US and Israel conclude landmark 10-year defense deal

'Single largest pledge' of aid in US history.

By
September 13, 2016 22:13
4 minute read.
C-Dome

Rafael Advanced Defense Systems’ C-Dome system, a sea-based version of the Iron Dome anti-rocket battery, fires from an Israeli Navy missile ship. (photo credit: screenshot)

 
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The United States and Israel have concluded a landmark aid agreement worth at least $38 billion, the largest pledge to an ally in American history, which will govern their defense relationship through 2028.

The Memorandum of Understanding, negotiated over a year by senior officials in the Obama administration and Netanyahu government, will be announced officially at a signing ceremony on Wednesday at the State Department. US National Security Adviser Susan Rice and her Israeli counterpart, Yaakov Nagel, are expected to attend.

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Nagel, who led talks with Rice over the package, arrived in Washington on Tuesday for the event. Rice spoke of the negotiations in June before the American Jewish Committee: “ Even in these days of belt tightening, we are prepared to sign the single largest military assistance package – with any country – in American history ,” she said.

The deal, she continued, will “constitute a significant increase in support, and provide Israel the funding to update much of its fighter aircraft fleet, substantially enhance the mobility of its ground forces and continue to strengthen its missile defense capabilities. ” The $38 billion over 10 years includes supplemental funding for missile defense that Israel received until now outside the MoU framework.

Still, the new sum constitutes about a $4 billion increase in the $34 billion in military aid Israel received over the past decade, which included $30 billion under the MoU, and another nearly $4 billion from 2007-2017 in supplemental missile defense aid.

In total, the agreement constitutes “the single largest pledge of bilateral military assistance in US history ,” the Obama administration said in a statement, announcing plans for the signing ceremony in the Treaty Room.

A n MoU is no treaty, however: this deal is not a formal legal document, and is not binding on Congress, which was not party to the negotiations and is not privy to details of the concluded deal One member of Congress, Senator Lindsey Graham of South Carolina, has already taken umbrage at the suggestion that Congress must follow to a “T” an agreement it had no say in negotiating.



Graham seeks to increase defense aid to Israel in 2017 by an alleged $300 more than the deal prescribes.

“I’m offended that the administration would try to take over the appropriations process,” Graham, who chairs the Senate subcommittee on the foreign affairs budget, said over the weekend. “We can’t have the executive branch dictating what the legislative branch will do for a decade based on an agreement we are not a party to.”

Graham’s spokesman, Kevin Bishop, noted to The Jerusalem Post on Sunday that his markup passed through committee back in June.

“The negotiations were between the Obama administration and the Israeli government – Senator Graham was not part of the negotiations,” said Bishop, noting his boss sees no need to be bound by the administration’s position.

The White House was allegedly waiting for Graham to drop his efforts before signing the deal.

On the down side of the ledger, from an Israeli perspective, is that the MoU is expected to phase out offshore procurement to Israeli defense companies. All the money received will need to be spent in the US, as opposed to the current situation , in which 26% of the annual $3 billion could be converted into shekels and spent in Israel.

The current M o U, which provided Israel with some $30 billion in military assistance over the last decade, expires in October 2017.

In May, Manufacturer’s Association head Shraga Brosh demanded that Netanyahu veto any deal that would eliminate procurement in Israel.

“The Israeli government’s acceptance of Obama’s plan would be a mortal blow to Israel’s defense manufacturing, and mean the loss of thousands of jobs in Israel in favor of the Americans,” Brosh said at the time.

Even with a higher overall level of defense aid, he said, blocking the government’s ability to spend the money in Israel would cut hundreds of millions of dollars out of the local industry. According to the MAI, defense accounts for about 15% of all Israeli manufacturing jobs, and every $1 billion in defense procurement supports 2,000 direct jobs and 5,500 overall jobs in the economy.

In 2015, Israel’s defense exports amounted to $5.7 billion, around 13% of all industrial exports. The loss of American procurement from aid would break up supply lines and technological investment that help the industry flourish, Brosh said.

On Tuesday, however, Brosh and the MAI remained mum on the emerging deal.

The change in the procurement regulations are not expected to kick in until the seventh year of the deal, allowing the defense industry ample time to adjust to the new reality, senior government officials said.

Niv Elis contributed to this report .

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