Israel is not the largest recipient of US foreign assistance

A common assertion about US-Israeli relations is that the US gives Israel more financial aid – formally referred to as “assistance” – than it does to any other country in the world, and has given more over time (e.g., here and here and here).

That assertion needs to be put to rest. It is only true with an arbitrary definition of “assistance” and selective reading of the data.

Unfortunately, those problems begin at the top. Official data on US foreign assistance are compiled by USAID and the State Department. These are the same data reported to Congress, to the OECD, and to a number of other organizations that track flows of foreign assistance by type, destination, implementing agency, and so on.

According to those official data – I call it the “USAID list” – Israel received $3,308,801,618 in assistance in 2022. $3.3 billion was designated as Foreign Military Financing (FMF). The remaining $8.8 million was non-military assistance, with roughly half of that going to “American Schools and Hospitals.”

Israel also receives $500 million from the US for missile defense costs. This is part of a special 2019-2028 MOU with the US Department of Defense (DoD) that does not appear on the USAID list since DoD programs are…well, different. We’ll revisit this shortly, but first it’s important to understand the FMF.

The FMF is a key funding mechanism for US foreign assistance. In 2022, with the Department of Defense as the “implementing partner,” the US gave a total of $9.735 billion through FMF agreements. Israel’s $3.3 billion made it the largest beneficiary, but Egypt received $1.17 billion, Jordan $425 million, and Czechia, Poland, Bulgaria, Romania, Slovakia, Iraq and Lebanon each received between $210-$310 million.

What this means in practice is that the US provided the recipient countries with “payment waived” (i.e. free) weapons and weapons systems. In Israel’s case, a small portion could be used for domestic purchases, though that special arrangement is being phased out. In either case, FMF funds are highly meaningful for recipient countries. In Israel’s case, the funds reportedly account for around 16% of Israel’s defense budget. Across all countries, FMF frees up local funds for other functions.

Yet treating the FMF as nothing more than foreign assistance tells only half of the story. Irrespective of the recipient, the FMF is an indirect subsidy from the US government to its large weapons manufacturers, helping them preserve a skilled manufacturing base and increase economies of scale. In Israel’s case, in particular, the FMF encourages the establishment of manufacturing facilities for Israeli-designed weapons in the US. For example, it is now widely known that key components of Iron Dome’s Tamir missiles are manufactured in Arizona, and that a factory manufacturing the complete missile is about to be built in Arkansas. Less widely known is the fact that all major Israeli defense companies, most of which are parastatals, have US-based subsidiaries. This means that when Israel develops these products, many of them with US financial assistance, especially in later stages of R&D, it gives the US the right to veto the sale of products to third parties. And when these Israeli companies set up manufacturing facilities in the US, it helps preserve US jobs – the sales are not only to Israel – even as Israel’s purchase of these products is offset against FMF funding. Clearly, Israel benefits more from this arrangement than the US, but to ignore the FMF’s complementary strategic advantages makes no sense.

Here’s the more important issue when talking about Israel’s ranking in terms of total foreign assistance. The centrality of FMF in debates about assistance to Israel highlights the arbitrariness of what makes it onto the USAID list of foreign assistance and what doesn’t: Why, for example, is FMF considered foreign assistance while other Department of Defense programs that also involve generous gifting of US resources – including the $500 million that Israel gets for missile defense – are not considered foreign assistance?

Foreign bases is the big example. The US maintains more than 800 foreign military bases. In 2015, these reputedly cost the US government $70-100 billion per year. More recent estimates are difficult to find, but given inflationary pressures since then, they must be in the $110-150 billion range today. Many of these bases are quite small and in out of the way places. This includes one small air defense base in Israel with a few dozen troops, opened in September 2023 (conspiracy theorists will enjoy that timing). The largest foreign bases, however, are typically hosted by the wealthiest allies of the US. As of 2021, more than 50,000 US troops were stationed in Japan, 35,000 in Germany, 28,500 in South Korea, 12,500 in Italy, almost 10,000 in the UK, and so on. Many countries have US bases.

The enormous expense of building and maintaining these bases is documented in Base Nation. Estimates presented there suggest that annual per serviceman costs are $10,000-40,000 higher for servicemen stationed abroad than their counterparts stationed in the US. While wealthy host countries often contribute to the cost of hosting American troops, those contributions do not come close to covering that cost. For example, a 2021 report by the US Government Accountability Office showed that between 2016 and 2019 the US spent $20.9 billion in Japan, and $13.4 billion in South Korea: that’s $5.2 and $3.35 billion per year, respectively, after accounting for contributions by the Japanese and South Korean governments.

