For strategic security and diplomatic support, Israel has depended almost totally upon the United States. Since the establishment of the state in 1948, the United States has expressed its commitment to Israel's security and well-being and has devoted a considerable share of its world-wide economic and security assistance to Israel. Large-scale American military and economic assistance began during the October 1973 War, with a massive American airlift of vital military matériel to Israel at the height of the war. From 1948 through 1985, the United States provided Israel with US$10 billion in economic assistance and US$21 billion in military assistance, 60 percent of which was in the form of grants. From 1986 through 1988, total United States economic and military assistance to Israel averaged more than US$3 billion a year, making Israel the largest recipient of United States aid. Of the annual total, about US$1.8 billion was in Foreign Military Sales credits, and about US$1.2 billion was in economic assistance.

During the administration of President Ronald Reagan, the United States-Israeli relationship was significantly upgraded, with Israel becoming a strategic partner and de facto ally. A number of bilateral arrangements solidified this special relationship. In November 1983, the United States and Israel established a Joint Political-Military Group to coordinate military exercises and security planning between the two countries, as well as to position United States military equipment in Israel for use by American forces in the event of a crisis. In 1984 Israel and the United States concluded the United States-Israel Free Trade Area Agreement to provide tariff-free access to American and Israeli goods. In 1985 the two countries established a Joint Economic Development Group to help Israel solve its economic problems in 1986 they created a Joint Security Assistance Group to discuss aid issues. Also in 1986, Israel began participating in research and development programs relating to the United States Strategic Defense Initiative. In January 1987, the United States designated Israel a major non-NATO ally, with status similar to that of Australia and Japan. Two months later, Israel agreed to the construction of a Voice of America relay transmitter on its soil to broadcast programs to the Soviet Union. In December 1987, Israel signed a memorandum of understanding allowing it to bid on United States defense contracts on the same basis as NATO countries. Finally, the two countries signed a memorandum of agreement in April 1988 formalizing existing arrangements for mutually beneficial United States-Israel technology transfers.

Israel has also cooperated with the United States on a number of clandestine operations. It acted as a secret channel for United States arms sales to Iran in 1985 and 1986, and during the same period it cooperated with the United States in Central America.

The United States-Israeli relationship, however, has not been free of friction. The United States expressed indignation with Israel over an espionage operation involving Jonathan Jay Pol 2000 llard, a United States Navy employee who was sentenced to life imprisonment for selling hundreds of vital intelligence documents to Israel. During the affair, Israeli government and diplomatic personnel in Washington served as Pollard's control officers. Nevertheless, United States government agencies continued to maintain a close relationship with Israel in sensitive areas such as military cooperation, intelligence sharing, and joint weapons research.

The main area of friction between the United States and Israel has concerned Washington's efforts to balance its special ties to Jerusalem with its overall Middle Eastern interests and the need to negotiate an end to the Arab-Israeli conflict, in which the United States has played a major mediating role. In 1948 the United States hoped that peace could be achieved between Israel and the Arab states, but this expectation was quickly dashed when Arab nations refused to recognize Israel's independence. American hopes were dashed again when in 1951 Jordan's King Abdullah, with whom some form of settlement seemed possible, was assassinated and in 1953 when the Johnston Plan, a proposal for neighboring states to share the water of the Jordan River, was rejected.

The June 1967 War provided a major opportunity for the United States to serve as a mediator in the conflict working with Israel and the Arab states the United States persuaded the United Nations (UN) Security Council to pass Resolution 242 of November 22, 1967. The resolution was designed to serve as the basis for a peace settlement involving an Israeli withdrawal from territories occupied in the June 1967 War in exchange for peace and Arab recognition of Israel's right to exist. Many disputes over the correct interpretation of a clause concerning an Israeli withdrawal followed the passage of the UN resolution, which was accepted by Israel. The resolution lacked any explicit provision for direct negotiations between the parties. Although the Arab states and the Palestinians did not accept the resolution, it has remained the basis of United States policy regarding the Arab-Israeli conflict.

In December 1969, the Rogers Plan, named after United States Secretary of State William P. Rogers, although unsuccessful in producing peace negotiations, succeeded in ending the War of Attrition between Israel and Egypt that followed the June 1967 War and established a cease-fire along the Suez Canal. In 1971 United States Assistant Secretary of State Joseph P. Sisco proposed an "interim Suez Canal agreement" to bring about a limited Israeli withdrawal from the canal, hoping that such an action would lead to a peace settlement. The proposal failed when neither Israel nor Egypt would agree to the other's conditions.

In October 1973, at the height of the Arab-Israeli war, United States-Soviet negotiations paved the way for UN Security Council Resolution 338. In addition to calling for an immediate cease-fire and opening negotiations aimed at implementing Resolution 242, this resolution inserted a requirement that future talk be conducted "between the parties concerned," that is, between the Arab and the Israelis themselves.

In September 1975, United States secretary of state Henry Kissinger's "shuttle diplomacy" achieved the Second Sinai Disengagement Agreement between Israel and Egypt, laying the groundwork for later negotiations between the two nations. The United States also pledged, as part of a memorandum of understanding with Israel, not to negotiate with the PLO until it was prepared to recognize Israel's right to exist and to renounce terrorism.

