10, 2006, the Knesset approved the first reading of the budget by a 62-47
vote, with 4 Labor Members of the Knesset abstaining to protest bread price increases.
Foreign Policy
Middle East
Iran. Israeli officials state that Iran will pose an existential threat to Israel if it achieves
nuclear capability. Ayatollah Khomeini, founder of Iran’s Islamic revolution, decreed that
the elimination of Israel is a religious duty. His disciple, President Mahmud Ahmadinejad,
quoted Khomeini when he called for Israel to be “wiped off the map,” has described the
Holocaust as a “myth” used as a pretext to create an “artificial Zionist regime,” and
suggested that Europe, the United States, or Canada donate land for a Jewish state. He
repeatedly makes virulently anti-Israel statements. Iran has a missile, the Shahab-3, capable
of delivering a warhead to Israel. Israeli officials have called on the international community
to thwart Iran’s nuclear ambitions in order to avert the need for Israel to act as it did against
Iraq’s reactor at Osirak in 1981.
When U.S. Vice President Dick Cheney warned in early 2005 that Israel might act pre-
emptively against Iran, Israel’s then Defense Minister Shaul Mofaz countered, urging a U.S.
pre-emptive strike. Israel has nuclear weapons, and the prospect of a counterattack is seen
by many as a deterrent against an Iranian attack. On January 17, 2006, then Acting Prime
Minister Olmert said, “Under no circumstances ... will Israel permit anyone who harbors evil
intentions against us to possess destructive weapons that can threaten our existence.” He
added, “Israel acted, and will continue to act, in cooperation and consultation with ...
international elements.” On April 23, he told the cabinet, “our position has always been that
it would not be correct to focus on us as the spearhead of the global struggle as if it were our
local, individual problem and not a problem for the entire international community. The
international struggle must be led and managed by — first and foremost — the US, Europe,
and the UN institutions. We are not ignoring our need to take ... steps in order to be prepared
for any eventuality.”
On April 12, the head of Israeli Military Intelligence, Maj. Gen. Amos Yadlin, stated
that Iran could develop a nuclear bomb “within three years, by the end of the decade.” Meir
Dagan, head of Mossad (the Institute for Intelligence and Special Operations) had previously
offered a two-year estimate. Olmert reportedly has given Mossad responsibility for the Iran
nuclear issue.
Iran also provides financial, political, and/or military support to Hizballah, Hamas,
Palestinian Islamic Jihad (PIJ), the Al Aqsa Martyrs’ Brigades, and the Popular Front for the
Liberation of Palestine-General Command — Palestinian terrorist groups seeking to obstruct
CRS-6
IB82008
05-18-06
the peace process and destroy Israel. It has compensated families of suicide bombers. In
January 2006, Mofaz charged that Iran had financed a PIJ suicide bombing in Tel Aviv.
Palestinian Authority. During the Oslo peace process of the 1990’s, Israelis and
Palestinians negotiated a series of agreements that resulted in the creation of a Palestinian
administration with territorial control over parts of the West Bank and Gaza Strip. After
Sharon came to power and during the intifadah, Israel refused to deal with the late
Palestinian leader Yasir Arafat. After Arafat’s death in November 2004 and the election of
Mahmud Abbas as President of the Palestinian Authority (PA) in January 2005, Israel’s
relations with the PA and its leaders improved somewhat. Sharon and Abbas met at a summit
in Sharm al-Shaykh, Egypt, in February, and promised to end violence and to take other
measures. Israel made some goodwill gestures toward the PA, and President Abbas and 13
Palestinian factions agreed to an informal truce. After June 2005, however, Sharon and
Abbas did not meet. Although Israeli officials described the disengagement from the Gaza
Strip as unilateral, they met with Palestinian counterparts to coordinate aspects of
implementation of the disengagement plan, notably security and disposition of assets.
Israel still has 242 settlements, other civilian land use sites, and 124 unauthorized
settlement outposts in the West Bank and 29 settlements in East Jerusalem — all areas that
the Palestinians view as part of their future state. Israel retains military control over the West
Bank and is building a security barrier on West Bank territory to separate Israelis and
Palestinians and prevent terrorists from entering Israel. Palestinians object to the barrier
being built on their territory. The barrier is taking the form of a future border between Israel
and Palestine, and critics suggest that it will cut Palestinians off from East Jerusalem.
