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US ready to raise military aid to Israel if more funds spent on American materiel

New package could top $40 billion over 10 years; Susan Rice indicates arrangements allowing Israel to purchase domestically must change

US National Security Advisor Susan Rice (AP/Craig Ruttle/File)
US National Security Advisor Susan Rice (AP/Craig Ruttle/File)

The United States has offered to increase its military aid to Israel, under a decade-long deal set to take effect in two years’ time, on the condition that Jerusalem spend more of the funds on American goods and services, rather than on domestic ones as it is authorized to do now.

Negotiations between Israel and the US over a memorandum of understanding for an aid package to replace one that expires in 2018 have been ongoing for months, amid tensions over the Iranian nuclear deal reached last year which Israel vociferously opposed. Israel has charged that the accord signed between Tehran and six world powers, including the US, poses an existential threat to Israel and challenges its qualitative military edge in the region.

The US offer currently on the table, outlined to members of Congress on Friday in a letter by National Security Adviser Susan Rice, includes a pledge to substantially increase the aid package, worth some $30 billion, and ink a new one that would constitute “the largest pledge of military assistance to any country in US history.” The letter was sent in response to a missive signed in April by 83 out of 100 senators calling on President Barack Obama to increase foreign aid to Israel and sign the new deal.

According to a report in The New York Times, the next 10-year deal could top $40 billion, and would include a 10-year pledge to fund Israel’s missile defense systems, an arrangement currently funded separately in yearly installments. It has been subject to much controversy recently as the White House and Congress have disagreed over the size of the annual increase for the missile defense program.

The US has either jointly developed or financed all three of the Israeli programs — the Iron Dome (short-range missile interceptor), Arrow (long range) systems, and David’s Sling (medium range). The latter is meant to ensure Israel can counter threats from neighboring Gaza, south Lebanon and Syria, as well as from an Iran that is relentlessly developing its ballistic missile systems.

The Arrow 3 missile is launched from Palmachim air base in central Israel on December 10, 2015. (Defense Ministry)
The Arrow 3 missile is launched from Palmachim air base in central Israel on December 10, 2015. (Defense Ministry)

In talks with the US, Prime Minister Benjamin Netanyahu has been seeking to anchor the additional aid for missile defense in the memorandum of understanding.

The sides have refused to officially provide details of the unfolding deal, but reports have indicated that Israel was insisting on a price tag the US was hesitant to approve. A senior Israeli official said last month that Netanyahu was determined to conclude talks but “not at any price.”

According to The New York Times on Friday, an emerging sticking point in negotiations has been how much US money Israel would be allowed to spend domestically and how much on American goods and services.

Under the existing agreement, Israel is permitted to spend about 25 percent of the aid it receives outside the US and another 13% on fuel for its aircraft — allowances no other recipient of US aid is granted.

According to the report, that arrangement originated in the 1980s to build up Israel’s defense industry, which has thrived, helping Israel to become among the top 10 arms exporters in the world — and a competitor with the US.

In her letter co-authored with the White House’s director of the Office of Management and Budget, Shaun Donovan, Rice indicated that these special arrangements had to change.

Speaking to Haaretz, one senior US official said that this stipulation “no longer serves Israeli or US interests. We would like to modify it.”

“It doesn’t make sense from a US perspective,” the source added. “We want more of the assistance to be spent in the US on US companies helping to support economic growth and jobs creation here at home.”

Recently, US and Israeli officials, including Defense Minister Avigdor Liberman, have indicated that they were close to finalizing the deal.

Liberman was in the US recently to unveil the new production line of F-35 fighter jets Israel purchased from US defense giant Lockheed Martin.

Defense Minister Avigdor Liberman sits in the cockpit of the F-35 stealth fighter jet, as Chief of Staff of the IAF Brig. Gen. Tal Kelman stands over him, during an unveiling ceremony in Fort Worth, Texas, on June 22, 2016. (Ariel Hermoni/Defense Ministry)
Defense Minister Avigdor Liberman sits in the cockpit of the F-35 stealth fighter jet, as Chief of Staff of the IAF Brig. Gen. Tal Kelman stands over him, during an unveiling ceremony in Fort Worth, Texas, on June 22, 2016. (Ariel Hermoni/Defense Ministry)
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