The MOU outlines defense aid to be provided to Israel by the Americans to the tune of $30 billion in the next decade.

 Signing of Memorandum of Understanding between Israel and the United States


Signing ceremony of the MOU at the Foreign Ministry, Jerusalem

(Communicated by the Foreign Ministry Spokesman)

A memorandum of understanding (MOU) was signed by Israel and the United States at a ceremony today (16 August) at the Ministry of Foreign Affairs. The MOU outlines defense aid to be provided to Israel by the Americans to the tune of $30 billion in the next decade.

Representing the United States at the ceremony were Undersecretary of State R. Nicholas Burns and US Ambassador to Israel Richard Jones. On the Israeli side, Bank of Israel Governor Stanley Fisher, Director General of the Foreign Ministry Aaron Abramovich, Director General of the Ministry of Defense Pinchas Buchris and Israel’s Ambassador to the United States, Salai Meridor, attended.


Transcript of ceremony and press conference afterwards

Master of Ceremonies:
On behalf of the Director General of the Foreign Ministry, Mr. Abramovich, it is my pleasure to introduce and to welcome to the Foreign Ministry the delegations, Undersecretary Burns, Ambassador Jones, the Israeli Delegation headed by the Governor of the Bank of Israel, Stanley Fisher, the Director General of the Ministry of Defense Buchris and, of course, Ambassador Meridor, our man in Washington. I did not forget anyone, I think. And so we can start.
We will start with opening statements. I would like to invite the Governor of the Bank of Israel to the podium.

The Governor of the Bank of Israel, Stanley Fisher:
Undersecretary Burns, Ambassador Jones, members of the American delegation, and Israeli colleagues, Foreign Ministry Director General Aaron Abramovich, Ambassador Meridor, Director General Bucheris, colleagues.

We are delighted to be able to welcome the US delegation to this meeting, during which the Memorandum of Understanding between the Israeli and the American Governments, on the provision of 30 billion dollars of financing for Israel’s military needs, will be signed.

This is an extraordinarily important agreement for Israel – important in the first instance for what it says about the Israeli and American relationship. The Memorandum, which will be distributed after it has been signed, includes a sentence  which starts: “Reflecting the unshakable commitment of the United States to Israel’s security, the United States supports increased level of foreign military financing grant assistance to Israel in future years, to help Israel with the needed security requirements.”

The aid itself is of critical importance; its reflection of the United State’s unswerving support is no less important. It expresses a great deal of confidence in Israel to continue its very important defense and economic policies, in a very difficult environment.
We have an exceptionally heavy defense burden, the highest in what used to be called the Free World – in total, about ten per cent of GDP (gross domestic product) – and the fact that the United States is willing to share a significant part of that burden, particularly, the part relating to purchases of American military equipment, is a critical element in the budget. This is because in this country we face a trade-off between dealing with our immediate problems and making sure that our economy grows rapidly enough for us to be able to deal with future problems. For that, we have to pursue economic policies that are supportive of economic growth, and to do that, we have to try to keep the tax burden reasonable. We nonetheless have very high government expenditures, largely because of defense, and the United States financial assistance is critical to our ability to maintain responsible economic policies that are conducive to growth and, therefore, conducive to the future strength of the Israeli economy and Israel’s capacity to have the resources to defend itself in the future.

If I may add a personal word to the American delegation – It has been a great pleasure, Undersecretary Burns, to be able to have you as our counterpart for these negotiations. It was never at any stage a question about the support of the United States for Israel, its support for the provision of financial assistance on a very significant scale, and you handled these negotiations in a way which made us appreciate even more the extraordinary relationship between our countries.
We are delighted that you personally are here to sign this agreement; we are delighted that you are here with your colleagues, and we are delighted to be signing the agreement.
We would ask you to extend thanks also to the Secretary of State, and to the President, on behalf of this delegation. I am sure the Prime Minister expressed his own thanks to you and through you, to the United States Government. Thank you very much for being here. Thank you very much for this agreement.