The Israeli government accepted the Roadmap, the framework for a peace process
leading to a two-state solution, developed by the United States, European Union, U.N., and
Russia, reluctantly and with many conditions. Sharon contended that the Roadmap requires
that the PA first fight terror, by which he meant disarm militants and dismantle their
infrastructure. Abbas preferred to include terrorist groups such as Hamas in the political
system and refused to disarm them prior to January 2006 parliamentary elections. Hamas’s
victory in those elections creates policy dilemmas for Israel and the international community.
Israel has demanded that Hamas abrogate its Covenant that calls for the destruction of Israel,
disarm and disavow terrorism, and accept all prior agreements with Israel as preconditions
for relations with a Hamas-led PA. As noted above, Prime Minister Ehud Olmert has said
that he prefers negotiations according to the Roadmap formula but also has declared that if
they do not occur, then he will proceed with a plan to unilaterally withdraw from part of the
West Bank and “converge” isolated settlements into large settlement blocs.
Egypt. After fighting four wars in as many decades, Israel and Egypt signed a peace
treaty in 1979. In 1982, Israel withdrew from the Sinai Peninsula, which it had taken in the
1967 war. Egypt and Israel established diplomatic relations, although Egypt withdrew its
ambassador during the four years of the second intifadah, 2001-2005, because it objected to
Israel’s “excessive” use of force against the Palestinians. Some Israelis refer to their ties
with Egypt as a “cold peace” because full normalization of relations, such as enhanced trade,
bilateral tourism, and educational exchanges, has not materialized. Egyptian President Hosni
Mubarak has visited Israel only once — for the funeral of former Israeli Prime Minister
Yitzhak Rabin. Outreach is often one way, from Israel to Egypt. Egyptians say that they are
reluctant to engage because of Israel’s continuing occupation of Arab lands. Israelis are
CRS-7
IB82008
05-18-06
upset by some Egyptian media and religious figures’ anti-Israeli and occasionally anti-
Semitic rhetoric. Nonetheless, the Egyptian government often plays a constructive role in
the Arab-Israeli peace process, hosting meetings and acting as a liaison. In March 2005, it
helped secure an informal Palestinian truce and later helped prevent it from breaking due to
violence between Palestinian factions and Israel and between Palestinian security forces and
factions. Since the January 2006 Hamas election victory, Egyptian officials have
unsuccessfully urged the group to accept a 2002 Arab League declaration that offers Israel
recognition within its 1967 borders.
Egypt deployed 750 border guards to secure the Gaza-Egyptian border after Israel’s
disengagement from Gaza. After one year, the two sides will jointly evaluate the mission.
Thus far, Israeli officials have expressed satisfaction with Egypt’s monitoring of the border.
Israel refused an Egyptian request to deploy military border guards, instead of police, for
greater control of smuggling along the entire border in Sinai, which some Israelis argue
would require a change in the military appendix of the 1979 peace treaty.
In December 2004, Egypt and Israel signed a Qualified Industrial Zone (QIZ)
Agreement under which jointly produced goods enter the U.S. market duty free as part of the
U.S.-Israeli Free Trade Agreement (FTA). As a result of the QIZ, Israeli exports to Egypt
grew 110% in 2005. On June 30, 2005, Israel signed a memorandum of understanding to
buy 1.7 billion cubic feet of Egyptian natural gas for an estimated U.S.$2.5 billion over 15
years, fulfilling a commitment made in an addendum to the 1979 peace treaty. The deal
includes cooperation in construction of the infrastructure and may expand to other energy
areas. Gas is not expected to flow before 2007. (See also CRS Report RL33003, Egypt:
Background and U.S. Relations, by Jeremy Sharp.)
