How US Aid to Israel Works: MOU, FMF, and Oversight

U.S. aid to Israel works primarily as military assistance, delivered under a ten-year bilateral Memorandum of Understanding that commits $38 billion in Foreign Military Financing grants and missile defense funding from fiscal year 2019 through 2028, paid out annually by Congress and topped up during the Gaza conflict by tens of billions in emergency supplementals. Cumulatively, the United States has provided Israel roughly $174 billion in bilateral assistance and missile defense funding since the late 1940s, making Israel the largest cumulative recipient of U.S. foreign aid since World War II.¹ Adjusted for inflation, that reaches roughly $298 billion in 2024 dollars. Today, virtually all bilateral aid is military; economic grants were phased out in 2008.

The Ten-Year Memorandum of Understanding

Long-term planning is governed by a bilateral Memorandum of Understanding, currently the one signed in September 2016 covering FY2019 through FY2028. It commits $38 billion total: $33 billion in Foreign Military Financing grants and $5 billion in missile defense cooperation.² That works out to $3.3 billion in FMF and $500 million for missile defense per year, both increases over the prior MOU’s $3.1 billion and roughly $425 million.³

The MOU is a political commitment, not a binding contract. Congress must still appropriate the money each year, and the executive branch must include it in its budget requests. Setting predictable targets a decade out lets both governments plan large procurement programs that take years to execute, and Congress has consistently funded at or above the MOU baseline.

How Foreign Military Financing Works

The primary channel is Foreign Military Financing, a grant program that funds the purchase of American-made defense equipment and services. Israel uses these grants to buy fighter aircraft, precision munitions, electronic warfare systems, and other advanced hardware from U.S. manufacturers. The money flows back to American defense contractors.⁴

Two features of Israel’s FMF arrangement are distinctive. First, since FY1991 Congress has required that Israel receive its full annual FMF allocation in a lump sum within 30 days of the appropriations act being signed. The funds are deposited into an interest-bearing account at the Federal Reserve Bank, where they earn interest until Israel draws them down for specific contracts. No other FMF recipient gets this accelerated disbursement or the ability to earn interest on the funds.

Second, Israel has historically been allowed to spend a portion of its FMF grant on Israeli-manufactured defense products through an Off-Shore Procurement exception. When the current MOU began in FY2019, the allowance was 26.3 percent of the annual grant. Under the MOU it phases down to zero by FY2028.⁵ No other FMF recipient has ever had an off-shore procurement exception.

Missile Defense Co-Funding

Beyond FMF, the United States co-funds a set of layered missile defense systems, generally through the Department of Defense budget rather than the State Department, which allows direct technical collaboration between the two militaries.

Iron Dome intercepts short-range rockets and artillery. U.S. contributions exceed $6 billion for batteries, interceptors, co-production, and maintenance since inception.⁶
David’s Sling covers medium-range threats including cruise missiles and larger rockets.
Arrow 2 and Arrow 3 handle long-range ballistic missile defense; Arrow 3 intercepts exo-atmospherically.
Iron Beam is a laser system under development for short-range rockets and drones at lower per-intercept cost. The 2024 supplemental allocated $1.2 billion for Iron Beam procurement through September 2026.⁷

The MOU sets $500 million a year as the missile defense baseline, but actual funding has frequently exceeded that through supplemental appropriations during periods of heightened conflict.²

War Reserve Stockpile in Israel

The United States maintains a stockpile of military equipment on Israeli soil, the War Reserve Stockpile for Allies–Israel (WRSA-I), authorized under the Foreign Assistance Act. The Department of Defense pre-positions weapons, ammunition, and other defense articles for potential emergency use. The equipment remains U.S. property until formally transferred, and Israel covers the storage costs.

Congress has authorized additions of up to $500 million a year through FY2027.¹ Because transfers from the stockpile to Israel can happen quickly, WRSA-I effectively functions as a pre-staged emergency pipeline. During the Gaza conflict, the 2024 supplemental included $4.4 billion to replenish Defense Department stocks drawn down for transfers to Israel.⁷

Emergency Supplementals During the Gaza Conflict

The October 2023 Hamas attack and the operations that followed triggered the largest surge in aid since the annual baseline was established. In April 2024, Congress passed the Israel Security Supplemental Appropriations Act as part of a broader national security package. The Israel-specific funding included:

$4 billion for Iron Dome and David’s Sling procurement
$3.5 billion in additional Foreign Military Financing
$1.2 billion for Iron Beam procurement
$4.4 billion in operations and maintenance funding, primarily to replenish DoD stocks transferred to Israel
$801.4 million for Army ammunition procurement

These allocations came on top of the regular FY2024 appropriation of $3.3 billion in FMF and $500 million for missile defense.¹ For FY2025, a continuing resolution held FMF and missile defense cooperation at FY2024 levels.

Legal Conditions on the Aid

Two statutes set the framework. The Foreign Assistance Act of 1961 governs U.S. foreign aid programs generally. The Arms Export Control Act governs the sale and transfer of defense articles to foreign governments. Together they establish that U.S.-provided equipment may be used for legitimate self-defense and internal security, not offensive aggression.

Qualitative Military Edge

Under the Arms Export Control Act, any proposed arms sale to another Middle Eastern country must include a certification that the sale will not undermine Israel’s qualitative military edge, defined as the ability to counter and defeat any credible conventional military threat from any individual state, coalition of states, or non-state actors while sustaining minimal damages and casualties.⁸ For sales involving major defense equipment, the executive branch must also explain how Israel could address the new capabilities, evaluate the effect on regional balance, identify any additional capabilities Israel might need in response, and describe any related security assurances offered to Israel.

