The approved budget comprises, for the first time, $500 million in aid to the Palestinian Authority, including $100 million for the training of Palestinian security forces by American general Keith Dayton.
The aid will be handed over to the Palestinians under the condition that the American taxpayers' money will only be transferred to a Palestinian government whose members accept the conditions of the international Quartet – the United States, Russia, the European Union and the United Nations. The conditions include recognizing Israel, renouncing violence and accepting past agreements signed with the Jewish state.
For the first time, the American foreign aid budget law includes a clause forbidding American export and import banks to use the aid funds for providing guarantees, insurance or credit to companies sullying refined oil to Iran.
Netanyahu relinquishes civilian aid
The annual American aid was given for the first time following the peace agreement Israel signed with Egypt, and had amounted to $3 billion a year. It was comprised of $2 billion in security aid and $1 billion in civilian aid.
During his first term in office, Prime Minister Benjamin Netanyahu gradually relinquished the civilian aid, while increasing the security assistance to $2.4 billion.
When the agreement expired, a new memorandum of understanding was signed between the Bush administration and the Olmert government to gradually increase the security aid in the coming decade due to the need to maintain Israel's advantage in light of the threats posed by Iran and terror organizations.
Despite the serious financial crisis, the Americans did not raise the possibility of reducing the aid or cancelling it at any stage. Israel is bound by the agreement to use 75% of the security aid in dollars – in other words, to produce military devices in the US in order to help create workplaces there.
The US has helped and continues to help Israel with the production line of the Arrow 2 missile defense project, which is jointly developed by the Boeing company and the Israel Aerospace Industries. For the past two years, the US has been funding the development of the Arrow 3 multilevel defense system against Iranian ballistic missile.