Omar Assad, 78, a grocer who spent most of his adult life in Milwaukee, was on a return visit to the West Bank in January 2022 when he was handcuffed, gagged and blindfolded, dying after lying on the ground for more than an hour on a cold winter night.
The incident was linked to the Israeli army's Netzah Yehuda, a unit founded in 1999 to encourage recruits from the ultra-Orthodox community, which is largely exempt from compulsory military service.
A State Department panel decided against imposing sanctions on the unit after being presented with information by the government of Israel, which has vocally opposed action against its military amid the ongoing war with Hamas in the Gaza Strip.
"After thoroughly reviewing that information, we have determined that violations by this unit have also been effectively remediated," State Department spokesman Vedant Patel said.
"This unit can continue receiving security assistance from the United States of America," he said.
A US official said that two soldiers involved in the incident, while not ultimately prosecuted, were removed from combat positions and have left the military.
The military has also taken steps "to avoid a recurrence of incidents," including enhanced screening of recruits and a two-week educational seminar specifically for the unit.
Experts say that Netzah Yehuda has mostly drawn ultra-Orthodox youths who see the military as a way to integrate into Israeli society, but it has also attracted fervent nationalists from the West Bank.
The West Bank, which Israel has occupied since 1967, is home to three million Palestinians alongside some 490,000 Israelis living in settlements considered illegal under international law.
The army concluded that Assad's death was the result of "a moral failure and poor decision-making on the part of the soldiers."
It said Assad "refused to cooperate" when stopped by soldiers in the village of Jiljilya and that soldiers tied his hands and gagged him without checking on him later.
It was unclear why soldiers stopped Assad. The Palestinian official news agency Wafa said he died from a stress-induced heart attack.
Israeli Prime Minister Benjamin Netanyahu has voiced anger over foreign pressure on human rights, insisting the country has its own means of justice.
The International Criminal Court in May said it intended to pursue arrest warrants for Netanyahu, his defense minister and Hamas leaders for alleged war crimes in the Gaza war.
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