America goes to the polls on 3rd November. Israel goes to the polls today. Their relationship is of huge significance to American voters, but it has almost entirely been ignored by Israelis in their election campaign.
One of the hot button issues in the US is the military aid transfer, so we have invited Former Israeli Defence Minister General Yoav Gallant to talk about the subject. It’s essential reading for subscribers of The World’s Intelligent Journal —and for voters in Wisconsin who know nothing about the Middle East. (Daniel Clarke-Serret, Editor of Guerre and Shalom)
The first article in our symposium on military affairs came from British Shadow Foreign Secretary and Lt Colonel Tom Tugendhat MP. He spoke about the arms we should purchase:
Heading into the midterms, almost every American politician is being asked the same question about Israel on every stage. Should the United States continue aid to Israel? Should it be cut, conditioned or used as leverage?
The question carries the premise that American support for Israel is a transfer of value from a benefactor to a recipient. That premise is wrong. It has been wrong for a long time. And because it is wrong, the debate built on top of it produces answers that misrepresent to the American people what their money has actually been doing for the past half-century.
I served as Israel’s Minister of Defense during the most difficult period in our modern history, more than a year of the seven-front war that began on October 7, 2023. I have sat across the table from American counterparts in shaping this relationship. I have watched, on the battlefield, what American and Israeli capabilities look like when they are combined against a common enemy. I want to set out what this relationship actually is, and what it is not.
Under the current Memorandum of Understanding, the United States provides Israel $3.8 billion annually, of which $3.3 billion is Foreign Military Financing and $500 million is cooperative missile defense. American political discourse treats this as foreign aid, grouping it with disaster relief and humanitarian assistance, calling it a subsidy or a gift. The description misidentifies the transaction.
Foreign Military Financing is not a transfer of value to Israel. It is a defense procurement arrangement under which Israel receives the dollars on paper and then spends them on American-made defense equipment, produced on American soil, by American workers, in American congressional districts. By 2028, nearly every FMF dollar will be required to be spent in the United States.
The cheques may written in Jerusalem, but the jobs are made in Arkansas, Alabama, Texas, Arizona and Connecticut. In effect it is a co-investment in American industrial capability —or an Israeli-American subsidy for the American arms industry.
When American FMF dollars pay for the F-15s, F-35s, and other US-made systems Israel buys, Israel’s own defense budget is freed for what no foreign assistance program covers, namely the indigenous research and development of Israeli systems. The aid does not simply move money. It allows Israel to invest its own resources in domestic R&D at a scale no other ally can match, with the urgency of a country that has stood under arms continuously for nearly eighty years, defending borders against constant attack from neighbors who do not accept its existence. No other Western country has built up that kind of accumulated combat experience over that span of time.
The systems that come out of that R&D get tested under combat conditions. By the time they mature, they have been validated against the most demanding threat environments in the world. American forces then receive the finished products, ready for fielding, without having paid for the development cycle and without having borne the operational risk of testing them in war.
Trophy, the active protection system now fielded on American Abrams tanks across multiple armored brigades, was developed in Israel using Israeli resources, combat-proven on Israeli Merkavas, and only then procured by the US Army after American commanders concluded no equivalent American system existed.
The helmet-mounted display that defines the F-35’s pilot interface, supplied through a joint venture between Israel’s Elbit Systems and the American firm Collins Aerospace, equips every F-35 produced anywhere in the world.
In the June 2025 campaign against Iran and the February 2026 joint operation, Israeli air defenses helped protect American bases across the Gulf, and Israeli intelligence and electronic warfare contributed to combined operations that would otherwise have required additional American deployments.
The American taxpayer rarely hears about these returns, because the political debate is conducted at the level of the headline number. Yet the transfer isn’t charity. American dollars flow into American factories, American assistance frees Israeli capital for innovation and American forces eventually receive Israeli-developed capabilities refined in real combat.