Undersecretary Burns:
Good morning, ladies and gentlemen. And, to the Governor of the Central Bank of Israel, Stanley Fisher, I just want to say thank you so much for the remarks that you have just made. And to the entire Israeli delegation, thank you for the work we have done over the past six months. I want to say thank you to Governor Fisher, with great skill and wisdom; to the Ambassador of Israel to the United States, in Washington, Sallai Meridor, who is a very good friend to us and a very effective representative of his country; to Aaron Abramovich, my friend; to director General Buchris and the other leaders who are here from Israel – thank you for the work we have done together.

I am here to represent President Bush, Secretary of State, Condoleezza Rice, and Secretary of Defense, Robert Gates, and also my friend here, Ambassador Dick Jones, to say how pleased we are that the United States can make this long-term investment in Israel’s security. Of a thirty-billion-dollar figure of defense assistance over ten years; that is a major contribution of American assistance, and we do it first and foremost because the United States has an abiding interest in the security of Israel.
Every American President, since President Harry Truman, when Israel was founded, has felt that the United States should be front and center in supporting the State of Israel. President Bush certainly feels that way and we know that the American people are committed to the security of Israel. This contribution of thirty billion dollars over the next decade will allow the State of Israel to plan its defense expenditures in a way that is rational, in a way that takes into account its own appreciation of the situation in this region and will allow successive American administrations to also know that our commitment to Israel will be secure, beyond the presidency of President Bush and into the next American presidency. This is a very important point for us.

Secondly, I would like to say that the United States of course understands that Israel lives in an increasingly dangerous region and, when Secretary Rice made her statement two weeks ago announcing that we would commit to this level of military assistance for Israel, she noted the fact that the United States and Israel and many of our friends in the Arab world face a situation where Iran is resurgent, where Iran is seeking a nuclear weapons capability, where it is seeking to expand its conventional power in the Middle East, and where there is now a nexus of cooperation among Iran and Syria, Hizbullah, Palestinian Islamic Jihad and other groups who are responsible for the conflicts in this region, Iran and Syria in particular, funding and arming those groups that are terrorist in nature. In every part of the Middle East, they are the reason why there is violence – in their assistance to Hamas, Iran’s assistance to Hamas, and the assistance to the Hizbullah and the destabilizing impact that the Hizbullah has in Lebanon, in Iran’s assistance to the Shiite militant group in Iraq, and the adverse consequences that has had for our country.
And, so we look at this region and we understand that a secure and strong Israel is in the interest of the United States.
We have also announced, in conjunction with the assistance to Israel, a maintenance of our very high level of defense assistance to Egypt, and we have said to the congressional leadership that we intend to seek their support for an increased military assistance to our friends in the Gulf, to Saudi Arabia and to Kuwait and to Bahrain and to Qatar and the United Arab Emirates and to Amman. All of this together represents a signal from the United States that our country is strong in this region; that we intend to be a good friend to our allies and our partners in this region, and we intend to work with them for peace and stability and against those who would practice terrorism and violence in the region.

The final point I would like to make is this. We consider these thirty billion dollars in assistance to Israel to be an investment in peace, in long-term peace. Peace will not be made without strength; peace will not be made without Israel being strong in the future.

And, of course, our objective as a country and our specific objective as a government, is to contribute to that peace, a peace between Israel and the Palestinian people; the creation of an independent Palestinian state, willing to live side by side in peace with Israel. And a general peace in the region that has eluded the Israel people for fifty-nine years, but which  we hope is the destiny of the Israeli people, as well as the Arab peoples of the region, and our policy in this entire region is dedicated to that final objective.
So with those three points, I would just like to say how grateful we are in the United States for the way that we have been able to work with our Israeli colleagues. There are personal bonds of friendship here in this room that are very important to us; there is a national bond of friendship which is important to every American and to our Government, and we are very proud to be able to sign this agreement today and we thank Governor Fisher and his colleagues in the way that these negotiations have been conducted.
Thank you very much.

