Except for Israel and Egypt: Trump stops foreign aid, including to Ukraine

The US Secretary of State issued an order last night (Fri) to stop all security aid to foreign countries and suspend the new programs, with the exception of Israel and Egypt – this is reported in several news agencies.

Israel’s annual aid package is $3.3 billion for procurement, while Egypt’s is $1.3 billion. However, the US is the largest aid donor in the world with about 68 billion dollars in the fiscal year 2023 (about 1% of its budget), and already during the election campaign US President Donald Trump pledged to stop this. The new American order also states that the US “wants to strengthen the ability of the Lebanese army to deal with the instability and confront The harmful Iranian influence” – referring to Hezbollah.

In Kiev they are waiting for Trump’s decision

A prominent country that may be hurt by the measure more than all of them is Ukraine, as next month it will be three years since Russia invaded its territory. A senior official at USAID (the American Agency for International Development) told the Reuters news agency that officials in charge of projects in Ukraine were ordered to stop activities – including support for schools or health institutions. The current situation also calls into question future foreign exchange shipments to Kiev amounting to approximately $3.85 billion that the Biden administration approved, and now we wonder what Trump will decide on the matter.

Other countries receiving American aid this year are Jordan, Taiwan, Georgia, Estonia, Latvia, Lithuania, Indonesia, Philippines, Thailand, Vietnam, Djibouti, Colombia, Panama and Ecuador. A significant impact in the field of health may be reflected in the PEPFAR program to combat the HIV virus, which since its inception during the tenure of George Bush Jr. has saved 25 million people, including 5.5 million children.

According to the report, Secretary of State Marco Rubio will examine possible concessions over the next 85 days. One that has already been approved is approval for the provision of emergency food aid in the shadow of the ceasefire agreement and the humanitarian situation in Gaza, but professional sources minimize that the emergency food aid is only a tiny part of the humanitarian aid. On the other hand, the AP news agency states that the update sent by Rubio to the American embassies will, among other things, also affect anti-corruption, development, water, sanitation and occupational training programs.

“These are bilateral decisions, but we still expect from those countries that have the ability to generously finance development aid,” said UN Deputy Spokesman Farhan Haq. However, the document that Rubio sent to the embassies already contains clear messages, including the direct message that from Washington’s point of view A review is required with President Trump’s “consistent with foreign policy” aid programs. “No new funding will be provided for new awards or Extensions of existing ones, until each one is checked and approved,” was quoted from the document on the BBC. “Stop work orders must be issued immediately, in accordance with the conditions, until the date determined by the secretary at the end of the inspection.”

Good news from the White House

From the Israeli perspective, the Trump administration’s renunciation of aid to Israel is a very positive message, all the more so when the current annual aid package, which also includes half a billion dollars for joint programs in the field of air defense, ends in 2028. Therefore, Prime Minister Benjamin Netanyahu will be required to work with President Trump to establish a new memorandum of understanding starting in 2029.

However, American aid in the war is much more extensive than the $3.8 billion per year under the MOU. In the first year of the Iron Swords War, the US invested no less than 17.9 billion dollars in military aid to Israel. This is according to the “Costs of War” report published by the Watson Institute at Brown University. This is an amount equal to approximately 3.8% of Israel’s GDP.

The Israeli defense budget for 2025 is NIS 117 billion (approximately $30.9 billion), which constitutes 6.5% of GDP and 20% of the state budget. In the bottom line, the scope of military aid from the US is equal to about 57.9% of defense spending. And this, if we do not count in this framework about 4.86 billion additional dollars that were invested in the first year in the increased activity of the US in the region, such as, for example, air defense assistance to Israel.

The principle of Israel’s qualitative military advantage is anchored in the basis of American policy. In a study by the Watson Institute, it is noted that a total of 334 of Israel’s combat aircraft are made in the USA – F-15, F-16, and F-35, which are a key means of Israel’s qualitative advantage. In addition, the Air Force operates more than 40 combat helicopters Apache model, they are also American made.

In the first year of the war, Washington supplied Israel with, among other things, more than 4 million kg of jet fuel, about 57,000 155 mm shells, 3,000 Hellfire missiles, 1,800 bunker busters, 200 stray weapons and about 20,000 guns. Thus, according to Watson’s research, American aid from 1959 to this year, adjusted for inflation, amounts to approximately 251.2 billion dollars. To the huge sums was added the unusual action of deploying the American THAAD battery in Israel starting in October.

Grants instead of loans

Significant American aid began in the Yom Kippur War, after which grants were added – until 1984, the grant system took over the full amount of aid instead of loans. The significance was already great in the Israel of the 1980s, because in 1985 American aid represented about 10% of the Israeli GDP. The significant change of moving to the Memorandums of Understanding, which forms the basis of American aid today, began in 1999.

The advantage of being anchored in the Memorandums of Understanding is that they are not law, and consequently do not require congressional approval. The current memorandum, launched in 2019 and ending in 2028, includes $3.3 billion in military procurement financing (FMF) annually. To which was added half a billion dollars for the development of joint projects in the field of air defense. A problematic issue in the current memorandum of understanding is the conversion clause (OSP): the ability to use certain aid from the annual grant for conversion into shekels and use in the local defense industry.

The memorandum of understanding that entered into force in 2019 states that Israel was allowed to convert 815 million dollars (24.6%) of the FMF. At the same time, a model was established in which the scope of conversions is reduced in pulses starting in 2023, including a sharp one next year, until zero in 2028 – with the goal that the entire amount will be invested back into American industry. In a new memorandum of understanding that will be one of the most significant activities of Prime Minister Netanyahu and his people against the Trump administration, it is very possible that the main difficulty will be in the conversion section, out of the new president’s desire to leave as much investment as possible in the American economy.