Jordan. Israel and Jordan signed a peace treaty in October 1994 and exchanged
ambassadors, although Jordan did not have an ambassador in Israel during most of the
intifadah. Relations have developed with trade, cultural exchanges, and water-sharing
agreements. Since 1997, Jordan and Israel have collaborated in creating 13 qualified
industrial zones (QIZs) to export jointly produced goods to the United States duty-free under
the U.S.-Israel Free Trade Agreement (FTA), although Jordanian companies are now said to
prefer arrangements under the U.S.-Jordan FTA over the QIZ. Normalization of ties is not
popular with the Jordanian people, over half of whom are of Palestinian origin, although
King Abdullah II has attempted to control media and organizations opposed to normalization.
The King is very supportive of the peace process, wants the Roadmap to be implemented,
and has hosted meetings between Israeli and Palestinian leaders. (See also CRS Issue Brief
IB93085, Jordan: U.S. Relations and Bilateral Issues, by Alfred Prados; and CRS Report
RS22002, Qualifying Industrial Zones in Jordan: A Model for Promoting Peace and
Development in the Middle East? by Mary Jane Bolle, et al.)
Syria. Israel and Syria have fought several wars and, except for rare breaches, have
maintained a military truce along their border for many years. Yet, they failed to reach a
peace agreement in negotiations that ended in 2000. Since 1967, Israel has occupied Syria’s
Golan Heights and, in December 1981, effectively annexed it by applying Israeli law there.
There are 42 Israeli settlements on the Golan. Syrian President Bashar al-Asad has said that
he wants to hold peace talks with Israel, but Israeli officials demand that he first cease
supporting the Lebanese Hizballah militia, which attacks Israeli forces in the disputed
Sheba’a Farms area of Lebanon and communities in northern Israel and aids Palestinian
CRS-8
IB82008
05-18-06
militant groups. They also want Asad to expel Palestinian rejectionist groups (i.e., those who
do not agree with the Israeli-Palestinian peace process). Sharon said that the Golan is
essential for Israel’s security and discussion of withdrawal would be a mistake. (See also
CRS Issue Brief IB92075, Syria: U.S. Relations and Bilateral Issues, by Alfred Prados.)
Since Syria was implicated in the February 2005 assassination of former Lebanese
Prime Minister Rafiq Hariri, international pressure on the Asad regime has mounted. Israeli
officials have said that Israel is not interested in the fall of the regime, only in changing its
policies. Some reportedly fear that anarchy or extreme Islamist elements might follow Asad
and prefer him to stay in power in a weakened state. On December 1, Sharon said that
nothing should be done to ease U.S. and French pressure on Syria, implying that Syrian-
Israeli peace talks would do that. His successor, Olmert has indicated that talks with Syria
are not on his agenda and has blamed Damascus for Palestinian terror attacks in Israel.
Lebanon. Israeli forces invaded Lebanon in 1982 to prevent Palestinian attacks on
northern Israel. The forces were gradually withdrawn to a self-declared nine-mile “security
zone,” north of the Israeli border. Peace talks in the 1990’s failed to produce a peace treaty,
mainly because of Syria’s insistence that it first reach an accord with Israel. Israel
unilaterally withdrew from southern Lebanon on May 25, 2000. Lebanon insists that the
Israeli withdrawal is incomplete because of the continuing presence of Israeli forces in the
Sheba’a Farms area, in the region where Lebanon, Syria, and Israel meet. The United
Nations has said that Israel’s withdrawal from Lebanon was complete and treats the Sheba’a
Farms as part of Syria’s Golan Heights occupied by Israel. Lebanon claims that Syria
verbally recognized that Sheba’a is Lebanon, but will not demarcate the border as long the
Israeli occupation continues. Hizballah took control of the former “security zone” after
Israeli forces left and attacks Israeli forces in Sheba’a and northern Israeli communities. Al
Qaeda in Iraq’s claim of responsibility for firing rockets from Lebanon into northern Israel
in December 2005 was not confirmed. Israeli officials questioned whether Al Qaeda could
act without Hizballah knowledge and approval. The Lebanese government considers
Hizballah to be a legitimate resistance group and a political party represented in parliament.