Master of Ceremonies:
We will now move to the formal signing of the Memorandum of Understanding. Signing of the Memorandum of Understanding will be Undersecretary Burns from the American side, and Mr. Aaron Abramovich, from the Israeli side.

Press Conference
Q: Thank you. This question is to Undersecretary Burns and the question I – allow me please two questions, if you will.

One, regarding the paper, the document that you have just signed. Are there any restrictions, are there any stipulations that are attached to that document that are either an annex or something that is not being articulated here in this page?
Of the things that the Administration expects Israel to do – to act accordingly, and how to use that assistance – are there things that Israel is not expected to do? This is one question.

And the other one would be just a regional question, if you will. What are the expectations from the regional meeting that the President initiated, and do you have a confirmation that Saudi Arabia is expected to take part in that meeting, and if so, at what level?

Undersecretary Burns: Thank you very much; I hope that you can hear me.
Well, I think you will soon see the text of this Memorandum of Understanding – it is very straightforward. It reflects the fact that both Israel and the United States agree on many things; we agree that the security of Israel is important to both of our countries and to a peace in the Middle East. We agree that, particularly, the interest of the United States in helping Israel maintain military strength is obvious and that this is a reflection of the support of our administration and, I should say, of the sentiment in our Congress, which very deeply supports the State of Israel. And it stipulates the fact that, over the next ten years, there will be an increasing level of bilateral military assistance; it is actually very specific in terms of how we will do that. You know, that it is thirty billion dollars over ten years, and it averages over that time to three billion dollars a year, but it is not always set at three billion; that is an average, but the numbers do add up. I was with the Governor of the Central Bank this morning, and we did make sure that the numbers add up, and in that sense the Memorandum of Understanding does not convey any restrictions; we have great faith in the Israeli Government. And we have great faith that the Israeli Government will make the necessary decisions to strengthen its military forces. The United States has a self interest in that, so it is a straightforward Memorandum, and I think that you will see that when it is released to the press.

And, the second question – I can only say that I just arrived here yesterday, but, after having spent the last week or so in Washington – and Secretary Rice has focused very much on what the President of the United States has asked her to do, and that is to convene a meeting in the United States in the autumn – we have not yet set the date for that meeting, but the meeting is designed to propel forward a future peace between Israel and the Palestinian people. I will be, in the course of my trip this week, of course, meeting with the leaders of the Palestinian leadership. We do that, because we have great faith in them and look forward to working with them, as well as to other countries in this region to support this process. To see a quickening of that process and to see a deeper commitment by everyone involved to make progress. And in that respect, I think that when Secretary Rice and Secretary Gates were in the region just two weeks ago, I think she spoke to the press after her meeting with the King of Saudi Arabia and with Prince Saud, and I will let Secretary Rice’s comments stand for the record; I could not possibly improve on them.
Thank you.

Q: I would like to ask Undersecretary Burns, given the regional aspect of this arms assistance deal, how important was the size of this investment in Israel to getting the support of the American Congress?

Undersecretary Burns: Of course, we worked on this agreement with the Israel Government over the last six months. Governor Fisher led a delegation of nearly everybody in this group, and many people in the front row, to Washington back in March, February and March, and we had extensive conversations with the Israeli Government at that time. In fact, some very impressive presentations were made by the Israeli military leadership as well as the civilian leadership, about their long-term projection of the threats to Israel and how Israel had to prepare for those threats. And that was a very important session for us. Because it gave us, over the course of two days, many, many hours of conversation, a very specific sense of what Israel was facing and how Israel would prepare itself to maintain the peace. That also led us to have a series of conversations with the Congressional leadership, about what was the right level of support of the United States and we did take care to talk to many members of the Congress about this. In fact, I have just phoned, and I do not think that he would mind me saying this, I just phoned Chairman Tom Lantos on the way over to this meeting to say that we would be signing this agreement and I hope very much that it will have the support of the Congress; and I think we will, for this level of assistance to Israel.

