Ending American military aid to Israel would not simply remove money from a defence budget.
It could weaken the industrial machinery that turns shared security interests into weapons, research and operational advantage.
That is the warning from the Chief Executive Officer (CEO) of Rafael Advanced Defense Systems, Yoav Tourgeman, who told Aviation Week on October 14, 2026, that phasing out assistance after 2028 could reduce the daily exchange of ideas and projects between American and Israeli companies.
His concern deserves attention: alliances are built not only in summit meetings, but also in laboratories, production lines and procurement offices.
The current arrangement is substantial. Under a 2016 memorandum of understanding (MoU), covering fiscal years 2019 through 2028, Washington pledged, subject to congressional appropriation, $38 billion: $33 billion in Foreign Military Financing grants and $5 billion for cooperative missile-defence programmes.
That equates to an average of $3.8 billion annually, including $500 million for missile defence.
The agreement expires on September 30, 2028, and negotiations over a successor framework are underway.
The Israeli Prime Minister, Benjamin Netanyahu, has said he wants to taper aid, potentially to zero over the following decade.
Aid buys access, not just equipment
Foreign Military Financing (FMF) is not an unrestricted cash transfer. It helps Israel purchase American defence equipment and services, linking Israeli forces and industry to US suppliers, standards and technology.
The Congressional Research Service reported that, as of April 2025, Israel had 751 active US Foreign Military Sales cases valued at $39.2 billion.
From 2018 through 2022, Washington also authorised more than $12.2 billion in permanent defence exports to Israel through Direct Commercial Sales.
The implications extend far beyond immediate procurement: funding decisions made today can determine the research pipeline, technological innovation and production capacity available years down the line.
The relationship also runs through co-development and co-production.
Iron Dome, David’s Sling and Arrow missile-defence programmes are not simply Israeli products receiving American money; they involve joint investment, technical collaboration and manufacturing links across both countries.
US legislation for fiscal 2025 authorised up to $110 million for Iron Dome components produced in America, $40 million for David’s Sling components and $50 million for Arrow 3 components. Such arrangements create skilled jobs, supplier relationships and shared engineering knowledge.
They also make each side familiar with the other’s requirements, testing processes and operational lessons.
Tourgeman’s point is that a smaller financial incentive can sustain a much larger network of cooperation.
The risk is gradual erosion
Tourgeman acknowledged that $3.8 billion had become less significant relative to Israel’s expanding defence spending.
The Israeli government approved a 2026 defence budget of 158 billion shekels, reported at roughly $51 billion.
Israel can, therefore, argue that a gradual reduction in aid would reflect its greater economic and military capacity, rather than a retreat from the alliance.
The case for reform is real: a wealthy, technologically advanced state should have room to assume more of its own costs.
But the arithmetic does not settle the industrial question.
Aid has historically represented about 14 per cent of Israel’s defence budget, according to a Congressional Research Service estimate based on published defence figures.
Its direct budget share may be smaller than in earlier decades, yet its effect can be concentrated in areas where cooperation matters most.
The current memorandum is also phasing out Israel’s ability to spend part of FMF on Israeli-origin equipment, with offshore procurement set to reach zero in fiscal 2028.
A new arrangement that simply ends grants without replacing them with joint research funds, co-production contracts or predictable procurement commitments could weaken demand signals for companies on both sides.
That would not happen overnight. Projects could continue under commercial contracts, separate appropriations and arms sales.
Yet uncertainty affects hiring, investment and long-term research decisions well before a programme formally ends.
If American and Israeli firms no longer have reliable shared funding, they may pursue separate designs, supply chains and priorities.
The danger is not an immediate collapse of cooperation; it is a slow thinning of the institutional ties that make cooperation routine.
Replace Dependence with a Durable Partnership
There are also American interests at stake. Joint missile-defence work gives US firms access to Israeli operational experience and technologies developed against rockets, drones and ballistic missiles.
Co-production distributes manufacturing capacity and can deepen supply-chain resilience. Israel, in turn, gains scale, financing and access to a vast defence market.
The relationship is therefore not charity in one direction. It is a strategic exchange, even if the benefits and political costs are not identical for each partner.
Still, the existing model has vulnerabilities.
Aid requires congressional appropriations and is exposed to domestic political disputes.
Critics question whether unconditional support is appropriate amid Israel’s conduct of war, while some lawmakers argue that funds should be redirected to American priorities.
These pressures make a continuation of the old arrangement uncertain.
Washington and Jerusalem should negotiate a transition that distinguishes direct grants from shared strategic investment.
A successor framework could gradually reduce FMF while protecting multi-year funding for joint missile defence, research, testing and co-production.
It should publish clear milestones, cost-sharing rules and independent reviews of outcomes.
Such a model would make Israel more responsible for its own procurement while preserving projects that deliver measurable value to both countries.
It would also give industry the predictability needed to invest across a decade, rather than wait for each annual budget cycle.
Tourgeman’s warning is ultimately about the connective tissue of the alliance.
Israel may be capable of paying more; America may be unwilling to keep writing the same cheque.
Neither fact makes industrial separation inevitable.
But if aid is withdrawn before a replacement architecture is built, both countries could discover that the money they saved was less money than the cooperation they lost.
The test after 2028 is not whether the alliance can survive without aid.
It is whether Washington and Jerusalem can redesign the funding before the partnership’s practical foundations begin to erode.
The writer is a journalism lecturer and the CEO of The International Lens. (theinternationallens.com)
