This report describes issues related to U.S. aid provided to Palestine to support prevention/combating against terrorism, creating coexistence with Israel and self-governance, and meeting humanitarian needs. In includes introductory and historical background as well as in-depth analysis of the types of U.S. bilateral aid to Palestine, U.S. contributions to the U.N. Relief and Works Agency for Palestine Refugees in the near East (UNRWA), and the issues involved in determining future aid.

This report discusses various security concerns for Israel and the resulting influence on U.S. policy. Israel is a leading recipient of U.S. foreign aid and a frequent purchaser of major U.S. weapons systems. By law, U.S. arms sales cannot adversely affect Israel's "qualitative military edge" over other countries in its region. The two countries signed a free trade agreement in 1985, and the United States is Israel's largest trading partner.