US Treasury Secretary Timothy Geithner and Israeli Treasury director-general Doron Cohen signed an agreement in Washington on Wednesday that will extend US loan guarantees to Israel to 2016.

The agreement, signed on the sidelines of the US-Israel Joint Economic Development Group (JEDG) forum, gives Israel four more years to use $3.8 billion in guarantees left over from the $9b. in guarantees granted in 2003. The guarantees are conditional on Israel meeting deficit and expenditure targets and making economic reforms.

Even if Israel does not take advantage of the loan guarantees, having American backing helps it obtain favorable rates on borrowing abroad.

The guarantees come on top of more than $3b. in military assistance and joint US-Israel missile defense projects.

Finance Minister Yuval Steinitz said in a press statement that the agreement is “important evidence” of the special economic relationship between the US and Israel.

Israel’s economic attaché in Washington, Eli Groner, said it shows much more than just American support for the Israeli economy, explaining that it is also a considerable diplomatic expression of support.

At least one Israeli official has expressed displeasure at continuing to accept US loan guarantees.

Bank of Israel Governor Stanley Fischer, speaking at the annual Caesarea Forum in June, said: “It is unhealthy for a state that is proud of its sovereignty to turn to external actors every time there is a problem. I would prefer that we stand on our own two feet.”

The annual JEDG forum has been held since the mid-1990s and focuses on bilateral economic issues. Topics being discussed at this year’s two-day event include natural gas, alternative energy, the Israeli labor force and the euro-bloc troubles.

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