If you are still not convinced that this is a good investment, set the United States government aside for a moment and ask the question any private investor would ask. Would a private investor put capital into Israel right now?
The answer is publicly available. In 2025, the Tel Aviv Stock Exchange’s flagship index rose roughly fifty percent, after rising thirty percent in 2024. It was the best-performing major stock market in the world for two consecutive years. Foreign institutional holdings in Tel Aviv equities reached a record $19 billion, more than double the pre-war level, with eighty percent of inflows from North America. Google paid $32 billion for a single Israeli cybersecurity company, the largest acquisition in its history.
In 2020, Nvidia, a single American company, paid $6.9 billion for one Israeli technology firm called Mellanox, a specialist in high-speed networking. That single acquisition cost roughly 1.8 times what the United States transfers to Israel in an entire year. Mellanox’s technology became the networking core of the entire AI data center revolution. Nvidia’s networking division, built on the acquisition, generated nearly $11 billion in revenue in a single recent quarter, exceeding the entire purchase price. Over the same period, Nvidia’s market capitalization rose from $93 billion to more than $5 trillion.
This is one American company making one investment in one Israeli company. The bet was less than two years of American aid to Israel, yet the return reshaped the most important industry in the modern world.
All of this happened while Israel has faced multi-front wars, alongside European arms embargoes, credit-rating downgrades, and the most sustained international campaign to isolate Israel diplomatically in a generation. Capital does not vote with slogans. It votes with facts. Every major institutional investor in the world, looking at the same evidence available to Washington, is increasing their allocation to Israel. Washington is the only one debating an exit.
$3.8 billion is a significant amount of money, and the security assistance Israel receives from the United States matters to Israel. But the budgetary share has changed.
In the past, the aid was a significant share of Israeli GDP. Today, measured against an Israeli economy approaching $720 billion, it represents about half a percent. The shekel appreciated fourteen percent against the dollar in 2025 alone, reaching its strongest level in three decades, further reducing the aid’s practical value to Israel. The aid still matters in budgetary terms, but the relative share is much smaller than it once was. And alongside that change, the shared benefit, what each country gains from the partnership, has only grown more important.
The above said, there is no doubt the time has come to update the partnership. The original relationship was built between a global superpower and a small, determined country. Today Israel is still small. But it is also a defense partner that fights alongside American forces, an arms exporter to dozens of allied nations, and a creator of technologies that the whole world buys and that the United States benefits from. Israeli defense exports reached $14.8 billion in 2024 in their fourth consecutive record year, placing Israel among the top ten arms exporters in the world. This is no longer the relationship the original aid framework envisaged.
The shift is already happening, project by project, contract by contract. American capital and scale meeting Israeli research and combat validation. Manufacturing running through both economies. Export revenue shared. Strategic capability compounding on both sides. The pattern is consistent. What is missing is the framework that institutionalizes this co-operation as the basis of the relationship.
American security assistance to Israel is, in effect, (already) an American investment in joint developments. I proposed this evolution when I was Israel’s Minister of Defense, and I am proposing it again now. The transition should happen gradually, with both governments designing the instruments, the rules, and the milestones together. The proper horizon is 2048, Israel’s centennial, twenty-two years away. The partnership should no longer be a political instrument used against either ally for electoral advantage.
The American public deserves a true picture of this relationship, not an partisan agenda dressed up as policy analysis. Americans understand the difference between a cost and a return, between a handout and a stake. What they rightly object to is being told that a strategic asset is a cost, or that a co-investment which has built American factories, fielded American capabilities and protected American troops is a favor done to someone else.
The data points the same way from every direction. The battlefield says the partnership works. American industry says the partnership works. Capital markets say the partnership works. Every investor with access to the facts is committing more to Israel, not less.
The question is not whether to continue. The question is how to update the structure to reflect what the evidence has been showing for years.
(This post was originally published by The Free Press, though some sections have been edited in the Guerre and Shalom version.)