Israel, Boeing sign multi-billion-dollar ‘reciprocal’ spending agreement
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Israel, Boeing sign multi-billion-dollar ‘reciprocal’ spending agreement

Many hope deal could ease worries the US aid package to Israel would decimate local industry, due to its clause that all money eventually be spent on American-manufactured arms

An Israeli Air Force F-15 takes off during the Blue Flag air exercise at the Ovda air force base, north of the Israeli city of Eilat, on November 8, 2017. (Jack Guez/AFP)
An Israeli Air Force F-15 takes off during the Blue Flag air exercise at the Ovda air force base, north of the Israeli city of Eilat, on November 8, 2017. (Jack Guez/AFP)

The Economy Ministry announced Tuesday that it had reached a deal with Boeing that will see the multinational corporation spend billions of dollars in the Jewish state if it wins major defense contracts.

The “reciprocal procurement” agreement will have Boeing collaborate with Israeli companies for at least 35 percent of the value of any transaction it signs with the Israeli government, Reuters reported.

The ministry said Boeing is in competition in Israel for a number of important tenders, including the manufacture of additional F-15 aircraft, refueling planes and transport helicopters.

The Economy Ministry said Israel expects to spend over $10 billion with Boeing over the next decade, and the deal will mean $3.5 billion worth of new business in Israel, according to Reuters.

An Israeli heavy transport helicopter flies over Cyprus as part of a binational exercise in early December 2017. (Israel Defense Forces)

It is thought the deal could ease concerns within Israel’s defense industry that the US aid package to Israel — the biggest of its kind, giving Israel $38 billion in military assistance over ten years starting from 2019 — could decimate local industry due to its requirement that all the money eventually be spent on US-manufactured arms.

In May, the Defense Ministry told lawmakers that up to 22,000 workers in the defense industry could lose their jobs amid $1.3 billion in annual losses unless US President Donald Trump agreed to reverse a clause in the US military aid package to Israel that insists the money only be spent on US-made arms.

One clause specifies the gradual phasing out of a practice that has enabled Israel to use 26.3 percent of the cash on its own defense industries. By 2028, all of that money will have to be spent on US-made military hardware.

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