Israel views it as a terrorist group and wants the Lebanese army to move into the south and
to disarm Hizballah. (See also CRS Issue Brief IB89118, Lebanon; and CRS Report
RL31078, The Shib’a Farms Dispute and Its Implications, both by Alfred Prados.)
Other. Aside from Egypt and Jordan, Israel has diplomatic relations with the majority-
Muslim governments of Mauritania and Turkey and has had interest or trade offices in
Morocco, Tunisia, Oman, and Qatar. The latter four suspended relations with Israel during
the intifadah. Former Foreign Minister Silvan Shalom had predicted that relations with Arab
and Muslim countries would improve due to Israel’s disengagement from Gaza. The first
diplomatic breakthrough was his September 1, 2005, meeting in Istanbul with the Pakistani
foreign minister, although Pakistani officials asserted that they will not recognize Israel until
an independent Palestinian state is established. On September 14, Pakistan’s President
Musharraf shook Prime Minister Sharon’s hand in a “chance” meeting at the U.N. summit
in New York. Pakistan agreed to accept Israeli humanitarian aid after a devastating
earthquake in October. Shalom met the Indonesian, Qatari, Algerian, Moroccan, and
Tunisian foreign ministers in New York. Also in September, Bahrain ended its economic
boycott of Israel, a move required by the World Trade Organization and the Bahrain-U.S.
Free Trade Agreement. Bahrain has vowed, however, not to normalize relations. In
September, Tunisian President Ben Ali sent a personal letter to Sharon, praising his
CRS-9
IB82008
05-18-06
“courageous” withdrawal from Gaza. Shalom attended the World Summit on the
Information Society in Tunisia in November.
European Union
Israel has complex relations with the European Union. Many Europeans believe that
the Israeli-Palestinian conflict is a root cause of terrorism and Islamist extremism among
their own Muslim populations and want it addressed urgently. The EU has ambitions to
exert greater influence in the Middle East peace process. The EU is a member of the
“Quartet,” with the United States, U.N., and Russia, which developed the Roadmap. EU
officials appeared to share Palestinian suspicions that Sharon’s disengagement plan meant
“Gaza first, Gaza only” and would not lead to the Roadmap process. They observed, with
concern, Israel’s ongoing settlement activity and construction of the security barrier in the
West Bank, which, according to the Europeans, contravene the Roadmap and prejudge
negotiations on borders. Israel has been cool to EU overtures because it views many
Europeans as biased in favor of the Palestinians and hears Europeans increasingly question
the legitimacy of the State of Israel. Some Israelis contend that the basis of such views is an
underlying European anti-Semitism. Nonetheless, in November 2005, Israel agreed to allow
the EU to maintain a Border Assistance Mission (EU-BAM) to monitor the reopened Rafah
crossing between the Gaza Strip and Egypt.
To Israel’s dismay, some EU representatives met local Hamas leaders elected in
December 2004 in order to oversee EU-funded local projects. The EU also authorized its
monitoring mission for the January 2006 Palestinian parliamentary elections to contact the
full range of candidates, including Hamas, in order to carry out its task. EU officials have
said, however, that Hamas will remain on the EU terror list until it commits to using
nonviolent means to solve the Israeli-Palestinian conflict. The EU agrees with the Quartet’s
preconditions for relations with the Hamas-led government: disavowal of violence,
recognition of Israel, and acceptance of prior Israeli-Palestinian accords. The EU is
developing, at the Quartet’s request, a temporary international mechanism to aid the
Palestinian people directly while bypassing the government. Israel also demands that the
EU include Hizballah on its list of terrorist organizations and has protested meetings between
European ambassadors and the Hizballah minister in the Lebanese cabinet.
Israel participates in the EU’s Euro-Mediterranean Partnership Initiative, otherwise
known as the Barcelona Process, and in the European Neighborhood Policy (ENP). And
European Union countries combined are Israel’s largest trading partner, but the EU bans
imports from Israeli settlements in the occupied territories. (See CRS Report RL31956,
European Views and Policies Toward the Middle East, by Kristin Archick.)
