IB82008
Israel: Background and Relations with the United States
July 25, 2005
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Summary
On May 14, 1948, the State of Israel declared its independence and was immediately engaged in a war with all of its neighbors. Armed conflict has marked every decade of Israel's existence. Despite its unstable regional environment, Israel has developed a vibrant parliamentary democracy, albeit with relatively fragile governments. Prime Minister Ariel Sharon formed the current three-party coalition in January 2005 in order to secure support for his plan to withdraw from the Gaza Strip and four small settlements in the West Bank, now scheduled to be implemented after August 15. Some observers are already predicting an early national election some time after disengagement. Israel has an advanced industrial, market economy in which the government plays a substantial role. The economy has recovered from declines experienced due to the Palestinian intifadah (uprising) against Israeli occupation and the international high-tech crash. Finance Minister Benjamin Netanyahu is attempting to liberalize the economy by cutting the role of government. Israel's foreign policy is focused largely on its region, Europe, and the United States. The government views Iran as a strategic threat due to its nuclear ambitions, and blames Iran for supporting anti-Israel terrorists. Israel negotiated a series of agreements with the Palestinians in the 1990's, but the Oslo peace process ended in 2000, shortly after the beginning of the intifadah. Israeli and Palestinian officials resumed contacts after the death of Yasir Arafat. Their immediate focus is on the success of Israel's disengagement from Gaza. Both sides have accepted the internationallybrokered framework for achieving a two-state solution, known as the "Roadmap." Yet, Israel's vision of a Palestinian state remains unclear. Israel concluded a peace treaty with Egypt in 1979 and with Jordan in 1994, but never reached an agreement with Syria or Lebanon. It unilaterally withdrew from southern Lebanon in 2000. Israel's relations with the European Union are important because the European countries collectively represent Israel's second largest trading partner and a participant in the peace process. However, Israel considers the EU to be biased in favor of the Palestinians and objects to its assuming an even larger role in the peace process. Since 1948, the United States and Israel have developed a close friendship based on common democratic values, religious affinities, and security interests. U.S.-Israeli bilateral relations are multidimensional. The United States is the principal proponent of the Arab-Israeli peace process, but U.S. and Israeli views differ on various peace process issues, such as the fate of the Golan Heights, Jerusalem, and Israeli settlements. The United States and Israel concluded a free-trade agreement in 1985, and the United States is Israel's largest trading partner. Since 1976, Israel has been the largest recipient of U.S. foreign aid. While the two countries do not have a mutual defense agreement, they do have very close security relations. Current issues in U.S.-Israeli relations include Israel's military sales to China, inadequate Israeli protection of U.S. intellectual property, and espionage-related cases. See also CRS Issue Brief IB85066, Israel: U.S. Foreign Assistance and CRS Issue Brief IB91137, The Middle East Peace Talks.
