Here's how much aid the U.S. gives to Israel — and why it may get billions of dollars more

By Chris Matthews

Rich country's 'astronomical' security costs mean more aid could be on way

Israel's military campaign against Hamas has entered its sixth week, and the country is facing a growing backlash against the humanitarian toll of the war as well as uncertainty over the fate of a U.S. military aid package that has stalled amid partisan bickering in Washington, D.C.

President Joe Biden has requested $14.3 billion in military assistance for Israel as it seeks to destroy Hamas after the group killed 1,200 Israeli citizens and took more than 200 hostage last month. More than 12,000 Palestinians have died in the Israeli invasion, according to health authorities in Hamas-run Gaza.

Israel now receives $3.8 billion a year from the U.S. under a 10-year agreement that began in 2016. Here's how the new money could be used, and what the U.S. is asking for in return.

Why does Israel need American funds?

Israel is a wealthy country, with a GDP per capita of more than $54,000, greater than Germany or the United Kingdom, according to the World Bank, raising the question of why the country needs U.S. assistance at all.

"Israel is certainly much more advanced and financially better off than other countries in the region," Jonathan Panikoff, former career U.S. intelligence officer and director of the Atlantic Council's Mideast Security Initiative told MarketWatch.

See also: Biden says he believes a deal is near to free some hostages in Gaza

"The reality is it's still a very small country of nine million people and the cost for Israel's security operations is astronomical," he added.

The first line item in Biden's funding request is money to ensure Israel's Iron Dome and David's Sling missile defense systems, which protect Israel from rocket attacks staged by Hamas and other Iranian proxy groups like Hezbollah.

"Iron Dome has been a tremendous success intercepting rockets," Panikoff said, but operating it is very cost intensive, with each individual rocket interceptor costing upwards of $50,000, according to a recent estimate by the Center for Strategic and International Studies.

Panikoff added that funding Israel's rocket defense is cost effective in the long run because it "keeps the U.S. from having to defend Israel directly and move its own resources into the region."

In 2014, the U.S. and Israeli governments signed a co-production agreement that enabled the manufacture of components of the Iron Dome system to be manufactured in the U.S. by American defense manufacturer RTX Corp. (RTX). David's Sling is also jointly maintained by RTX and the Israeli government-owned defense company Rafael Advanced Defense Systems.

How does Israeli aid advance U.S. interests?

Pankioff argued that U.S. military aid to Israel is a cost-effective way to advance American interests in the region. He said that Israel's enemies in the region, like Iran and its proxies, also seek to harm the U.S. and that funding Israel so that it can best defend itself brings stability to the region.

"A conflict that spreads regionally is almost certainly going to have a significant impact on markets across sectors, but certainly the energy markets would be hard hit," he said. "You certainly would see an increase in prices broadly just because of how much commerce transit the Middle East and the Persian Gulf."

Keeping a lid on oil prices has been a major goal for Biden during his first term, and a recent bear market for crude oil (CL00) is helping ease inflation more broadly.

Can Congress agree on an aid package?

Both the Democratic president and Republicans on Capitol Hill say they want to quickly move an Israeli aid package, but the politics of how they'll get it done remain tricky.

House Republicans passed a bill giving Israel the full $14.3 billion requested by the administration, but they cut a proportional amount from the IRS budget to fund the request, a move that the Congressional Budget Office said would actually increase the deficit by a total of $26 billion because it would lead to lower tax revenue. The proposal is also a nonstarter for Democrats.

Read more: Fighting breaks out around hospital in northern Gaza sheltering infants, evacuees

The House Republican bill also ignored Biden's request that Israel aid be paired with $60 billion for Ukraine and tens of billions of more dollars for immigration enforcement and money aimed at countering China's influence on Taiwan and the Indo-Pacific region.

A bipartisan group of lawmakers is currently working on a bill that would include funding for all these priorities but also make significant changes to U.S. asylum law that advocates say are needed to stop the unprecedented surge of migrants at the southern U.S. border.

"How do you go back home and say you're justifying their defense but you're not protecting our own southern border," Republican Sen. Mike Rounds of South Dakota told Punchbowl News at a security conference in Canada over the weekend.

Rounds said he's been telling international counterparts that addressing the border is "going to determine whether or not there's funding for Ukraine, Israel and Taiwan."

See also: Bipartisan calls grow to 'fix' U.S. border before approving $75 billion to defend Israel, Ukraine

How will anti-Israel backlash affect negotiations

Biden's supplemental request is increasingly being criticized by figures on the left of the Democratic Party who argue that Israel has done too little to protect innocent civilians during its invasion of the Gaza Strip.

"While Israel has the right to go after Hamas, [Israeli Prime Minister Benjamin] Netanyahu's right-wing extremist government does not have the right to wage almost total warfare against the Palestinian people," Sen. Bernie Sanders of Vermont, an independent who votes with Democrats, said in a Friday statement.

"Displacing 1.6 million people from their homes, cutting off food, water, medical supplies, and fuel, and killing some 12,000 Palestinians -- nearly half of whom are children -- is in violation of every code of human decency. It must stop," he added.

Sanders' statement falls short of calling for an immediate cease-fire as roughly two dozen House Democrats did last week, but it does highlight growing fissures in the party over support for Israel. Politico reported over the weekend that there a preliminary discussions among Democrats in both chambers about coming to an agreement to condition aid on changes to Israeli military policy.

The Atlantic Council's Panikoff says such a move is likely to fail to convince Israeli leaders to modify their strategy, and that the Biden administration is already doing all it can to advocate for a more humanitarian approach.

"At the end of the day, Israel is a sovereign independent country and it's going to do what it needs to do to protect itself," he said. "At the same time, anybody who doesn't think the U.S. has exerted meaningful influence, and that the Biden administration has done an impressive job in arguing for humanitarian pauses and allowing in more aid isn't being intellectually honest."

-Chris Matthews

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11-20-23 1603ET

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