Relations with the United States
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, the United States and Israel have developed
a close friendship based on common democratic values, religious affinities, and security
CRS-10
IB82008
05-18-06
interests. Relations have been evolved through legislation, memorandums of understanding,
economic, scientific, military agreements, and trade.
Issues
Peace Process. The United States has been the principal international proponent of
the Arab-Israeli peace process. President Jimmy Carter mediated the Israeli-Egyptian talks
at Camp David which resulted in the 1979 peace treaty. President George H.W. Bush
convened the peace conference in Madrid in 1990 that inaugurated a decade of unprece-
dented, simultaneous negotiations between Israel, Jordan, Syria, Lebanon, and the
Palestinians. President Clinton continued U.S. activism throughout his tenure in office,
facilitated the Israeli-Jordanian peace treaty in 1994, and hosted the Israeli-Palestinian
summit at Camp David in 2000 that failed to reach a peace settlement.
Secretary of State Condoleezza Rice has not named a Special Middle East Envoy and
said that she would not get involved in direct Israeli-Palestinian negotiations of issues and
preferred to have the Israelis and Palestinians work together. However, she has traveled to
the region several times and personally mediated an accord to secure the reopening the Rafah
crossing between Gaza and Egypt in November 2005. The Administration supported Israel’s
disengagement from Gaza mainly as a way to return to the Road Map process to achieve a
solution based on two states, Israel and Palestine, living side by side in peace and security.
Some Israelis criticized U.S. insistence that the Palestinian elections proceed in January
2006, with Hamas participating, which produced a Hamas-led government. The Administra-
tion now agrees with Israel’s preconditions for dealing with that government.
Olmert has said that he would seek U.S. support for moves to determine Israel’s
permanent borders. On March 30, Secretary Rice observed, “I wouldn’t on the face of it just
say absolutely we don’t think there’s any value in what the Israelis are talking about.”
All recent U.S. Administrations have disapproved of Israel’s settlement activity as
prejudging final status and possibly preventing the emergence of a contiguous Palestinian
state. On April 14, 2004, however President Bush noted the need to take into account
changed “realities on the ground, including already existing major Israeli population center,”
(i.e., settlements), asserting “it is unrealistic to expect that the outcome of final status
negotiations will be full and complete return to the armistice lines of 1949.” He later
emphasized that it was a subject for negotiations between the parties.
At times of violence, U.S. officials have urged Israel not to retaliate with disproportion-
ate force. The current Bush Administration has insisted that U.N. Security Council
resolutions be “balanced,” by criticizing Palestinian as well as Israeli violence and has vetoed
resolutions which do not meet that standard.
Since taking East Jerusalem in the 1967 war, Israel has insisted that Jerusalem is its
indivisible, eternal capital. Few countries agree with this position. The U.N.’s 1947 partition
plan called for the internationalization of Jerusalem, while the Declaration of Principles
signed by Israel and the Palestine Liberation Organization in September 1993 says that it is
a subject for permanent status negotiations. U.S. Administrations have recognized that
Jerusalem’s status is unresolved by keeping the U.S. Embassy in Tel Aviv. However, in
1995, both houses of Congress mandated that the embassy be moved to Jerusalem, and only
CRS-11
IB82008
05-18-06
a series of presidential waivers of penalties for non-compliance have delayed the move. U.S.
legislation has granted Jerusalem status as a capital in particular instances and sought to
prevent U.S. official recognition of Palestinian claims to the city. The failure of the State
Department to follow congressional guidance on Jerusalem prompted a response in H.R.
2601, the Foreign Relations Authorization bill, passed in the House on July 20, 2005. (See
also CRS Issue Brief IB91137, The Middle East Peace Talks, by Carol Migdalovitz; and
CRS Report RL33000, Foreign Relations Authorization, FY2006 and FY2007: An
Overview, by Susan Epstein, coordinator.)
The United States has never recognized Israel’s annexation of the Golan Heights which
it views as a violation of international law. The current administration has not attempted to
revive Israeli-Syrian peace talks.
