Ambassador (ret.) Yoram Ettinger | “Second Thought: a US-Israel Initiative” | July 3, 2026
“Israeli Air Force Fly-by 67” by Zachi Evenor, CC BY-SA 4.0
*The US defense, aerospace and commercial high-tech industries, as well as the US Armed Forces, have leveraged Israel’s stature as the world’s most militarily and technologically challenged society, which has been forced to develop ground-breaking, time and cost-effective solutions, moving swiftly from concept to fully operational capabilities.
*Israel’s unique experience in intercepting ballistic missiles, cruise missiles and drone salvos has been integrated into the architecture of US-made air defense systems. It has saved the US many years of laboratory simulations and many billions of dollars in theoretical testing. The close collaboration with Israel – which excels in operational interoperability of a multilayered nearly impregnable shield – has provided the US with critical advantages – such as boosting US exports – in the technological and economic competition with China, Russia, Britain and France, and in the battle against Sunni and Shite Islamic terrorism.
*For example, during the early stages of the F-35 program, Israel’s operational adjustments, in collaboration with Lockheed-Martin, overcame most/all hardware and software glitches. Thus, saving the US 10-20 years of research and development, which amounts to mega-billions of dollars in research and development (total F-35’s R&D cost – $55bn). Similarly, the US-Israel joint development of the Arrow series (Arrow 2 and Arrow 3) and David’s Sling has refined radar algorithms, sensor fusion, and interceptor physics, benefitting the overall US missile defense program, including the Terminal High Altitude Area Defense (THAAD anti-missile system) and the Patriot system. These are real-life conditions, that no peacetime test can generate.
* The first deployment of a THAAD unit to Israel took place in October 2024, following a series of Iranian missile attacks. The system achieved its first recorded operational success on December 27, 2024, when it intercepted a ballistic missile launched from Yemen by (Iran’s proxy) Houthi terrorists. Acting as the prime showroom and billboard for the superiority of US-made military systems – intercepting cutting edge threats – Israel provides the ultimate marketing tool and export-multiplier for the US: effective combat validation.
*Israel’s 2024 and June 2025 combat experience (against Iran and the Houthis) triggered a THAAD production revolution, including new sales and replenishment demand. On June 24, 2026, Lockheed Martin was awarded a $35.3bn 2026-2032 sole-source, fixed-price contract for the THAAD interceptor production. As a follow up to the June 2025 War THAAD performance, the US Missile Defense Agency (MDA) awarded a $6.2bn annual contract to increase annual production from 96 to 400 missiles. In January and March 2026, Saudi Arabia and Kuwait ordered $9bn worth of Patriot PAC-3 missiles and $8bn Patriot next-generation radar. Poland announced a $15bn Patriot Phase II acquisition. The RTX (formerly Raytheon) Patriot missile system market was estimated at $12.09 billion in 2025, expected to reach $13.02 billion in 2026, growing to $20.61 billion by 2032. Much of the demand for US-manufactured air defenses has been generated by Israel’s combat experience.
*The US-made THAAD is one of dozens of advanced US military systems, supplied to Israel in its capacity as the largest battle-tested, no-cost, high-fidelity research and development center (a massive beta site) of the US defense and aerospace industries, that employ over 2.5 million Americans (e.g., Lockheed-Martin, Boeing, RTX-Raytheon, General Dynamics, Northrop Grumman and Caterpillar-Defense). In a similar manner, Israel serves as the leading hub of research and development centers (outside the US) for over 250 US commercial high-tech giants (e.g., Intel, NVIDIA, Dell, Amazon, John Deere, IBM, AOL, Applied Materials, Google, Facebook, Cisco, General Electric, General Motors, HP, 3M, Intuit, Motorola, Apple and Microsoft). This has bolstered the global lead of the US commercial high-tech sector. Israel has also received the THAAD in its role as the largest innovation center for the US Armed Forces, enhancing the battle tactics of the US air defenses.
*The US has benefitted from the extensive, battle-tested experience of Israel’s multi-layered air defense architecture, that has served as a mega-dollar-multiplier and a mega-force-multiplier for the US, just like the dramatic benefits derived from supplying Israel the F-35, F-16, F-15, F-4, Black Hawk and Apache combat helicopters, the C-130 Hercules transport plane, etc.
*The uniquely intense Israeli use of advanced US military systems has generated a wave of operational feedback to the US military and to US defense contractors, optimizing US capabilities, providing a substantial return on investment (ROI) on the annual investment in Israel ($3.8bn), which is misperceived as “foreign aid.” Israeli feedback/lessons shared with the US defense and aerospace industries have saved scores of years of research and development, which amount to mega-billions of dollars, bolstering US competitiveness, increasing US exports, expanding US employment, generating income tax revenues to the US Treasury, and tilting the global balance of power (away from Russia and China) in favor of the US with no need for additional US military personnel.
The Bottom Line
*The US makes a highly lucrative annual $3.8bn investment in Israel (misperceived as “foreign aid”) for which the US receives a wealth of battle tactics data, mega-billions of dollar R&D cost reductions, billions in exports, an expansion of employment, increased corporate and individual income tax revenues, and a formidable strategic anchor in a critically volatile region, which is the chief epicenter of anti-US Islamic terrorism, the home of 48% of global oil reserves and a vital intersection of shipping lanes between the Far East and Western Europe.
*Unlike the $35bn annual US cost of maintaining military bases in West Europe (including 80,000 US soldiers), the aforementioned contributions to the US economy and national security are extended by the self-manned and mostly self-funded Israel.
*US-Israel relations constitute a classic case of a mutually-beneficial two-way-street: a financial windfall for the US taxpayer!
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