The Failure of Using Arms For Influence

U.S.-Israeli Defense Industrial Diplomacy

An Israeli Harop Drone at the International Paris Air Show, Pierre Verdy, AFP, June 21, 2011

Earlier this month, President Biden froze shipments of JDAMs and artillery munitions to Israel until they could provide a credible plan to protect civilians in Rafah. Not only did that show of force fail to change Prime Minister Netanyahu’s calculus about entering Rafah, but it actually provoked a rather vitriolic response from Bibi, who asserted that the IDF would fight with their “fingernails” sans U.S. assistance if needed. 

Back in the late 90s, the U.S.-Israel power balance was such that a display of defiance from America’s golden child provoked Clinton literally ask, ‘who’s the superpower here?’ This time, the response from the U.S. was first silence, then conciliation. Which begs the question – who is the superpower around here? 

Apparently, U.S. influence in Israeli decision-making is approaching bankruptcy. It used to be that the mere reminder that the U.S. had the option to pause transfers was a credible use of pressure against Israeli foreign policy objectives. 

Now, notwithstanding an immense strain on Israel’s resources by its entrenched operations in Gaza, threats from Lebanese Hezbollah in the north, and a prodding Iran, Netanyahu feels comfortable enough in Israel’s resources and power to turn his nose up at repeated attempts by the Biden administration to restrain his campaign in Gaza. Bibi has not erred from his promise to eliminate Hamas at any cost; has not agreed to halt an invasion of Rafah; nor has he released a credible post-war plan for Gaza.

It is fair to note that Biden’s short-lived pause of some precision munitions doesn’t make a dent in the massive tranches of aid the U.S. automatically passes each year, amounting to something in the $300 billion range since 1948. But historically, this aid was used as a tool itself. 

Since 1948 America has been the primary security guarantor of Israel through the expansive provision of foreign aid. The threat of short-term freezes matched with the long-term threat of a U.S. renegotiation of sunsetting aid packages meant that Israel was motivated now and forever to stick close to U.S. policy goals. In return, per Congressional promise, it would receive a “qualitative military edge” in the turbulent Middle East. 

As it turns out, this dual incentive strategy no longer has legs. Short term, Israel has enough stockpiles (not to mention the newly inked $26.38 billion security supplemental passed in Congress last month) to continue to pursue some sort of operation in Rafah. One Congressional Research Service report estimates that the U.S. stockpile opened up to Israel following October 7, WRSA-I, may have up to $4.4bn worth of munitions on the ice. 

Long-term, U.S. aid to Israel has had the effect of forcing Israel to build up its defense industry. The aid is primarily financed through the U.S. Foreign Military Financing (FMF) program, in which Israel receives grants that it must use to purchase military equipment from the U.S., save for some exceptions in which Israel has been permitted to spend a portion of its FMF on domestic Israeli defense articles. From the 1970s until 2007, much of this U.S. aid also included heavy economic assistance, but the economic injection has largely phased out as the Israeli economy has strengthened, and the U.S. has given nearly exclusively military aid since 2020. 

Now, Israeli defense companies are being weaned off of cash flows straight from the U.S., as the 2016 MoU stipulates that Israel would need to phase out its ability to use U.S. military assistance for domestic purchasing. This means that Israeli defense giants like Elbit Systems, Rafael Advanced Defense Systems, or IAI are forced to partner with the U.S. or other countries to build a sustainable defense industrial base that is not strictly reliant on U.S. cash transfers. 

And, voila, now Israel has become a global leader in niche defense and high technologies, exporting systems such as high-technology sensors, radars, lasers, and other equipment to the U.S. Furthermore, in 2022, U.S. defense giant Lockheed Martin and Israeli’s Rafael Advanced Defense Systems announced a planned collaboration on a high-energy laser system. 