We have been the main supporter of Israeli security for many decades, but there is no question from an American point of view that the Middle East is a more dangerous region than it was, even than it was ten or twenty years ago. And Israel is facing a greater threat. It is immediate and it is also long term. The United States faces many of the same threats from the same organizations and countries that Israel does, and so we felt that this was the right level of assistance, and I hope very much and I am confident that we will receive a lot of support in Congress for this. I will let the members speak for themselves, and the leadership speak for itself, but I am confident of that, and I think that many members of Congress understand that the United States has friends, also, in the Arab world; they are of long standing. And these are countries that will be vital to building a peace between Israel and the Arab countries. And so our investment in their long-term security is also important and it is also a part of this general context that we live in, that we deal with, and the general policy that the United States is putting forward for our longer-term interest in the Middle East.

Q: Gentleman, I wonder if you can elaborate – from what has been stated on both sides during the past two weeks, this deal is supposed to preserve Israel’s qualitative edge. To the best of my knowledge, nothing has been published about the hardware that is going to be supplied to Israel or what is going to be supplied to Saudi Arabia or to Egypt.
And in past deals, to the best of my knowledge, what Arab allies of the United States have received in terms of the office shelf value has been very similar to what Israel has received. So how, in material terms, do you intend to preserve Israel’s qualitative edge? There has been speculation in the Israel press of the F22 and even the Tomahawk. Is this something that we are going to see?
Governor of the Bank of Israel, Stanley Fisher: There have been specific discussions between the defense departments of the two countries on this – on the details that you are discussing. Mr. Buchris, are you willing to add any details?

I do not think at this point that there is much point in going into the details, particularly of agreements that the United States has not signed with other countries. In terms of Israelis own requests, as far as I am aware at this stage, there have been discussions of the types of systems that would be involved but I am unaware of specific agreements on future specific systems that will be involved.

Undersecretary Burns: I would be happy to try and answer this question. Every American president since President Reagan – I believe that President Reagan was the first to articulate this – believed that the United States should be committed to Israel’s qualitative military edge. As we went through the deliberations with the Israeli colleagues over the last six months, that was a major consideration, and I think that it is self-evident why that should be so. We are not in a position today to announce specific elements of long-term Israeli acquisitions of American technology, but that will be announced in due course, when we begin, when we on the American side begin to notify the Congress as we must, under our constitutional system. But needless to say, given Israel’s predicament of living in a region that is very violent and unstable, its military edge is of interest to our country and we have committed to that, and I think that principle runs through everything that we have done and the agreement that we have signed today.

Q: Undersecretary Burns, you called this investment of thirty billion dollars an investment in peace. But, by guaranteeing this money for ten years, are you not taking away the vital leverage of the European Community that the United States could have to encourage Israel and the Palestinians towards some kind of peace agreement in the future; and what happens if a different Government is elected in Israel, perhaps a more hawkish Government. Is there a possibility that, if Israel starts to do things that the United States does not like, you could turn off the taps, or is it fixed?

Undersecretary Burns: I respectfully take issue with the logic behind your question. We are a friend of Israel. We are committed to Israel, we are also a friend to many of the Arab countries in this region and we are committed to their security. And what was announced, what Secretary of State Rice announced two weeks ago, together with Secretary Gates, was a long-term military commitment to Israel, to Egypt and to the members of the Gulf cooperation council, the countries that I listed in my opening remarks. But the long-term logic is, somehow you strengthen a country by undermining it. I do not understand that logic, and the only way we can achieve peace in the Middle East is to have strength, and the democratic country in this region, Israel, deserves continued and consistent military support from its partner and friend, the United States. The Arab countries in the region that are willing to stand up for peace and have a long-term association with the United States also deserve the certainty of knowing that we are going to be there for them.

