Economic allies: The US and Israel's top partnerships

Learn about some of the historic agreements and collaborations between the United States and the Jewish State.

DECEMBER 16, 2017 17:32

Updated: DECEMBER 17, 2017 10:51

A woman walks near high-rise buildings in the hi-tech business area of Tel Aviv (photo credit: REUTERS/AMIR COHEN) — A woman walks near high-rise buildings in the hi-tech business area of Tel Aviv

(photo credit: REUTERS/AMIR COHEN)

With Israel joining US-led “Power Africa” program on Monday, a multi-billion dollar project to electrify sub-Saharan Africa under the auspices of USAID, additional Israeli-American partnerships are coming under review.

Prime Minister Benjamin Netanyahu speaks at Power Africa, December 4, 2017 (GPO)

Here are some of the historic agreements and collaborations between the United States and the Jewish State.

1. Defense MOUs

In 2016, Israel and the US signed a defense agreement worth $38 billion, the largest foreign aid pledge in American history. The aid package is set to last until 2029 and requires that Israel not lobby the US Congress for additional funds.

For 2017, Israel received $3.1 billion in foreign military financing, more than any other country. In future years, Israel will receive $3.3 billion annually, along with an additional $500 million for missile defense – such as for the Iron Dome.

2. Loan Guarantees

When the Israeli government needs to take out a loan, it can pay significantly cheaper interest rates because the US government issues a loan guarantee – or a promise that it will pick up the tab if Israel doesn’t pay.

Israel relied more heavily on loan guarantees to lower borrowing costs during the second Intifada, when it was building its expensive West Bank separation barrier, along with absorbing hundreds of thousands of Russian immigrants in the 1990s. But given that Israel’s credit has improved significantly since the end of the second Intifada, Israel hasn’t touched needed its loan guarantees in years.

3. Power Africa

In December 2017, Israel formally joined the US Agency for International Development’s Power Africa program, opening the way for Israeli companies to participate in its Power Africa program.

The agreement opens the door to dozens of Israeli clean-energy firms to seek multi-billion-dollar contracts facilitated by Power Africa. The aid program seeks to provide electricity – via private companies – to some 60 million Africans by 2030. The Prime Minister’s Office, under Director-General Eli Groner, worked tirelessly for a year to get Israel into the lucrative humanitarian program.

4. Israel Bonds

Since its inception in 1951, worldwide sales of Israel bonds are worth more than $40 billion. At least 300,000 people are owners of an Israel bond.

The Israel Bonds organization (Development Corporation for Israel) underwrites the bonds in the United States. They are a way for the Israeli government to issue debt in order to sponsor infrastructure projects and bolster the Israeli economy.

5. BIRD/BARD

BIRD, the Binational Industrial Research and Development Fund, and BARD, the Binational Agricultural Research and Development Fund, lie at the historic heart of the US-Israel relationship, founded by the US and Israeli governments.

BIRD/BARD provides matchmaking services between American and Israeli companies, along with covering up to 50 percent of development and going-to-market costs. Since its inception in 1977, BIRD has approved more than 800 projects, many of them being leading multinational corporations.

6. Noble Energy’s deal with the US

The American government was instrumental in supporting the offshore gas deals of Houston-based Noble Energy with Israel. The company helped develop Tamar gas field, and is part of a consortium developing Leviathan, Tamar and Karish gas fields.

These projects will allow Israel to achieve energy independence and provide natural gas to neighboring Jordan, bolstering the relationship and securing Israel’s geopolitical stature.

7. Free trade agreement between Israel and the US

The US-Israeli free trade agreement, signed in 1985, was the first free trade deal ever entered into by the American government. It reduced trade barriers and helped make regulations more transparent.

Since signing, the deal has helped boost bilateral trade ten-fold to $49 billion in 2016, according to the US Embassy in Tel Aviv. And Israelis invest almost $24 billion in the US, triple the rate a decade earlier.

8. Start-Up Nation

Israel has more companies listed on NASDAQ than any other foreign country barring China. Its 300 hi-tech companies on the tech stock exchange are more than Indian, Japanese and South Korean companies combined, reported the US Embassy in Tel Aviv.