Another major United States initiative came in 1977 when President Jimmy Carter stressed the need to solve the Arab-Israeli conflict by convening an international peace conference in Geneva, cochaired by the United States and the Soviet Union. Although Egyptian President Anwar as Sadat conducted his initiative in opening direct Egyptian-Israeli peace talks without United States assistance, the United States played an indispensable role in the complex and difficult negotiation process. Negotiations ultimately led to the signing, under United States auspices, of the September 17, 1978, Camp David Accords, as well as the March 1979 Treaty of Peace Between Egypt and Israel. The accords included provisions that called for granting autonomy to Palestinians in the West Bank and the Gaza Strip through a freely elected self-governing authority during a five-year transitional period at the end of the period the final status of the occupied territories was to be decided. Carter had hoped that this process would enable the Palestinians to fulfill their legitimate national aspirations while at the same time safeguarding Israeli security concerns. While criticizing the Begin government's settlement policy in the occupied territories, the Carter administration could not prevent the intensified pace of construction of new settlements.

Following Israel's invasion of Lebanon in early June 1982, on September 1, 1982, President Reagan outlined what came to be called the Reagan Plan. This plan upheld the goals of the Camp David Accords regarding autonomy for the Palestinians of the West Bank and the Gaza Strip and disapproved of Israel's establishment of any new settlements in these areas. It further proposed that at the end of a transitional period, the best form of government for the West Bank and the Gaza Strip would be self-government by the resident Palestinian population in association with Jordan. Under the plan, Israel would be obliged to withdraw from the occupied territories in exchange for peace, and the city of Jerusalem would remain undivided its final status would be decided through negotiations. The plan rejected the creation of an independent Palestinian state. Although Labor leader Peres expressed support for the plan, Prime Minister Menachem Begin and the Likud opposed it, as did the PLO and the Arab states. The plan was subsequently shelved.

The United States nevertheless continued its efforts to facilitate Arab-Israeli peace. In March 1987, the United States undertook intensive diplomatic negotiations with Jordan and Israel to achieve agreement on holding an international peace conference, but differences over Palestinian representation created obstacles. In Israel, Likud prime minister Shamir and Labor minister of foreign affairs Peres were at odds, with Shamir rejecting an international conference and Peres accepting it. Peres and Labor Party minister of defense Rabin reportedly held talks with Jordan's King Hussein, who wanted the conference to include the five permanent members of the UN Security Council, as well as Israel, the Arab states, and the PLO. The Reagan administration, on the other hand, was reluctant to invite the Soviet Union to participate in the diplomatic process. The administration insisted that any prospective conference adjourn speedily and then take the form of direct talks between Israel and Jordan. The administration also insisted that the conference have no power to veto any agreement between Israel and Jordan.

A major difficulty involved the nature of Palestinian representation at a conference. A Soviet-Syrian communiqué repeated the demand for PLO participation, which Israel flatly rejected. The United States asserted that, as the basis for any PLO participation, the PLO must accept UN Resolutions 242 and 338 with their implied recognition of Israel's right to exist. Both the PLO mainstream and its radical wings were unwilling to agree to this demand. The Palestinian uprising (intifadah) in the West Bank and the Gaza Strip began in December 1987. In February 1988, Secretary of State George Shultz visited Israel, Egypt, Jordan, and Syria in a statement issued in Jerusalem he called for Palestinian participation, as part of a Jordanian/Palestinian delegation, in an international peace conference. The PLO rejected this initiative. The United States proposal called for a comprehensive peace providing for the security of all states in the region and for fulfillment of the legitimate rights of the Palestinian people. The propo 1071 osal consisted of an "integrated whole" and included the following negotiating framework: "early negotiations between Israel and each of its neighbors willing to do so," with the door "specifically open for Syrian participation" "bilateral negotiations . . . based on United Nations Security Council Resolutions 242 and 338 in all their parts" "the parties to each bilateral negotiation" to determine "the procedure and agenda of the negotiation" "negotiations between an Israeli and a Jordanian/Palestinian delegation on arrangements for a transitional period for the West Bank and Gaza," with the objective of completing "these talks within six months" and "final status negotiations" beginning "on a date certain seven months after the start of transitional talks," with the objective of completing the talks "within a year."

On March 26, 1988, Shultz met with two members of the Palestine National Council (PNC), which represents Palestinians outside Israel various political and guerrilla groups with the PLO, and associated youth, student, women's and professional bodies. According to a PLO spokesman, the PNC members, Professors Ibrahim Abu Lughod and Edward Said, both Arab Americans, were authorized by Yasir Arafat to speak to Shultz, and they later reported directly to the PLO leader about their talks. Little resulted from this meeting, however, and Shultz found no authoritative party willing to come to the conference table.

The United States once again involved itself in the peace process to break the stalemate among the Arab states, the Palestinians, and Israel following King Hussein's declaration on July 31, 1988, that he was severing most of Jordan's administrative and legal ties with the West Bank, thus throwing the future of the West Bank onto the PLO's shoulders. PLO chairman Yasir Arafat thereby gained new international status, but Shultz barred him from entering the United States to address the UN General Assembly in early December because of Arafat's and the PLO's involvement in terrorist activities. When Arafat, following his December 14 address to a special session of the UN General Assembly in Geneva, met American conditions by recognizing Israel's right to exist in "peace and security," accepted UN Resolutions 242 and 338, and renounced "all forms of terrorism, including individual, group and state terrorism," the United States reversed its thirteen-year policy of not officially speaking to the PLO.

The Israeli National Unity Government, installed in late December, denounced the PLO as an unsuitable negotiating partner. It did not accept the PLO's recognition of Israel and renunciation of terrorism as genuine.

Whether the United States-PLO talks would yield concrete results in terms of Arab-Israeli peace making remained to be seen as of the end of 1988. Notwithstanding the possibility of future progress, the new willingness of the United States to talk to the PLO demonstrated that, despite the special relationship between the United States and Israel and the many areas of mutual agreement and shared geopolitical strategic interests, substantial differences continued to exist between the United States and certain segments of the Israeli government. This was especially true with regard to the Likud and its right-wing allies.

Data as of December 1988