When Israeli Prime Minister Benjamin Netanyahu meets with President Trump at the White House this week, the two leaders should announce the launch of negotiations on the next U.S.-Israel military-assistance Memorandum of Understanding.
Of course, other pressing issues will also occupy their attention: cementing the ceasefires in Gaza and Lebanon, securing the release of the remaining Israeli hostages, a potential Israeli-Saudi normalization deal, and the Iranian nuclear program. But getting talks underway on the next MOU should not wait.
The current 10-year agreement, which I helped negotiate while serving as U.S. Ambassador to Israel, provides Israel with $3.3 billion in foreign military financing and $500 million for missile defense programs annually, for a grand total of $38 billion. It runs through fiscal 2028. A new 10-year MOU, starting in fiscal 2029, would govern U.S. assistance to Israel for a decade after President Trump leaves office.
That start date might seem a long way off. But it is less than four years away, and these negotiations will be time-consuming. We started negotiating the current MOU following President Obama’s visit to Israel in March 2013, and took until September 2016 to sign it. Some counseled Netanyahu to wait for Hillary Clinton or Donald Trump in hopes of a better deal, but both sides agreed it was crucial to sign two years before the previous MOU expired. That time enabled the Israel Defense Forces to make decisions on major acquisitions with realistic funding projections — including on additional F-35 aircraft even before the new agreement came into effect. To meet that timeline for the next MOU, negotiators will have less than two years, and it will be a sprint.
These negotiations will be complex. First, it will be challenging for Israel to assess its future defense needs. Israel’s longest war, which began inOctober 2023, has not fully wrapped up, but it has reshaped the Middle East. It has also forced the IDF into a much-higher-than-normal operating tempo, increasing wear and tear on its equipment and expending a huge volume of munitions. The current MOU has enabled Israel to purchase a third squadron of F-35s, 25 F-15IA fighter jets, and four KC-46A tankers. But the new MOU will likely need to fund upgrading or replacing Israel’s aging F-16s and the purchase of additional F-15IAs. The Israel Security Supplemental Appropriations Act that Congress passed and President Biden signed in 2024 provides $14.1 billion to help resupply munitions. But Israel will not want to revisit the shortages it experienced in this war.
The specific systems are only part of the assessment. Those needs must be mapped against a projection of what the Middle East will look like over the next 15 to 20 years, when the arms purchased under the new MOU will be employed. How will the threats evolve, whether from Iran, its terrorist proxies, or other actors? What new offensive technologies could proliferate, as unmanned aerial vehicles have in recent years? What capabilities will be needed to defend against them? And how should Israel apportion its defense spending across its forces? These questions require deep discussions between U.S. and Israeli teams, and they will take time.
The 2016 MOU contained an innovation: dedicated, stable funds—$500 million per year—for missile-defense programs, rather than have them be subject to the ups and downs of congressional-executive budget negotiations. That did not prevent supplemental appropriations in 2022 ($1 billion) or 2024 ($5.2 billion) to replenish Iron Dome and David Sling interceptors used in war, and to further develop the Iron Beam laser air defense system. Additional supplemental appropriations may be needed before the next MOU to replenish Arrow 2 and 3 interceptors, after their use against Iranian ballistic missile attacks in April and October 2024.
But the MOU will also have to address the proliferating UAV and ballistic missile threat, and the expansion and upgrade of defensive systems it requires. This is a worldwide problem, but as the past year has shown, no country faces it more acutely than Israel, even as the United States has helped defend Israel with a counter-UAV air defense coalition, offshore missile defense assets, and a THAAD battery on land. Israeli and U.S. planners must evaluate what this threat will look like in 2040 and beyond. What advantages and efficiencies may derive from building out a proper regional integrated air and missile defense network, once Israel and Saudi Arabia normalize relations? What new technologies, like Iron Beam, could make these air and missile defenses more cost-effective? And what other technologies and programs—including ongoing U.S.-Israel work on counter-tunneling and cyber threats—might be brought into the MOU, as missile defense was in the last negotiation?
All of this will be expensive. President Trump supports Israel, and will no doubt want to help meet its defense needs. And he may want his name on a big, beautiful deal. But as in any negotiation, there will be counterpressures and opportunities for leverage. Three issues stand out.
First, the MOU could be negotiated against the backdrop of dramatic regional developments. A possible Israeli-Saudi normalization deal, which the Saudis say requires a pathway to some form of Palestinian statehood. Could Trump use the MOU as a sweetener to get Netanyahu to swallow that bitter pill? Would it be paired with a U.S.-Israel defense treaty? With Iran’s proxies weakened, how will the next turn on Iran’s nuclear program — tougher sanctions, a Trump-negotiated deal, or a military strike — affect Israel’s perception of the Iranian threat?
Second, Israel has huge defense needs, and its initial asks will be high. But the United States has other FMF recipients it provides for, including Egypt and Jordan, two important partners of Israel. Trump seems determined to shrink nearly all federal spending. If global FMF takes a cut while Israeli FMF increases, Israel could end up receiving an outsized percentage of the total. Already, Israel’s $3.3 billion annual FMF (not counting the large 2024 supplemental) is a bit more than half of the global total. Israel and its supporters have generally favored larger global foreign aid budgets, so Israel is not so exposed by receiving the vast majority of these dollars, a concern that might be heightened after Gaza.
Third, the current MOU phases out a longstanding program called Off-Shore Procurement (OSP), unique to Israel, that allowed Israel to use up to 26.3 percent of its FMF funds to purchase from Israeli defense contractors. Israel resisted this phase-out in the negotiations, arguing its defense industrial base would suffer. Obama saw Israel’s defense industry as mature enough to stand on its own, and wanted the FMF dollars spent in the United States, where they create American jobs. Israel could seek to revive that provision, especially with its need to ramp up domestic defense production after the war. But they might encounter Trump supporting Obama’s logic that the money should be spent at home.
So there is much to do, and little time to waste. Appoint the teams, and start the talks.
Daniel B. Shapiro served as U.S. Ambassador to Israel from 2011 to 2017, and most recently, as Deputy Assistant Secretary of Defense for Middle East Policy.