Trade and Investment. Israel and the United States concluded a Free Trade
Agreement 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 200% since the FTA became effective. As
noted above, qualified industrial zones in Jordan and Egypt are considered to be part of the
U.S.-Israeli free trade area. The United States is Israel’s main trading partner, while Israel
ranks about 20th among U.S. trading partners. In 2005, the United States imported $23.8
million in goods from Israel and exported $27.1 million in goods to Israel.
Israel encourages U.S. investment. In July 2005, the U.S. microchip manufacturer Intel
announced that it would invest $4.6 billion in its Israeli branch; Israel provided a grant of
15% of an investment of up to $3.5 billion or $525 million to secure the deal. In May 2006,
U.S. investor Warren Buffet announced that he was buying 80% of Iscar, a major Israeli
metalworks, for $4 billion.
Aid. Israel has been the largest recipient of U.S. foreign aid since 1976. In 1998,
Israeli, congressional, and Administration officials agreed to reduce U.S. $1.2 billion in
Economic Support Funds (ESF) to zero over ten years, while increasing Foreign Military
Financing (FMF) from $1.8 billion to $2.4 billion. The process began in FY1999, with P.L.
105-277, October 21, 1998. Separately from the scheduled ESF cuts, Israeli has received an
extra $1.2 billion to fund implementation of the Wye agreement (part of the Israeli-
Palestinian peace process) in FY2000, $200 million in anti-terror assistance in FY2002, and
$1 billion in FMF in the supplemental appropriations bill for FY2003. P.L. 109-102,
November 14, 2005, the Foreign Operations Appropriations Act, 2006, provided $240
million in ESF, $2.28 billion in FMF, and $40 million for the settlement of migrants to
Israel. For FY2007, the Administration has requested $120 million in ESF, $2.34 billion in
FMF, and $40 million for migrants.
On July 11, 2005, Israeli press reported that Israel was requesting about $2.25 billion
in special aid in a mix of grants and loan guarantees over four years, with one-third to be
used to relocate military bases to Israel in the disengagement from Gaza and the rest to
develop the Negev and Galilee regions and for other purposes, but none to help compensate
settlers or for other civilian aspects of the disengagement. Preliminary discussions were held
but no formal request made, and in light of the costs of Hurricane Katrina, Olmert postponed
it. On November 15, an Israeli news source reported that talks had resumed on a $1.2 billion
CRS-12
IB82008
05-18-06
aid package for the Negev and Galilee; $800 million for military aspects of disengagement
had been deleted after a negative U.S. response. In January 2006, Shimon Peres reportedly
discussed it with Secretary Rice. However, neither the FY2005 supplemental nor the
FY2006 foreign operations bills appropriate aid for this purpose.
Congress has legislated other special provisions regarding aid to Israel. Since the
1980s, ESF and FMF have been provided as all grant cash transfers, not designated for
particular projects, transferred as a lump sum in the first month of the fiscal year, instead of
in periodic increments. Israel is allowed to spend about one-quarter of the military aid for
the procurement in Israel of defense articles and services, including research and develop-
ment, rather than in the United States. Finally, to help Israel out of its economic slump, P.L.
108-11, April 16, 2003, provided $9 billion in loan guarantees over three years, use of which
has since been extended to 2008. As of July 2005, Israel had not used $4.9 billion of the
guarantees. (See also CRS Report RL33222, U.S. Foreign Aid to Israel, by Jeremy Sharp.)
Security Cooperation. Although Israel is frequently referred to as an ally of the
United States, the two countries do not have a mutual defense agreement. Even thought there
is no treaty obligation, on February 1, 2006, however, President Bush stated that the United
States would defend Israel militarily. On November 30, 1981, U.S. Secretary of Defense
Caspar Weinberger and Israeli Minister of Defense Ariel Sharon signed a memorandum of
understanding (MOU), establishing a framework for continued consultation and cooperation
to enhance the national security of both countries. In November 1983, the two sides formed
a Joint Political Military Group, (JPMG) which meets twice a year, to implement most
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 2001,
an annual interagency strategic dialogue, including representatives of diplomatic, defense,
and intelligence establishments, was created to discuss long-term issues. In 2003, reportedly
at the U.S. initiative due to bilateral tensions related to Israeli arms sales to China, the talks
were suspended. (See Military Sales, below.) After the issue was resolved, they resumed at
the State Department on November 28, 2005, and reportedly focused on Syria and
democratization in the Arab world. On January 11, 2006, the JPMG convened in Tel Aviv
also for the first time since 2003.
