The U.S.-Israel alliance remains more critical than ever as the two countries face an unprecedented array of shared threats. From a potential nuclear-armed Iran to the expanding military capabilities of the terrorist groups Hamas and Hizballah, Israel is finding it increasingly difficult—and expensive—to meet these challenges. Implementation of a 2007 U.S.-Israeli security agreement, which pledges to provide Israel with $30 billion in military assistance during the next decade, is vital to ensuring that Israel maintains its qualitative military edge over those adversaries that threaten the Jewish state and actively work to undermine U.S. interests in the region.

The United States and Israel are facing an unprecedented array of threats, ranging from the build-up of terrorist armies to a potential nuclear-armed Iran.

• Iran—whose leadership calls for Israel’s destruction and for a world without the United States—continues to advance its uranium enrichment efforts and could have a nuclear weapons capability as early as next year.
  
  
• Iran has an arsenal of sophisticated Shihab missiles that can hit Israel, U.S. forces in the region and parts of Europe, and could acquire intercontinental ballistic missiles that can strike the United States within the next decade.
  
  
• Tehran also plays a destabilizing role in the region through its continued support of terrorist groups that are threatening Israel and working to undermine U.S. efforts in the region, from Israeli-Palestinian talks to Lebanon to Iraq.
  
  
• Hamas—which violently took control of Gaza a year ago—is transforming itself into a terrorist army, carrying out daily rocket attacks on Israeli civilians and undermining U.S.-backed Israeli-Palestinian negotiations.
  
  
• Hizballah, backed by Iran and Syria, has restored and enhanced its arsenal, amassing 40,000 rockets and missiles, or nearly three times the amount it had prior to the war with Israel in 2006.
  
  
• The Syrian military has embarked on a modernization effort and arms-buying spree not seen since the 1980s, purchasing more sophisticated anti-tank and anti-aircraft missiles from Russia and amassing an alarming arsenal of long-range missiles and short-range rockets.

Spiraling defense costs require increased aid to enable Israel to maintain its qualitative military edge over Iran and hostile Arab states.

• Despite a strong economy, Israel is forced to spend proportionately greater sums of money on defense than any country in the industrialized world. Israel is spending eight percent of its gross domestic product, or nearly double what the United States spends.
  
  
• Israel has committed to a 10-year plan of sustained increases in its own defense spending to accompany the expected growth in U.S. security assistance. Israel is slated to spend $150 billion on defense during the next decade, a 50 percent increase over the previous 10-year period.
  
  
• The military hardware—including American-built ships and fighter aircraft—that the IDF must acquire over the next decade to maintain its qualitative edge are more complex, diverse and expensive than previous systems.
  
  
• The most recent U.S.-produced front-line fighter jet deployed by Israel—the F-16I— cost $45 million. By contrast, the U.S. F-35 Joint Strike Fighter, which Israel is seeking to purchase in the next decade, may cost up to $100 million each.
  
  
• Israel’s increased spending comes as overall regional military spending has accelerated throughout the Middle East, fueled by windfall oil profits. From 2002 to 2006, the growth rate of Saudi Arabia’s military budget was almost six times that of Israel’s, while Iran’s rate of military spending grew 16 times more than the Jewish state’s.

The new U.S.-Israel 10-year security agreement is aimed at helping the two allies face growing threats and improve the chances for peace.

• The administration requested $2.55 billion in security assistance for Israel as part of its fiscal year 2009 budget submission to Congress.
  
  
• This request represents the first year of a new 10-year Memorandum of Understanding (MOU) reached last year by the United States and Israel. Subject to congressional approval, the plan pledges $30 billion in security assistance to Israel over the next decade.
  
  
• Under the agreement, Israel is slated to receive gradual increases in aid over the next four years—before leveling off at $3.1 billion for the remaining six years.
  
  
• The agreement comes as the first 10-year MOU, signed by President Clinton and Israeli Prime Minister Benjamin Netanyahu in 1998, concludes at the end of the current fiscal year.
  
  
• In signing the new MOU, then-Undersecretary of State Nicholas Burns stressed that the agreement represents a vital U.S. “investment in peace” and that “a secure and strong Israel is in the interests of the United States.”
  
  
• Both countries have long recognized that their mutual interests in deterring war, promoting stability and eventually achieving peace are only possible if the United States continues to ensure Israel’s qualitative military edge over its potential adversaries.