Bibi’s $10-Billion Blunder

Prime Minister Benjamin Netanyahu has dropped his threat to wait for the next president to make a better offer on a 10-year military aid bill if the Obama administration doesn't meet his demands.

That's the word from officials at the White House, the Congress and the Israeli government. 

The most persuasive arguments apparently came from Republican leaders like Speaker Paul Ryan and Sen. Lindsey Graham, who chairs the Senate panel that writes foreign aid spending bills, and AIPAC.  They personally and privately warned the prime minister that looming budget restraints next year posed major problems and now is the time to cut a deal.

That advice was echoed by Israeli Defense Minister Avigdor Lieberman and Finance Minister Moshe Kahlon.

In response to a bipartisan letter from 83 senators urging the president to agree to a significant but unspecified aid hike, National Security Advisor Susan Rice said Israel will get the "largest pledge of military assistance to any country in U.S. history" plus "unprecedented multi-year commitment of missile defense funding."  But she warned that negotiations are taking place in "an especially challenging budgetary environment" and Netanyahu can't get everything he wants.

A dissenting voice came from Donald Trump's real estate lawyer and Israel advisor, David Friedman. He told Israel's Channel 2 News that Netanyahu should wait for his boss to become president because then aid to Israel "will go up" and "won't be small." 

It is unknown whether the PM is getting similar advice from his friend and financial backer Sheldon Adelson, who has pledged $100 million to help elect Trump.

Negotiations lagged as Netanyahu tried to hang tough, but when struck with a dose of reality from all sides, the talks began to make some progress. He started out demanding $5 billion a year for 10 years plus other benefits, but those close to the discussions say the final number will be closer to the $3.7 Obama initially offered.  The current level is $3.1 billion, all in grants, which is more than U.S. aid to all other countries combined.

Obama was never tempted to let Netanyahu wait to see if he could get a better deal next year, said a well-placed administration source. The president was anxious to extend the Memorandum of Understanding (MOU), which expires next year, before leaving office in January to keep a promise to Congress to substantially increase aid to Israel following the Iran nuclear agreement, the source explained.

Obama rejected Netanyahu's demand that missile defense funding be outside the new MOU.  The two are expected to be combined in the new MOU plus a requirement that once Israel accepts the deal it will not try to go around the administration to get Congress to add more money.

The administration also wants to phase out a 30-year-old provision unlike that given to any other country. Today nearly a quarter of the $3.1 billion  ($815.3 million) is for Israel to spend at home on defense procurement plus another $400 million primarily for jet fuel.

It no longer serves the best interest of both countries, said Rice.

Israel's defense industry no longer needs to be propped up and that money should be spent in the United States, like the rest of the aid to Israel and other countries, in the administration's view.  With Israel one of the world's largest arms exporters, this provision subsidizes Israeli firms that are in direct competition with American firms and takes away American jobs, argues the White House.

Unless Netanyahu comes up with new demands, there is a growing likelihood a new MOU can be signed as early as this summer.  It won't be everything he aimed for, having lost much of his leverage through a combination of partisan meddling in US politics and unrealistic demands, but it will still give Israel more than all other countries combined.

Netanyahu's misreading of the political landscape in Washington and his failure to take advantage of the opportunities presented early last year before the Iran battle, his meddling in American partisan politics and his threat to wait for the next president to meet his demands backfired on him.

His poor judgment may wind up costing Israel $10 billion over the next decade in lost aid increases and other benefits.

About the Author
Douglas M. Bloomfield is a syndicated columnist, Washington lobbyist and consultant. He spent nine years as the legislative director and chief lobbyist for AIPAC.