US Cuts $4 Billion Israeli Aid Package by Two Years
Trump orders an early halt to military funding, forcing Israel to cover procurement costs with domestic tax revenue ahead of the 2028 treaty expiration.
By Rafael Collins ·
The United States will stop sending money to Israel much sooner than previously scheduled.
President Donald Trump announced on Tuesday that the US will end nearly $4 billion in annual military aid to Israel by the end of 2026. This date is two years earlier than the expiration of the current ten-year agreement. The memorandum of understanding currently provides $3.8 billion per year and remains valid until September 2028. Israeli officials in the Finance and Defense ministries were surprised by the timing. The change requires the Defense Ministry to find new funding for major purchases over the next year. This shift places a financial burden on Israeli taxpayers or forces cuts to other parts of the national budget.
The aid package consists of two main parts. It includes $3.3 billion in foreign military financing, which is spent almost entirely on American-made weapons. It also includes $500 million annually for missile defense systems. If the funding stops, Israel plans to continue buying US equipment by paying with its own tax revenue. The Israeli Air Force relies heavily on American platforms, including F-15, F-16, and F-35 fighter jets and KC-46 refueling aircraft. A loss of funding could force Israel to delay deals, scrap projects, or buy cheaper local alternatives for missiles and bombs. This strategy follows earlier doubts about US reliability during the Gaza war, when the Biden administration delayed some shipments and refused to provide 2,000-pound bombs.
The loss of $500 million in air defense funds will likely impact joint research. American funding supports the development of new technology for intercepting aerial threats. This financial shift also signals a change in the relationship between the two countries. Trump stated that Israel is a good ally and that Jerusalem supported the cutoff. Prime Minister Benjamin Netanyahu has previously favored ending the aid, but he wanted the process to happen gradually over a decade. In June, Israeli and US officials began talks on a framework to move from aid to a reciprocal partnership. The timing of the announcement, just before the midterm elections, reflects the political pressure on both parties regarding arms sales. Incoming lawmakers have expressed support for halting or conditioning aid. Israeli officials must now determine which weapons the country can fund itself and which it can do without.
The Knesset approved a defense budget in March that gave the ministry a record 143 billion shekels. This amount equates to approximately $45 billion. The Finance Ministry agreed in July to transfer an additional 15 billion shekels, or $5 billion, immediately. Defense officials state that a shortfall of 40 billion shekels, or $12 billion, remains. This deficit exists even before accounting for the early end of US assistance. The cost of wars in Gaza, Lebanon, and Iran, along with operations in Yemen, has increased defense spending. Israel has also spent significant amounts to fix gaps exposed since the October 7, 2023, assault. The early end of aid changes the financial math for these ongoing and future operations.
