The U.S. relationship with Israel is frequently viewed as a one-way commitment. Since 1948, the United States has provided Israel with over $158 billion in direct aid—more than $300 billion when adjusted for inflation—making it the largest cumulative recipient of U.S. foreign assistance. The support has overwhelmingly taken the form of military financing, with more than $113 billion dedicated to defense and weapons systems, alongside $45 billion in economic aid.
A 2016 agreement between the two nations guarantees $38 billion over a ten-year period through 2028, including $5 billion specifically for missile defense. The U.S. has also extended billions in loan guarantees with certain requirements that the funds be used to purchase U.S. systems.
However, Israel is increasingly less interested in loans and aid, and is instead turning its focus to economic opportunities that can benefit both nations.
According to an analysis for Federal Newswire by Israel defense experts, the partnership delivers an estimated $48 billion in annual benefits to the United States—nearly 15 times the value of the roughly $3.3 billion in U.S. security assistance has appropriated for Israel each year. The analysis was based on recent reports by US and Israel defense agencies.
How the U.S. Benefits
In broad terms, the U.S. relies on Israel's military as a high-stakes testing ground for American weapons systems, including aircraft, armor, and munitions. U.S. assets are deployed in live combat more frequently in Israel than in any other allied nation, allowing the Pentagon to receive after-action performance data without putting American troops in harm’s way.
The U.S. also relies on Israeli intelligence for early warnings on threats to U.S. interests and assets in the region. These include Israeli insights and intelligence assets in Iran, Syria, and within terrorist networks. For example, in 2017 according to reports in the New York Times and CNN, Israeli operatives uncovered a plot by ISIS to bomb airliners using explosive-laden laptop batteries. The intelligence allowed tightened security on international flights that likely saved countless lives.
According to the Department of Defense, the actionable intelligence provided by Israel saves the U.S. approximately $2.6 billion annually from economic losses. The figures are based on airline industry and other liability benchmarks referenced in a 2024 DOT guidance document.
The U.S. also saves by not having to maintain a military presence in Israel, where it has important regional interests, compared to the cost of deployments in Japan, Korea, or Europe—totaling tens of thousands of troops and billions of dollars in upkeep. Israel provides troops in the region, as well as strategic coverage in the Eastern Mediterranean without a standing U.S. base. This saves approximately $2 billion per year in operational costs according to a 2024 GAO report.
Currently, Israel provides a form of U.S. deterrent to Iran’s development of nuclear weapons that could be capable of reaching North America. This important service, an incalculable value, was not included in the analysis.
In more specific terms, the U.S. has developed missile systems with Israel’s help, including Iron Dome, David’s Sling, and Arrow-3. The systems were first field-tested in Israel and then licensed back to the United States. According to a 2023 Reuters report and information provided by Boeing, the Arrow-3 sale to Germany generated $3.5 billion in revenues, with up to 50% of the work performed by U.S. contractors.
Israel’s Technology Advantage
In fact, the Iron Dome missile defense system was initially developed solely by Israel, allowing the country to retain proprietary technology rights. The United States has since become a production partner, which may provide additional economic benefits to the U.S. if President Trump’s comments about creating an Iron Dome for the U.S. leads to actual deployment.
In other areas, Israeli trauma medicine has profoundly shaped American emergency response systems. Techniques adapted from Israeli battlefield care—such as the “Stop the Bleed” initiative—are estimated to save roughly 300 U.S. lives annually, with a $4.1 billion societal welfare impact, according to a March briefing by the American College of Surgeons.
Similarly, Israel’s high-tech startup ecosystem has become a vital pipeline for U.S. commercial and defense innovation. The Israel-United States Binational Industrial Research and Development (BIRD) Foundation promotes joint industrial research and development between the two nations. The foundation provides capital for collaborative projects, enabling Israeli and U.S. companies to co-develop technologies. It estimates that joint research yields about $1.2 billion per year for the U.S.
In cybersecurity, U.S.-Israel joint simulations protect critical infrastructure like water and power systems—training that is difficult to run domestically under U.S. regulations. The shared programs help prevent industrial-scale data breaches and, according to reports that cite 2024 IBM data, generate about $100 million in avoided losses annually.
The economic benefits extend beyond defense. In 2024, Israel purchased $14.8 billion in U.S. goods, contributing $13.2 billion to U.S. GDP. In addition, the $3.3 billion in annual Foreign Military Financing that the U.S. provides to Israel is largely reinvested in American defense manufacturing.
A New "American Options" Doctrine for the US-Israel Alliance
When tallying all categories—from strategic deterrence and tech transfer to economic and medical benefits—the U.S.-Israel alliance provides an annual return to the U.S. of at least $48 billion, according to the analysis for the Federal Newswire, far exceeding U.S. direct and indirect costs to maintain the relationship.
U.S. policy makers will want to consider these benefits as threats to both nations mount. It may be time to reduce aid to Israel in favor of smarter policies that take advantage of Israel’s battle-tested capabilities, and that release constraints on Israel’s unique technology innovations.
The benefits from relations with Israel can be increased through a re-imagined alliance that gives America options in where it will invest with Israel for mutual benefit. Israel has gained from the alliance, but it is economically and technologically able to stand on its own. The new question for the U.S. is, how can our investments pay larger dividends for America given that Israel is done with aid packages and is seeking an investment partner?
