An Israeli delegation led by Ministry of Defense director general Gen. (res.) Amir Baram will leave for Washington next week for a critical round of talks at the Pentagon and in Congress. “Globes” has learned that the delegation’s goal is to kick-start talks on a new defense memorandum of understanding (MOU) between the countries, which will replace the current military aid agreement that expires in 2028. The urgent departure comes amid growing Ministry of Defense concerns about procrastination by the Trump administration, stemming from internal political constraints and intersecting interests in the region.
The visit has been planned since December 2025, when Prime Minister Benjamin Netanyahu met with US President Donald Trump at his Mar-a-Lago, Florida residence and presented him with his plans for future aid. Netanyahu then chose to lead the inter-ministerial team on the issue, which hopes to succeed in bringing about the signing of a new MOU before the Trump administration is replaced.
Israel’s trap
Within the framework of domestic US politics, Israel finds itself in a trap with the Trump administration. On the one hand, the administration does not want to involve top figures. On the US side, the talks are led by Ambassador to Israel Mike Huckabee with Secretary of State Marco Rubio’s chief of staff, Dan Holler. On the other hand, AIPAC (the pro-Israel lobby in Washington) is unhappy about the late stage at which the Israeli government has found it appropriate to include it in the process. In actual fact, AIPAC itself was reluctant to be involved in the process.
The current MOU, which expires in 2028 and was signed in 2016 by Prime Minister Netanyahu and former President Barack Obama, grants Israel annual procurement in the US of $3.3 billion. In addition, $500 million was promised for cooperation in the field of air defense.
Today, the negotiation process with the US administration is being carried out with an understanding of Trump’s economic strategy – and its implications for Israel. Baram addressed the issue at a Reichman University conference in Herzliya last week. According to him, the US operates under the concept of America first, and therefore the infrastructure for the next defense partnership agreement will be “a strong, independent and proactive Israel, which stabilizes the Middle East,” and thus in effect constitutes “an asset that allows the US to direct resources to Asia.” In other words, China.
The amount to be spent in Israel will be reduced to zero
The common desire in the US and Israel is to replace annual aid with cooperation that will expand the number of jobs in the US and benefit the US economy. Israel has internalized that financial aid, if any, will not significantly benefit the Israeli economy. This understanding is derived from the conversion clause (OSP) in the existing agreement: the ability to convert part of the annual grant into shekels for use by the local defense industry. At the beginning of the agreement, the conversion clause stood at $815.3 million (24.7% of the procurement budget), but its reduction has been consistent. Last year was the most significant reduction: from a conversion budget of $725.3 million (21.9%), there was a drop to $450.3 million (about 13.6%). This year there has been a further decrease to $250.3 million (about 7.5%). In the last year of the MOU, 2028, the conversion clause will stand at zero. This does not affect the large Israeli defense companies that have a presence in the US, but the small ones.
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In the new MOU, Israel may by choice not have a US procurement component at all. Instead, the Ministry of Defense aims to create a binding framework of a certain investment in the partnership, in which each side will contribute what it is good at. In the days when people talk in front of cameras about “disconnection” from dependence on the US, the understanding is that there will be no disconnection. Israel has increased its independence in the last three years in terms of armaments, but in terms of aircraft development and production, Israel does not have the financial capacity to meet the challenge.
Like Baram, Netanyahu has not hidden his position on the partnership in a series of interviews he has conducted in recent months in Israel and abroad. On CBS, he defined it as a “maturation process,” in which US aid grants will become a deep security partnership. Moreover, in his appearance last week on Channel 14, Netanyahu was asked if he wanted to halt US aid, and he answered “yes.” He added, “We can, since our economy will soon reach a trillion dollars, finance these fractions of a percent of our GDP ourselves. I want it to start this year.”
What the Americans want
On the US side, there is no substantial progress in the talks. It is likely that the issue will be on the agenda at a meeting expected soon between Netanyahu and Trump. But as also reflected in the US administration’s talks with Iran, domestic US politics in general and what is happening within the Republican Party in particular are giving their signals and leading to processes that do not necessarily align with Israeli interests. At a time when Trump wants to reach an agreement with Iran even before the midterm elections in November, it is not certain that the administration is interested in another MOU with Israel.
The Ministry of Defense director general has also addressed the need to diversify Israel’s diplomatic options. “The war has sharpened the price of a more powerful Iran for all parties in the region. It has created an identity of interests for the formation of a broader alliance – from India, through the UAE to Greece and Cyprus,” Baram explained. “Israeli strengths in technology, proven operational experience and security innovation, combined with the financial power of the Gulf may enable a new security-economic front. Expanding our strategic partnerships is not a substitute for the partnership with the US, but it will allow us to increase Israel’s room for maneuver and power in the international arena and allow us to diversify strategic support.”
The establishment of this alliance is evident in the security arena. India, for example, is Israel’s main defense export destination, and according to data from the Stockholm International Peace Research Institute (SIPRI), it was the destination for 29% of Israeli defense exports between 2021-2025. According to the Ministry of Defense international defense cooperation division (SIBAT), total export deals with India have amounted to about $20.6 billion over the past five years.
Published by Globes, Israel business news – en.globes.co.il – on July 5, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.
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