The new aid-deal: The Obama administration is removing the unique provision allowing Jerusalem to invest money for research & development of future Israel-made products.

By i24news

The White House is seeking to cancel a provision in its upcoming 10-year arms deal with Israel that allows the Mideast ally to spend part of the funds on Israeli-made goods, Foreign Policy reports.

IDF tanks equipped with Israel’s Rafael’s Trophy defense system – Courtesy of Rafael Advanced Defense Systems

Since the 1980s, Israel has been permitted to dedicate some of the money to home-produced arms, thus boosting the country’s defense sector. But in 2015, Israeli security companies sold $5.7 billion worth of arms – almost double what it exported in 2003, according to the magazine. Indeed, Israel’s defense expertise has made it the world’s largest exporter of drones.

Removing the provision could hurt Israel’s defense sector while possibly helping American companies that are seeing fewer buyers at home.

According to Foreign Policy, Israel could lose some $10 billion over the next decade if the provision is scrapped.

The change would require Israel to spend all the money it receives in the deal on US-produced arms from companies like Lockheed Martin and Raytheon.

Lockheed Martin Corp products on display – Photo: ERIC PIERMONT/AFP/FILE

Under the current 10-year arms deal between the US and Israel, set to expire in 2018, Israel received $30 billion to spend on military expenses over the decade, with 26.3 percent of the money being earmarked for Israeli-produced goods.

The Obama administration has promised to sign a new deal that would “constitute the largest single pledge of military assistance to any country in US history.”

The US has reportedly offered $3.5 billion to $3.7 billion per year, lower than the $4 billion a year Israeli Prime Minister Benjamin Netanyahu requested, but still a significant increase over the previous package.

According to Israeli newspaper Yedioth Ahronoth, the US is willing to let Israel keep the existing arrangement for the first five years after the new deal, but the arrangement would then be phased out (with the exception of projects developed together).

The White House has also offered a guaranteed sum for missile defense programs over the next decade, replacing an arrangement that has required Israel to request missile defense funding from Congress on an annual basis.

Israel receives more than half of all US foreign military aid, according to Foreign Policy, and would see this proportion rise under the reported terms of the new deal.

View original i24news publication at:
http://www.i24news.tv/en/news/israel/diplomacy-defense/123117-160819-us-to-stop-permitting-israel-to-use-arms-deal-funds-on-its-own-weapons-report