Benjamin Netanyahu told an audience of American Jewish leaders on February 15 that Israel intends to phase U.S. military funding down to zero over the next ten years, recasting the bilateral relationship from one of donor and recipient to a partnership of equals. He framed the plan as part of a broader ambition to build a fully autonomous Israeli defence industrial base capable of meeting the country’s security needs without annual American grants.
The United States currently provides Israel with several billion dollars of military assistance each year; a 2016 memorandum of understanding committed roughly $38 billion over a decade. Those funds have underpinned Israel’s ability to procure advanced American platforms, sustain missile-defence collaboration and subsidise a domestic defence sector that has grown into a major exporter of sensors, drones and missile systems.
Netanyahu’s announcement is both symbolic and practical. Symbolically, it signals an assertion of sovereignty and technological maturity: Israel’s defence firms — from Rafael to Elbit and Israel Aerospace Industries — now produce systems that are competitive on global markets. Practically, reducing dependence on grant aid would force a reallocation of national resources and reshape how Israel acquires and fields capabilities that today rely on U.S. finance and supply chains.
Achieving full financial independence will not be straightforward. Many of Israel’s most advanced systems are either American-made or incorporate U.S. components and classified technologies whose transfer is tightly controlled. Sustaining aircraft fleets such as the F-35, continuing cooperative missile-defence programmes, and maintaining interoperability with American forces all carry recurring costs that the Israeli state would have to absorb or renegotiate on different commercial terms.
There are also political and economic trade-offs. Ending cash transfers would reduce Washington’s leverage over Jerusalem, with implications for policy coordination and congressional support. Conversely, Israel’s defence companies stand to gain: greater self-funding could accelerate exports and deepen industrial partnerships abroad, but it could also pit Israeli firms more directly against U.S. contractors and complicate technology-sharing arrangements that have underpinned bilateral collaboration for decades.
Domestically, a transition away from U.S. grants would require hard choices. Defence spending would likely rise as a share of Israel’s budget unless new efficiencies are found or procurement is adjusted. The government would need to balance investment in indigenous R&D, sustainment of legacy platforms, and the commercial drive to expand arms exports — all amid persistent regional threats from Iran, Hezbollah and other actors.
For Washington, the announcement presents a dilemma. Policymakers who view aid as a means of ensuring regional stability and preserving influence will be wary of losing a lever that has bipartisan backing. Yet a shift to a partnership model — where Israel purchases systems as a customer rather than receiving grants as a beneficiary — could be acceptable if accompanied by continued cooperation on intelligence, joint development and combined operations.
Netanyahu’s decade-long timetable is ambitious and deliberate: it markets Israeli capability to diaspora leaders and signals to U.S. audiences that Jerusalem intends to shoulder more of its defence burden. Whether the plan results in a clean break from U.S. cash transfers, a renegotiated financial architecture, or mainly rhetorical posturing will depend on complex negotiations over procurement, technology transfer and the politics of both countries.