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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. The Kadima Party placed first in the March 28, 2006, Knesset (parliament) election; Prime Minister Ehud Olmert formed a coalition government. The tenure of the government is now uncertain due to scandals involving Olmert, which led to a Kadima leadership primary. Israel has an advanced industrial, market economy with a large government role. Israel's foreign policy is focused largely on its region, Europe, and the United States. It views Iran as an existential threat due to its nuclear ambitions and support for anti-Israel terrorists. Israel concluded peace treaties with Egypt in 1979 and Jordan in 1994, but not with Syria and Lebanon. Israel unilaterally withdrew from southern Lebanon in 2000. Hezbollah, which then took over the south, sparked a 34day war when it kidnaped two Israeli soldiers in July 12, 2006. Israel negotiated a series of agreements with the Palestinians in the 1990s, but that process ended in 2000. Israel resumed talks with the Palestinian Authority (PA) in June 2007, after PA President Mahmud Abbas dissolved an Hamas-led unity government. On November 27, the international Annapolis Conference officially welcomed the renewed negotiations. 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 some issues, such as the Golan Heights, Jerusalem, and settlements. The Bush Administration and Congress supported Israel's 2006 military campaigns against Hezbollah and Hamas as acts of self-defense. The United States and Israel concluded a free-trade agreement in 1985. Israel is a prominent recipient of U.S. foreign aid. The two countries also have close security relations. Other 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 will be updated as developments warrant. See also CRS Report RL33530, Israeli-Arab Negotiations: Background, Conflicts, and U.S. Policy, CRS Report RS22768, Israeli-Palestinian Peace Process: The Annapolis Conference, and CRS Report RL33222, U.S. Foreign Aid to Israel.