In Europe, too, costs are high and have been rising. After Russia’s 2014 invasion and occupation of Crimea, the US initiated the European Deterrence Initiative (EDI), since renamed the European Reassurance Initiative, to fund the first increases in US troops in Europe since the end of the Cold War. The EDI budget increased from $0.8 billion in 2016 to $6.5 billion in 2019 and $6.0 billion in 2020. This is in addition to prior military expenditures in Europe.

In any clear-headed discussion, the substantial long-term military presence of US forces in all these countries would count as foreign assistance. Just like the FMF, that presence saves the local host government a lot of money. It is also the product of local political choices, in this case, the decision by many host governments to systematically underfund their militaries and instead rely on the protection of the US. In 2019, Japan spent 0.9% of GDP on defense, Germany 1.05%, Italy 1.25%, the UK 1.85%. South Korea, with its mandatory military service for men, reached a relatively heady 2.43%. But no OECD country came close to the US, which spent 3.22% of its enormous GDP on defense, other than Israel, where spending was 5.4% of GDP (not including the $3.3 in FMF credits and the $500 million missile grant).

This “free-rider” approach to defense practised by many US allies has been a longstanding lament among US political and military leaders in both Democratic and Republican administrations. They are not alone in claiming that European countries can afford their more generous social welfare programs in part because they rely on US protection and on American taxpayers paying for that protection.

Yet not a dollar of these enormous sums that the US spends on its European and Asian allies is reflected in the USAID data on foreign assistance. Look up the total financial assistance given to these countries on the USAID list and you’ll see that Japan received $1.45 million, Germany $7.35 million, Italy $1.59 million, the UK $25 thousand, and South Korea $145 thousand. The billions that the US actually spends every year in most of these countries – in addition to the substantial secondary economic benefits that accrue to areas around such bases, amounting to additional billions in Germany – does not count as foreign assistance because it is disguised as another line item in defense spending.

That is the administrative sleight-of-hand that allows people to claim that Israel receives more foreign assistance than any other country. It is convenient camouflage, but it shouldn’t mislead anyone. Spending billions on US overseas bases is no less meaningful foreign assistance than the FMF program through which Israel receives assistance.

An even more meaningful and emotive example of foreign assistance that the US provides and that is also not reflected in the USAID list involves body counts. The US has sent troops into combat in support of many allies over many decades. This is the burden of being the world’s only liberal superpower. In its Middle East wars alone, around 300 US servicemen were killed during the first Gulf War, around 7,000 across the various operations since 2001 (Operation Iraqi Freedom, New Dawn, Enduring Freedom, Inherent Resolve, Freedom’s Sentinel), in addition to around 53,000 who were wounded in action. Put aside the hundreds of billions spent on these operations, and the enormous amounts spent on survivors and the injured, including the many with long-term mental health issues. Put aside the disproportionate share of those veterans who take their own life, and the waves of trauma that also buffet and batter family members and friends. One would think that putting US soldiers in the line of fire is the most meaningful type of assistance that the US can provide but here, too, it is not included in official USAID accounts of foreign assistance.

What does this all mean for the assertion that in any given year the US gives Israel more financial assistance than it does to any other country in the world, and that over time it has also given more?

Israel is the star of the FMF funding mechanism, receiving much more than all other countries. On other types of foreign defense assistance, however, including those that cover the cost of maintaining large military bases, facilitate flows of funds from those bases to the local economy, and spending American lives to defend local hosts, US assistance to Israel is virtually zero.

That zero spending is largely the product of Israeli policy makers’ choices to spend, as a percentage of its GDP, four times as much on defense as most NATO countries. It is inspired by foundational Zionist ideas that posit the willingness and ability to fight as a necessary condition for meaningful independence.

That’s why Israel doesn’t need US foreign assistance in terms of military bases and Americans fighting on the ground. Rather, any assistance has to be geared toward helping us help ourselves, not taking our place on the frontlines.

The results of these ideas and policy choices need to be clear to American policymakers and citizens. American soldiers do not defend Israel’s borders and have never died defending Israel. How many close US allies can make that claim?

Here’s the bottom line for comparing foreign assistance. A fair, sober and comprehensive comparison of US assistance across countries must include all types of civilian and military assistance. If FMF counts, so too should building a base, posting soldiers and putting them into combat. Deciding to include only FMF while excluding the others is completely disingenuous. It also looks suspiciously like a double-standard, which we know are habitually employed to discriminate against Israel.

When we do actually conduct a fair, sober and comprehensive comparison of US foreign assistance, it reveals a somewhat different ranking than the one we keep hearing about. Israel still places very high. But to say that Israel is the largest recipient of US military assistance is simply wrong. That crown belongs to any number of other US allies who have long underfunded their militaries, long relied on US servicemen for their protection, and long banked on American taxpayers to fund it.