Israel: background and relations with the United States.(CRS Report for Congress: Received through the CRS Web)

Updated July 26, 2006

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. Most recently, the Kadima Party placed first in the March 28, 2006, Knesset (parliament) election, and Prime Minister Ehud Olmert formed a four-party coalition government. Israel has an advanced industrial, market economy in which the government plays a substantial role. The economy is now doing very well, and increased social spending is expected.

Israel's foreign policy is focused largely on its region, Europe, and the United States. The government views Iran as an existential threat due to its nuclear ambitions and support for anti-Israel terrorists. Israel concluded a peace treaty with Egypt in 1979 and with Jordan in 1994 but never reached accords with Syria and Lebanon. It negotiated a series of agreements with the Palestinians in the 1990s, but the Oslo peace process ended in 2000, with the intifadah or uprising against Israeli occupation. Israeli and Palestinian officials resumed contacts after the November 2004 death of Yasir Arafat. Both sides accepted but have not implemented the "Roadmap," the international framework for achieving a two-state solution to their conflict. Israel unilaterally disengaged from Gaza in summer 2005 and is constructing a security barrier in the West Bank to separate from the Palestinians. The victory of the Hamas terrorist group in the January 2006 Palestinian parliamentary elections complicated Israeli-Palestinian relations and added impetus to Israeli ideas for unilateral steps in the West Bank. On June 25, the Hamas military wing kidnaped an Israeli soldier, provoking Israeli military operations to force his release. Israel unilaterally withdrew from southern Lebanon in 2000, but Hezbollah occupied the area and continued to fire rockets from the region into northern Israel. It sparked a major conflict by kidnaping two Israel soldiers on July 12, 2006. European countries collectively are Israel's second largest trading partner, and the EU participates 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. The two countries also have 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. This report replaces CRS Issue Brief IB82008, Israel: Background and Relations with the United States, and will be updated as developments warrant. See also CRS Report RL33530, Israeli-Arab Negotiations: Background, Conflicts, and U.S. Policy, CRS Report RL33566, Israel-Hamas-Hezbollah: the Current Conflict, and CRS Report RL33222, U.S. Foreign Aid to Israel.

 
Contents 
 
Most Recent Developments 
 
Historical Overview of Israel 
 
Government and Politics 
  Overview 
  Recent Political Developments 
  Current Government and Politics 
 
Economy 
  Overview 
  Current Issues 
 
Foreign Policy 
  Middle East 
    Iran 
    Palestinian Authority 
    Egypt 
    Jordan 
    Syria 
    Lebanon 
    Other 
  European Union 
 
Relations with the United States 
  Overview 
  Issues 
    Peace Process 
    Trade and Investment 
    Aid 
Security Cooperation 
  Other Current Issues 
    Military Sales 
    Espionage-Related Cases 
    Intellectual Property Protection 
U.S. Interest Groups 
 
List of Figures 
 
Figure 1. Map of Israel 
 
List of Tables 
 
Parties in the Knesset, March 2006 

Most Recent Developments

Israel is in the midst of a two-front war against U.S.-designated terrorist groups in response to the June 25 kidnaping of an Israeli soldier by Hamas and others near Gaza and the July 12 abduction of two Israeli soldiers from northern Israel by Hezbollah. (1) Both attacks occurred on undisputed, sovereign Israeli territory, not subject to the stalled peace process that began in the 1990s. The Israeli military campaign and government's conduct of it have broad public support and backing in parliament.

Historical Overview of Israel (2)

The quest for a modern Jewish homeland was launched with the publication of Theodore Herzl's The Jewish State in 1896. The following year, Herzl described his vision at the first Zionist Congress, which encouraged Jewish settlement in Palestine, a land that had been the Biblical home of the Jews and was later part of the Ottoman Empire. In 1917, the British government issued the Balfour Declaration, supporting the "establishment in Palestine (which had become a British mandate after World War I) of a national home for the Jewish people." Britain also made conflicting promises to the Arabs concerning the fate of Palestine, which had an overwhelmingly Arab populace. Nonetheless, Jews immigrated to Palestine in ever greater numbers and, following World War II, the plight of Jewish survivors of the Nazi holocaust gave the demand for a Jewish home greater poignancy and urgency.

