US Aid Cutoff to Israel Sparks Arms Deal Crisis: Who Will Pay the $10 Billion Bill?

President Donald Trump’s announcement this week of his intention to stop military aid to Israel by the end of the year has raised questions about the future of security cooperation between the two countries, primarily concerning who will fund already-concluded arms deals. According to a report published today (Thursday) by the "Wall Street Journal," Israel has requested billions of dollars in American military equipment exceeding the amounts Washington pledged to provide, and the cessation of aid may leave some of these requests without a clear source of funding.

According to a document issued by the US State Department, referred to Congress and obtained by the newspaper, approximately $10 billion in additional funding was needed as of April 1 to finance existing requests, separate from previously pledged aid to Israel. It is unclear whether this amount has changed since then. The document stated that commitments could be funded through US aid money, the Israeli budget, or a combination of both.

These developments come after Trump said on Tuesday that the United States intends to stop payments to Israel by the end of the year. According to the report, the statement surprised Israeli officials, including those in the security establishment. Israeli Prime Minister Benjamin Netanyahu had previously said that Israel should gradually reduce its reliance on US aid, proposing to end direct aid within the next decade.

Israel currently receives approximately $3.3 billion annually under US military aid, designated for purchasing American-made equipment, including fighter jets, bombs, and vehicles. This aid is based on a ten-year agreement signed during the Obama administration, which remains in effect until 2028. Additionally, Congress approved an extra aid package for Israel worth approximately $26 billion in 2024, against the backdrop of the war in Gaza.

One feature of the aid mechanism is the ability to use funds the US has pledged to provide in the future to place orders in the present. This allows flexibility in purchasing and supplying weapons but also creates financial obligations extending beyond the period of the aid agreement. Democratic Congressman Joaquin Castro, who asked the State Department for details regarding these obligations, told the newspaper that even if the current agreement continues until 2028, there will remain orders worth approximately $10 billion that need financing.

At the same time, US lawmakers are working on a proposal to change the model of security cooperation with Israel, shifting from grants and direct financial aid to investments in the defense sector and joint production of military technologies. Supporters of the move believe it will allow deeper cooperation between the two countries, including in projects such as the Iron Dome system, in which American companies have also participated. Conversely, opponents of the proposal warn that it will integrate Israel more deeply into supply chains and Pentagon programs, making it harder to change cooperation in the future.

But even a transition to joint production will not solve Israel’s immediate procurement needs. According to the report, Israel still relies on continuous supplies of American munitions, and its future requests include the purchase of a squadron of 25 advanced F-35 aircraft.

Despite Trump’s statement, current and former US officials believe an immediate halt to aid is unlikely. Josh Paul, a former State Department official who resigned in protest over the Biden administration’s support for the war in Gaza, told the "Wall Street Journal" that stopping aid by the end of the year is unfeasible, partly due to funds already approved by Congress. According to him, no steps supporting this statement have been taken so far.

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