Key Points:

• The incoming Trump Administration seeks allies who are willing to invest the resources necessary to meet their own security needs and defend themselves. This is particularly true as America makes East Asia the primary focus of its strategic and military resources.
• Israel can play a key role in America’s Middle East strategy as the bridgehead, together with the Gulf states, of the pro-American camp, aligned against the anti-Western axis led by Iran and backed by China and Russia.
• At the same time, US-Israel defense-industrial cooperation should transition from being based primarily on Foreign Military Financing (FMF) grants to Israel, toward greater Israeli independence in funding its own defense acquisitions and rebuilding its defense industrial base, as well as toward greater mutual cooperation in the realms of defense innovation and start-ups.
• While the aid has greatly contributed to Israel’s security and military build-up, the current framework of grants in the form of FMF has many drawbacks. It should be updated to reflect current American priorities, Israel’s economic development, and the broader strategic context.
• Historically, alongside helping build up Israel’s capabilities, the FMF framework has served to facilitate or encourage Israel’s surrender of various strategic territories. It also contributed to Israel’s adoption of a defensive and technology-focused security concept, whose weakness was exposed during the October 7^th attack; and had the effect of downgrading critical sections of Israel’s domestic military industry.
• However, in order to make the transition toward independently funding its security needs feasible, Israel must take steps to secure its borders and complete the change in the regional balance of power. Destroying Iran’s ‘ring of fire’ built up around Israel over the past two decades, alongside additional steps, will change the risk environment and make the necessary transition from patronage to partnership feasible.
• Achieving these goals will allow for a new US-Israel Memorandum of Understanding (MOU) which would: Reduce FMF grants gradually over the next decade from current levels to zero; maintain Israeli access to technology and parts; reconstitute Israel’s capacity for munitions production; and identify fields for mutual investment and expanded cooperation in development and production including UAVs, high-energy laser systems, offensive and defensive cyber capabilities, artificial intelligence, missile defense and subsystems for large combat platforms.