JERUSALEM — The diplomatic crisis between the U.S. and Israel has sent a tremor through their alliance, but one key part of the bond seems virtually untouchable: the roughly $3 billion a year in U.S. military aid.
Israel's harsher critics often call for aid cuts to twist Israel's arm. Yet amid the uproar of recent days over plans to build 1,600 new homes for a Jewish neighborhood in a disputed part of Jerusalem, there has been no serious talk of using aid as a club.
One reason may be the potential backlash from Israel's supporters in the U.S. Another is that much of the money cycles back into the American economy.
Israel is the biggest recipient of American aid after Afghanistan. But unlike most other countries, Israel's aid is earmarked entirely for military spending. Under an agreement between the two allies, at least three-quarters of the aid must be spent with U.S. companies.
This means that the "close, unshakable bond," as Secretary of State Hillary Clinton described it, is also a mutually beneficial one: Israel gets the latest American military technology, and American weapons makers — Lockheed Martin, Raytheon, Boeing and others — get a steady stream of income.
The U.S. stepped up funding to Israel after the Arab-Israeli wars of 1967 and 1973, at a time when the Soviet Union was arming the Arabs. Following the 1979 Israeli-Egyptian peace treaty, Washington guaranteed Israel would continue receiving annual military and civilian aid in a 3:2 ratio with aid given to Egypt. Since then, Israel's share has ranged between $2.1 billion and $3.7 billion a year.
Over the past decade, as Israel's economy has grown, the U.S. has converted the whole package to military funding, under an agreement to have it at $3.15 billion a year by fiscal 2013 and keep it at that level until 2018.
The package amounts to only about 2 percent of Israel's annual gross domestic product, compared with 14 percent in 1985. But for a country with hostile neighbors, and where military spending ranks sixth in the world proportional to size of economy, that aid is vital. It represents about 20 percent of the country's annual defense budget.
Equally important, it gives Israel ready access to advanced hardware.