Sequestration may have dramatic repercussions for IDF

Israeli military procurement budget, including Iron Dome and Arrow missile defense, could face a $300-million cut

Haviv Rettig Gur is The Times of Israel's senior analyst.

An Iron Dome battery placed in the Tel Aviv area on November 17, 2012 during Operation Pillar of Defense (photo credit: Alon Besson/Ministry of Defense/Flash90)
An Iron Dome battery placed in the Tel Aviv area on November 17, 2012 during Operation Pillar of Defense (photo credit: Alon Besson/Ministry of Defense/Flash90)

NEW YORK — As sequestration goes into effect Friday, Israeli defense planners are bracing for a potentially dramatic cut in US assistance that may slash as much as $300 million in aid over the next seven months.

The term “sequestration” refers to painful across-the-board cuts in federal spending that were passed into law in 2011 as a way to force Democrats and Republicans to compromise on a plan to reduce the estimated $900-billion annual federal deficit. The parties have been unable to reach a compromise, and the sequestration will go into effect Friday, slashing government spending deeply, though not immediately.

While exact figures pertaining to any sequestration-related cuts remain shrouded in the fog of behind-the-scenes negotiations and much political grandstanding, a full implementation of sequestration would mean significant reductions in US military assistance to Israel, including funding for joint missile defense programs and the Iron Dome short-range, anti-rocket system.

The majority of the cut will come in Israel’s share of US foreign aid funding. The US State Department spends roughly $5.1 billion each year in “military assistance to support ongoing partnerships worldwide.” Of that figure, some $3.1 billion go to Israel. With sequestration expected to slash non-defense discretionary spending (a category that includes foreign aid) by an expected 8.2%, Israel is slated to lose over $254 million from its expected aid.

Some of Israel’s neighbors could be hit as well. Egypt receives $1.3 billion from the same military assistance budget, and Jordan some $300 million. That leaves Egypt with a potential cut of about $107 million, and Jordan of approximately $25 million.

The cuts could have a dramatic impact on the IDF’s ability to meet its acquisitions plans for several military systems, including the F-35 Joint Strike Fighter, new C-130 Hercules transport planes, and Namer armored personnel carriers currently under construction in the Joint Systems Manufacturing Center in Lima, Ohio.

Since the American assistance funds are used to pay for these multi-year acquisition contracts, the disruption caused by the disappearance of such aid this year could disrupt the production line and result in increased cost per unit.

The reduction in US aid, combined with the expected cost increase, will amount to a painful squeeze on Israel’s defense budget, exacerbating an expected budget crunch for the IDF caused by government plans to cut Israel’s own defense-driven budget deficit of recent years.

The silver lining for Israeli planners: If the military assistance cuts are implemented, Israel will have leeway in deciding what to cut.

“Foreign aid is given as a general pot,” one Washington source familiar with the issue told The Times of Israel this week. “We give the Israelis the benefit of the doubt that they are the best judges of their defense needs. So although they will consult with the State Department and Department of Defense on how to cut the aid, they ultimately decide what they need. If there’s a cut, it’s logical to assume the Israelis will decide where to make the more drastic cuts.”

While the slice in the military assistance budget is the largest of the expected cuts from sequestration, it may not be the most painful. Beyond the military assistance funds, the Obama administration has helped fund joint US-Israeli missile defense programs through the Department of Defense.

Three of these systems, developed under a DoD budget line titled “US-Israeli missile defense cooperative programs,” are the Arrow 2, Arrow 3 and David’s Sling, designed to intercept long- and medium-range missiles such as those found in the arsenals of Iran and Hezbollah. All three were jointly funded by the US and Israel, with different parts constructed in both countries. The Pentagon’s share of the funding is slated to be $268 million in fiscal year 2013 (which ends on September 30). With the cut to defense spending expected (though not guaranteed) to be around 7.9%, the US contribution to those programs could drop by over $21 million over the next seven months.

That cut is separate from the cut to funding for Iron Dome, an advanced missile defense system developed in Israel that is designed to intercept short-range rockets launched from Gaza and Lebanon. US funding for Iron Dome, also through the Department of Defense, comes to $211 million in fiscal year 2013, a figure that could be cut by $17 million by sequestration.

The projected cut to Iron Dome would be especially painful for Israel, as Israeli defense planners seek to more than double the number of deployed batteries to 13 (from the current five) in order to better protect Israeli civilian centers from future rocket attacks by groups such as Hezbollah and Hamas.

Iron Dome faces another hurdle in Washington’s chaotic budget environment, one unrelated to sequestration. Congress has been unable to agree on a new federal budget for fiscal year 2013, and will likely resort to passing a “continuing resolution” by the March 31 deadline to continue current spending levels while budget negotiations (or, more likely, a budget standoff) remain underway. Since the Iron Dome system is not included in the existing federal budget, Iron Dome’s funding would not automatically continue in the event of a continuing resolution.

However, efforts are already underway to save the Iron Dome funding. “Iron Dome isn’t automatically transferred in, but there will have to be an exception made,” promised one source who closely follows the issue.

“A bill is being proposed [in the House] to grant the president the ability to authorize Iron Dome funding through fiscal year 2013,” concurred another Capitol Hill source familiar with the proposal.

The question of military assistance and missile defense funding will be key to the agenda at the AIPAC Policy Conference set to open Sunday in Washington, D.C.

But as one of Israel’s staunchest advocates on Capitol Hill (who asked to remain anonymous, because of the sensitivity of the issue) said this week: “While we’re hoping some of the Israel programs will not be hit, we just don’t want to presume that.”

As Washington wrestles with a budget crisis that could slash hundreds of billions from federal spending — leading to hundreds of thousands of jobs lost, according to some estimates; cuts to programs for schoolchildren and the poor; and reductions in funding for programs that fight disease in the developing world — Israel, too, looks set to suffer from the sudden, unplanned drop in the US federal budget.

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