On May 6, 1986, Israel and the United States signed an agreement (the contents of
which are secret) for Israeli participation in the Strategic Defense Initiative (SDI/”Star
Wars”). Under SDI, Israel is developing the “Arrow” anti-ballistic missile with a U.S.
financial contribution so far of more than $1 billion and increasing annually. The system
became operational in 2000 in Israel and has tested successfully, most recently on December
2, 2005, when it shot down a missile simulating an Iranian Shahab-3 that can be armed with
nuclear warheads and reach Israel. P.L. 109-148, December 30, 2005, the Defense
Appropriations Act, Section 8088, provides $132,866,000 for the Arrow program:
$60,250,000 is earmarked for missile component co-production, and $100,000,000 is
earmarked for a joint feasibility study on a Short Range Ballistic Missile Defense initiative.
In 1988, under the terms of Sec. 517 of the Foreign Assistance Act of 1961, as amended,
Israel was designated a “major non-NATO ally,” affording it preferential treatment in
bidding for U.S. defense contracts and access to expanded weapons systems at lower prices.
Israel participates in NATO’s Mediterranean Dialogue, its Istanbul Cooperative Initiative,
and in Operation Active Endeavor monitoring the Mediterranean Sea to thwart terrorism.
CRS-13
IB82008
05-18-06
Other Current Issues
Military Sales. Israel accounts for about 10% of the world’s defense exports, totaling
$3.5 billion in 2004. The United States and Israel have regularly discussed Israel’s sale of
sensitive security equipment and technology to various countries, especially China. Israel
reportedly is China’s second major arms supplier, after Russia.2 U.S. administrations believe
that such sales are potentially harmful to the security of U.S. forces in Asia. In 2000, the
United States persuaded Israel to cancel the sale of the Phalcon, an advanced, airborne early-
warning system, to China. More recently, Israel’s agreement to upgrade Harpy Killer
unmanned aerial vehicles (UAVs) that it sold to China in 1999 angered the Department of
Defense. China tested the weapon over the Taiwan Strait in 2004. The Department
suspended technological cooperation with the Israel Air Force on the future F-35 Joint Strike
Fighter (JSF) aircraft as well as several other cooperative programs, held up shipments of
some military equipment, and refused to communicate with the Israeli Defense Ministry
Director General, whom Pentagon officials believed had misled them about the Harpy deal.
On August 17, 2005, the U.S. DOD and the Israeli Ministry of Defense issued a joint
press statement reporting that they had signed an understanding “designed to remedy
problems of the past that seriously affected the technology security relationship and to restore
confidence in the technology security area. In the coming months additional steps will be
taken to restore confidence fully.” According to the Israeli newspaper Ha’aretz, Israel will
continue to voluntarily adhere to the Wassenaar Arrangement on Export Controls for
Conventional Arms and Dual-Use Goods and Technologies, without actually being a party
to it. On November 4, in Washington, Defense Minister Mofaz announced that Israel would
again participate in the F-35 JSF project and that the crisis in relations was over. In March
2006, the new Defense Ministry Director General Jacob Toren said that an interagency
process had begun approving marketing licenses for Israeli firms to sell selected dual-use
items and services to China, primarily for the 2008 Olympic Games, on a case-by-case basis.
On October 21, 2005, it was reported that Israel would freeze or cancel a deal to upgrade 22
Venezuelan Air Force F-16 fighter jets, with some U.S. parts and technology. The Israeli
government had requested U.S. permission to proceed, but it was not granted.
