Negotiation Musings: on The New US-Israel Defence Deal

There’s a few publications covering the latest multi-year $bn US-Israel defence deal; some of them are seeing this as an Israeli achievement (whether that’s good or bad for the region), while others are singing a completely different song, especially as this new deal includes some unprecedented terms:

  1. A 9% decline in annual aid in real terms (increase in nominal terms, for the headlines), despite said geopolitical state of flux.
  2. A clause that forces Israel to spend all aid money with US manufacturers. Previously, 26% was cordoned off for Israeli manufacturers — this will be a body blow to the local security industry and to jobs.
  3. A prohibition on Israel going to congress for a top-up in the next few years — clearly aimed at neutralising a Republican Party/Netanyahu alliance against Hillary Clinton, if she is elected.

This deal could have easily just focused on the number, but it didn’t. Putting my politics aside for the moment, from a negotiations point of view, I find it quite interesting how Obama seems to have consciously used his ego to lead him through the process, against common negotiation wisdom, but obviously to great effect. After Netanyahu repeatedly antagonised Obama over the last 8 years (building more settlements, publicly supporting Romney, speaking against Obama in Congress), the president of the US is letting his anger show through the terms.

With regards to using time pressure, theoretically, with US elections looming, and Clinton vying for the endorsement of Jewish-American organisations, Netanyahu held the cards; evidently that was either a false assumption, or even if it was true, it did not help him at all.

Overall seems like a very bad deal for the Israeli government, with less aid, less jobs, and less ability to renegotiate in the future. Above all with this deal, I believe Obama’s team has attempted to send a loud political message to Israeli voters and Republican members of the US Congress alike.

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