This has all resulted in Israel’s defense industry becoming the ninth largest weapons exporter in the world. India is the largest purchaser of Israeli weapons and a prime candidate for Israeli investment. Israel has invested in Modi’s “Make in India” initiative, and Israel’s biggest defense contractors (IAI, Elbit Systems, Rafael Advanced Defense Systems) have partnered with Indian tech and defense companies to produce high-tech systems and new defense technologies. Others are looking to Israeli technology too, like Morocco, which has announced a cooperation with Israeli drone company BlueBird Aero Systems.

It is worth noting that some of these Israeli defense sales have themselves gone strictly against U.S. interests. For example, Azerbaijan has been a massive beneficiary of Israeli arms exports. During Azerbaijan’s offensive on Armenia, Israel supplied the Azerbaijani army with nearly 70% of their weaponry. Concurrently, U.S. Secretary of State Antony Blinken condemned Azerbaijan’s military actions, which in the U.S.’ view, worsened an “already dire humanitarian situation in Nagorno-Karabakh and undermined prospects for peace.” 

While Israel was shipping weapons to be used in Nagorno-Karabakh, the U.S. was sounding the alarm on Ukrainian weapon stocks depleting, and the necessity of U.S. allies to generally burden-share and support Ukraine’s efforts. Beyond requisite EU assistance, a diverse cast stood up military support for Ukraine, including faraway U.S. partners like Australia and Taiwan. Israel, though, merely sent some humanitarian aid and approved some export licenses. It is not that all of our allies will care about the same geopolitical threats that we do. But wringing the EU's necks on burden-sharing practices while ignoring a prime aid beneficiary’s own monetary practice is more than concerning.

Of course, the crisis in Gaza today most clearly underscores this divergence of U.S.-Israeli policy, especially in areas where the U.S. is spending a lot of diplomatic cash. Netanyahu’s post-war planning is a mess, for starters. He consistently dismisses calls for a concrete day-after plan for Gaza, even at the threat of resignations from the likes of center-right Knesset member Benny Gantz. To boot, ceasefire negotiations between Hamas and Israel, moderated by Egypt and the U.S., went nowhere – notwithstanding Antony Blinken and then Bill Burns’ personal travel to Egypt to try to cinch the deal. 

All things considered, Israel’s current need for weapons paired with U.S. domestic appetite for punitive measures on Israel should mean that today more than ever, Biden’s ability to influence Netanyahu is boosted. But it isn’t. Traditional levers of influence are not working. What does this mean?

For one thing, Israel has been a key chip in Middle East multilateral agreements brokered by the U.S. Recall the Abraham Accords, which for all of its shortcomings was a standard and lucrative deal for the five states involved—the first such deal involving Israel since 1994 Israel-Jordan peace treaty. More recent attempts have failed, no thanks to Israeli-U.S. divergences in policy objectives. Or, take the current U.S.-Saudi defense pact, which might be completely derailed by Israeli refusal to accept Saudi conditions. 

Should we expect a permanent rupture in U.S.-Israeli relations now that we cannot influence them? Probably not—the U.S.-Israel relationship is institutionalized nearly to the point of automation, and a breakdown at the top won’t see a major congressional upheaval of aid agreements or even on our policy of support to Israel. 

But long term, the U.S. can no longer walk in path dependency, and assume that Israel is the one key to U.S. strategic goals in the Middle East. The divergences in U.S.-Israeli policy means that Washington needs to work on U.S.-Saudi and U.S.-Emirati relations, and to some extent U.S.-Jordanian relations as well. Especially because Saudi Arabia and the UAE have expressed time and again that they wish to retire the “all roads to cooperation run through Ramallah/Jerusalem” cliché. We should help them do so.

It is worth broadening the scope of Israel-U.S. alignment to see that long before October 7^th, Israel has been cementing a legacy as a high-tech defense state—one that might only rely on heavy U.S. assistance for the next decade. After that, if U.S. and Israeli leadership continue to have different outlooks on what the future of the Middle East should be, the U.S. should not be surprised to continue to be met with defiance, as the lever of aid continues to rust.