So I would suggest the reverse of your question. I think that history in many different areas would indicate that the only way to peace is to show countries like Iran and Syria that the United States will remain the primary factor of stability in this region. That our own presence, political and military is going to continue and that we are going to stand up for our friends; that is the best way to make peace. And whether it is the peace breakthrough made here, in 1977 and in 1978 and in 1979, or whether those made in the mid 1990’s, they were all made because the United States did not forsake Israel and the United States paid attention to Israeli security, as well as those of our Arab friends.
So that is the foundation that we are laying today and it is a very important one for peace; I do not see any other road to peace, frankly, if countries do not meet their commitment to their friends.

Q: Mr. Burns, is this understanding made with the proposed sale to the Saudis, and during your discussions here are you discussing with the Israelis the Saudi deal, and hearing their reservations about the deal?

Undersecretary Burns: Well, the commitment that we are making for long term, a ten-year military assistance to Israel is not linked to United States military assistance to any other country in the region; it is not conditioned upon it, it is not linked; it is completely separate, but it does take place within the wider framework of our general policy in the Middle East, so that is how I would answer your first question.
What was your second question?
(Repeated without a microphone.)
Well, I will let the Israeli Government speak for itself. I would say that I met with the Prime Minister last evening and told him how grateful we were for some of the comments he made about a week ago Sunday, regarding why the United States felt it necessary to continue our relationship with our friends, the moderate Arab countries, and so we were grateful for those comments, but I would certainly leave it to my Israeli colleagues if they would want to say anything today.

Israel Bank Governor Stanley Fisher: The Prime Minister has made the position of the Israeli Government clear on this issue, which is to show understanding of the need for the United States to support its allies in the Gulf, and of course, the relationship with Egypt is an ongoing annual one. So, I do not think that there is – that statement speaks for itself.

Q: Undersecretary Burns, has the United States conditioned all of this financial aid on any Israeli concessions towards the Palestinians, maybe even previous commitments by the Israeli Government to dismantle illegal outposts – that is just one example? Has the United States demanded any moves towards the Palestinians from the Israeli Government?
Undersecretary Burns: This agreement does not have within it restrictions or conditions. We have not linked this, our support for the future security of Israel, to any other issue. It stands on its own. There is an intrinsic American interest in seeing that Israel remains secure and strong in the Middle East, so the agreement does not place any conditions on the State of Israel now, in the way you would suggest. But I did say in my remarks, and Secretary Rice has spoken repeatedly in the past, of the fact that we are committed to peace in this region and President Bush and Secretary Rice have made it clear that one of the major priorities for our Government, for the remaining months in office of this Government, seventeen months, will be to help push forward a peace agreement between Israel and the Palestinians, and Secretary Rice has made that very clear. So, obviously, that is a policy interest, but when you are a friend of a country, and we are a friend of Israel, and a supporter, and when a country like Israel faces security threats, we give our commitment to help them and we will work in other areas, obviously, and sometimes we will agree, and sometimes we will disagree in aspects of policies; but when it comes to the security of a country, friends do what is right, and that is, we support them.

Q: Mr. Burns I wonder if you can confirm that Israel is the only recipient of US military aid that is allowed to divert that aid, I believe twenty-three point six per cent, towards its domestic arms industry and, if that is the case, given an understanding that this is a fixed amount, have you encountered or do you foresee any opposition from the United States arms industry, which is essentially a foreign competitor.

Undersecretary Burns: I am just – I want to give a good answer to your question – you know that, as part of this agreement, over the course of ten years, a certain percentage of the funds, slightly over a quarter, can be used by the State of Israel for purchases within Israel and that is – we have had this agreement with Israel for a long time, but I am just looking for assistance, to my colleagues. I am informed that this is a unique agreement, but I just wanted to be able to establish that, because we have a relationship with a lot of countries around the world.

(Inaudible question)
Undersecretary Burns: Well, you know the United States has a rather large defense budget and we also are a purveyor of military assistance to many of our friends around the world; this is a unique arrangement given the fact that we have a unique relationship with the State of Israel.

Thank you everyone for coming.