The security agreement between the US and Israel is yet to be signed, and as time goes by it appears that the Americans are in no hurry to complete the deal, Walla reported on Tuesday. Sources at the defense ministry who expected the US aid package to be agreed on by the Passover holiday are seeing the weeks since that target date passing by with little movement from Washington. So far, the Obama Administration has decided to increase the security aid budget to Israel above the current annual $3.2 billion, but in addition they would like to reduce the portion of the budget which may be converted from USD to shekels for IDF purchases from Israeli security manufacturers. That last part would be the most painful, with long-term consequences for Israel’s security.
As part of the US aid package in the past, Israel was allowed to convert a quarter of the money into 3 billion shekel ($786 million) for purchases from Israeli companies. The Israelis object to the American decision to bite into that part of the package, because it would result in a long-term effect on Israel’s defense budget and its military industrial complex.
A former senior defense apparatus official told Walla that “the US plan to cancel the conversion to shekels, even if it’s only a reduction, would have a significant effect on the attractiveness of the entire US security aid package.”
The aid budget offer as it stands today is far lower than Israel’s stated ambition at the start of negotiations with the US. Congressional sources have said that Israel was asking for $4 to $5 billion a year, which over the span of the deal, from 2019 to 2028, could total $50 billion — compared with $30 billion for the 2009 to 2018 package signed with President George W. Bush. The final deal will likely fall between $37.5 billion—the US position, and $40 billion—the amount Israel has come down to. Even at the minimalist, US version, Israel still receives a bump of $750 million over 10 years.
Today the US pays for $3 billion out of Israel’s $15.6 billion defense budget.
The defense source speaking to Walla said an American decision to keep the entire aid package in dollars, to be spent only with US manufacturers, could mean serious out-of-pocket costs for Israel. “For instance,” he explained, “when we purchase the F-35 from the US, it comes with additional derivatives paid for in shekels: we are expected to build an advanced infrastructure for the new squadron, as well as specialized maintenance and special takeoff lanes—for which the US budget converted part would have paid. Cutting it would directly harm the defense budget as well as the military industries.”
Incidentally, as Defense News reported in April, Israel is demanding of Lockheed Martin and the F-35 Joint Program Office to maximize its autonomy over its new stealth fighter force, including its own command, control, communications and computing (C4) system, indigenous weaponry and the ability to perform heavy maintenance in-country rather than at predetermined regional overhaul facilities. No other buyer has asked or received these exceptions for a system that’s considered the most advanced and secret in the US’ possession.
Brig. Gen. Tal Kalman, IAF chief of staff, told an audience in Tel Aviv this year that Israel’s “unique requirements” demand independence in maintaining the stealth fighters. Speaking on Sunday at a conference of Israel Defense and the Fisher Institute for Strategic Air and Space Studies, Kalman said the IAF is going for a “phased and coordinated process” to establish an F-35 logistics center at squadron headquarters at Nevatim Air Base in southern Israel.