Espionage-Related Cases. In November 1985, Jonathan Pollard, a civilian U.S.
naval intelligence employee, and his wife were charged with selling classified documents to
Israel. Four Israeli officials also were indicted. The Israeli government claimed that it was
a rogue operation. Pollard was sentenced to life in prison and his wife to two consecutive
five-year terms. She was released in 1990, moved to Israel, and divorced Pollard. Israelis
complain that Pollard received an excessively harsh sentence. Israel granted him citizenship
in 1996, and he remains a cause celebre in Israel. Israeli officials repeatedly raise the Pollard
case with U.S. counterparts, but no formal request for clemency is pending. Pollard’s
Mossad handler Rafi Eitan, now 79 years old, is head of the new Pensioners’ Party. (See
CRS Report RS20001, Jonathan Pollard: Background and Considerations for Presidential
Clemency, by Richard Best and Clyde Mark.)
2 Ron Kampeas, “Israel-U.S. Dispute on Arms Sales to China Threatens to Snowball,” Jewish
Telegraphic Agency, June 8, 2005, citing a U.S.-China Economic and Security Review 2004 report.
CRS-14
IB82008
05-18-06
On June 13, 2005, U.S. Department of Defense analyst Lawrence Franklin was indicted
for the unauthorized disclosure of classified information (about Iran) to a foreign diplomat.
Press reports named Na’or Gil’on, a political counselor at the Israeli Embassy in Washing-
ton, as the diplomat. Gil’on has not been accused of wrongdoing and returned to Israel.
Foreign Minister Shalom strongly denied that Israel was involved in any activity that could
harm the United States, and Israel’s Ambassador to the United States Daniel Ayalon declared
that “Israel does not spy on the United States.” Franklin had been charged earlier on related
counts of conspiracy to communicate and disclose national defense information to persons
not entitled to receive it. On August 4, two former officials of the American Israel Political
Action Committee (AIPAC), Steven J. Rosen and Keith Weissman, whom AIPAC fired in
April, were identified as “persons” and indicted for their parts in the conspiracy. Both denied
wrongdoing. On October 24, their attorneys asked the court to summon Israeli diplomats to
Washington for testimony. On January 20, 2006, Franklin was sentenced to 12 years, 7
months in prison. Rosen and Weissman are the first nongovernment employees indicted
under the 1917 Espionage Act for receiving classified information orally and argue that they
were exercising protected free speech. Their trial begins on August 7.
Intellectual Property Protection. The “Special 301” provisions of the Trade Act
of 1974, as amended, require the U.S. Trade Representative (USTR) to identify countries
which deny adequate and effective protection of intellectual property rights. In April 2005,
the USTR elevated Israel from its “Watch List” to the “Priority Watch List” because it had
an “inadequate data protection regime” and intended to pass legislation to reduce patent term
extensions. The USTR singled out for concern U.S. biotechnology firms’ problems in Israel
and a persistent piracy affecting the U.S. copyright industry. In November 2005, U.S.
Ambassador to Israel Richard H. Jones urged the Knesset to put Israel in line with
Organizations for Economic Cooperation and Development (OECD) countries with
copyright law. (Joining the OECD is an important Israeli foreign policy goal.) On December
15, then-Minister of Industry Olmert and then-USTR Rob Portman agreed to negotiations
on the issue. On April 28, 2006, however, the USTR decided to keep Israel on the Priority
Watch List due to continuing concern about copyright matters and about legislation Israel
passed in December 2005 that weakened protections for U.S. pharmaceutical companies. As
they had in 2005, Israeli officials criticized the USTR decision as discriminatory.
U.S. Interest Groups
An array of interest groups has varying views regarding Israel and the peace process.
Some 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/site/c.ijITI2PHKoG/b.685761/k.CB97/Home.htm]
American Jewish Congress: [http://www.ajcongress.org/]
Americans for Peace Now: [http://www.peacenow.org/]
Anti-Defamation League: [http://www.adl.org/]
CRS-15
IB82008
05-18-06
Conference of Presidents of Major Jewish Organizations:
[http://www.conferenceofpresidents.org/]
The Israel Project:
[http://www.theisraelproject.org/site/c.hsJPK0PIJpH/b.672581/k.CB99/Home.htm]
Israel Policy Forum: [http://www.israelpolicyforum.org/]
New Israel Fund: [http://www.nif.org/]
Zionist Organization of America: [http://www.zoa.org/]
Figure 1. Map of Israel
CRS-16