Leahy Laws

The Leahy Laws bar the United States from furnishing assistance to any unit of a foreign security force when the Secretary of State has credible information that the unit committed a gross violation of human rights.⁹ The prohibition is unit-specific, not country-wide, and lifts only if the recipient government takes effective steps to bring those responsible to justice. Two parallel Leahy provisions exist, one administered by the State Department and one by the Department of Defense.

Humanitarian Access

Section 620I of the Foreign Assistance Act prohibits all security assistance under both the Foreign Assistance Act and the Arms Export Control Act to any government that restricts the transport or delivery of U.S. humanitarian assistance.¹⁰ The President can waive the restriction on national security grounds after notifying the relevant congressional committees. The provision has drawn attention during the Gaza conflict.

Human Rights Reporting

The State Department must submit an annual report to Congress on the human rights practices of every country proposed to receive security assistance. If the Senate Foreign Relations Committee or the House Foreign Affairs Committee requests a formal statement on a specific country, the Secretary of State has 30 days to respond. Failure to provide it triggers an automatic suspension of security assistance deliveries until the statement is transmitted.

End-Use Monitoring

The Arms Export Control Act requires the U.S. government to verify that defense articles are used consistent with the terms of their transfer. Two programs handle this. Golden Sentry, run by the Defense Security Cooperation Agency, monitors items sold through Foreign Military Sales; it involves scheduled inspections, physical inventories, and reviews of accountability records by Security Cooperation Organizations at U.S. embassies.¹¹ Blue Lantern, run by the State Department’s Directorate of Defense Trade Controls, covers commercially licensed defense exports through interviews with foreign parties, inspections, and confirmation from foreign governments that entities involved are in good standing.¹²

Recipients must agree not to retransfer equipment to third parties without U.S. authorization, not to use articles for unauthorized purposes, and to protect them with the same degree of security the U.S. government would provide. A Government Accountability Office investigation found cases in which a defense contractor and Israeli officials diverted $12.5 million in FMF through an overpricing scheme and circumvented restrictions on using U.S. funds for work performed in Israel.¹³

How Congress Moves the Money

Turning the MOU into dollars requires annual action. The executive branch submits a budget request that includes desired funding levels for Israel. The House and Senate Appropriations Committees draft the spending legislation. Once signed, the funds become available. The State Department oversees FMF administration; Treasury executes the electronic transfer. Israel’s FMF allocation moves in a lump sum within 30 days, then sits in an interest-bearing Federal Reserve account until drawn down.

Congress can also block individual arms sales. Under the Arms Export Control Act, the executive branch must notify Congress before finalizing major defense sales. For sales to Israel and other close allies, Congress has a 15-day review window to pass a joint resolution of disapproval; for most other countries, 30 days.¹⁴ The President can bypass the waiting period by declaring a national security emergency, a mechanism the Trump Administration invoked in February 2025 for roughly $4 billion in arms sales to Israel.⁶

Canceling already-appropriated aid is harder. Under the Impoundment Control Act, a president can propose a rescission, but Congress must approve it within 45 days of continuous session; otherwise the funds must be released for their intended purpose.¹⁵ In August 2025, the executive branch used what it described as a “pocket rescission” to cancel $5 billion in previously appropriated foreign aid, though Israel was exempted.

2025 Policy Shifts

In January 2025, the State Department issued guidance exempting U.S. aid to Israel and Egypt from a broader executive order freezing foreign assistance. The freeze affected most other recipients but left the two largest military aid programs untouched.⁶

In February 2025, the administration rescinded National Security Memorandum 20, a Biden-era directive that had required the State and Defense Departments to obtain assurances from recipients that U.S.-provided weapons were being used consistent with international humanitarian law. NSM-20 had become a point of political contention during the Gaza conflict, with lawmakers and humanitarian organizations arguing that Israel’s initial assurances were not credible given conditions on the ground.

That same month, the administration notified Congress of four Foreign Military Sales cases to Israel totaling approximately $8.4 billion, including a single $6.75 billion munitions package described as the largest such sale to Israel since 2015. The administration invoked the emergency provisions of the Arms Export Control Act for roughly $4 billion of these sales, bypassing the standard congressional review period. Several senators introduced resolutions of disapproval; none advanced to a vote.

1
Congress.gov. U.S. Foreign Aid to Israel
2
The White House. Fact Sheet – Memorandum of Understanding Reached with Israel
3
U.S. Department of State. Ten-Year Memorandum of Understanding Between the United States and Israel
4
United States Department of State. Foreign Military Sales – Process and Policy
5
International Trade Administration. Israel Defense Industry Intro to Foreign Military Financing
6
Congress.gov. U.S. Foreign Aid to Israel – Overview and Developments
7
Congress.gov. HR 8034 – Israel Security Supplemental Appropriations Act, 2024
8
Office of the Law Revision Counsel. 22 USC 2776 – Reports and Certifications to Congress on Military Exports
9
Office of the Law Revision Counsel. 22 US Code 2378d – Limitation on Assistance to Security Forces
10
Office of the Law Revision Counsel. 22 USC 2378-1 – Prohibition on Assistance to Countries That Restrict United States Humanitarian Assistance
11
Defense Security Cooperation Agency. Golden Sentry End-Use Monitoring Program
12
U.S. Department of State. End-Use Monitoring of U.S.-Origin Defense Articles
13
U.S. Government Accountability Office. Foreign Military Aid to Israel – Diversion of US Funds and Circumvention of US Program Restrictions
14
Office of the Law Revision Counsel. 22 USC 2776 – Reports and Certifications to Congress on Military Exports
15
U.S. Government Accountability Office. Impoundment Control Act