$38 billion aid deal for Israel nears a rewrite

The Trump administration and the Israeli government are reportedly negotiating a new memorandum of understanding, or MOU, on U.S. military aid to Israel. If finished, it would be the fourth such bilateral understanding between the two countries, and it could change the mechanics of the aid as much as the total amount.

The current 10-year agreement runs through fiscal 2028 and covers $38 billion in military aid, including $33 billion in Foreign Military Financing grants and $5 billion for missile defense. The biggest change under discussion would move more support into joint defense accounts and phase out Off-Shore Procurement, the system that lets Israel spend part of U.S. assistance on Israeli-made arms.

From direct grants to shared accounts

That shift matters because aid structure shapes who gets paid and what gets built. Moving more money into accounts such as Procurement, Defense-Wide, and Research, Development, Test and Evaluation Defense-Wide would keep the dollars inside defense work, but it would route them differently and give the relationship a less direct feel than the current grant-heavy model.

Past MOUs have helped set the terms of U.S. aid to Israel for years at a time. They are not legally binding treaties, and they do not need Senate ratification, but they have still guided how Congress has usually appropriated assistance.

Congress still holds the purse

That leaves lawmakers with the last word. Even if the administration and Israel settle on a new understanding, Congress would still decide whether to fund it and on what terms.

Timing adds pressure. Israel faces elections this fall and is looking to replenish munitions after the war in Iran and other conflicts, which gives both sides an incentive to settle the shape of the next deal in the months ahead.