In 1947, the U.N. developed a partition plan to divide Palestine into Jewish and Arab states, with Jerusalem under U.N. administration. The Arab states rejected the plan. On May 14, 1948, the State of Israel proclaimed its independence and was immediately invaded by Arab armies. The conflict ended with armistice agreements between Israel and its neighbors: Egypt, Jordan, Lebanon, and Syria. Israel engaged in armed conflict with some or all of these countries in 1948, 1956, 1967, 1973, and 1982. Since the late 1960's, Israel also has dealt with the threat of Palestinian terrorism. In 1979, Israel concluded a peace treaty with Egypt, thus making another multi-front war unlikely. Israel's current relations with its neighbors are discussed in "Foreign Policy" below.

Government and Politics

Overview

Israel is a parliamentary democracy in which the President is head of state and the Prime Minister is head of government. The unicameral parliament (the Knesset) elects a president for a seven-year term. The incumbent is Moshe Katzav. The Prime Minister is the leader of the party with the most seats in parliament. The political spectrum is highly fragmented, with small parties exercising disproportionate power due to the low vote threshold for entry into parliament and the need for their numbers to form coalition governments. In the March 2006, election, the threshold to enter parliament was raised from 1% to 2%--an action intended to bar some smaller parties from parliament but that spurred some parties to join together simply to overcome the threshold. National elections must be held at least every four years, but are often held earlier due to difficulties in holding coalitions together. The average life span of an Israeli government is 22 months. The peace process, the role of religion in the state, and political scandals have caused coalitions to break apart or produced early elections.

Israel does not have a constitution. Instead, 11 Basic Laws lay down the rules of government and enumerate fundamental rights; two new Basic Laws are under consideration. (3) On February 2, 2006, the Knesset's Constitution, Law, and Justice Committee approved a draft constitution encompassing existing Basic Laws and a chapter of human rights and basic principles. However, the coalition agreement of the government that took power in April promised the ultra-orthodox Shas Party that Basic Laws would not be changed (i.e., transformed into a Constitution) without its approval. The new Chairman of the Constitution Committee, Menachem Ben-Sasson of the Kadima Party headed by Prime Minister Ehud Olmert, has said that he would try to advance the cause of the constitution. Israel has an independent judiciary, with a system of magistrates courts and district courts topped by a Supreme Court.

There is an active civil society. Some political pressure groups are especially concerned with the peace process, including the Council of Judea, Samaria, and Gaza (Yesha Council), which represents local settler councils and opposes any withdrawal from occupied Arab territories, and Peace Now, which opposes settlements, the security barrier in the West Bank, and seeks territorial compromise. Both groups have U.S. supporters.

Recent Political Developments

Israel's domestic politics have been troubled in recent years. Prime Minister Ariel Sharon's plan to disengage from the Gaza Strip and four small West Bank settlements split his Likud Party. In August 2005, Finance Minister Benjamin "Bibi" Netanyahu resigned from the government to protest disengagement and became a candidate for Likud chairman, challenging Sharon. In September, Sharon supporters in the Likud Central Committee narrowly defeated an effort by opponents of disengagement to call an early party leadership primary to depose Sharon. On November 7, eight Sharon opponents in Likud joined the opposition to deny Knesset approval of three new Sharon cabinet appointees; the dissidents considered two of the appointments compensation for supporting disengagement.

In November, Histadrut labor federation head Amir Peretz defeated acting party leader Shimon Peres and former Infrastructure Minister Benjamin Ben Eliezer in a Labor Party leadership primary. Peretz emphasized the party's need to champion socioeconomic goals, which it had subordinated for the sake of joining Sharon's coalition. On November 20, Labor voted to withdraw from the coalition government, depriving Sharon of his parliamentary majority.

On November 21, Sharon said that he was no longer willing to deal with Likud rebels, resigned from the party, and founded a new "centrist" party, Kadima (Forward). He asked President Katzav to dissolve parliament and schedule an early election. Some 18 Likud Members of the Knesset (parliament) (MKs), including several ministers, the chairman of the Likud Central Committee, several Labor MKs, players in other political parties, and prominent personalities joined Kadima. Former Labor …